Multi level Marketing (MLM)

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MULTI LEVEL MARKETING (MLM)
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MULTILEVEL MARKETING
A BUSINESS STRaTEGY KNOwN aS mULTILEvEL maRKETING
(MLM) ENTaILS HIERaRCHICaL, UNPaID SaLES TEamS
SELLING GOODS DIRECTLY TO CUSTOmERS wHILE aLSO
HIRING NEw FIRm SaLES REPRESENTaTIvES.
MULTILEvEL maRKETING IS aLSO KNOwN aS NETwORK
maRKETING aND REFERRaL maRKETING
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MLM SaLES TEamS USUaLLY HIRE FEmaLES, YOUNG
PaRENTS, OR aNYONE LOOKING
WORKING OF mULTILEvEL maRKETING
FOR aLTERNaTIvE EmPLOYmENT. MLM COmPaNIES aTTRaCT
EXISTING CUSTOmERS TO SELL BY OFFERING THEm FRE
EDOm aND NEw
SaTISFIED BUSINESS
OPPORTUNITIES. THE HYPOTHESIS THaT CLIENTS COULD
BE mORE PRONE TO RELY
ON THEIR FRIENDS aND aCQUaINTaNCES aS
REPRESENTaTIvES THaN COmPLETE STRaNGERS SELLING
THE ITEmS IS a KEY COmPONENT OF aN MLM maRKETING
PLaN. THE FRIENDS aND FamILY OF REPRESENTaTIvES
wHO USE THEIR COmmUNITIES aS
THEIR CONSUmER BaSE maY aLSO BE QUICK TO SUPPORT T
HEIR BUSINESS ENDEavOURS.
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IS MULTILEVEL MARKETING LEGAL?
MULTILEvEL maRKETING IS LEGaL IN THE U.S. aND
mOST COUNTRIES. IT IS BaNNED IN SOmE OF
COUNTRIES, SUCH aS BaNGLaDESH, CHINa aND SaUDI
ARaBIa. WHILE LEGaL IN THE UNITED STaTES, THE
MLM BUSINESS PRaCTICE IS OFTEN CONSIDERED
CONTROvERSIaL BECaUSE IT CaN USE PREDaTORY
RECRUITING TECHNIQUES aND UNPaID LaBOR OF ITS
SaLES REPRESENTaTIvES. THE MLM BUSINESS STRaTEGY
HaS SO maNY aNaLOGY TO a PYRamID SCHEmE, wHICH
IS ILLEGaL IN mOST COUNTRIES.
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WHaT IS THE DIFFERENCE BETwEEN mULTILEvEL
maRKETING aND a PYRamID SCHEmE?
THE majOR DIFFERENCE BETwEEN aN MLM aND a PYRamID
SCHEmE IS wHETHER IT FaLLS UNDER THE DEFINITION
OF a LEGaL maRKETING STRaTEGY. IN ESSENCE, MLM
STRaTEGIES aRE LEGaL wHILE PYRamID SCHEmES aRE
NOT.
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MajOR DIFFERENCES BETwEEN MLM aND ILLEGaL PYRamID
SCHEmES INCLUDE THE FOLLOwING
PYRamID SCHEmES ENLIST aS maNY PEOPLE aS POSSIBLE
INTO THEIR SaLES TEamS IN ORDER TO PROFIT FROm
THE INvESTmENTS OF THEIR NEwEST aSSOCIaTES,
wHEREaS MLM TaCTICS ENLIST aS maNY PEOPLE aS
POSSIBLE INTO THEIR SaLES TEamS IN ORDER TO SELL
aS maNY ITEmS aS POSSIBLE. PYRamID SCHEmES
DEmaND a vERY SUBSTaNTIaL INvESTmENT BEFORE a
BUSINESS OwNER CaN EvEN SIGN a CONTRaCT TO STaRT
wORKING FOR THEm. THE SaLES TaCTICS maY REQUIRE
a SaLES REPRESENTaTIvE TO BUY a mINImUm NUmBER OF
THEIR PRODUCTS. IN CONTRaST TO PYRamID SCHEmES,
wHICH PLaCE LITTLE TO NO EmPHaSIS ON THE END
USER, MLM BUSINESS mETHODS INvOLvE RESEaRCH aND a
STRaTEGY TO FOCUS ON a TaRGET CUSTOmER FOR
REPRESENTaTIvES TO SELL TO.