Analysis of the Network-Marketing & Party Plan Concept

Abstract

Direct selling, an ancient form of distribution, remains a profitable business model employed by renowned brands like Tupperware and NuSkin. However, the significance of direct selling in Belgium, particularly its impact on the labour market, is often underestimated. Consultants, who directly promote products to consumers, are the primary catalysts for success in this industry and Network-Marketing through home parties has gained popularity in Belgium over the last decades, attracting individuals from diverse backgrounds. Nonetheless, recruitment poses the main challenge in the industry, as finding individuals willing to showcase products is difficult. Therefore, this Master's Thesis aims to address the lack of research in this specific context by investigating on individuals’ motivations and barriers to become self-employed consultants in NWM through home parties in Belgium as well as the perception of the Belgian fiscal and legal system as motivator or hindrance regarding this choice. The literature review explores the concept of direct selling, Network-Marketing, and home parties, emphasizing the importance of consultants in driving business performance. It provides insights into the industry's structure, including factors such as initial investment, product characteristics, compensation plans, training programs, and recruitment and further examines the Belgian legal and fiscal system for consultants, providing necessary context for the empirical research. The empirical part of the thesis focuses on interviews with Belgian consultants and other relevant participants. The findings confirm motivations and barriers identified in the literature, highlighting advantages and disadvantages of self-employment, along with specific aspects of Network-Marketing like low entry costs, equal opportunities, pay-for-performance, unique compensation plans, and enthusiasm for the products sold. The study also emphasizes the influence of product quality, compensation systems, management practices, public perception, and cultural factors on consultant motivation. Regarding the Belgian fiscal and legal system, the research reveals that it generally motivates individuals to enter Network-Marketing with the choice of system by the direct selling company and the application of the special VAT decision for home parties being crucial factors determining motivation or hindrance. Further, suggestions are made to improve the system, such as simplifying administrative processes, addressing tax obligations, and providing clearer guidance for newcomers. Ultimately, the research concludes that the remuneration system and individual perspectives significantly influence consultants' decision to engage in direct selling. Overall, this thesis provides valuable insights into consultants' motivations and barriers in Network-Marketing through home parties in Belgium, as well as the impact of the Belgian fiscal and legal system. The findings assist practitioners and managers in understanding key factors that drive consultant engagement and inform decisions regarding recruitment, compensation, and legal compliance. Finally, efforts to enhance the attractiveness of direct selling in Belgium and improve the fiscal and legal system can support industry growth and success.