The advocates of multilevel marketing describe MLM as the more
efficient and effective means of marketing and gener-ating
leads and sales to your business. But the traditional
marketing companies feel reluctant to adopt new network
marketing strategies in order to run their business. Also mostly
people don’t even understand exactly the differences between
both the strategies. This is the reason why we have dedicated
this chapter to explore difference between the multi level
marketing and the traditional marketing strategies.
LETS’ explore the major differences:
Difference between MLM and Traditional Marketing
The most significant difference between MLM and the
traditional marketing is the role of the marketer. In multi
level marketing initially an individual is hired as a sales
representative who is required to market the company and
its products and / or services and generate sales, which is
fairly similar to any traditional marketing business.
MLM Success Guide 17
However on the other hand under multi level
marketing, he is also required to identify and recruit
additional sales reps as his down line. The new
sales rep in turn can appoint another person as
company’s sales rep or marketer.
Under MLM a marketer has the authority to get
customers and recruits and trains another sales
person to get customers. However in a traditional
marketing company, a sales manager and /or sales
reps are hired by the company itself.
Under MLM an unlimited number of sales reps can be
hired no matter whether they generate enough sales or
not however under a non-MLM company sales reps are
hired based on the financial resources of the company.
Also a new sales manager is only hired when the
existing manager is overwhelmed.
In a MLM company the structure of the
distributing network expands vertically, however
in a tradition marketing company there is
generally horizontal expansion.
The MLM marketers are usually paid commissions, i.e.
their compensation is usually based on number of sales
made by them or by the people in their down line. This
is the reason why MLM enjoys rapid expansion as the
marketers can recruit as many sales reps as they like
and the company doesn’t have to worry about fixed
salaries. However, in traditional marketing the sales
managers or reps are usually paid fixed salaries.
Also MLM companies usually do not require high set
up costs as opposed to the traditional ones that
require huge investments to set up a whole
marketing and distribution channel.
One of the other major characteristics of multi level
marketing is that the parent companies are making plenty
of money. Sales force under MLM is so vast that even if no
18 CALVIN CLARKE
single promoter is selling at high levels but the group
as a whole is selling at a very high level, the company
would still enjoy the profits. However under traditional
set up if a manager is not performing well the sales of
the company are adversely affected.
Under MLM the high performers earns high and reach
to the top and the rest (the low performers) can not
survive and leave the market themselves. The MLM
Company like any other traditional company does not
have to worry about going through the tedious
procedures of appraisals, hiring and firing etc.
Hence the above differences clearly manifests the advantages
associated with the multilevel marketing over the traditional marketing
methods as MLM is not only the most flexible way of marketing but
also due to its network feature it has the tendency of expanding rapidly
in the market and if directed effectively it can earn huge profits to the
company. Not only that people who can join the marketing team under
MLM can work any time they like and reap the benefits on not only the
sales they make but also on the sales made by the reps they recruit.
Hence MLM has the characteristics of enjoying leveraged income and
greater market penetration.
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