A BRIEF HISTORY OF NETWORK MARKETING
By Jeffrey A. Babener
Excerpted from Network Marketing: What You Should Know, Jeffrey Babener, Legaline Publications
MLM/DIRECT SALES consultant practice tips. MLM/DIRECT SALES Companies are required to file registrations in a number of states which have adopted MLM/DIRECT SALES Statutes. Specific MLM/DIRECT SALES information must be filed and specific rights for distributors, including MLM/DIRECT SALES buy back and MLM/DIRECT SALES refund policies must be addressed in MLM/DIRECT SALES documentation. MLM/DIRECT SALES Legal and MLM/MLMLegal.com and Babener and Associates provides expert MLM/DIRECT SALES Consultant and MLM/DIRECT SALES Consulting advise on MLM/DIRECT SALES corporate, MLM/DIRECT SALES software, MLM/DIRECT SALES Compensation, MLM/DIRECT SALES Taxes, etc. MLM/DIRECT SALES Consulting is an important component for MLM/DIRECT SALES startup. Careful Choice of MLM/DIRECT SALES Software is another component of MLM/DIRECT SALES Corporate. An MLM/DIRECT SALES Consultant and MLM/DIRECT SALES Law and MLM/DIRECT SALES Legal is part of the MLM/DIRECT SALES Startup Team. MLM/DIRECT SALES Compensation must be reviewed by an MLM/DIRECT SALES Consulting standpoint by an MLM/DIRECT SALES Consultant and MLM/DIRECT SALES Legal and MLM/DIRECT SALES Law professional and programmed by a MLM/DIRECT SALES Software and MLM/DIRECT SALES Technology provider.
Cycle 5. The 1950's - The Birth of Today's Giants
The modern era really begins in the 1950's. It is here that network marketing truly was born. In addition to the older giant, Avon, those giant companies that dominated the 1950's are still the leading forces in the worldwide network marketing industry a half century later, namely, Tupperware, Shaklee, Amway and Mary Kay. When asked to describe this type of marketing, these household words immediately come to mind, and the inquirer is informed that "it is the sort of marketing" done by companies like Tupperware, Shaklee, Amway and Mary Kay. They have become almost brand names synonymous with this channel of distribution. There is not a network marketing company today that does not owe its roots in some way to these companies who pioneered in the 1950's.
Earl Tupper was a plastics man, not an MLM-type of guy. He was an early pioneer in plastics who had developed flexible, lightweight and nonbreakable plastic, as well as the famous Tupperware seal for consumer containers. He started selling his products in 1945 through conventional retail distribution, but without great success. These products needed demonstration. In 1951, Tupperware Home Parties was launched with the aid of former Stanley dealers, Brownie Wise and Gary McDonald. The party plan of demonstration and sale was a success and is emulated by other party plan companies a half century later. Tupperware is a worldwide billion-dollar company operating in more than 40 countries. It went on to be one of the world's largest producers of consumer plastics products, and the name "Tupperware" is virtually synonymous in the minds of people everywhere with durable and usable plastic kitchen storage containers
Dr. Forrest Shaklee was not a "Yankee Peddler." He was a chiropractor with a life-long devotion to nutrition. He developed a process for "vitalized minerals," a method of extracting minerals from vegetables, and corresponded with a man of similar interest, the Polish biochemist, Casimur Funk, who was credited with the discovery of "vitamins." Many in the industry credit Shaklee for introducing vitamins to America in the aftermath of the founding of the multilevel marketing person-to-person sales program in 1956. Shaklee went on to become one of the largest and most respected of brand names for nutritional supplements. With its product Basic-H, a biodegradable cleaning product, it also became a leader in environmental products. Its expertise was so respected that Shaklee was chosen to serve as nutritional consultant for U.S. Olympic teams. The good name that it earned paved the way for every nutritional MLM company to follow in its footsteps.
When the world thinks of multilevel marketing or network marketing, the first word to the lips is Amway. That is understandable in that no network marketing company has had the singular worldwide success of Amway. Utilizing an MLM format commenced in 1959, its founders, Rich DeVos and Jay Van Andel, built a distribution company with a diverse product line of hundreds of products, into a giant, whose worldwide sales approached $7 billion, with millions of distributors, by the end of the 1990's.
Life had been simpler in the beginning. DeVos and Van Andel had earlier been distributors for an MLM direct selling company, Nutrilite, a California-based producer of vitamins and food supplements, when they decided to start Amway in 1959. (Later, they acquired Nutrilite in 1972, which as a division of Amway helped make Amway the largest seller of nutritional supplements in the world.) They initially operated the company from the basements of their homes. Their initial products were biodegradable cleaning products, but over time Amway went on to sell virtually every type of consumer product and many services as well. They pioneered strategic relationships with corporate America, for instance, signing on more than a million customers for MCI. Their theme, "we're changing the way America shops," influenced every consumable based MLM company thereafter, turning legions of consumers into pursuers of "the American dream" as Amway distributors bought, sold, and recruited others to do the same. Amway's success as a major presence in Japan set the standard for American MLM companies looking to global expansion. Finally, Amway's 1979 successful defense against the FTC of the legality of the concept of multilevel marketing (the FTC charged it was a pyramid) set the legal standard for all MLM companies for decades to come.
Mary Kay Cosmetics
They write case studies about Mary Kay at prestigious business schools. Its products are as well received in Moscow as in Dallas. This billion-dollar company has brought honorable attention to the direct selling industry because of its reputation for integrity and commitment to the empowerment of women. All networking companies that since focused on the empowerment of women owe a place in their heritage to Mary Kay Ash and her famous awarded "pink Cadillacs."
Actually, Mary Kay, founded in 1963, missed the 1950's by a few years, but belongs in the same company of giants such as Tupperware, Shaklee and Amway. Like several other famous direct sellers, Mary Kay Ash had an earlier career with Stanley Home Products and other direct selling companies. In fact, she had 25 years in direct selling behind her and effectively came out of retirement to start Mary Kay. She had believed that earlier direct selling companies did not take women seriously and, therefore, empowerment of the woman became the philosophical foundation of what was to become one the world's leading skin care companies. She became famous for her personalized attention to her distributors. When she began Mary Kay, she began with one shelf of cosmetics and nine salespeople. Later, Mary Kay, having grown to one of the largest direct selling companies, was to end up on the New York Stock Exchange before being taken private by the family.
Mary Kay sells both by person-to-person as well as party plan. Mary Kay officials prefer to distance themselves from being referenced as MLM, asserting that, since all distributors buy direct from the company, Mary Kay is not an MLM, i.e., a multilevel distribution system like Amway and Shaklee. Most industry observers consider MLM to mean payment of override commissions on the sales of recruited sales organizations and, in that regard, Mary Kay fits the criteria for MLM compensation plans. That issue aside, Mary Kay has demonstrated that commitment to product and to a cause, women's empowerment, is a vital tool in achieving a successful networking company, whether in 1963 or 2003.
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