Causes of the Existence of Unappreciated Multi-Level Marketing Companies in Ho Chi Minh City

I. Abstract

In Vietnam, with the development of the economy, Multi-level Marketing experienced was at a particular position in business models. MLM companies, however, could not expand their brands widely because of several problems. An aim of our research was to determine what the reasons were toward attitude of consumers. We have carried out observations of MLM companies in Ho Chi Minh City, along with conducting a survey (questionnaire) on some groups of theirs customers. Participants was delivered questionnaires and interviewed. Other accurate information about the essence of MLM was collected to get the most objective point of view. Results indicated that the products’ quality versus theirs price were not balance enough to convince the consumers. To increase the numbers of people appreciated, the information of MLM model and products should be communicated properly and the products’ quality should be improved.

II. Introduction

Since Viet Nam joined WTO, more and more merchandises from other countries have been poured into Viet Nam. There are various distribution modes to bring products to customers, among which is the Multi-Level Marketing (MLM) called as Network Marketing or Direct Sales. Several researchers have been performed in this method of delivering goods. Ross (2008), Sales (2010), Myers (2011) studied the differences between ‘pyramid structure’ and ‘pyramid schemes’. Brodsky, N. (1998) depicted how MLMs churn through human relationships. Mills, A.C. (1996) captured the "stink" of MLM pathology and culture most vividly. The exposing fraud, cult-like tendencies and deception of a particular MLM company is revealed (Scheibeler, E.; 2004). According to experience, Fitzpatrick, R.L. (2002) described ten untruths of MLM which is lurked by ten good things. However, there is little information available on the reason why MLM companies have not been appreciated despite their approval by government and some others leading networkers. This purpose of this study was to investigate the causes of the problem. It is hoped that information in this research may provide a new insight into the nature of MLM and help to improve the image of this marketing system.

III. Method

This research was carried out around several districts such as District 1, 10, Binh Thanh and Tan Binh District (Dist.), Ho Chi Minh City (HCMC). Instruments of this investigation were observation, survey (questionnaires), and interviews. The majority of subjects were youth and dynamic MLM customers around 18 to 35 who currently are students or employees. Observations were performed at local cosmetic shops in Binh Thanh Dist., HCMC; and inside the two companies: Aloe Trading Company, Ltd (ATC), Tan Binh Dist., HCMC and AVON, Inc., Dist.1, HCMC. Four random employees at different positions of the two MLM companies were interviewed.