Analysis: NCHIMUNYA MUVWENDE
IS THERE such a thing as free money, earning thousands of Kwacha in a day while sitting in the comfort of your home?
Well, this message has from time to time been relayed to me by several individuals from institutions such as Aim Global, Irizers, long rich and other networking marketing companies.
In their messages, they make it clear that I would earn as much as my monthly salary in a day if I were to join them and my daily work will not be disturbed.
Wow, who doesn’t love money? Who wouldn’t love to earn so much while lazing around, a term referred to as Leisure-Work trade-off in economics? It is for this reason that I decided to understand what really networking marketing is all about.
Network marketing, which is also known as pyramid marketing, is a business model which involves people not directly employed by the company selling the company’s products and services and the same are remunerated on a commission basis. In simple words, under this business model, non-salaried participants get paid whenever they recruit someone or if a person below them in the pyramid makes a sale or recruits. Let me dwell much on the pyramid structure that does not involve any products but merely recruiting others.
So you get paid to get a new recruit? Interesting! Pahwa, a marketer, argues that this is an ill-practice which makes a person earn money by taking advantage of his friends and family.
He further argues that companies having a pyramid model tend to deceive people while making them believe that they’ll earn in future (which they do by deceiving more people). For example, a person will be asked to pay US$100 to be a part of the company with a promise that he’ll get 25 percent of every new recruit’s admission fees who he refers to the network.
His argument is justified, in my opinion, and here is why. These companies are looking to penetrate various countries and markets where they have no representation and they know that various advertising strategies may not yield much influence.
What these companies really want is to use your influence to influence your friends and family. When a person you trust tells you he is earning so much money simply by recruiting others, you are more likely to trust them than trusting TV adverts. What these companies have realised is that the word-of-mouth marketing is a far more powerful and effective method of marketing, especially that the message comes from someone you know and trust.
But why are foreign companies using this strategy? Well, the companies spend millions of dollars in advertising. In 2017 alone, the Coca-Cola Company spent US$3.3 billion in advertising while the competitor, Pepsi, spent US$2.4 billion. Imagine if this money was channelled to business expansion as opposed to advertisement. Networking marketing provides a platform for reduced advertising cost and effective outreach to various ethnicities.
But does one earn free money? The answer here is indifferent! While it is true that you can earn so much money depending on your cunning influence and marketing skills, it involves one engaging in vigorous hard work to influence the masses.
The catch here is this: if you do not put in your level best, then you earn nothing or may end up thinking you have been duped. Having worked on a commission-based job before, you find that to win customers, you may resort to all sorts of lies all in a bid to win customers.
This is why you find that the marketers tell you that you will earn as much as US$5,000 in a day. This indeed is not realistic but they are forced to do so just to influence you to join. Many of us are moved by the fact that one mentions getting so much money while lazing around, but let our reasoning rise above our emotions.
My view is that for companies, networking marketing is the way to go for effective business expansion because it is less costly but powerful and this must be emulated by Zambian companies that have not really expanded within and outside the country. However, the challenge will be on the misrepresentation of the actual values of the company.
Since the people engaged as independent business advertisers (IBA) are interested in the commission they will receive, they will give out false information about the firm, which may negatively affect the business if no precautions are taken. It will be important that clear guidelines are given to those joining as to what the company actually stands for and the consequences of sending misinformation must be communicated.
For individual marketers, ensure that you state facts and not falsely appealing to the conscience of others. Do not excite emotions of others when you truly know that there is more to earning than just joining a network.
If you don’t know, it is actually a crime to deceive others by getting some funds from them as they join, a case called obtaining money by false pretences. Be transparent and be clear to ensure that this new business model is embraced by many and you could earn so much as opposed to using dubious strategies.
Is networking marketing for the lazy or hard-working? Well, it is for you to judge after reading this write-up and decide whether it would work for you. Think and Act Smart.
The author is an economist.
Analysis: NCHIMUNYA MUVWENDE