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CHAPTER I
The Problem and Its Settings
Introduction
In the words of a young network businessman, Hash Mfukuli, "Everyone is business
minded until it's time to be open minded about businesses." This can happen when a person is
approached by a neighbour, a friend, a co-worker, a classmate, or a family member who proposes
an arresting business opportunity. These offerings often times entail multilevel marketing where
one can work at the persons own terms and conditions, and a lucrative promise of an instant
bright future.
Multilevel Marketing (MLM) is a specific form of direct selling that achieved significant
international growth during the nineties. Also known as network or matrix marketing, MLM
is a way of selling goods or services through distributors or representatives. MLMs typical
promises to its distributors are the commissions coming from both the sales of the companys
goods or services, and the fees and sales of the distributors recruits. These recruits are also
known as the distributors down lines who will, in turn, look for their own recruits who will
become their own down lines. This replicating process results in the pyramid structure of MLM,
thus the infamous term pyramiding was attributed to it.
Consequentially, the growth and popularity of MLM, also had a corresponding increase
in the investigation and prosecution of illegal pyramid schemes. In a legitimate MLM company,
commissions are earned only through the sales of products or services. No money may be earned
from recruiting (signup-fees) members to join the company. If distributors are paid primarily

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from the money received from new recruits, then the company is, more likely, involved in an
illegal pyramiding scheme. This scheme is one of the drawbacks of the revolutionary MLM
strategy that may have affected consumers patronage of it.

Background of the study

According to a website (www.businessdiary.com.ph) over 90 million people are
involved, and tens of thousands more are getting involved each year in network marketing. Since
it operates through distributors or independent representatives who are reaching customers that
companies are not able to reach through traditional offline or online marketing strategies,
network companies and their associates recruit more and more individuals as their sales force.
The history of network marketing dates back in 1930's when Carl Rhenborg first
introduced the benefits of using supplements. He set up his own company in America called The
California Vitamin Company which later became Nutrilite. It was not until six (6) years later
that Rhenborg invented the multilevel marketing strategy to help boost the sales of his company.
From then on, the network marketing scheme featured a low upfront deal which involve low
capital for the purchase of a product kit while selling them directly to friends, family members,
and relatives. In Multilevel Marketing the sellers are compensated not just for their respective
sales, but also for the sales generated by their recruits. The recruiting is generally done through
personal networking, thus the name, Network Marketing (Muncy 2008).
This marketing strategy has become very popular, so that, more and more companies
today are selling their products and services directly to customers without intermediaries. New
prospects are identified and approached through a process called direct marketing. Peterson

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defines direct selling as face to face selling away from a fixed retail location. (Peterson,
Albaum & Ridgway 2009).
Often the terms multilevel marketing and direct marketing are used synonymously. Hence
it is of utmost importance to first understand the difference between them. Representatives of
direct selling, do not get paid on multiple levels as representatives of multilevel marketing do. In
direct selling, people just sell products to people face to face. Strategies typically includes home
selling situations such as door to door solicitations, appointments, referrals, and product parties
as well as the catalogues and the internet to disseminate information (Frenzen & Davis 2011).
According to Indian Direct Selling Association, almost all salespeople representing direct selling
organizations operate as independent contractors rather than employees. The sales force is
generally paid through a commission system which provides maximum selling motivation.
(Peterson & Wotruba 2006; Wotruba & Tyagi 2005).
It was claimed that the reason why network marketing is starting to explode is because
people see that job security no longer exists and that the job market is shrinking. The world
population is also starting to explode. Network marketing is all about building networks of
people. As population explodes, it is going to ideally suit this type of business model.

Rationale of the Study

In the Philippines, there are hundreds of companies offering products and services that
are recognized through their brand names. These companies are aware that word-of-mouth
marketing is also a powerful and effective method of marketing, especially because the
endorsement is coming from those whom people know and trust. Table 1 shows the strength of

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the network market companies in the Philippines. This indicates that among all network market
companies, UNO ranks first.
Table 1: Top Network Marketing Companies in the Philippines
Philippine Rank
1
2
3
4
5

Network Marketing Companies Name

UNO (Unlimited Network of Opportunities)
DXN International Private Ltd.
AVON Products Inc.
Forever Living Products Philippines, Inc.
NU Skin Philippines, Inc.
Source: www.businessdiary.com.ph

These companies are more than willing to pay their representatives, to communicate their
products and services to the representatives network of friends and family. However, do these
Network Marketing companies still strongly perform in the market these days? This study looked
at the present-day perceptions of consumers on network marketing because it is hoped that their
insights reveal facts about its effectiveness as a business strategy.

