Theparty plan is a method ofmarketing products by hosting what is presented as asocial event at which products will be offered for sale. It is a form ofdirect selling. The primary system for generatingsales leads for home party plan sales is the home party itself: the salesperson uses the home party business model as a source for future business by asking attendees if they would like to host selling parties, too.
Direct selling through the party plan typically usesmulti-level marketing (salesperson is paid for selling and for sales made by people they recruit or sponsor) rather thansingle-level marketing (salesperson is paid only for the sales they make themself).[1]
This plan has been used primarily to sell items whose main appeal is to women by women, such as kitchenutensils,home decor items, jewelry, cosmetics,handbags, and similar products.[2] Recent additions to the field includelingerie, wine, andsex toys. Sometimes a combination party is held, at which a wide variety of such merchandise is offered for sale.
In this system, representatives of the sales organization, usually women, approach other women about hosting a social event in their homes during which a product will be demonstrated and offered for sale to guests. In consideration, they will be given hostess gifts and a portion of the proceeds from the amount of goods sold. Frequently all in attendance will be given a token item of nominal value as an incentive to attend.
At the event, the salesperson displays and demonstrates various products. She then takes orders from attendees. The salesperson is almost always paid solely acommission on sales. If the salesperson has recruited other sales people into the organization, then she also receives a commission based on her recruits' sales.[citation needed]
The party plan is regarded as primarily the invention of Norman W. Squires, who developed it for Stanley Home Products in Westfield, MA, which company was founded by Stanley Beveridge and Catherine O'Brien in the mid-1930s. Mr. Beveridge and Ms. O'Brien were former employees of theFuller Brush Company, which sold its products with door-to-door salespersons.[citation needed]
The party plan is criticized for exploiting social conventions and pressuring "guests" into buying things they do not want.[2]
Purse parties that are not done through a dedicated program by the manufacturer differ, however, from these other parties in that the merchandise at these parties often consists of counterfeitknock-offs of popular, name-brand purses.[3] Merchandise at American purse parties is usually bought in bulk fromsmugglers in New York's Chinatown or inLos Angeles' garment district and sold to unsuspecting customers at a significantly higher price, although still lower than the retail price of the legitimate product. These inferior smuggled goods have been linked toorganized crime and the funding ofterrorism, so purse parties have become of interest tolaw enforcement. Selling such purses, with an imitation designer label, is aUS federal crime, even if the seller tells the buyer that the purse is a fake.[3]