social relations to business relationships: network

Social Relations to Business Relationships: Network Marketing asan Alternative Channel

Teemu Ylikoski, Helsinki School of Economics & Business Administration 1 Elina Oksanen, Helsinki School of Economics & Business Administration

Abstract

Network marketing is an effective channel alternative that is especially powerful as a way of expanding the business through the social network. We claim that network mar keting is a social channel that differs from other direct marketing channels in several respects, yet it has certain similarities with online channels. The paper discusses the dif ferences and similarities between network marketing and more conventional choices.

Introduction

Recent trends in marketing emphasize a change from location-centered thinking to di rect channels that reach the customer irrespective of physical locations (Sheth & Sisodia 1999). The trend is particularly apparent with online channels, e.g. the Internet.

As the meaning of location reduces, channel structures need to evolve. This seems to be particularly apparent in the recent growth of popularity of direct channels. This has been proposed to lead to a diminished need for middlemen, thus effectively leading to disin- termediation.

This paper takes a look at an alternative direct channel that has been somewhat over looked. We argue that network marketing has in fact enormous potential for some appli cations, even though it has been far overshadowed by other phenomena in the academic press. Network marketing (multi-level marketing) is a channel alternative, which can be an effective way of organizing the marketing and distribution functions of the firm. Furthermore, it is especially powerful as a way of expanding the business.

In this paper, we will begin by characterizing the network marketing phenomenon. Then, we will suggest that the phenomenon reflect a conceptually different type of channel, which we have termed the social channel. We will continue by discussing the comparative strengths and weaknesses of this channel alternative in comparison to more conventional ones, and conclude with a discussion on how network marketing and the Internet compare.

1 Helsinki School of Economics and Business Administration, Department of Marketing, P.O. Box 1210, FIN-00101 Helsinki, Finland. Tel: +358-9-43138780, Fax: +358-9-43138660, E-mail: [email protected].

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The Network Marketing Phenomenon

During the last decade the direct selling industry has expanded rapidly. Global retail sales have increased more than 2,4 times and the amount of salespeople has more than tripled. In 1997 the estimated global retail sales through direct selling were US$80.47 billion and there were more than 30,9 million direct salespersons in the world (WFDSA 1998).

Furthermore, interest in direct selling exceeds the level of recent purchases, although marginally, indicating room for continued growth (Wirthlin Worldwide 1997). As a re sult, more and more businesses are looking at direct channels as lucrative future alterna tives.

Network marketing refers to the development of a legitimate retail selling and dis tribution network that grows via a social network (Coughlan & Grayson 1998). It is currently one of the most applied ways of organizing direct selling businesses. About 79% of all U.S. direct selling companies were network marketers, with retail sales of $16.08 Billion (72% of total sales) and about 81% of people employed in direct selling, almost 7.5 million individuals, were members in a network marketing organization (DSA 1998).

The term "network marketer" includes companies that conduct business exclusively through network marketing, as well as companies that have particular network market ing divisions. Network marketers span over several industries. For example, Amway Corporation is the world's largest network marketer, present in 60 countries with two million sales persons worldwide. Nu Skin has about 300 000 consultants spread over eight countries. A.L. Williams Corporation, the largest seller of individual life insurance since 1984 - currently bought by the insurance giant Primerica (Herbig & Yelkur 1997) - is a network marketing company as well as Shaklee, Herbalife, Jeunique, GNLD and Quorum. On the other hand, Gillette, Colgate-Palmolive, Discovery Toys, MCI and Ex- Cel are examples of companies selling through network marketing parallel to other marketing channels (Herbig & Yelkur, 1997).

Network Marketing: A Social Channel Alternative

Reaching customers more effectively, and establishing, developing and maintaining re lationships with them are probably the most prominent issues presently in marketing. While these issues and the impact of new channels have been discussed in detail, the discussion seems to focus on the effects of technology on customer service (Peterson et al. 1997, Sheth & Sisodia 1999).

However, one alternative that could work well in such a pursuit has been overlooked: network marketing. The network marketing concept involves 1) a company that supplies the goods and services and 2) a network of independent (non-employed) sales persons who sell the products direct to end consumers and expand the or ganization by recruiting new members into it (WFDSA 1998). The business concept

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is fundamentally based on word-of-mouth marketing and customer advocacy. Sales per sons are assumed to spread the word of their positive experiences with the product and/or the company among their social contacts.

