What is MLM – Network Marketing?
Multilevel Marketing is the good old word of mouth advertising, only
remunerated. When using a product and like it, it is natural to want to talk with friends.If the friends also start to use it, not because of the wonderful advertising they saw on TV. It is because the product was indicated by someone they trust.
If this industry does not need to invest in traditional advertising, you can redirect a portion of profits to produce increasingly higher quality products and other party to pay commissions to those people who display their products and thus encourage them to give more and more people. The whole idea is very simple, but we should avoid some pitfalls. I speak a little about them later in the text, when I speak also of the most common criticisms of the MLM.
Why MLM – Network Marketing works?
MLM works because people prefer to use products listed by a known another person who had never heard. It works because the products offered are good and cost the fair value. It works because people feel satisfied with the product and indicate to acquaintances who are satisfied with the product and indicate to the known and so on, on a scale of exponential growth.
If the product is not good, is not the MLM that will make it good. But we must remember that sometimes what is good for one is good for others. Each has their personal taste and their own ideas of what is good for you or not.
Who is MLM?
Enterprising people, who know they could make money with this alternative income if they make it a serious and honest work. Just sign up for an MLM company that uses for its growth does not make anyone grow.
Working to promote the products and the opportunity offered by the company, yes. It takes hard work and dedication, but much less work than, for example, build their own business. And with the main advantage of being able to start without the initial investment.
Taking into account the high cost needed to start any tiny company, we can not consider € 500 a “great investment”. And in most cases, it took far less than that to get into MLM. One should take into account the costs of starting the business value of the kit to enter the system, usually less than 300 € and some essentials like phone and pamphlets for distribution, for example.
No major investment is needed to begin. You can grow as much as getting started modestly “over.” The most important is consistency of actions.
We have the entrepreneurial spirit and the spirit of the teacher. We must teach people to do the same as us. We must lead by example. We need to catch by hand and teach the first steps, show what kind of advertising works and what does not work. But at the same time show that we do not own the truth, one thing that did not work with us can work with another person.
Who should avoid MLM?
Disbelievers in MLM. Who does not like the company’s products. Anyone thinking about earning money easily without having to work.
What are the advantages of MLM?
Possibility of unlimited gains. Without much chance of getting
initial investment. Ability to work only in their spare time, without an office.
What are the disadvantages of MLM?
High level of rejection by those who do not know. Not only by them, but mainly by those who “think they know.” This rejection is created by millions of people who promise unlimited earnings without any work, people who use the MLM companies such as particular forms of pyramids, just wanting to win more and more people registering, without worrying about the quality of products or for training who sponsor them.
People who require the new members to make purchases astronomical to allow the entry of these in their groups “success.” All this puts people off a serious of large chance of success, by simple ignorance of the whole.
The confusion that many people do when they are brought to a Multilevel Marketing opportunity with financial pyramid schemes or chain is clarified to read this article written by Prof.. Liliana Alves Costa (Master of Business Administration, a university lecturer and consultant firms).
“With the rapid development of the broad trends, we realize that not all information is within our reach, in order to monitor in a satisfactory manner, such a trend, because due to its large extent, some strive to focus on a particular subject or cover a superficial knowledge on relevant issues in today’s world.
Since the Network Marketing, also called Multilevel Marketing, a new trend in the marketing area, little has been disclosed or made with respect to further study on it, so as to make it a subject of current disclosure between business , academic and social.
Actually, this has become a relevant topic of interest and also the media, the fact that current data show its growth and a better understanding of the way it operates, with satisfactory results.
Perhaps by not understanding the distinction between Pyramid Schemes and Network Marketing, many people refer to both as the same thing. Occasionally, it is generating the system of Network Marketing as its image problems due to the perception that the public is replaced by the company regarding this as unscrupulous and unethical.
Because Network Marketing is a form of direct selling, also known as MLM or Multilevel direct selling, is to prove that this method is highly efficient and successful to compensate dealers direct placement and distribution of products and services directly to consumers.
The WFDSA – World Federation of Direct Selling Associations and Direct Selling Associations have demonstrated, with global codes of conduct, the appointment of its members with fair and ethical practices in the marketplace.