Statement of the Problem

Multilevel Marketing has proven to be an effective marketing strategy. However, because
of illegal pyramiding schemes and other drawbacks, the Multilevel Marketing Programs had
been a constant source of debates. Thus, this paper attempts to study consumers perception of
multilevel marketing nowadays using the following questions:
1. How do consumers perceive network marketing in terms of product price?
2. How do consumers perceive network marketing in terms of product quality?
3. How do consumers perceive network marketing in terms of the credibility of the
company?

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Objective of the study
The objective of the study is to determine the perception of consumers towards network
marketing companies. To achieve this objective, this study assessed the following subsidiary
intents:
1. To validate if the consumers consider the usefulness and quality of the product.
2. To verify if the brand name or the company image is the factor to be considered.
3. To recognize the justification of price-quality relationship of the products or services
offered.

Hypotheses
Ha: The network marketing is effective in terms of price, product and credibility.
Ho: The network marketing is not effective in terms of price, product and credibility.

Theoretical Framework
This study is built on the theoretical framework as cited in JC Sweeney, GN
Soutar (2008). It suggests that customers arrive at a Consumer Perception Value by factoring in
the Total Customer Benefit and the Total Customer Cost. This is summarized in the diagram
below.

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Fig.1 CPV Process

Sources: JC Sweeney, GN Soutar - Journal of Retailing, 2008 Elsevier

Customer Perceived Value (CPV) is the difference between the prospective customers
evaluation of all the benefits and all the costs of an offering and the perceived alternatives.
Total Customer Value is the perceived monetary value of the bundle or economic,
functional, and psychological benefits customers expect from a given market offering.
Total Customer Cost is the bundle of costs customers expect to incur in evaluating,
obtaining, using, and disposing of the given marketing offering.

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Conceptual Framework

INPUT

PROCESS

OUTPUT

Demographic
profile of the
respondents (age,
gender, occupation)
Psychographic
profile in terms of
price, product and
credibility of a
network marketing.

Questionnaire

consumer
perception in
network marketing
in terms of price,
product and
credibility.

Interview

Data Analysis
Figure 2. IPO Model

This figure is an innovative Input-Process-Output Model showing how customer set their
preference. It includes the demographic profile of the respondents such as age, gender and
occupation. It also contains the source of information the researchers used, such as, unpublished
thesis, books and internet information. The process frame refers to the statistical procedures of
the research study as to how the data were gathered, evaluated, analyzed and interpreted by using
either the descriptive or inferential method. The output frame presents the goals of the study, the
expected outcomes and/or the status to be concluded and achieved.

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Significance of the Study

This present study includes the analysis of the efficacy of the companys business
strategy in pricing, product quality and the stability of company image as factors making up
consumers perception. It is significant in the following sense:

Findings of this study served as indicators as to whether this type of marketing plan is
still an effective strategy in businesses.

Marketers and agents understand peoples view point about the usefulness, quality, and
price of the products that they are offering.

This study may help students who will be taking related topics in the future through the
relevant information this contains.

This study provides the researchers with an opportunity to utilize the knowledge in
marketing, to widen the information they already have, and to gather facts that may be
used as business professionals.

Scope and limitations

The study is intended to know the relevance of network marketing to consumers for year
2015. The analysis of respondents perception and preferences is also limited to product quality,
price and the company credibility. In relation to this, respondents are also considered by their
demographic profiling such as employment status, gender and by age of the people of San Pedro
City, Laguna. The extent of the data that are collected is capped by the survey questionnaire the
researchers made.

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Definition of terms
Consumer

A purchaser of a good or service in retail; An end

user,

and

not

necessarily

purchaser,

in

the distribution chain of a good or service.

Credibility

Degree to which a communicator or communication

is

believed by the recipient. Credibility is

particularly important when the message to be

conveyed varies substantially from the recipients
current beliefs or attitudes. The credibility of such a
message will be increased if delivered by a
communicator who is expert, trustworthy, and
appealing.
Direct Selling

form

of

selling

whereby

independent

MLM/Network Marketing representatives, working

on commission, sell face-to-face outside of an
established retail location.
Distributor

A person who contracts independently to sell

products or services for an MLM / Network
Marketing company.

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Down line

All the people recruited as distributors into network

marketing / MLM Company constitutes that
companys down line. Your down line consists of
everyone whom you recruit, who is recruited by
your recruits, and so on.

Entry Fee

The percentage of a companys total revenue that it

pays out to distributors, in the form of overrides,
commissions, and bonuses.

Matrix

A comp plan that limits the number of people on

your frontline, usually to two or three.

MLM/ Multilevel Marketing

An alternate term for network marketing. It can also

be used to distinguish those particular network
marketing plans that permit distributors to draw
income from more than one level.

Network Marketing

Any form of selling that allows independent

distributors to recruit other independent distributors
and to draw a commission from the sales of those
recruits.