Sales persons' friends and acquaintances are offered not only a chance to purchase the products but also to join the sales organization. Each member of the sales organization has equal rights to sell the products and to recruit new members. The company compen sates the sales persons both for selling the products and for training and motivating re cruits.

Thus, two points emerge. Firstly, network marketing differs from conventional direct selling in its ability to combine centuries old direct selling techniques and recent devel opments in information and communication technologies in a novel way (Poe 1995). Secondly, it is fundamentally based on putting individuals' social networks into business use. Thus, we term the system a social channel.

Although network marketing is in fact personal selling, the way it is implemented dif fers greatly from conventional door-to-door sales. We think that the issue results from each individual's liberty of acting in various roles in the organization (Oksanen 1999). Each sales person (termed distributor in the network marketing business, see Dewandre & Mahieu 1995) uses his/her social contacts for finding a market for the products as well as recruiting new members into the organization.

The company (the network marketer) gives up immediate control of marketing to end buyers and trusts a group of unemployed individuals with the responsibility. Because the level of commitment that each of these individuals has is not based on employment, commitment becomes critical. After all, creating and maintaining customer relationships is entrusted to a third party.

However, what makes the network marketing concept special is that these unemployed members of the marketing organization focus on their own social contacts. Thus, a network marketing sales person targets his/her family, friends, acquaintances, and other contacts. Each sale and/or new recruit is likely made among the people this individual knows - although it is not compulsory.

On a theoretical level, we claim that the company gives up control of its marketing channel in order to benefit from an immense network of individual people's social con tacts. Because the marketing efforts are based on these networks of social relationships and because they are often limited to just that, we propose that this reflects in fact a so cial channel. Moreover, the system transforms social relationships of individuals into business relationships.

Network marketing explicitly promotes action. Customer advocacy forms the basis for compensating loyal customers for word-of mouth marketing. The more network mar keting functions (selling, recruiting, training) a customer performs, the more the com pany pays for it.

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The reward system in the network marketing business is highly effective. Financial compensation of sales representatives is usually performance based instead of behavior based. That is, compensation is paid as a percentage of actualized sales instead of num ber of sales presentations or customer calls. A sales representative's total compensation is based on sales commissions on their own sales and a percentage of the sales of the salespeople they have recruited in the sales organization. Hence, the compensation principle encourages both to sell and to activate the members of the social channel to recruit, purchase and sell.

As we noted, network marketing's business principle relies on people recruiting their friends and acquaintances to join the organization. This may lead to a highly cost- efficient means of expanding the customer base. The network marketing company stands only to benefit, since compensation for recruiting is only paid to sales reps if they succeed in recruiting new members who increase total sales.

However, network marketing companies do not require any selling or recruiting activi ties from the sales person. Some individuals join the organization only in order to ac quire the benefits - e.g. discount on purchases - related to the sales person status. In that sense the entire sales organization serves as a buying club for consumers only inter ested in the products. Thus, the concept of a network marketing customer is more di verse than the customer of a traditional distribution channel.

Therefore, the activity level of a customer in the network marketing system varies. The members of the organization form a continuum, which begins with buying club mem bers, who only purchase, and ends with networkers, who actively build the organization further (Oksanen 1999). The active networking members of the organization build the network of contacts by expanding the number of people involved, and thus extend the social channel.

Sales persons' and buyers' roles transcend their conventional interpretations in network marketing. Customers involve passive buyers and active buying club members. In addi tion to the traditional sales people role (direct sellers), network marketing hosts part- nering-oriented sales people (Weitz & Bradford 1999), i.e. networkers.

The unconventional roles in network marketing lead Croft and Woodruffe (1996) to ask whether network marketing is in fact a distribution channel at all. Namely, evidence in dicates that the sales persons in fact consume an extensive proportion of the purchased products themselves. However, as these authors discuss, it may not be relevant to ques tion the validity of a form of distribution based on the fact that only a small proportion of the product is sold outside the distribution network. We propose that it is in fact in evitable that the roles of people involved in network marketing do not fit most precon ceived classifications. As we have discussed, this is a result from a dominant feature of the social channel in action.


