Multi-level marketing, also known as MLM network marketing, is a marketing strategy where individuals sell their products or services either by word of mouth or by direct selling. Generally, distributors earn commission not only through their own sales but also with the sales made by the people recruited by them.
MLM salespeople not only sell the company’s products but also encourage others to join the company as a distributor.
Other terms that are used for multi-level marketing are word of mouth marketing, interactive distribution and relationship marketing. As the multi-level marketing field grows, its members multiply.
BusinessIt is legitimate business strategy though there are various criticisms about it. One of the major issues in MLM is its pyramid structure. In pyramid scheme,it uses money from the new recruits to pay the people at the higher level. Pyramid schemes can sometimes be spotted by their greater focus on recruitment than on product sales.
The point of proving the legitimacy of MLM depends on two factors.
- If the company’s product or services are sold primarily to the customer,
- it is legal and the company is deemed legitimate multi-level marketer.
But if the company is selling its products to its members who must recruit new members to buy their products then there is point of illegitimacy. In this case, the company may be running pyramid scheme which is illegal.
Product base evaluation:
Home product is the field where there is highest number of direct sellers with 24.4%. Second place goes with 23% of direct sellers on the field of health and wellness product.
Personal care and beauty direct sales companies come with 19.4%. 11% for clothing and accessories, 3% for educational products and 19.2% work for companies specializing in other product and services.
Tags: marketing
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