Perception

The process by

which

people

translate

sensory impressions into a coherent and unified

view of the world around them. Though necessarily
based

on

incomplete

and

unverified

(or

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unreliable) information, perception is equated with

reality

for

most practical purposes

and

guides human behavior in general.

Price

A value that will purchase a finite quantity, weight,

or other measure of a good or service.

Product

A good or service that most closely meets

the requirements of

particular market and yields enough profit to justify

its continued existence
Prospect

A potential customer or recruit.

Recruit

A prospect who has agreed to join your down line as

a distributor.

Up line

All of the people above you in a network marketing/

MLM organization. It is also, an alternate term for
sponsor.

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CHAPTER II
Review of Related Literature and Studies

This section presents the selected research papers, book, journal articles, and survey
results related to this paper. Most of them were sourced online because they are more current,
and are much more accessible. To date, only a few books and academic research papers are
available on the topic of multilevel marketing.

Network Marketing Build Relationships

On one hand, there are views that recognize the value of network marketing. In her book,
How Firms Relate to their Markets: An Empirical Examination of Contemporary Marketing
Practices, Nicole Coviello (2005), a professor of Marketing at Wilfred Laurier University,
Canada, claimed that network marketing is mainly used in business-to-business markets and
personal selling, including trade fair sale presentations are the preferred marketing tools in this
type of marketing. Network marketing develops relationships between firms. It also coordinates
activities among several parties for common benefit, resource exchange, market access, and trust.
Coviello (2006) also said that these relationships are established through interaction marketing.
The focus, however, is on the network as a whole, rather than on one specific intera
ction and relationship. On the same line of thought, Gronoroos (2007) furthered that the
different interactions and exchanges within the network have impact on the firm's position in the
network.

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Corroborating with her is Brodie (2010), a professor of Department of Marketing

University of Auckland Business School. He concurred that each firm in a network has both
direct and indirect relationships with customers and suppliers, which can be both formal and
informal. These relationships are part of a larger network and can be both interpersonal and
impersonal, or close and distant. The level of power and communication differs between
different relationships. The networks are constructed through social relationships overtime, and
therefore has strategic orientations.
Biggart and Sparks (2011) expounded that network marketers are independent network
marketing business owners. Their behaviors are also affected by both the micro-social and
macro-social environments. The network marketers macro-social environment is mainly
composed of other network marketers that have been broadly promoted. This means that some
NMOs promote themselves as a way for the ordinary person to attain wealth and status without
such barriers to entry.

Disadvantage of Network Marketing

Dean Van Druff (2000), on the other hand, contended that multi-level marketing has its
disadvantages. First he claimed that MLMs are "doomed by design." To recruit too many
salespeople, who in turn will then attempt to recruit even more salespeople, ad infinitum, is not
feasible. Second, he also asserted that the real attraction of involvement in multi-level marketing
is the thinly veiled pyramid con-scheme made quasi-legal by the presence of a product or
service. Lastly, he stated that the ethical concessions necessary to be "successful" in many MLM
companies are stark and difficult to deal with for most people.

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Len Clements, in her blog (www.insidenm.com) disagreed with network marketing

critics. According to her, Anti-MLM zealots tend to come in two flavors: ignorant or vindictive.
In other words, they have either never actually participated in MLM themselves (thus have
adopted someone else's opinion as their own, or simply guessed at their conclusions), or they
have participated and failed at it.

Benefits of Network Marketing in Having Your Own Business

There are several studies that discuss the benefits of network marketing. In their book
Economics and Marketing Aspects of the Direct Selling Industry, Alfred Nichols and Michael
Granfield (2012) pointed out that network marketing gives several distinct advantages, such as,
securing distribution and sales quickly at a relatively low fixed cost, gaining consumer
acceptance for a new product particularly when this involves a new entrant in that product
industry, gaining entrance to a market while avoiding excessive promotional and advertising
expenses as well as potential price wars, and earning a potentially higher rate of return on sales
by eliminating large outlays for media advertising.
They also observed that, in order to achieve success, network marketers need to attract as
many people as possible to join them and establish their new network marketing business.
As for Thierry Volery, a professor of entrepreneurship and Director of the Swiss Institute for
Entrepreneurship and Small Business at the University of St. Gallen, Switzerland, the launch of a
new business can be a long and difficult process; all sorts of hurdles such as lack of resources,
compliance costs, and hard reality, will exist.

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This was agreed by Nicole Biggart (2009) saying that if new network marketers conduct

their businesses independently, most of them may find the barriers to the launch of the business
are too high due to lack of experience and resources.

