Mechanics of systems “pyramid schemes”
Until the 1990s, was predominant a free system, in which every person could increase his affiliate marketing group without any limit.
Today is the most widely used matrix system, where each employee can build a group whose maximum size can be defined contractually. The reason for the change is the increasing number of sellers, which actually constitutes the structural and systemic problem of marketing “pyramid”.
In the limiting case as an n number of customers/vendors at the first level (the vendors chosen by whoever starts the chain) and assuming that every seller reach an n number of vendors/customers spreading the goods (or the transfer of money) ideally, the result is, at any level, a total of vendors/customers.
The example shown demonstrates the unsustainability of this structure, it is therefore illegal in some countries: given n = 6, p = 11 customers/sellers are more of the inhabitants of the United States and p = 13 has been almost doubled the entire world’s population.
The inefficiency of the system the sample in question would make sense, therefore, how large is the profit margin for those who started and how little circles, however, the money to low levels.
In the second analysis are three structural limits:
In a building ideal, be exhausted in a few steps all potential customers: as it is sometimes less consumables specialist (i.e. a particular SOAP, or perceived as such by potential buyers), the offer is likely to outpace demand in short time.
In a building ideal, be exhausted in a few steps all potential marketers: a large number of agents will fail to reach a fraction of earnings that the system theoretically allows.
The ideal construction does not reflect the reality of the average operator: in fact, typically that occurs a few sellers will be able to recruit the best available agents, while only a small part of the latter will place the volumes of goods needed to achieve significant gains. In addition, clients may not always apply to this network of sale for purchasing exclusive products, but not for this irreplaceable.