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Advantages and Disadvantages of Network Marketing as an Alternative Channel

Although network marketing (the social channel) is a marketing channel alternative, this interpretation is too limited (i.e. the channel is suitable for more than communicating and distribution). However, we will begin the discussion with this aspect. It is no coin cidence that network marketers confine their business activities to a single channel, i.e. most network marketers do not use other channels at all. The benefits produced by net work marketing are a powerful impulse for the company to forego conventional sales channels.

Network marketing produces several benefits for the firm. The most significant ones influence the efficiency and effectiveness of marketing. Strengths and weaknesses of network marketing as compared to conventional alternatives are presented in Table 1.

In Table 1 we suggest that the relative strengths and weaknesses of different channel alternatives can be reduced to a simple plus/minus comparison. This is naturally a rough simplification, and emphasizes only some aspects of the alternatives. We have tried to organize the alternatives according to their relative strengths. In other words, the signs do not indicate anything absolute, but rather, the functionality of an alternative with re spect to the others represented in the table.

Table 1. Different channel alternatives contrasted

Channel (ex.)

Business function

Acquiring information of potential custom ersTargeting customers

Communicating, in forming customersPersuading, con vincing, handling counterargumentsDelivering products and collecting pay mentPerforming after- sales tasks

Conven- Conven- Online (the Conven- Social tional indi- tional direct Internet) tional per- (network rect (store (mail-order) sonal (di- marketing) retailing) rect sales)'

+/- ++ +/- +

+ + ++

+

+/- - - +/-

+/- +/- ++ + ++

Acquiring information and targeting customers. It is axiomatic that companies using conventional indirect distribution channels suffer from lack of direct contact with the end customer. It should be noted that this does not imply that these alternatives would somehow be less advisable than direct channels. However, in terms of acquiring infor mation of the customers, targeting them, and communicating with them, the firm needs to rely to a great deal on the effort of its middlemen. Wholesalers, retailers, and other In McLoughlin, Damien. and C. Horan (eds.), Proceedings of The 15th Annual IMP Conference,

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possible actors in the chain of distribution all mediate the information from and to the customer.

Conventional direct channels (catalog and mail order) are somewhat closer to the cus tomer. Although collecting data on potential customers and creating databases of them is painstaking, at least the company is solely responsible for interfacing with the cus tomer. If reliable data is available, segments can be accurately defined, which may lead to less unnecessary communication performed. Else, segmentation can be inefficient.

Online marketing channels have high potential for identifying and targeting customers and communicating with them. The vast amounts of data and the unlimited number of "channels" on the Internet make it possible for the firm to identify new segments. Also, opportunities exist for targeting segments very accurately (e.g. according to a combina tion of hobbies, occupation, and media habits), at least in the future.

Conventional direct selling suffers from similar difficulties in identifying and targeting customers as direct channels do in general. Network marketing is different, however. Through the social network, new opportunities and segments can be served on a one-to- one basis, assuming that all the members of the organization are committed to the busi ness. Through network marketing, the organization can reach less apparent segments. For example, groups of customers who are otherwise hard to locate can be found through the network of social contacts.

We propose that the online channels have the most potential in terms of acquiring in formation of customers and targeting them. The social channel provides a highly effec tive way of reaching customers in person, but suffers from the lack of mass communi cation potential.

Communicating to customers and persuading them to buy. Indirect channels have potential, of course. This comes partly from their typical capacity for effective persua sion (e.g. a sales clerk who suggests alternatives and answers questions). Catalogs and mail order suffer in comparison to indirect channels in their capacity to communicate and persuade. Since the communication process is under the customer's command, it is likely that a large deal of advertising material is discarded, and that potential counterar guments lead to termination of the purchase process. Although an efficient direct mar keting organization can reduce the costs of delivery, it can probably never reach the effi ciency of a retail outlet, which carries a selection of goods available without delay.

Online channels enable interactive communication, which may take the persuasiveness of a message to a new level, if e.g. the message can be tailored to the needs of the re cipient. However, recent research has also provided evidence to the contrary; i.e., inter activity of marketing communications may in fact reduce the persuasiveness of the mes sage. Interactivity can have counterproductive effects particularly for people with visual processing orientations (Bezjian-Avery et al. 1998).

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A network marketing system is a short channel. Network marketers communicate di rectly with sales reps and undertake physical distribution directly to them through com pany-controlled warehousing. Communication can therefore be rapid and highly effec tive, particularly in the introduction of new product lines (Croft & Woodruffe 1996).