There are also studies that tackled the perceptions of the consumers. The first was
conducted for the Direct Selling Association in 1976 by Louis Harris and Associates. A total of
18 product categories were investigated. The objective of the study was to assess the attitude
towards direct selling industry, focusing on its strength and weakness. According to this study,
consumers reported that direct selling, especially the use of cold calls, represent intrusion. They
were concerned about letting strangers in to their homes, and to being subjected to high sales
pressure and the use of misleading and unfair sales practices. They end up the buying products
they do not need and paying an unfair price for products that are directly sold.

Consumer Attitudes Towards Network Marketing

Barnowe and McNabb (2012) also made a study about consumer attitudes towards direct
selling methods, through face-to-face interviews with 491 residences in three (3) Pacific North
West metropolitan areas. The study showed that 92 % of the households had experienced direct
selling attempts in the past three years. The findings of this study reinforced previous studies
which and have indicated that women make more purchases from direct selling than men. As was
the case in the earlier studies by Harris and Associates and Nowland Organisation (2014), the
consumers in this study complained about pushy, untrustworthy sales persons, and about the
inconvenience of some direct selling encounters. Consumers in this study criticized the poor

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quality of products and services, and the poor follow up services including warranties and other
recourse problems.
On the positive side, direct selling provides, for some consumers, a set of strong
attractions, personalized attention in the convenience of ones own or another house, the chance
to ask questions, and the chance to try products or them personally demonstrated.

Other Marketing Techniques That Can Be Integrated With Network Marketing

The study of Massey and Seitz (2011), looked at how a company might best integrate one
or more direct marketing techniques such as direct mail or telemarketing with its direct sales
operation. The study investigated purchasing and shopping behavior; generalized orientation
towards buying habits associated with direct selling, attitude towards direct selling programs and
perceived satisfaction among the users of this method of distribution.

Synthesis of Review
The related literatures and studies show different factors that can affect consumer
perception, as well as the importance of offering price, product and credibilitygreat healthcare
benefits to the recruitment and retention of employees to a particular company whether it is
mandated by law or naturally offered by the company.

Differences between multilevel marketing and pyramid scheme

Multilevel marketing is a popular way of retailing in which consumer products are sold,
not in stores by sales clerks, but by independent businessmen and women (called distributors),

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usually in customers' homes. As a distributor you can set your own hours and earn money by
selling consumer products supplied by an established company. In a multilevel structure you can
also build and manage your own sales-force by recruiting, motivating, supplying and training
others to sell those products. Your compensation then includes a percentage of the sales of your
entire sales group as well as earnings on your own sales to retail customers. This opportunity has
made multilevel marketing an attractive way of starting a business with comparatively little
money. And the most important statement should be emphasized is that multilevel marketing is a
legitimate income opportunity for everybody. Anyone can do it.

Pyramid schemes are illegal scams in which large numbers of people at the bottom of the
pyramid pay money to a few people at the top. Each new participant pays for the chance to
advance to the top and profit from payments of others who might join later. For example, to join,
you might have to pay anywhere from a small investment to thousands of peso. When the
promoter has been paid off, his box is removed and the second level becomes the top or payoff
level. Only then do the two people on the second level begin to profit. Each time a level rises to
the top, a new level must be added to the bottom, each one twice as large as the one before. Of
course, the pyramid may collapse long before you reach the top. In order for everyone in a
pyramid scheme to profit, there would have to be a never-ending supply of new participants. In
reality, however, the supply of participants is limited, and each new level of participants has less
chance of recruiting others and a greater chance of losing money. A closer inspection of a
pyramid schemes so called "products" typically reveals that they have no real market value. This
is because the products are often "gimmicks" such as certificates, spurious training programs or

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magazine subscriptions, illusory discounts, or over-priced and under-performing "miracle"

treatments and the like. Recruits are often obliged to "invest" in large quantities of these products
with no realistic prospect of marketing them to actual consumers (or returning them for credit).
Their investments, however, generate substantial income for the promoter who enticed them into
the scheme.

Differences between lawful multi-level marketing model and illegal pyramid schemes
The following factors differentiate illegal pyramids from lawful direct selling businesses:
Legitimate direct selling companies offer a genuine business opportunity based on the sale of
quality products to consumers. They routinely offer consumers satisfaction guarantees or
cancellation rights so that the consumer may return the product for replacement or refund if the
consumer is dissatisfied. Pyramids schemes have no such commercially viable product sales
base.
Legitimate direct selling companies strongly discourage overstocking of inventory and provide
participants leaving the plan with an opportunity to return any unused, saleable merchandise to
the company for a refund of not less than 90% of the salesperson's net cost. In contrast, pyramid
schemes often encourage or require large stocks of non-refundable inventory and disappointed
scheme participants are then left with stock which they can neither sell nor return. Legitimate
direct selling opportunities may be taken up with minimal start-up costs and little or no inventory
investment. Even modest entry fees may be refundable if the new direct seller decides not to
pursue the opportunity. Conversely, pyramid selling schemes often require high entry fees and/or
substantial "investment" in inventory, and neither are refundable. This is because pyramid

