What is Multi Level Marketing?
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| Multi Level Marketing |
Multi level marketing is known as network marketing.
This is a kind of business where franchising and direct selling are combined. This
business makes a person associated to a company in an independent transaction
approach. It is an approach where the company creates a contactor relationship
to the person who wants to expand his business.
The members make their earnings based on the
sales they have reached in that particular product or service. It also includes
the sales of the person that they have recruited to join the business. Most of
the time the individual who has recruited more members and provided a good
sales output on the product compensate higher because of the effort to transact
in two different fields.
There are “pyramid schemes” or Ponzi schemes,
which are considered illegal. Most people associate multi level marketing to these
kind of schemes because they also recognize themselves to be a legitimate
networking business. Because of the bad image brought up by these schemes, many
prefer to use their names for their businesses as “home based business
franchising” or “affiliate marketing”.
Commissions are earned in the process of
selling a particular product or service in a legitimate network marketing.
There can be no earnings in what they call as a “sign up fee” or for just
recruiting yourself alone. This kind of marketing is always criticized because
of the questionable recruitment process where they get their revenue and
profit. They get their sales from members and new members, which are considered
the end users of the product and as the distributors.
These criticisms led to the major changes in
the multi level marketing in the early 1980s when many companies have started
to allow their members to concentrate only on marketing and not on distributing
or stocking the product. Most multi level marketing firms nowadays perform as
fulfillment firms by taking the tasks of shipping the product, paying the
commissions and taking orders from their clients.