Because of the personal selling involved, network marketing possesses tremendous po tential in communicating and persuading the potential customer. The network mar keter's operation relies on word-of-mouth and customer advocacy. This leads to virtu ally no advertising costs. On the other hand, it can also increase the effectiveness of marketing, since the customers are likely to perceive this kind of communication as more trustworthy.

Because of the social network and the word-of-mouth communication involved, net work marketing has more potential for communicating than conventional direct sales. That is, direct selling relies solely on the sales force and is thus limited in reach. Net work marketing, if successful, can overcome these limitations. Communication of the products can spread over a network of social contacts, possibly even reaching the level of mass communication.

We think that the one of the most significant benefits that the social channel possesses is related to communication. The personal contact facilitates immediate contact and feed back and is thus presumably most effective in persuading customers. Because of the high amount of personal effort involved, direct selling as such is very limited in the number of potential customers that can be reached. We propose that the network mar keting system can overcome these difficulties if the social channel is used to its full po tential.

Distributing the product to customers and serving potential after-sales needs. Thegreatest benefits of indirect channels come from cost-efficient delivery. Because of mid dlemen, fewer outlets are needed for the company itself. Also, efficient warehousing is possible. However, after-sales tasks of the firm may not be handled in the best possible way in indirect channels. Since customers come to contact with middlemen only, the firm needs to rely on these channel intermediaries in after-sales tasks as well.

A major weakness of online channels is their low perceived security of transactions. This will likely impede delivery and payment through online channels for some time to come. For after-sales tasks, the cost-efficiency of online channels is highly appropriate. Customers can contact the firm and the firm can reach the customers through the me dium with very low costs. Also, automated product support can be offered at any time of the day, at almost equally low costs.

Personal selling and network marketing alike suffer from low delivery efficienc\ Be cause of the large number of sales personnel and the large amount of selling circum stances, efficient delivery is difficult to organize. Network marketing may be cost- efficient in the sense of cutting out wholesalers and conventional retailers, but it still

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rcannot avoid certain channel costs. "You can eliminate middlemen but you cannot eliminate their functions or cost." (Cateora, ref. Croft & Woodruffe 1996).

Despite inefficiencies in distribution, the distribution strategy of network marketing can benefit the business. The entire distribution network (i.e., individual sales representa tives) pays cash with order and holds inventory at its own expense. However, the com pensation principle may lead to difficulties in that individual sales reps have an interest in stockpiling, because increased sales lead to a higher status level in the sales hierarchy, or it may lead to higher bonuses. For this reason, companies usually set requirements on the percentage of purchases that have to be sold to end customers. In accordance with most Direct Selling Associations' rules, companies also have to follow certain buy-back policies. These policies exert strong disincentives to indulge in inventory building (Croft & Woodruffe 1996).

For after-sales needs, network marketing offers significant benefits. Because of the per sonal contact involved, customers become acquainted with their sales representative. This lowers the thresholds of contact, i.e. customers know whom to contact and find it easier to talk to a friend.

The social channel is much like personal selling in that the delivery of items is often cumbersome and requires organizing separate systems for distribution. Indirect channels hold the inventory at retail outlets, which reduces the effort needed in distribution from the company. Despite the somewhat laborious distribution system, network marketing can lower these costs because part of the inventory is held at distributors' expense.

Network Marketing as an Alternative Shopping Channel For the Consumer

Network marketing would hardly have achieved the success it now possesses without providing benefits for the customer. Network marketing divides consumer opinions; some find it irritating, some find it useful. Nevertheless, the system provides some sig nificant benefits for the customer.

From the perspective of the network marketer, end customers as well as sales persons who consume the product themselves form the company's customer base. Table 2 com pares network marketing with other alternatives. It is important to note that the table only discusses the advantages and disadvantages of channels with respect to different stages of the purchase process. In a real purchase, the consumer may use several chan nels, e.g. the Internet for acquiring information and a supermarket for acquisition (see Peterson et al. 1997 for a discussion on this).

