Business

What is Multi-Level Marketing?

Multi-Level Marketing

Multi-Level Marketing is a controversial marketing model. Often referred to as the pyramid scheme. Multi-Level Marketing is a network marketing model that is shaped like a pyramid.

The pyramid scheme is used to define it. It is often seen as a scam or a fraud scheme. But before being too quick to judge whether or not it is a fraud, we must first understand what Multi-Level Marketing really is.

Multi-level marketing focuses on direct selling to customers to develop a personal relationship with them. Moreover, the idea is to invite the customer to sell the products further creating a chain of sellers.

So whoever buys the product can also become a seller for the wholesaler. In return, the new member keeps a percentage of a commission for the sales made and the new members are introduced into the hierarchy. 

So the question arises: Why is Multi-level Marketing seen as a fraud?

The pyramid scheme fraud

Firstly you need to understand that there is a difference between Multi-Level Marketing and the pyramid scheme. The pyramid scheme is a scam that focuses on creating a hierarchy of sellers. 

Those sellers may take advance amounts from buyers and customers. According to competitive intelligence consultants only to be part of a larger scam. In which the company simply pulls out taking the advanced and not giving out any product. 

Moreover, the company often scams people by introducing marketing courses or training programs. They charge a hefty amount for such training for product selling techniques. Only to pull out when the amount is received.

These companies are not often registered and are focused on hiring new members rather than actually selling products and services. Because the real objective was not to sell but to generate fraudulent income by exploiting people. 

So the pyramid scheme is more about making extravagant promises rather than discussing business. This is the common mode of manipulation that false companies use in the name of multi-level marketing.

Moreover, the pyramid scheme relies more on getting new members to create a network rather than actually focusing on selling products and services. So they may often highlight the importance of networking as the main method of making money.

To add to this, the pyramid scheme fraud pushes distributors to buy more than they can sell. This is made to be a requirement for the distributors to remain in the network which otherwise would be dissolved from them.

In reality, it is merely a fraud to accumulate as much money as possible. So they often use pressure tactics as well as emotional manipulation to get you to commit. More importantly, they try to give you less time to think and analyze the company.

The Multi-Level Marketing Technique

There are many genuine Multi-level Marketing companies that actually focus on the practice. Rather than cheating their customers and network members. Firstly Multi-level marketing is usually of a product that is already well known and established.

So the products can not be sold at a higher price than that of in the market. While on the other hand scams are almost always based on products that are luxurious or rare. So that their actual price can be hidden more effectively.

The Multi-Level Marketing model is based on developing relationships with customers in order to sell the product. So in order to be a part of the network, you must buy the product as well as develop relationships with other people who are willing to buy and sell.

The multi-level marketing model is also hierarchical. This means that the one who starts the network gets the biggest benefit from it. So member A gets 2 people to sell his products while further selling some units to them.

On the contract that they in turn would get 3 people each to buy and sell their products forward. Member A will keep a percentage of the profit while the rest will be given to members B and C who in turn will keep a percentage of profit that was earned by other members of the network.

This means that the biggest benefit goes to the top member of the network and the lowest benefit goes to the lower members of the network. So Multi-Level Marketing is a chain-making business that is hierarchical in nature.

So the idea is that if you want to make more money through multimedia marketing you need to make more connections. And then make sure that you get as many people into the business as you can.

So the more people you can get to buy and sell for you, the more profit you will generate. But you need to first make sure if Multi-level marketing is actually right for you. 

Is Multi-level Marketing for you?

First, you need to make sure that the business you are going to be part of is authentic. So you need to learn how to identify the red flags, if any, indicating if someone is scamming you.

One good indicator is that the product is being close to the market price. And the product is well known and well established in the market by corporate intelligence consultants. The second indicator is to identify any misinformation about the company.

Often scammers lie about the location of their premises or the structure and the members of their company. You need to make sure the company has registered legally before signing up for any such ventures or making any payments.

Conclusion

The whole purpose of setting up a network is to improve sales and direct selling. If the joining method is too excessive and demands a subscription for training, it is likely fraud.

Then you must understand your ability to sell the given product only then will you be able to perform well. Since Multi-level marketing is purely about how you can contribute to the network you might need to expand your circle to benefit from the model.

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