why do Mary Kay people claim they're not MLM or Pyramid when it's clear they are?

Question

the definition of MLM is: A sales system under which the salesperson receives a commission on his or her own sales and a smaller commission on the sales from each person he or she convinces to become a salesperson.

The definition of a pyramid scheme or marketing is Typically, new recruits pay a sum of money to join the "program" and become a distributor of a product or service, and are told that they'll make money based on the number of new recruits they in turn bring in. The basic idea is that the higher up on the pyramid you are, the more money you'll make.


As a former MK person this is exactly how they work so how can they deny it?!

They claim to be the #1 selling brand, howeever their sales numbers are based off of what the consultants buy not what the customers buy so even that's not ligit. Yes it's a good product but it's not the best. I've had directors tell me themselves, the only way to make money in MK is by recruiting, and convincing the new recruit to purchase as big of an inventory you can possibly convince her to buy.

they claim dual marketing because the commission off the recruit doesn't come from that person. However, the definition of MLM or Pyramid says nothing about where the commission comes from, it only says they recieve a commission.

Answer 1

I think it is what they are taught to say. MLM and Pyramid have become negative words. That is not to say that MLM is illegal or pyramid selling is illegal. As long as commissions are calculated on sales it should be fine.

Where the illegal part comes in is where money is paid to recruit. Some could argue that product loading is a way around the illegal status because commissions are paid on product, but in most States product loading is not legal either.

The temptation of distributors is to buy their way into a level or status by making their sales look good. Its a path to disaster. If a people can't maintain a level or progress without product loading then the comission system is out of wack.

Answer 2

They probably deny it because the term mlm has such a negative appeal. Someone even wrote how much they hate mlm. As far as it being a pyramid, I doubt it is because technically, they are illegal. A pyramid is when the top person makes the most money and everyone under them makes less. Your big corporations are set up like pyramids even though they do not admit it. A lot of people in Mary Kay really just focus on selling the product, which is another reason they may not admit they are an mlm. But really, aren't all businesses mlm? I mean doesn't a real estate broker make money off of someone who sells the real estate. We all live in a dream world when we do not admit that most businesses are mlm or pyramids.

Answer 3

I am also a former MK person, and I think the reason they deny being MLM, is because of the stigma attached to it these days. A lot of people who are uneducated in direct sales and network marketing, like Ralphy here, think that's a big scary pyramid scam. The reality is, that absolutely any job out there is a pyramid. I don't know of any Walmart cashier who earns more than the manager, and I don't know of any manager who earns more than the CEO. Thus, a pyramid.

The problem with MK, is they experienced hyper growth many years ago, as did Amway, Watkins, Tupperware and many others. They were all excellent in their time, offering a product that the average family could really use and buy at a discount. MK was an excuse for the average housewife to get away from the house for an evening and try the glamour side of life for a change. But, that ship has sailed now. Most of the boomers are empty-nesters and no longer need to fill their home with products or find an excuse to get out of the house. What they are looking for now is health and anti-aging. You will find that most companies in that category, don't try to hide what they do because they are poised for hyper-growth and have an 18 year window of opportunity.
The older companies that have yet to update their compensation plans, usually claim they are not MLM or Network Marketing. They like to say they are in Direct Sales, but you're right, as soon as you earn money on your downlines efforts, you are in MLM...period.
It's definately not a bad thing, it's merely an alternate way for a company to market their product. People buy into the myth that all MLM companies charge a higher price for their product so that the people on top make all the money. I know of several companies that you just plain get what you pay for. You can buy dimestore make-up or you can buy MK. You're definately getting a better product, and you will have to pay for that quality.
The money they save in advertising and brick and mortar overhead is passed on to the representatives in the field who are doing all the work...unlike conventional stores. If you work at a grocery store and your till tape is the highest that day, you get squat. The manager and owner will pocket the profit and you will still get your hourly wage, whereas in network marketing, you are paid in direct proportion to the amount of work you do.

If more representatives were able to explain this to their customers, people wouldn't be ashamed to say they are in MLM.

Answer 4

Mary Kay consultants buy the product for $1. Sell it for $2. The commission checks come from Mary Kay. NOT the "recruit". It is called Dual-Marketing. The "recruit" never gives the "recruiter" money. Mary Kay does.
I did not start out or build my business with a HUGE inventory. I sell the product, hold the classes, and tell my customers to expect the product in 1-2 weeks, and give them a 10% discount. I have 1 recruit who does the same. I think it probably just depends on who your director is. Mine does not hound me. She is supportive. It is EASIER to have inventory, because women are impulsive buyers, but I don't, and I was able to quit my full-time job, and stay at home with my kiddos. I know probably not the NORM.

Answer 5

For an MLM / Network Marketing opportunity to work you need Affordable Products That Sell Well And Marketing Systems That Work !!

1. You need products that sell like Chocolates at Easter-Time, Toys at Christmas, Turkeys on Thanksgiving or Cold Drinks during a summer heat-wave.

2. The products must be AFFORDABLE to most people, EVERYBODY must be able to afford to buy them and the products MUST be consumable, so they generate REPEAT BUSINESS (this is SO important!)

3. You can't be asking your prospects to pay anything up-front, like an associate joining or registration fee, or be made to buy some kind of “Business starter kit”. (That’s a No -No!)

4. The business system, support system and marketing plan must be SO SIMPLE and is MUST BE very EASY TO FOLLOW, so that even a complete novice should be able to generate healthy, on-going, weekly earnings within just a few short months

Here’s a great example: http://www.simplyseen.com

Answer 6

Mary Kay is actually a direct selling company with a dual marketing plan. The business plan is actually taught in the Harvard School of business and in 30 other Universities across the United States. You don't have to recruit anyone to make money. But just like any other job...the higher up you go the more money you make.

Answer 7

I hate MLMs with a passion, but I think MK's product line is more legit than most. At least people have heard of MK because of its products. Other MLMs like amway/quixtar use products that no one has ever heard of because they are complete farces.

I wish everyone was required to take a course on pyramid schemes and MLMs.

Answer 8

because they are dumb.