Table 2. Benefits provided by different purchase channels in customer buying ac tivities

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Customer activity / benefit

Store or su- Mail-order The Internet Network Mar- permarket______________________keting

Identifying needs

Searching for in- formationComparing alterna tivesSelecting an alter nativePurchasing the al ternativePost-purchaseneedsSocial interaction

The table is a rough simplification of the relative benefits of different purchase chan nels. Also, we make the comparison only in relation to the other alternatives. We have considered social interaction as one of the benefits provided by shopping. This is natu rally a simplification, since there can be other non-purchase related motives involved as well. However, we think that this motive is most beneficial in differentiating between the alternatives.

Identifying purchase needs. Conventional shopping alternatives are on an equal ground in terms of the cues they present to consumers. Consumers can get cues of pos sible purchase needs from many sources, such as friends, advertising / catalogs, and from packages in the store. The Internet has an immense potential as a source of this kind of information, as it holds product descriptions, advertising, and consumers' opin ions. Also, this information is available at all times, whenever the consumer wishes to know of it.

Network marketing can have a high potential as a source of need identification. Friends 1 opinions and recommendations receive an increasing weight, when consumers shop from their friends. The network marketing sales person's role in identifying possible purchase needs is tremendous there. As a downside, consumers may feel pressured to purchase products from a friend that they actually wouldn't need. This might lead to ar tificially created markets that are not based on customers' true needs, but instead, on exploitation of social relationships.

Acquiring information and comparing alternatives. Conventional indirect channels make it possible for the consumer to compare products directly on the store shelves. Although the information they have at hand is restricted to advertising and package in formation available in the store, comparing the alternatives is easy. Also, physical han dling of the product increases the sensory information that consumers can acquire (Alba etal. 1997).

Despite that tremendous amounts of information that mail-order businesses produce, the amount of information available to a consumer at any state is rather low, unless the con-


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sumer has kept all the catalogs and not disposed of them. Also, comparing product of ferings across different mail-order vendors is troublesome and requires a lot of effort.

In its current state, the Internet leaves much to be asked for. However, it provides the consumer with a vast selection of alternatives and a mass of information concerning these alternatives. If the consumer possesses the capability to use the available online search aids, comparing product offerings can become very effective (Ylikoski 1999). Still, the consumer needs to make the decision him/herself, at least as long as intelligent search agents are widely introduced. The table assumes that the consumer on the Inter net can use the intelligent tools available on the Internet, such as Compare.net. These facilities make comparisons over a wide range of alternatives possible in an efficient way.

Network marketing relies to a great deal on customer word-of-mouth. For the buyer, this may be beneficial in terms of the acquisition of information. Information from word-of- mouth sources, i.e. recommendations and other comments from friends and relatives, is often viewed as more credible than e.g. commercial information. The network market ing buyer may attribute high credibility to friends and other strong tie sources (Duhan et al. 1997), even though these people have a stake involved in selling.

The high amount of personal selling involved in network marketing gives customers profound knowledge of products. Provided that buyers are really interested in the prod ucts, they may acquire information that they otherwise would not have the time for On the other hand, it may be questioned whether all that information is really necessary.

A downside for some consumers is that network marketing does not encourage com paring and evaluating alternatives across competitors. Instead, it relies more on the of ferings of a single vendor, and moreover, on the sales person's influence. For example, although network marketing provides quite extensive amounts of information on the or ganization's products, the setting does not enable the consumer to compare the offerings with alternatives from other suppliers. Consumers report that the lack of comparison is one of the greatest complaints concerning direct selling (Wirthlin Worldwide 1997).

Choosing and acquiring the product. The conventional store is very effective when the consumer wishes to choose and purchase the product. If the store personnel can as sist the consumer in choosing the alternative, the consumer has a higher likelihood of finding an appropriate one. Since purchase is quick and delivery is immediate, the con sumer can leave the premises in possession of the product.

Direct mail, as well as the other direct alternatives discussed in this paper, all require the consumer to wait for a period before the delivery. This makes also the Internet less lu crative as a purchase medium for physical items. Products need to be delivered by mail and transport is slow and costly, unless the product is information-based. Information products can be transported through the Internet immediately and at low cost. Thus, if the customer is in need of a product that can be delivered in digital form, the Internet is

highly beneficial.

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The network marketing context makes it possible for consumer to receive advice con cerning choice, both from the sales person and from other people in the sales presenta tion. As a downside, the network marketing context may lead the buyer feel compelled to buy. Participating in a sales presentation e.g. at one's friend's home leads the con sumer feel obliged to buy, because he/she knows that the host or hostess will benefit fi nancially from his/her purchase. This social pressure can lead to less satisfied customers and reduced long-term profitability.