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operators make their money from new recruits to their schemes. The sales and marketing plans of
credible direct selling companies are based on the progressive recognition and reward of direct
sellers for the development of a customer base for consumption of the company's products. The
development and stability of a direct seller's business is dependent on satisfied consumers and
fairly remunerated direct selling network members. Pyramid schemes, on the other hand, offer
get-rich-quick schemes to induce participants to buy "ground-floor" or "leadership" positions. In
pyramid selling schemes there is no viable, long-term business opportunity.
Unfortunately, some potentially fraudulent schemes will claim to offer a multilevel marketing
opportunity, but in fact are simply recruiting schemes in which people must make substantial
investments in order to participate.

The Other Side of the Story

Mehta, Stephanie N. (1995) suggest that although the opportunities promised by
multilevel marketing companies are huge as the independent contractors earn commissions on
products sold to neighbours, friends and colleagues but the ground reality however suggests that
distributors are often sucked in by the promises of big money and ultimately succumb to
pressures to buy overpriced products and land up earning less money themselves.

MLM

organizations mostly prosper by exploiting peoples relationships. Being a part of a MLM

organization means that one must accept that selling to friends, neighbors and family is a part of
building the business also termed as networking. But to those not in the MLM, it seems as
if the friendship is being abused or used merely a pretext for selling. Lifelong friends are now
prospects and neighborhood is now a market(Croft, Cutts & Mould, 2000a). The views of

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the customers (earlier friends, relatives etc.) about the changed relations and the pressures of
purchasing the high priced products to oblige the friend has not been presented in detail.

CHAPTER III
Research Methodology

Research Design
The present study was an effort to assess the effectiveness of network marketing
companies. The descriptive research design method was used for the study. The present study is
based on both primary and secondary data. The data for this study was obtained through a survey
conducted among the potential consumer in entire city. It involves using a self-designed
questionnaire in collecting data from the respondents.
To study the product, credibility, price sensitivity and the demographic profiling of the
consumer for the effectiveness offered by network marketing companies, an exploratory study
through questionnaire was carried out amongst the consumers to collect the primary data.
Interviews and questionnaire were the major sources of data for this study. The
researchers studied the interview information and survey reports for effective practices. Data
analysis began following each observation and interview.

Respondents
The researchers need 400 respondents and have 5% marginal errors. The researchers used
Slovins formula to determine the number of respondents needed in the study. This is segmented

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to college students, employees, self-employed and to those who are non-working. Research is
conducted in the city of San Pedro Laguna with politically subdivided into 20 barangays namely
Bagong Silang, Cuyab, Estrella, GSIS, Landayan, Langgam, Laram, Magsaysay, Nueva,
Poblacion, Riverside, San Antonio, San Roque, San Vicente, Sto. Nio, United Bayanihan,
United Better Living, Sampaguita, Narra, and Calendola.
Research Instrument
The method of collecting data and the development of the instrument for gathering data
was also explained.
The instrument that was used in this study was survey questionnaire and interview.
Survey questionnaires covered the demographic profile of the respondents of this study, such as
their name, age, gender, and occupation. Researchers asked questions about the factors affecting
the consumers perception in Network Marketing Companies composing (7) seven question
within the area of San Pedro, Laguna.
Primary the researchers used survey to obtain information from respondents. This acts
as the primary method of data gathering.
Secondary the secondary method are works of synthesis and interpretation based upon
primary sources, internet information and the work of authors.

Data Gathering
The data for this research were collected using a survey questionnaire. The survey was
created using suitable questions modified from related research and individual questions formed
by the researchers. The survey was comprised of 7 questions, which were related to the

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participants perception regarding network marketing company. After the validated

questionnaire, these were distributed to the 20 barangays of San Pedro Laguna. The researchers
assured confidentiality of their survey sheets, secured permit of the willingness of respondents
and also understood that peoples consciousness. These may also affect their honesty and
effectiveness in answering the survey, and so, the researchers gave people the option of being
anonymous. There were no incentives offered for participating in the research. Next, the
researchers would interview for the suggestion of the respondents of what improvements should
a network marketing company provide to change the perception of consumers. After gathering
data from the respondents, the researchers tallied result to formulate analysis and interpretation
to conclude and recommend strategies.

