What is 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.
Many people who are victims of the illegal schemes in multi level
marketing are required to buy expensive products, but most of these
schemes do not last long because most of the sales are not easily
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