Franchises, Business Opportunities, and Investments There are multi-level marketing plans — and then there are pyramid schemes. In multilevel or network marketing, individuals sell products to the public — often by word of mouth and direct sales. Typically, distributors earn commissions, not only for their own sales, but also for sales made by the people they recruit.
If you understand what those words mean or you can decipher the graphics and multi-paragraph explanations of the compensation plan, then you are one step ahead of me — and the majority of MLM participants!
Multi-level marketing (MLM), also called pyramid selling, network marketing, and referral marketing, is a marketing strategy for the sale of products or services where the revenue of the MLM company is derived from a non-salaried workforce selling the company's products/services, while the earnings of the participants are derived from a pyramid. There are multilevel marketing plans – and then there are pyramid schemes. Not all multilevel marketing plans are legitimate. If the money you make is based on your sales to the public, it may be a legitimate multilevel marketing plan. Don’t pay or sign a contract in an “opportunity meeting.” Take your time to think over your. Fall 47 ETHICAL ISSUES IN MULTILEVEL MARKETING: IS IT A LEGITIMATE BUSINESS OR JUST ANOTHER PYRAMID SCHEME? James A. Muncy Because of their inherent interest in marketing, students in marketing and sales classes are often approached by those.
Most MLM companies require independent distributors to purchase a minimum amount of products, reach a certain sales quota, or recruit a certain number of new distributors before they are eligible to earn compensation. These three categories make up a large percentage of the products offered by MLM companies.
The most common products are health foods and nutrition items such as vitamins, juices, and extracts; skin care products; financial products; exercise equipment; household items; clothing and accessories.
One common factor among some not all MLM products is the relative high price compared to comparable items you can purchase from a retail store. Most companies or MLM associates will claim the difference is in the quality or proprietary nature of the product.
But there are several credible counter-arguments to those claims. If the product were so revolutionary or such high quality, companies would want to put it in as many hands as possible, which generally means distribution through retails outlets such as Wal-Mart, Target, grocery stores, etc.
Another counter-argument is the fact that in network marketing, several people generally get a cut of the sale. A common financial product sold through MLM companies are money merge accountswhich work to more quickly eliminate your mortgage.
Some of these companies are legitimate, while others are not. The same often goes for recruiting new distributors. The biggest selling point is owning your own business, setting your own hours, freedom from a boss or a schedule, etc. Many companies have large conventions that are more like pep rallies than seminars.
It is not uncommon to see some of the top distributors flanked by high priced cars or pictured in front of their multi-million dollar mansions. The truth is that multi-level marketing is a lot of work and the vast majority of distributors earn less in commissions than they spend on membership fees, training products, and minimum purchase requirements.
In many cases, MLM companies are selling the dream of becoming wealthy.
Question to ask before joining a multi-level marketing company As with any business, it is important to understand the company, business model, products, threats, opportunities, and other requirements before joining. At the minimum you should be able to easily answer the following questions: Is the company publicly traded?
Has it been involved in any major lawsuits regarding its operations?
Which products does the company sell?The following article has been written to provide information and further scholarship in which supports the hypothesis that a direct sales job with a multilevel marketing company is a legitimate job opportunity and can provide a viable business model for starting and maintaining one’s own personal business.
Fall 47 ETHICAL ISSUES IN MULTILEVEL MARKETING: IS IT A LEGITIMATE BUSINESS OR JUST ANOTHER PYRAMID SCHEME? James A. Muncy Because of their inherent interest in marketing, students in marketing and sales classes are often approached by those.
Unfortunately, not every multilevel marketing opportunity is a legitimate business opportunity. Many pyramid schemes, frauds designed to part the unwary from their money, are disguised. Like multilevel marketing, pyramid schemes depend on recruiting people to become distributors of a product or service.
Multi-level marketing, or MLM, is a business model that relies on independent representatives to sell products for a company. Instead of the company paying for advertising and promotion, multi-level marketing companies rely on individuals to spread the word about their company.
Even legitimate business opportunities involve risk. For example, if you’re considering buying a franchise, you’ll want to find out more about how to shop for a franchise opportunity, the obligations of a franchise owner, and questions to ask before you invest.
Discover the Top 25 Network Marketing Companies in the World. Who are the top 25 network marketing companies?Well, it really depends on how you define “The Top 25 ” As you might imagine, the truth can be a bit subjective.