Experts said that if people can create word-of-mouth about a product, why not use them to sell the product itself. This gave rise to Multilevel Marketing (MLM) where companies like Tupperware, Avon, Amway and Oriflame create distribution channels in the invisible networks. But it is important to note that MLM is not buzz. It has very different objectives and ways in which it operates. To give a clear picture on the distinction between the two, I am including an excerpt from the book “The Anatomy of Buzz” by Emanuel Rosen:
“While these programs work for certain companies, it’s important to note that the phenomenon they’re based upon is not exactly buzz. There is a key difference between and a marketing scheme in which friends are supposed to sell something to their friends or recruit them as distributors. While buzz may be stimulated with an occasional incentive, it is usually free from any monetary transaction. A customer recommends a product because she truly believes in this product. Part of her credibility comes from the fact that she has nothing to gain by recommending the product, which is not the case when she is selling it.
Advocates of MLM love to point out the potential for exponential growth that comes with this method. (“If your friend tells two friends, and these two friends tell two friends, you reach a huge audience very fast.”) But in real life this exponential growth is hardly ever reached. Why not? Because many people don’t want to get involved in this type of business and don’t feel comfortable selling to their friends. Most people want to talk with their friends without having to sell them anything. When they meet a relative, they want to hear about the family, without thinking of how they could enroll him as part of their “downline” (the industry term for the chain of distributors one recruits).
MLM is far from gone, however. The very same trends that cause customers to rely on their friends in making purchasing decisions – information overloaded, customer skepticism, and customer connectivity – could help MLM organizations to expand, especially in product categories such as skin care, personal services, and food supplements. There is also evidence that this marketing method is more effective in certain social circles and countries than in others. But as MLM grows, it’s important not to confuse it with buzz. Don’t expect an MLM organization to grow at the rate of an ICQ or Hotmail. It’s a different phenomenon.”