Learn more about Multi Level Marketing / Network Marketing? Are these all scam or is there any truth to it as a money making avenue?
The term network marketing has two different meanings. In generally it is a synonym for multi-level marketing and often by mistake considered the same as a pyramid scheme.
Multi Level Marketing (MLM) is also known by several other terms, and depending on the country where you live it could be referred to by some other name, although it would mean the same thing.
Other Names for MLM
Here are some of the popular terms used to refer to multi level marketing.
MLM, Multi Level Marketing, Network Marketing, Multilevel Marketing, Consumer Direct Marketing, Referral Marketing, Pyramid Scheme
What is MLM?
So what exactly is multi-level marketing?
It’s a marketing strategy where you get paid not only for the sales you personally generate, but also for the sales of others that you have recruited in the system.
The idea of “network marketing” is often used to describe a marketing concept that emphasizes on the inter-connectivity of market players and transactions. These outlook initiated in industrial marketing, also called B2B marketing, where multiple contact points are distinctive.
Instead of using the regular distribution course that moves from manufacturer to warehouser to wholesaler to retailer to end customer, Network Marketing companies use a network of self-governing marketers to pass the products directly from the manufacturer to the end customer.
Basically, you create a down-line of distributors and a hierarchy of multiple levels of compensation. In this type of marketing, there is no “sales & distribution” chain that exists in any traditional format, and so the advertising expenses are taken out of that chain and given to the individuals to market the products instead.
Why is it Good?
It is good because it creates work at home businesses, since the distributors do the marketing of the business themselves.
The products are priced in such a way that the multi-level marketing companies are able to pay big bucks to the individual who promote the products.
Basically, in MLM, the advertising budget is taken out and passed on to the distributors, rewarding them for their marketing efforts, and for bringing in new business.
The self-governing marketers bring in a percentage of the profit in each sale they make. While it’s possible and highly recommended to make an income by selling to end customers directly, the real clout of Network Marketing is that you are allowed to build a layer of other independent marketers below you, and make a percentage of their combined sales.
There is limited amount of time that a person can spend working. By having sub layers working with you, you can multiply that time. Imagine having sub layers of 100 people each putting their effort and only an hour a day in five days a week. In one month 20,000 hours of work would be done. It would take one person 10 years to produce the same amount of work.
You Get Residual Income
This is another attractive feature of any network marketing company. You can get residual income, which means you have a chance to earn money, month after month, year after year.
And why is that? It is because the products of these companies are consumable items, which means they get sold repeatedly, most often on a monthly basis.
Why Does it Have a Bad Name?
There are certain jurisdictions (especially in the US), where certain variations of this type of pyramid marketing is not allowed.
But then it is not because the products are bad, it is because certain variations of these schemes give them an advantage over the bigger companies that engage in the traditional method of marketing.
Besides, in any network marketing:
The company is happy because they are making money. The distributors are happy because they are making money, in some cases really good money.
However, most media companies are NOT happy because the traditional means of advertising doesn’t exist, so they lose out on making any money. They are losing out on the millions / billions of dollars that are usually spent on advertising campaigns.
No wonder that these guys hate Network Marketing!
Another reason that most dislike those who are associated with MLM, is because they get too aggressive at times, and try to sell the products to their friends and relatives, even when they are least expecting it.
Video Showing the Biggest MLM Companies in the World:
Legitimate Network Marketing Opportunities
How to Find A Legitimate Network Marketing Opportunity: Here are some useful suggestions and review of some of the better ones.
Commonly referred to as multi-level marketing, network marketing is a concept where individuals come together with a parent company and act as independent contractors in the sales of a product or service. In return for helping to promote and sell the parent company’s product or service, individuals are financially compensated in an amount that has already been determined. The actual amount of compensation will vary from one network marketing opportunity to another and will be strictly dependent upon the company’s policy.
A legitimate network marketing opportunity will not grant money for recruiting new members, which are required to pay sign-up fees. Instead, they should be paid based on the commissions that they earn from the sale of a product or service. One of the main problems that many network marketing companies face is their comparison to illegal pyramid scams. However, there are a large number of legitimate network marketing companies that operate regularly in every state and in dozens of countries. Today, they are commonly referred to as affiliate marketing or programs.
The best way to distinguish a legitimate network marketing program from a fraudulent operation is through the company’s policy. First and foremost, questionable operations will require high entrance fees and/or the requirement for members to purchase expensive products. Typically, these types of companies fail rapidly when the merchandise cannot be resold for profit, which leaves the members in financial distress and the founders with a large bank account.
With the increasing popularity of the internet, it is important that entrepreneurs be able to recognize the differences between a legitimate and fraudulent company. As a general rule, affiliates should never have to pay a sign-up fee in order to help a company sell it’s products. Simply put, it makes no sense to pay money in an effort to help someone else promote and sell their products. Instead, it is more realistic that the sign-up be free and the individual be paid based on the sales that they generate for the company.
The majority of large internet retailers offer affiliate programs, which allow members to track their commissions and log in to their account at any time. One of the best ways to ensure a network marketing opportunity is legitimate is to know the parent company’s reputation by checking with the Better Business Bureau and through speaking with other entrepreneurs and gaining feedback on their experiences. Every day, individuals find great success or simply a way to earn extra cash through a combination of the internet and a legitimate network marketing opportunity.
To Conclude
As long as you are convinced that the products are not harmful in any way, this can be another source of income for you. In fact, most of the time, the products are of much better quality than their traditional counterparts, because part of the advertising funds is pumped back into the products.
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