What is Multi Level Marketing or MLM?

MLM  or Multi Level Marketing is a business structure designed to create a marketing sales force. The typical Multi Level Marketing program works through recruitment. You are compensated for your sales along with additional compensation for new distributors and the sales they generate. This action creates a downline or network of distributors, on multiple levels, in the form of a pyramid.

Multi Level refers to the system of compensation provided to the persons who are causing the product to move or the service to be provided.

Marketing simply means moving a product or service from the manufacturer or provider to the consumer.

Network Marketing vs. MLM vs. Pyramid Scheme

Network marketing is a method of marketing that utilizes independent representatives and their own interpersonal skills to reach potential customers, both offline and online via social 'networking' or word of mouth.

Multi Level Marketing is a method of marketing that depends on selling a product and an opportunity to consumers using a recruitment method. One person begins the process, who in turn recruits another via 'networking', who then recruits another and so on. The option to become a distributor of the product and recruit others is heavily promoted and necessary for success.

Pyramid Schemes are not concerned with the sale of a product, they focus on profits

made doing volume sales to the latest, new recruits who only buy the products in order to participate in the scheme.

        General Guidelines to follow as a potential Investor in MLM

- Start-up costs ought to be expected, even with legitimate companies but not substantial, high pressure investments that enable you to become a 'distributor'.

- Does the company have a buy back policy for the inventory you may need to purchase?

- Are consumers interested in the product/s or does the company seem
to be making money by recruiting alone?




Is MLM Legal?

Many questions regarding ethics arise when the term MLM enters a conversation, for example - Is MLM Legal? As we have learnt so far, you need to do your homework. Legitimate opportunities in MLM are out there. The website linked to above, First Class MLM (Is MLM Legal?), in my humble opinion is an excellent source for information on Multi Level Marketing. It covers many avenues, appears unbiased and comes from experience.

Tip the Scales of Justice Accordingly...Legal or Illegal?

As always, do your own research! In today's society being naive about a business decision can be eradicated with effort on your part. Learn to ask the right questions and learn when not to be satisfied with the answer.

Books about Multi Level Marketing