Mathematical Model for Network Marketing

Direct selling industry in India is one of the fastest growing non-store retail formats. Various store and non-store retail formats have evolved to cater to this growing market and direct selling is one such non-store retail format. The growing Indian market has attracted a large number of Indian and foreign direct selling companies. By 2014-15 direct selling business in India would reach a size of Rs 10,843 crore on back of increased consumer spending. Multi-level marketing (MLM) also known as pyramid selling, network marketing, and referral marketing is a marketing strategy in which the sales force is compensated not only for sales they personally generate, but also for the sales of the other sales people that they recruit. This paper attempts to focus on key aspects of MLM and also what further researcher can add on to the existing literature.

Journal of Management and Science

As the Business Enviornment become more and more competetive, companies are forced to push themselves to very edge of their capabilities. Ultimately the success of companies relies on their human resources and business and marketing strategies wich can help them to show up in global markets. So Network Marketing has become increasingly used method in order to ehance the small and large logistic companies performance. Multi-level marketing is a marketingapproach that motivates its participants to promote a certain product among their friends. The popularity of this approach increases due to the accessibility of modern social networks, however, it existed in one form or the other long before the Internet age began (the infamous Pyramid scheme that dates back at least a century is in fact a special case of multi-level marketing). The India Direct Selling Association (IDSA) has projected that the network marketing industry will be around Rs 9000 crores by 2013 end.The purpose of this pa...

International Journal For Multidisciplinary Research, 2023

In India, direct sale is one of the most rising retail non-store models. Multi-level marketing is a type of business developed in the US in the 1950s. The network marketing strategy (also known as Multi-Level Marketing) consists of hiring manufacturers' individual businesses as distributors of goods of the organization and recruiting dealers and sub-distribution firms to distribute items, typically in their home countries. The sales force is not only paid for sales but also for sales carried out by its hiring, in the context of direct selling is a multi-level marketing. The participants who can have various forms of pay are referred to as this hired sales team. This essay discusses in more detail the method of targeted marketing and multi-level marketing. A comparative research on facets of MLM and direct marketing is discussed in depth in this report.

Physica A-statistical Mechanics and Its Applications, 2006

We investigate a dynamic model of network marketing in a small-world network structure artificially constructed similarly to the Watts-Strogatz network model. Different from the traditional marketing, consumers can also play the role of the manufacturer's selling agents in network marketing, which is stimulated by the referral fee the manufacturer offers. As the wiring probability a is increased from zero to unity, the network changes from the onedimensional regular directed network to the star network where all but one player are connected to one consumer. The price p of the product and the referral fee r are used as free parameters to maximize the profit of the manufacturer. It is observed that at a ¼ 0 the maximized profit is constant independent of the network size N while at aa0, it increases linearly with N. This is in parallel to the small-world transition. It is also revealed that while the optimal value of p stays at an almost constant level in a broad range of a, that of r is sensitive to a change in the network structure. The consumer surplus is also studied and discussed. r

Physica A-statistical Mechanics and Its Applications, 2008

Government regulators and other concerned citizens warily view multilevel marketing enterprises (MLM) because of their close operational resemblance to exploitative pyramid schemes. We analyze two types of MLM network architectures—the unilevel and binary, in terms of growth behavior and earning potential among members. We show that network growth decelerates after reaching a size threshold, contrary to claims of unrestricted growth by MLM recruiters. We have also found that the earning potential in binary MLM’s obey the Pareto “80–20” rule, implying an earning opportunity that is strongly biased against the most recent members. On the other hand, unilevel MLM’s do not exhibit the Pareto earning distribution and earning potential is independent of member position in the network. Our analytical results agree well with field data taken from real-world MLM’s in the Philippines. Our analysis is generally valid and can be applied to other MLM architectures.

Communications in Nonlinear Science and Numerical Simulation, 2017

Biologically inspired dendritic network growth is utilized to model the evolving connections of a multilevel marketing (MLM) enterprise. Starting from agents at random spatial locations, a network is formed by minimizing a distance cost function controlled by a parameter, termed the balancing factor bf , that weighs the wiring and the path length costs of connection. The paradigm is compared to an actual MLM membership data and is shown to be successful in statistically capturing the membership distribution, better than the previously reported agent based preferential attachment or analytic branching process models. Moreover, it recovers the known empirical statistics of previously studied MLM, specifically: (i) a membership distribution characterized by the existence of peak levels indicating limited growth, and (ii) an income distribution obeying the 80-20 Pareto principle. Extensive types of income distributions from uniform to Pareto to a "winner-take-all" kind are also modeled by varying bf. Finally, the robustness of our dendritic growth paradigm to random agent removals is explored and its implications to MLM income distributions are discussed.

International Journal of Trade, Economics and Finance

New products based on modern technologies (high-tech), in order to enter the market, face a number of challenges such as high investment required for research and development of these products, high cost of labor force, high cost of products, making profit at advanced stages, low life expectancy, high level of associated risks and required innovation. In terms of marketing these products, issues such as centralized decision making by the manager or the owner, dynamic environment, existence of larger competitors with higher resources and influence in the market, high expectation of customers and lack of resources are just some of the issues to mention. In this study the effects and functionality of network marketing strategies such as reduction of costs, increase in the rate of sales, brand making, job creation, effective networking, high level of innovative potentials, and increase in liquidity as the result of growth of sales; which itself is obtained by viral marketing and its expansion to a social networking site with exchanges of social capital has been investigated. The statistical population are a number of small scale companies providing microfiber Nano silver cleaning cloths based in the city of Tehran. The research method which has been used in this research is qualitative research method. The results of the research show that by providing a favorable reward plan in network marketing, microenterprises offering high-tech products can overcome many of their problems and difficulties in presenting, selling and promoting their products in the market.

Artha Vijnana, 57, 1. March 2015, 49-79., 2015

In trading relations and marketing of products of producing firms, network relations of dealers play an important role in the delivery of products and consumer satisfaction. Such dealer networks are strategically formed and the resulting network structure implies important properties. From simple random graphs to complex networks, the properties are evaluated with different parameters. This paper attempts to understand the topology of such an empirical network of dealer relations in marketing. The estimated network parameters are compared with the simulated structures of the standard network topologies of random graph, scale free, p* and rewired lattice networks. The results show that the empirical dealer network is close to that of a rewired lattice structure of social networks.

International Journal of Management and Network Economics, 3, 3, 2015, 181-198., 2015

Supply chain as is understood is not a liner chain. It, in reality, consists of many interlinked ties that actually form a network. With the availability of advanced tools like the SNA, it is more appropriate to use them to better understand the marketing intermediaries. The advancement in the SNA methodologies have still not been exploited completely for use by managers and SCM users. This paper tries to analyse a channel network using SNA techniques, with special use of a simple yet robust software-UCINET. The various network parameters have been estimated and analysed and given in a managerial perspective for use by managers of today.