Using personal relations in multilevel marketing organizations: The case of Herbalife
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2017-06-30
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en
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Abstract
Multilevel marketing organizations have a deviant structure in relation to other organizations, because they use distributors to sell their products. These distributors often appeal to their friends, family and acquaintances. The literature about the use of personal relations in multilevel marketing organizations is inconsistent and this leads to a research gap. This research studied Herbalife as a particular case to solve this research gap. This case provides deeper insight into the different dimensions on how personal relations are used, how the different relations relate to each other and for whom this applies. The main research question that is answered is: ‘how are personal relations used and which effects does this have for whom?’ This research is substantiated with literature about the involvement of personal relations in multilevel marketing organizations. The literature is directed towards the use of personal relations and the positive and negative effects of this use. The data was gathered on the basis of a qualitative research. Two Herbalife events were observed, ten interviews were conducted and the annual report of Herbalife was analyzed.
The existing literature states that personal relations are used for recruiting, for selling and as a form of control. This research came to the same conclusion. The positive effects of the use of personal relations for distributors are the broadening of their network, getting more money and providing a good basis for business relations. This study adds to the existing literature in that friends, family and acquaintances help distributors in starting their business. Personal relations provide a form of control for multilevel marketing organizations. This research adds to this as it strengthens the relationship between distributors and their personal relations and multilevel marketing organizations get a more positive image. The positive effects for friends, family and acquaintances is that they get a product that is trustworthy. This research adds to this finding in that friends, family and acquaintances get a new lifestyle and get discount on the products. However, distributors have the fear of being rejected by their personal relations and this research adds to this in that distributors get a different attitude towards their personal relations, distributors are not taken seriously and that they use friends for economic purposes. Furthermore, this study found that multilevel marketing organizations get a negative image, because multilevel marketing restructures the relationship between distributors and their personal relations in such a way that it leads to encapsulation. Furthermore, friends, family and acquaintances of the distributor may feel that multilevel marketing is unethical, because distributors make money out of friends, distributors do not return the product and multilevel marketing restructures the social relationship between them and the distributors. Moreover, this study found that distributors who are a distributor for a longer time period (>15 years) are more willing to approach its personal relations than distributors who are working for a shorter time period (<2 years).
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Faculteit der Managementwetenschappen