Introduction to Multi-Level Marketing
Do you have the entrepreneurial spirit? Can you afford not
to have your own business? Do you have a general understanding of what it takes to start a
part-time home business?
While there are many outstanding business opportunities for the individual, multi-level
marketing (MLM) or network marketing (NWM) opportunities offer the individual a means to
start his or her own business and ultimately achieve desired financial goals with little
initial investment or require substantial amounts of time to get started. MLM
opportunities are usually ideal for some one who wants a part time or home business that
has the potential to grow into a full time business. When offered a business opportunity
involving MLM, the individual must first decide if he or she wants to become involved in
running a business and selling a particular line of products or services. Many individuals
who become involved in and fail in a multi-level marketing business lose sight of the fact
that they are in an endeavor that is first and fore-most a business that should be run
like one.
While many have the desire to work for themselves, it also takes perseverance,
patience, skill and luck to be successful. Not all people, have the people skills to
successfully market products and services. Above all else, an entrepreneur is a marketer, a salesman.
What is Multi-Level Marketing?
MLM is only one of a number of methods used by companies to
advertise and deliver products or services to their targeted customer base. The type of
marketing channel used is generally determined by the type of product or service being
delivered to the marketplace as well as the market niche the company perceives itself to
be in. For example, a large automobile manufacturer advertises their cars on television in
order to provide information to all the potential auto buyers in the viewing audience. The
television advertisements are designed to develop brand recognition and convey information
regarding the particular brand of automobile to potential buyers. The commercials usually
do not inform the potential buyer where the automobile is available for sale. The
potential buyer would either search for sales outlets himself or see other commercials
from local automobile dealers advertising the benefits of buying from their dealerships.
Multi-level marketing is characterized by individuals
marketing selected products and services to small groups whose members in turn
individually market the products or services to other small groups of individuals. This
type of marketing focuses on the personal nature of one-on-one selling.
With the advent of massive computing power in today's business world and the
development of powerful, new database programs and data warehousing, companies are using
this technology to better define their customers for marketing purposes. Their marketing
efforts are developing towards the ability to identify individual consumers most likely to
purchase their products. It can be said that these companies are using state-of-the-art
technology to do what MLM has been doing for years, selling one-on-one.
Multi-level Marketing typically resembles a pyramid if
drawn on paper. The individual at the top refers to those individuals below as downline
members or simply "downline." The individuals above earn a small percentage of
income from the sales below which is referred to as residual income. The picture below
demonstrates the power of the MLM structure and the leverage gained by selling to small
groups.
The success of multi-level marketing has been duplicated by many companies or
individuals committing or attempting fraud on unsuspecting consumers. The Federal Trade
Commission has circulated a number of announcements warning consumers of illegal pyramid
schemes. More information may be found on the page addressing Profits
in Pyramid Schemes?
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