The WFDSA, founded in 1978, is a voluntary non-governmental organization which represents the global direct selling industry as a national federation of associations of direct sales (Direct Selling Association). There are currently over 50 participating DASs national federation, and in 1997 global sales of its retail members were estimated at over 80 billion dollars, with the work of more than 25 million independent dealers.
The WFDSA recognizes the need for ethical conduct in approving the market in 1994, the Global Code of Conduct for Direct Selling which all national associations must include in their national codes, which brings:
– Satisfaction and consumer protection
– Protection of direct resellers
– Promotion of fair competition along the lines of the company
– Ethical representation of earning opportunities in the industry
The code is a measure to autoregulamentação direct selling industry. There are no laws, but enforcement of the code requires a level of ethical behavior that go beyond national legal requirements.
It then clarify the exact Difference Between The Pyramid and the system of Network Marketing
In a basic concept, the system is a Pyramid scheme, recruiting people, generating revenues only from recruiting new members and collecting the charges, without any actual product or service is being moved. Therefore, the reward is only with the addition of new participants and those with investments, not for resale or distribution of products or services with a legitimate business function. No commercial support, the number of available recruits is finite, and arithmetically, later recruits have less chance of getting rich than the promoters of the scheme.
Therefore, this scheme is short-lived, and finally join that virtually have no chance to recover their fees or to benefit from the scheme. In the absence of an actual product, such schemes attempt to coerce people, ensuring they are legitimate companies that operate a Network Marketing plan with product disguise.
However, the sale of products used by this system have no market value because they are false certificates, training programs, magazine subscriptions, discount cards and illusions, and other treatments ineffective. People buy these products without recruited prospects for resale or the possibility of returning the amount paid by eles. EX: Bubble Game
The Evolution of Network Marketing, Marketing in a general context, is the junction of Relationship Marketing, which focuses on the quality of customer relations, and direct marketing, which happens to be the direct relationship between vendor and customer.
Therefore, the Network Marketing allows the direct relationship of the distributor (seller) with the client to maintain a quality of relationship between them, because this system only devotes itself to the permanence of a direct relationship in the long term.
Network Marketing is a distribution system or a form of marketing that moving legitimate goods and services with high market value, from the manufacturer to the consumer through a network of contractors
independent. It’s a way to organize and pay for resellers
involved in direct sales. It has a compensation plan for direct sales in which resellers can receive earnings in two ways.
First, dealers may receive compensation for their personal resale of products and services to consumers. Second, dealers may be paid for their purchases or resales of people he recruited and sponsored the plan, and may be paid from the resale of the group or network that recruited and sponsored by people recruited by him previously.
Therefore, it is an opportunity for dealers set up their own business by reselling goods and services and developing and training an organization or a network of resellers they sponsor to do the same.
Thus, a Multilevel distribution company means any person, firm, corporation or other business entity that sells or distributes goods or services through independent agents, contractors or distributors, and such participants may recruit other participants. Commissions, bonuses, refunds, discounts, dividends and other considerations of the program are or should be paid as a result of the sale of such service, product, recruitment, performance shares or additional participants.
One of the key issues for the Network Marketing companies have been entering the consumer focus in the whole process of product development. Each product is designed and manufactured as the company was responding to a request from the consumer. For this reason, the process begins with a detailed assessment to ensure that the product will meet the needs and consumer expectations.
This evaluation will continue at each stage of product development, through market research, analysis and prototype development and testing with consumers, the end product. Such companies have a team of highly qualified and trained to meet the needs of distributors, to help them with all the necessary guidance for the business to develop more and more.
They support their dealers with an active training program. In addition, the new distributors are motivated the most experienced, plus advice and all necessary assistance for the beginning of its activities.
Little by little, as they learn more about the products, the sales plan and marketing company, they can develop their independent businesses on a sound basis and to achieve the desired success. ” Finally you can have a good income with MLM, this might delay, but this is direct result of his work in developing an organization and not just selling the product. But the biggest benefit that network marketing can provide a serious business entrepreneur are passive income, those who are not only about their own efforts. This, only a true Multilevel Marketing company allows many people to achieve and maintain for life.