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Multi level marketing (MLM)

Chapter 2

Literature Review

This chapter of the dissertation presents the important concept of Multi Level Marketing (MLM). They include a synopsis and definitions of Multi Level Marketing.

2. 1 A synopsis of Multi Level Marketing

Firstly, Multi Level Marketing was a legitimate business, which provided a way for small companies to get their unique products to consumers in small towns and rural areas, which these areas are difficult or impossible to gain access to to these products. During the first time, the products sold themselves, and the multi level aspect was a means of giving a small reward to the people who had worked hard to make the business. However, the focus was always on the merchandise.

Nowadays, MLM opportunity appears to be famous in this business world. This sort of marketing strategy is actually any business where payouts occur at two or more levels. For instance, when someone make a sale, both that person and the individual who recruited first person will get the part of the proceeds. The distributor network is needed to build the business. Moreover, the distributor must buy the product for his or her personal use. However, this kind of marketing appears to be beyond your mainstream of business as usual. It can be said that kind of business sells hope, and promises wealth and independence to all.

If you choose to become a distributor with the MULTI LEVEL MARKETING Company, you'll make money both through the sales of the MLM's products and through recruiting other distributors, by obtaining a portion of the income these distributors generate.

The distributors that you sign up with your Multilevel Marketing plan are called your downline. The distributor that at first recruited you is named your upline. Often he or she will provide you with some help getting started, including training.

Some companies require that an individual pay a sign-up charge and/or make a short purchase of the very least dollar value to become distributor, while others may necessitate only that an individual sign an agreement form.

Typically the person who earns a fresh distributor is named that person's sponsor; the new distributor among others brought in by that sponsor are all in the sponsor's downline. Depending on the compensation model a firm chooses, distributors may have multiple people in their first level, and many levels in their whole downline or organization.

One of the benefits associated with working in an Multilevel marketing business is passive or residual income. Once a distributor has a substantial downline, she earns commissions even while taking vacation rather than actively working the business.

Compensation for distributors of a given company is by means of commissions based on the total level of sales, which is a mixture of sales to customers who buy direct from the company and sales to a person's downline distributors. Some distributors also earn income by purchasing products wholesale and Companies that use MLM range from decades-old companies to startups and from small companies with around a thousand distributors to large ones with hundreds of thousands. Some MLM companies are Amazon Herb Company, Avon, Pre-Paid Legal, Shaklee and Quixtar.

2. 2 Definitions of Multi Level Marketing

Multi Level Marketing is a term that describes a marketing structure utilized by companies, as part of their overall marketing strategy. Moreover, it is something for selling products or services by having a network of distributor. MLM is selling products by using independent distributors to generate and manage their own sales force by recruiting, motivating, supplying, and training others to market products. The distributors' compensation includes their own sales and a percentage of the sales group. The fundamental type of Multi Level Marketing program works through recruitment. For instance, you are invited to become distributor, sometimes through another distributor of the Multilevel Marketing Company's products and sometimes by way of a generally advertised meeting.

Multi Level Marketing is not simply an individual marketing structure. However, most Multi Level Marketing's have common characteristics. The simplest way to identify an MLM is to look at if a distributor may recruit unlimited people into a downline structure. Unlimited people means unlimited competition. Unlimited competition means unlimited failure.

The classic Multi- Level Marketing scheme may firstly be defined by its reliance on a geometric progression recruiting model for the development of every distributor's sales network. (A geometric progression is a variable mathematical concept. In MLM, its application is limited only by the mathematical capability and the imagination of the MLM scheme's creators. Geometric progressions are also the basis for against the law Chain Letters and pyramid schemes).

Secondly, MLM marketing schemes will reward the distributor and his upline members financially for the distributor's successful introduction of new distributors into his own group. (The matrix of recruited distributors formed under an MLM distributor from his recruiting is named that distributor's downline. Those in direct linear connection above a given distributor are called that distributor's upline).

Thirdly, distributors are most often required to get and personally use at the least their MLM's consumable products on a monthly basis to be able to qualify for recruiting commissions and over- rides. (This requirement ensures an upline income out of every new distributor). The reward or remuneration scheme for recruiting new distributors is integrated with the geometric growth recruiting model to create an individual marketing scheme's major distributor income characteristics.

2. 3 The different parts of Multi Level Marketing

The company that use Multi Level Marketing strategy will brings something or service to industry that is retailable and being retailed. In addition, the merchandise or service reaches the finish user through direct selling representatives, rather than through traditional retail establishment. Moreover, the company' s compensation plan was created to reward representatives for the sales of the product or service they make. It includes a feature that additionally rewards a representative who introduces yet another representative to the business, based on the sales volume of the next representative.

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