For purchasing the product, network marketing has the same disadvantages that other direct channels share as well. That is, the consumer needs to wait for the delivery of the products. This may be emphasized in network marketing because of the CWO; the cus tomer needs to wait for delivery of an item he/she has already paid for.

Social interaction. The conventional store usually makes person-to-person interaction possible. This is sometimes a problem in direct channels, such as mail-order, because consumers are not in contact with other people. Also, since the Internet is a computer- mediated context, it is axiomatic that no social interaction as such exists there.

Network marketing and party plans provide high opportunities for consumers who like to conduct business with other people (as opposed to more impersonal alternatives). It also works well with fulfilling post-purchase needs. Hence, it is likely that consumers who choose network marketing as their choice of distribution value social interaction more than hard comparisons.

The social interaction involved in network marketing is apparent in the amount of per sonal service that customers receive. This is an important determinant of channel choice since network marketing customers perceive the personal service as one of the most im portant reasons to buy (Wirthlin Worldwide 1997).

Network marketing enhances the characteristics of buying as a social activity Party plans, product demonstrations, and so forth all involve a high deal of social interaction. Hence, probably the greatest strength of network marketing is that it enables the con sumer to buy from and sell to friends.

Conclusion: Two Recent Non-Store Alternatives Compared And Contrasted

As we have discussed, social and online channels have many aspects in common. How ever, they also have differences, especially in terms of what kind of home shopping en vironments these non-store alternatives offer to consumers.

Online business expansion is an emerging trend. Since more and more businesses are expanding their activities over to the Internet, it is by no means exceptional that network marketers too should be interested in the potential of the ne\\ medium. Also, new media are not really an option for many industries. If business is in a transition over to the

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Internet (i.e., competitors or customers are already communicating or transacting over information networks, no alternative exists.

It is important to note, however, that combining social with online channels may be more difficult than it might seem. Although combining the power of network marketing with the benefits of the information network looks lucrative from the firm's perspective, difficulties may arise from the customers' point of view.

This is to say, social and online channels both offer similar benefits for marketing. Both have an excellent potential in terms of providing after-sales service, and both function very well in targeting customers and communicating with them cost-efficiently. Fur thermore, neither excels in delivery and in collecting payment. Hence, there is a tempta tion to think that network marketing and online channels are somehow similar alterna tives.

But this is not necessarily true from the potential buyer's perspective. As this paper has discussed, home shoppers can receive very dissimilar benefits from buying from a net work marketer as opposed to an online merchant. Whereas network marketing works best in fulfilling social needs and providing word-of-mouth, the Internet excels at pro viding enormous potential for seeking information and comparing alternatives.

Consumers' different motivations will likely influence the shopping channel that they choose. Consumers who favor purchasing in social settings and easy buying are proba bly more likely to choose network marketing as their home shopping channel. Consum ers who are more prone to compromise "social" shopping in favor of intensive compari sons are more likely to become shoppers in the information network.

Consequently, we think that online channels do probably not pose a significant threat to network marketers in general. It is likely that consumers will value similar motivations in the future as they do currently. The Internet will not make consumers compare items if they otherwise would not compare. Hence, there will probably be buyers who choose network marketing over alternative non-store channels in the future.

On the other hand, the information superhighway increases competition in some indus tries. For example, for purchasers of electronic equipment, more alternatives arise to choose from, possibly making network marketers worse off as a consequence.

For the network marketer considering these alternatives, some conclusions stand out. New media will probably not be very effective in attracting new customers. It is un likely that the Internet would work very well as a sales and marketing communication medium for a network marketer, since it does not provide the key benefits for the cus tomer that network marketing does.

However, the information network can work efficiently as an intra-network communi cation medium. It has high potential for disseminating information timely and with low cost to current customers and members of the sales network. From this perspecth e, on-

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line channels can work to benefit the firm even if used as a means of recruiting ne\\ members to the organization. Hence, the Internet can complement social networks, the key asset of network marketing.

References

Alba, Joseph, John Lynch, Barton Weitz, Chris Janiszewski, Richard Lutz, Alan Sawyer & Stacy Wood (1997), Interactive Home Shopping: Consumer, Retailer, and Manufacturer Incentives to Participate in Electronic Marketplaces. Journal of Marketing, Vol. 61, (July) 38-53.

