In 2009, in the context of an economic crisis, we often saw media sources telling us that marketing is effective only in theory but not in practice. With the beginning of Russian economic reform and the country in crisis, the new term “anti-crisis management” has become relevant. At the moment, nobody presents exact forecasts about overcoming the problem. Presumably, we can expect some progress no sooner than three years from now. We better face a new reality, define primary risks and adjust the business for new conditions to survive and be on top despite the situation. Changes always lead to great opportunities. During this period, the main objective of marketing management is to establish market leadership by increasing sales, market share, and customer loyalty. The practice of anti-crisis marketing management in the direct sales industry deserves special attention. Multilevel marketing (or network marketing) as the essential component of the direct sales industry is an example of practicality and efficiency in present-day conditions.
“Direct sales to consumers, bypassing trade organizations, have long been a prevalent way to sell goods and services,” says Tamara Shokareva, PhD in Economics, president of the Direct Sales Association of Russia.
“Today, 3.3 million Russians cooperate with direct selling companies and make a successful career with an annual turnover of over three billion dollars in consumer prices“.
Businesses have started acknowledging the advantages of network marketing as an effective market tool. Some manufacturing enterprises owners are actively searching for network companies to ensure stable sales of their products. Some representatives of manufacturing companies have started to create their own network marketing programs.
It seems that it is a global trend and Robert Kiyosaki speaks of it too: “You can have a great idea or a product, but they will become successful only if you have a network that will share the information with other people.”
Nevertheless, negative reactions towards network marketing remain in society. They are echoes of the chaotic Russian market formation, which hinders the development process of this network marketing, which is beneficial both for society and Russia in general.
What is more important in this case — objective realities or subjective opinions? Russia is already 5-7 years behind network marketing world leaders. Nevertheless, savvy marketing management solutions at different levels have led some people in the multilevel marketing market to top positions. What is the secret of the growing market share of direct selling companies like AVON, AMWAY, CORAL CLUB, MARY KAY, ORIFLAME, among others? The secret is simple. People have finally gotten rid of illusions. There are no longer myths that you can easily make money in no time. It eventually became evident that success is based on hard work, training, and steady trading of products.
From 2000 to 2009, the number of MLM companies in Russia increases. At the end of last year, 63 major MLM companies opened offices in Russia in 2008. During 2008, multi-level marketing companies of Russian origin also appeared on the market.
The Coral Club company registered in Canada began its work on the Russian market in 1997 with a small range of products, among which is Alka-Main or coral calcium. In 1998, the network company changed the marketing inside the network and prioritized living water products and a healthy lifestyle. CORAL CLUB accelerated from that period on. Many leaders appeared among distributors, demand for the products increased and the healthy lifestyle wave gained momentum.
In 1998, a healthy lifestyle was exotic, but in 2008 people more people got interested in the idea. In the setting of low competition, there was already enough demand for CORAL CLUB products but not many offers. In 2009 the demand did not stop. Probably their scientific approach in promoting the company played a role. Among their leaders, there are many doctors and experts who created their own concept of health. Comprehensive programs of CORAL CLUB are at the peak of popularity; they are meant to solve different problems such as hydration, purification, nutrition, protection of the cell and the body as a whole.
The president of the company Leonid Lapp and the CEO of the company Eric Megrabyan summarized the results of the company’s work in 2008. In 2008 the turnover of CORAL CLUB company continued to show steady income growth compared to 2007, and managers decided to develop their own trademark. By the end of 2008 more than 300 offices were opened, and the number is still increasing, about 3-5 new offices open each month. The total number of CORAL CLUB distributor partners in 2008 increased by 25%.
The aforementioned reveal the immense potential of network marketing. Even during the economic crisis, the direct marketing industry demonstrated stable development trends of labor employment markets, an increase of taxable base and the attraction of capital to Russia. It could be said that network marketing has proven its worth in Russia over almost two decades and can be considered a highly profitable business with minimal investment. Experts predict that in the next 10-15 years, network marketing will become such an exhaustive and familiar phenomenon in public life that businesses will not perceive it as a special or independent sphere of activity. It will become a standard tool used by every sector of the economy.