Sampling Method
Population
Sources coming from the Municipal of San Pedro Laguna have projected population of
331,849 people as of Year 2015.
Sample Size
The sample size is a part of population and the number of the people to be conveyed
upon. Random sampling is the best way to obtained a representative sample; they will be the one
who will answer the given survey questionnaires which will be tallied to be obtained the result
data that will be analyzed.
Where:
n = sample size / respondents

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N
1 Ne 2
n=400
n

N = population
E = margin of error (5%)
Sample Distribution
Barangays
Bagong Silang

Frequency
7,152

Sampling Size
9

Cuyab

23,638

28

%
2.25%
7%

Estrella

4,976

1.50%

GSIS

2,838

0.75%

Landayan

31,630

38

9.5%

Langgam

24,020

29

7.25%

Laram

6,569

2%

Magsaysay

13,028

16

4%

Nueva

6,264

2%

Poblacion

6,283

2%

Riverside

3,075

1%

San Antonio

58,716

71

17.75%

San Roque

7,864

2.25%

San Vicente

103,838

125

31.25%

Sto. Nino

4,569

1.5%

United Bayanihan

7,376

2.25%

United Better Living

7,299

2.25%

Sampaguita

6,023

1.75%

Narra

2,368

0.75%

Calendola

4,324

1.25%

100%
Total
331,849
400
Table 2 Sample Distribution of Population of San Pedro City, Laguna
Statistical Treatment

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A statistical technique used in understanding the data gathered by the researcher. The

tabulated frequency and percentage is appropriate for the analysis and ranking of data
frequencies. The formulas that the researchers used are selected because it is the easiest formula
that can give the most accurate answer in the research questions. The researchers used the
following formulas:
1.) Frequency

Where:
f = Frequency of an individual item
n = Total frequencies
2.) Percentage

Where:
%= percentage

n= size of the sample

f= frequency

100= constant

CHAPTER IV
ANALYSIS, INTERPRETATION AND PRESENTATION OF DATA

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This chapter presents the data that were gathered through survey and it has tabulated and

interpreted. It composes of the demographic and psychographic profile.

Respondents by Age Group

Chart 1
16%

17-25

7%

26-35
36-45

15%

63%

45-Above

Chart 1 shows that 62.75% or 251 of the respondents are within the age of 17-25, 15% or
60 of the respondents belong to the age of bracket of 26-35; 15.50% or 62 of the respondents are
36-45 and 6.75% or 27 of the respondents are within the age group of 45 and above.

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Chart 1.1 Product Usage

80.00%
70.00%
60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%

17-25

26-35

36-45

46-above

Based on the chart above, majority of the participants (67% or 268) never tried using the
products of a networking company while (33% or 132) had tried.

Chart 1.2 Respondents who agreed

80.00%
70.00%
60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%

17-25

26-35

36-45

46-above

Chart 1.2 shows that among the respondents, 48.92% or 91 within the age of 17-25 and
71.34% or 5 in the age group of 45 and above said that the price is the main factor to be
considered on the effectiveness of a network marketing. While 45.95% or 17 of the respondents

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belong to the age bracket of 26-35 and 53.57% or 15 of the ages 36-45 chose quality of the
product.

Chart 1.3 Respondents who disagreed

90.00%
80.00%
70.00%
60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%

17-25

26-35

36-45

46-above

Chart 1.3 shows that 44.62% or 29 of the respondents are within the age of 17-25 and
78.26% or 18 of the age 26-35 said that the company image is the reason why they disagreed
whereas 29.41% or 10 of the 36-45 think that the price and quality of the product matter. Also,
price, which consists of 45% or 9 participants, is considered on 46 years old and above
respondents.

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Chart 1.4 Respondents view on price

70.00%
60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%

17-25

26-35

36-45

46-above

Chart 1.4 shows that 39.44 % or 99 of the respondents, who are within the age of 17-25,
viewed the price of the product or services are cheaper than other non-network marketing. While
58.33% or 35 participants under 26-35 and 50% or 31 of 36-45 years old said that the offered
price of network marketing is expensive and 62.96% or 17 of 46 years old and above thinks it
has the same price.

Chart 1.5 Conveniency to shop

60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%

17-25

26-35

36-45

46-above

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Chart 1.5 participants within 17-25 years old (47.81% or 120), 26-35 (56.67% or 34) and

36-45 years old (40.32% or 25) noticed that the retail store is more convenient to them. While the
respondents 46 and above are more suitable in shipping.

Chart 1.6 Preferred Product

60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%

17-25

26-35

36-45

46-above

Chart 1.6 illustrated that the apparel is the preferred products of 17-25 years old with
respondents of 41.83% or 105. 38.33% or 23 of the participants within the age of 26-35 prefer
nutritional products. 36-45 and 46-above chose other products such as home care products.

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Respondents by Gender

Chart 2
Female

43%

57%

Male

Chart 2 shows that 56.75% or 227 of the respondents are female and 43.25% or 173 are
male.

Chart 2.1 Product Usage

90.00%
80.00%
70.00%
60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%

Female

Male

From the above chart, both female and male already tried the products of network
marketing company which has 76.21% or 173 and 54.91% or 95 respondents respectively.