Bezjian-Avery, Alexa; Bobby Calder; Dawn lacobucci (1998/ New media interactive advertising vs. traditional advertising. Journal of Advertising Research, Vol. 38,No. 4., 23-32.

Coughlan, Anne T. & Kent Grayson (1988), Network marketing organizations: Com pensation plans, retail network growth, and profitability. International Journal of Research in Marketing 15, 401-426.

Croft, Robin & Helen Woodruffe (1996), Network Marketing: The Ultimate in Interna tional Distribution'.' Journal of Marketing Management, Vol. 12, 201-214.

Dewandre, Paul & Mahieu, Corinne (1995): The Future of Multi-Level-Marketing in Europe - The Reasons of MLM success. Les Editions du Saint-Bernard, Brux- elles.

DSA, Direct Selling Association (1998), http://www.dsa.org.uk.

Duhan, Dale F, Scott D Johnson, James B Wilcox & Gilbert D Harrell (1997,1, Influ ences on consumer use of word-of-mouth recommendation sources. Journal of the Academy of Marketing Science, Vol. 25, No. 4, 283-295.

Herbig, Paul & Rama Yelkur (1997,), A Review of the Multilevel Marketing Phenome non. Journal of Marketing Channels, Vol. 6, No. 1, 17-33.

Oksanen, Elina (1999), Structure and Characteristics of Network Marketing Businesses, Helsinki School of Economics and Business Administrations, Working Papers W-226, Helsinki.

Poe, Richard (1995) Wave Three: The New Era in Network Marketing. Rocklin, CA. Prima Publishing.

Peterson, Robert A., Sridar Balasubramanian & Bart J. Bronnenberg (1997), Exploring the Implications of the Internet for Consumer Marketing. Journal of the Acad emy of Marketing Science, Vol. 25, No. 4, 329-346.


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line channels can work to benefit the firm even if used as a means of recruiting new members to the organization. Hence, the Internet can complement social networks, the key asset of network marketing.

References

Alba, Joseph, John Lynch, Barton Weitz, Chris Janiszewski, Richard Lutz, Alan Sawyer & Stacy Wood (1997), Interactive Home Shopping: Consumer, Retailer, and Manufacturer Incentives to Participate in Electronic Marketplaces. Journal of Marketing, Vol. 61, (July) 38-53.

Bezjian-Avery, Alexa; Bobby Calder; Dawn lacobucci (1998;, New media interactive advertising vs. traditional advertising. Journal of Advertising Research, Vol. 38,No. 4., 23-32.

Coughlan, Anne T. & Kent Grayson (1988), Network marketing organizations: Com pensation plans, retail network growth, and profitability. International Journal of Research in Marketing 15, 401-426.

Croft, Robin & Helen Woodruffe (1996), Network Marketing: The Ultimate in Interna tional Distribution'.' Journal of Marketing Management, Vol. 12, 201 214.

Dewandre, Paul & Mahieu, Corinne (1995): The Future of Multi-Level-Marketing in Europe - The Reasons of MLM success. Les Editions du Saint-Bernard, Brux- elles.

DSA, Direct Selling Association (1998), http://www.dsa.org.uk.

Duhan, Dale F, Scott D Johnson, James B Wilcox & Gilbert D Harrell (1997;, Influ ences on consumer use of word-of-mouth recommendation sources. Journal of the Academy of Marketing Science, Vol. 25, No. 4, 283-295.

Herbig, Paul & Rama Yelkur (1 991), A Review of the Multilevel Marketing Phenome non. Journal of Marketing Channels, Vol. 6, No. 1, 17-33.

Oksanen, Elina (1999), Structure and Characteristics of Network Marketing Businesses, Helsinki School of Economics and Business Administrations, Working Papers W-226, Helsinki.

Poe, Richard (1995) Wave Three: The New Era in Network Marketing. Rocklin, CA. Prima Publishing.

Peterson, Robert A., Sridar Balasubramanian & Bart J. Bronnenberg (1997), Exploring the Implications of the Internet for Consumer Marketing. Journal of the Acad emy of Marketing Science, Vol. 25, No. 4, 329-346.


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social relations to business relationships: network

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