MULTI-LEVEL MARKETING, or MLM, is a marketing strategy which
creates a down line of distributors and a hierarchy of multiple
levels of compensation. The sales force is compensated not only
for their own sales but also for the sales of the people they help
recruit. Firms, having a large product base, often cannot employ
equivalent sales force; and believe they would be better off
without the traditional approach. Hence, they implement MLM to
survive competition from multi-nationals.
MLM is also known as Network Marketing because it utilizes
a network of individual customers to hit other potential
customers. In other words, every individual customer serves as
a sales repre-sentative.
Multi-Level Marketing Vs. Pyramid Marketing
People often confuse MLM with pyramid marketing; however
there is very clear distinction between the two approaches:
pyramid marketing is about getting your money and then using
you to recruit other distributors; MLM, on the other hand, is
about moving the product through a larger network of
distributors so that the business can increase sales volume.
Another difference between MLM and pyramid marketing is
that Pyramid marketing requires each level to DOUBLE before a
new level is created so it isn’t fair to people lower down in the
levels and also unethical. MLM, however, awards a commission
based upon the volume of product sold through own sales
efforts as well as that of the down line organization.
Since MLM faces the risks of initiating a business that has
not been tested by the customers is not recognized, people
prefer to wait a coupe of years before joining. Hence, they also
witness the compa-ny’s track-record and reliability.
STRUCTURE OF MULTI-LEVEL Marketing
Multi-level Marketing follows a significantly different structure
than Pyramid marketing: the network is divided into parts
comprising of different number of people. Some parts of the
network may comprise of lesser people because the initiator
might not have been able to sign-up more people; however,
other parts may have flourished due to a hard-working marketing
genius have good resources. Hence, MLM turns out to be a
fairer approach to income generation.
GROWTH WITHIN MULTI-LEVEL Marketing Firms
An MLM opportunity, having a wide-spread network, brings
greater growth prospects as members become eager to introduce
more people. Furthermore, those present higher up in the network
are encouraged to share their experiences with those subordinating
MLM Success Guide 3
them. This is because improvements in the performance of new
entrants and subordinates will result in higher profits for the seniors.
HENCE, great income-earning opportunities can be availed out of Multilevel Marketing firms. The only key is to select one with a successful
product or service; such that you would prefer for yourself.
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