Network Marketing: Exploitation of relationships – Myth or Reality?

Abstract

The Network Marketing, first popularized by Amway, in 1950s in USA is gaining momentum in India. The total turnover of network marketing companies in India was estimated at Rs 301,044 crores in 2005 with an annual growth rate of 25% .The India Direct Selling Association (IDSA) has projected that the network marketing industry will be around Rs 8000 crores by 2010. Studies have shown that consumers often have negative perception of direct selling organisations and network marketing organisations in particular. The aggressive selling techniques, exaggerations of facts in recruiting, pyramiding scams and unethical way of exploiting relationships all together form a basis for this negative perception. The paper presents the exploitation of Relationships viz friends, relatives and colleagues and attitude of channel members in network marketing.