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Chart 2.2 Respondents who Agreed

45.00%
40.00%
35.00%
30.00%
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%

Female

Male

Chart 2.2 indicates 36.75% or 61 and 40.22% or 37 respectively are both female and male
thinks that the price is the main factor to be considered in the effectiveness of network
marketing.

Chart 2.3 Respondents who Disagreed

50.00%
45.00%
40.00%
35.00%
30.00%
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%

Female

Male

Chart 2.2 shows that 39.34% or 24 and 45.68% or 37 respectively are both female and
male disagreed because of the company image.

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Chart 2.4 View on Price

45.00%
40.00%
35.00%
30.00%
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%

Female

Male

From the above chart, both female and male thinks that the price offered of network
marketing company is more expensive which has 39.21% or 89 and 40.46% or 70 respondents
respectively.

Chart 2.5 Conveniency to shop

60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%

Female

Male

Chart 2.5 shows both female and male considered retail stores are more convenient in
shopping which has 41.85% or 95 and 53.76% or 93 respondents respectively.

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Chart 2.6 Preferred Product

50.00%
45.00%
40.00%
35.00%
30.00%
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%

Female

Male

Chart 2.6 shows that 36.12% or 82 of the female respondents choose apparel products
while 45.09% or 78 of male respondents prefer nutritional products.

Respondents By Occupation

Chart 3
14%
39%

Employed

30%
18%

Unemployed
Student
Self Employed

Chart 3 shows that 39.25% or 157 of the respondents are students, 29.50% or 118 are
employed, 17.75% or 71 are unemployed and 13.50% or 54 are self-employed.

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Chart 3.1 Effectiveness of Networking Company

Yes

36%

No

65%

From the above tabulation the researchers observe that majority of the respondents
(64.50% or 258) said that the Networking companies are still effective and still have impact on
them. While the 35.50% or 142 disagreed. The breakdown of the reasons why the respondents
agree and disagree will be shown on Chart 2.2 and 2.3.

Chart 3.2 Respondents who Agreed

60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%

Employed

Unemployed

Student

Self Employed

Chart 3.2 shows that among the respondents, 48.67% or 55 of the student and 40% or 14
of the unemployed agreed to the price to determine its effectiveness. While, 38.46% or 30 of the

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employed respondents said that the credibility of the company influence the effectiveness of
Network Marketing and 37.50% or 12 of the self-employed consider that the quality of the
product offered is what matters most.

Chart 3.3 Respondents who Disagreed

60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%

Employed

Unemployed

Student

Self Employed

Chart 3.3 shows that 50% or 11 of the self-employed participant considers that
companys images affects the effectiveness of a networking company. This was followed by low
quality category with 32.50% or 13 employed respondents and price offered by the network
marketing company with 31.82% or 7 of self-employed respondents.

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Chart 3.4 Product Usage

80.00%
70.00%
60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%

Employed

Unemployed

Student

Self Employed

Based on the chart above, majority of the participants (67% or 268) have tried using the
products of a networking company while 33% or 132 did not try.

Chart 3.5 Respondents view on price

70.00%
60.00%
50.00%
40.00%
Axis Title

30.00%
20.00%
10.00%
0.00%

Employed

Unemployed

Student

Self Employed

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Around 43.22% or 51 of the employed respondents feel that the price offering of a

network marketing companies was cheaper, and 57.41% or 31 of the self-employed participants
think that the price range is more expensive and 40.85% or 29 of the unemployed said it has the
same price.

Chart 3.6 Familarity on Network Marketing Companies

70.00%
60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%

Employed

Unemployed

Student

Self Employed

The awareness percentage of different Network Marketing Companies given in the chart
above represents that the awareness of Avon Products Inc. (47% or 188) is the highest followed
by UNO (29.25% or 117) and DXN International Private Ltd (9.5% or 38).

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Chart 3.7 Convenience to Shop

60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%

Employed

Unemployed

Student

Self Employed

Base on Chapter 3.7, about 37.29% or 44 of the respondents agreed on being provided
with the brochures or catalogues so that the employed consumers could make a choice from
various product ranges as all the products were not readily available. While, the unemployed
respondents has the higher percentage of 22.54% or 16 that falls on the shipping category and
54.78% or 86 of the students said that retail stores give them the convenience.

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Chart 3.8 Preferred Product

50.00%
45.00%
40.00%
35.00%
30.00%
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%

Employed

Unemployed

Student

Self Employed

Based on the result given above, 45.86% or 72 and 31.85% or 50 of the students prefer
apparel products and cosmetics products respectively. While, 35.19% or 19 of the self-employed
choose food supplements or vitamins products when buying in a networking company and the
others consists of gadgets and detergents.

