Network marketing, also known as multi-level marketing (MLM), faces challenges in gaining traction in African countries, particularly Nigeria.
Several factors contribute to this development.
Lack of trust and negative perceptions.
Many people view Network marketing as a pyramid scheme or scam, leading to skepticism and mistrust.
This perception is fueled by companies prioritizing recruitment over products sales, making unrealistic income.
Promises and using high pressure sales tactics.
Limited understanding of the business model
There is a need for better education on how network marketing works, its benefits and its potential for generating income, this lack of understanding can lead to misconceptions and hesitation to join or invest in MLM business.
High start up costs and financial risks
Starting a network marketing business often requires initial investment in inventory, training and marketing, this financial burden can be daunting for many potential entrepreneurs especially resources.
Oversaturation and competitions.
Some markets in Africa may be saturated with distributors for similar products making it challenging to stand out and succeed, this competition can lead to decreased sales and income potentials.
Cultural and social factors.
In some African cultures there is preference for traditional employment or business models, network marketing may be seen as unconventional or unrespectable affecting its adoption.
Regulatory challenges and scams
The presence of scams and illegitimate MLM companies in the industry can tarnish the reputation of genuine network marketing businesses.
Regulatory challenges and also lack of clear guidelines can also hinder the growth of MLM business in Africa.
Lack of training and support.
Many companies fail to provide adequate training and support to their distributors, leading to poor sales performance and high drop out rates.
The effect of close substitute to MLM company products and price differentiation.
Some customers of MLM distributors at times complains of price hike in MLM products when compared to substitute products and may tend to go for the substitute products.
MLM products have expiring dates after manufactured and the longer this products stay in ware houses reduced their validity and efficacy and likely to be a lost to distributors if un purchased before the expiring dates.
Exchange rates of international currencies to local currencies can lead to price hike, if the exchange rate of sales to distributors are higher ,the cost will be shifted to the customers which can hike products prices and affecting the rate of turn over.
To overcome these challenges, it’s essential to:
Educate potential distributors about the benefits and risks of network marketing
Choose reputable MLM companies
Companies with quality products and fair compensations plans .
Develop effective marketing strategies to reach target audiences .
Provide training and support to distributors to enhance their sales skills and business management
Foster a positive and supportive community within the MLM network.
In conclusion, carry out competitors products price analysis of substitute products before fixing unit products prices for MLM manufactured products to prevent consumers from avoiding MLM products due to high products cost.
– Benjamin Ibrahim, a Freelancer, writes from Lokoja.
