TY - JOUR
T1 - Network marketing organizations
T2 - Compensation plans, retail network growth, and profitability
AU - Coughlan, Anne T.
AU - Grayson, Kent
PY - 1998/12
Y1 - 1998/12
N2 - Network marketing organizations, or NMOs, are retail selling channels that use independent distributors not only to buy and resell product at retail, but also to recruit new distributors into a growing network over time. Commissions and markups on personal sales volumes, and net commissions on the personal sales volumes of downlines, are the methods of compensation commonly used to motivate NMO distributors. In this paper, we develop, analyze, and calibrate a dynamic decision model of the growth of a retail NMO. Descriptive and prescriptive insights show how compensation and other model parameters affect distributor motivation, sales, and network growth and profitability.
AB - Network marketing organizations, or NMOs, are retail selling channels that use independent distributors not only to buy and resell product at retail, but also to recruit new distributors into a growing network over time. Commissions and markups on personal sales volumes, and net commissions on the personal sales volumes of downlines, are the methods of compensation commonly used to motivate NMO distributors. In this paper, we develop, analyze, and calibrate a dynamic decision model of the growth of a retail NMO. Descriptive and prescriptive insights show how compensation and other model parameters affect distributor motivation, sales, and network growth and profitability.
KW - Compensation plans
KW - Decision support models
KW - Direct selling
KW - Network marketing organizations
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U2 - 10.1016/S0167-8116(98)00014-7
DO - 10.1016/S0167-8116(98)00014-7
M3 - Article
AN - SCOPUS:0000649885
SN - 0167-8116
VL - 15
SP - 401
EP - 426
JO - International Journal of Research in Marketing
JF - International Journal of Research in Marketing
IS - 5
ER -