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CHAPTER V
SUMMARY, CONCLUSION AND RECOMMENDATION

This chapter summarizes the findings, generated conclusions and recommendations based
on the analysis of the results of the study on Consumer perception on Network Marketing in
terms of price, product and credibility done by the researchers.

SUMMARY
This study was investigated to find out the consumer perception on network marketing in
terms of price, product and credibility.

Respondents by Age
62.75% or 251 of the total respondents were 17-25 years old, 15.50% or 62 were belong
to 36-45 years old, 15% or 60 were 26-35 years old and 6.75% or 27 were 46 years old and
above. In terms of price, 39.75% or 159 of the respondents by age said that the network
marketing companies offer more expensive than other non-network marketing companies. In
terms of product, 33.50% or 134 of the respondents by age prefer to buy in a network marketing
companies are apparel products and 47% or 188 of the participants feel the contingency in the
retail store. In terms of credibility, 42.96% or 61 of the respondents thinks that company image
has the big factor of ineffectiveness of network marketing.

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Respondents by Gender
56.75% or 227 of the total respondents were female and 43.25% or 173 were male. In
terms of price, 39.75% or 154 both female and male think that the offer product or services of a
network marketing is more expensive. In terms of product, male prefer apparel products to buy
in retail store while female have the preferences in cosmetic products to choose in brochure or
catalog so they could make a choice from various product ranges. And both female and male
impressions on the credibility need focus on the company image.

Respondents by Occupation
39.25% or 157 of the total respondents are students, 29.50% or 118 were employed, and
17.75% or 71 were unemployed and 13.50% or 54 self-employed. In terms of effectiveness,
64.50% or 258 of the total respondents agreed that network marketing was still useful and
35.50% or 142 disagreed. In terms of product usage, 67% of the total respondents tried the
products of a network marketing companies and 33% did not try. In terms of price, 39.75% of the
respondents opinion are more expensive, in terms of familiarity on network marketing
companies, 47% of the total respondents awareness are in Avon Products Inc., 29.25% UNO,
9.50% DXN International Private Ltd., 8.25% Forever Living Products Phil. Inc., 4.25% Nu Skin
Phil. Inc. and 1.75% others. 47% of the total respondents are more convenient in Retail Stores,
33% brochures or catalogue, 15.50% shipping and 4.50% others. In terms product type, 33.50%
of the respondents preferred to buy apparel products, 28.50% cosmetic products, 26.25%
nutritional products and 11.75% others such as home care, personal care and jewelry products.

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CONCLUSION
Based on the information the researchers have gathered most of the respondents in San
Pedro, Laguna believed that the Network Marketing Company are still effective on the approach
towards to the consumer. Thus, the results given above are the factors influencing the user in
terms of price, product and credibility.
From the analysis of data above, the researchers concluded the following:

The general perception about network marketing company reveals that more than half of

the respondents agreed on effectiveness.

With respect to gender status, it reveals that male and female participants think that

network marketing is still successful nowadays.

The study reveals that the respondents who were students were perceived well the

concept of network marketing company while self-employed has not.

Majority of the respondents regardless of age, occupation and gender finds the product

more expensive compared to other non-network marketing.

Consumers prefer buying clothes or apparel in retail stores rather than buying from other
means. Also, almost all of the consumers have already used products from a network

marketing company and they are familiar with AVON.

Participants who believed on the effectiveness of the network marketing prefers price as
main concern to patronize the companys products. On the other hand, others consider the
image of the company as a cause for incompetence or failure of the business.

RECOMMENDATION

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Based on the findings of the study, the researcher would like to give the following

recommendations and suggestions to strengthen the effectiveness of network marketing business

and to avoid its present pitfalls. In order to build up a clean and healthy company image, the
researchers suggest the following:

The government can legalize the business by enacting suitable law in the country to
regulate the operation of multilevel marketing companies since some of our respondents

suggest that kind of improvements.

The company should target students since they fall easily on how they will earn from

school and the way in which they can connect with the family/ friends.
Companies should focus more on retail stores aside from brochures, catalogues, shipping

and manpower.
Network Marketing companies have to establish their reputation to regain the trust of
consumers that had bad experiences from other network companies such as scam, bad

product quality and network companies rapid downfall.

Customers should check the quality and the background of the product before buying

from a network marketing companies.

Effective human resource development and enhanced convincing strategy of the agents
should be arranged by the network marketing companies themselves instead of imparting
training by upline leaders and distributors. This will avoid the insights of consumers
about the pyramiding scheme and they can focus more on the products quality and

pricing strategy that the company offers to the market.

For the consumers, they should expand their minds when it comes to buying decision of
consumer product. They should buy the product considering all the factors that will fit to
their personality and meet their satisfaction.

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For the future researchers, they should study more about consumer behavior to have a
wider understanding that could help other people as well. Also, students who are
interested with this topic could use this study as a reference or correlation for their own
purposes.