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THE MARKET
LASTS (TSLTL)
Network marketing originated from direct selling. It came to be recognized in the 1930s
and early 1940s. After this period, there came a time when emerging companies hit the
market though the early companies included Wachters Organic Sea Products, Fuller
DEFINITIONS
2) They both transmit information and demonstrate ideas about product services
1) Direct selling focuses on closing the sale and getting the order while network
marketing focuses on information sharing and creating a rapport with the buyer
over time.
2) The network marketer is an independent contractor while the direct seller is not.
network marketing, every time a consumer you introduced makes a purchase, you
get a commission.
5) The network marketing has different compensation formulas called the Market
Plan. It is advisable to study an organizations market plan before you settle in it.
NETWORK MARKETING HISTORY
Network marketing took roots in early 80’s as companies began managing the stocking
companies operated legitmately in the United State in all 50 states and in more than 100
other countries. Its also believed that MLM companies had taken roots in 1975 when the
United State Federation Trade Commission (FTC) accused Amway corporation of being
illegal pyramid. However in 1979, a US Federation Judge determined that the networking
Countries like Canada have network marketing regulations and companies contravening
the regulations, its directors are imprisoned up to 5 years. In Kenya there are no similar
Generally, the initial concern for people when introduced to a network marketing
opportunity is when they see the compensation plan which resembles a pyramid in shape.
Instantly they fear the worst as they draw a resemblance to illegal pyramid schemes. The
truth is that this pyramid structure is the same as every other sustainable business model
across the world. This is best highlighted in the diagram below (figure 1.)
Pyramid Scheme
a non-sustainable business model that involves the exchange of money primarily for
enrolling other people into the scheme without a legitimate product or service being
delivered. Eventually the number of new recruits fails to sustain the payment structure
and the scheme collapses with most people losing the money they paid in.
In a more practical sense, probably the easiest way to identify pyramid schemes is
• there is no legitimate product or service involved (ie you do not get a legitimate
• You do not get a financial return unless you have successfully introduced a
participants payment primarily for enrolling other people into the scheme, rather than
A successful pyramid scheme combines a fake yet seemingly credible business with a
for profit. The essential idea is that a "con artist" Mr. X, makes only one payment. To
start earning, Mr. X has to recruit others like him who will also make one payment each.
Mr. X gets paid out of receipts from those new recruits. They then go on to recruit others.
As each new recruit makes a payment, Mr. X gets a cut. He is thus promised exponential
credibility, most such scams are well equipped with fake referrals, testimonials, and
information. Only the originator (sometimes called the "pharaoh") and a very few at the
top levels of the pyramid make significant amounts of money. Individuals at the bottom
of the pyramid (those who subscribed to the plan, but were not able to recruit any
Ponzi scheme
investors from their own money or money paid by subsequent investors, rather than from
any actual profit earned. The Ponzi scheme usually entices new investors by offering
returns other investments cannot guarantee, in the form of short-term returns that are
either abnormally high or unusually consistent. The perpetuation of the returns that a
Ponzi scheme advertises and pays requires an ever-increasing flow of money from
The system is destined to collapse because the earnings, if any, are less than the payments
securities. As more investors become involved, the likelihood of the scheme coming to
the attention of authorities increases. While the system eventually will collapse under its
own weight, a Ponzi scheme deludes both individual and institutional investors as well
The scheme is named for Charles Ponzi,[1] who became notorious for using the technique
in early 1920. He had emigrated from Italy to the United States in 1903. His operation
took in so much money that it was the first to become known throughout the United
States. His original scheme was in theory based on arbitraging international reply
coupons for postage stamps, but soon diverted investors' money to support payments to
Knowingly entering a Ponzi scheme, even at the last round of the scheme, can be rational
Network Marketing
The concept behind MLM, also known as Network Marketing is a distribution model that
allows a company to sell their products directly to the consumer. Choosing to use a word
media). Therefore instead of paying the media for advertising, network marketing
companies are structured to reward distributors through commission in return for selling
The way it basically works is this: a company sells products or services via a network of
independent distributors who buy at wholesale prices from them, and then sell at retail
prices. The distributor usually pays some sort of joining fee or has to buy X products to
The company also urges distributors to bring in other people to act in the same capacity.
The referring distributor then also earns commissions on the products that the referred
distributor sells. If the distributor they referred also brings in other distributors, the
original distributor also receives commissions on those sales - and so on. This is the
"Multi Level" component. I've seen some matrixes go to 15 levels (or tiers) deep.
Although distributors can choose to sell the company’s products to earn their
commissions, not everybody wants to be a sales person and therefore choose to recruit
more distributors into their organisation as a means to build their referral base. Not only
does this create a group of loyal customers, it also allows you to leverage the efforts of
Most products and services sold via MLM or network marketing aren't available in bricks
and mortar stores, the whole model is built around independent distributors working via
their network of family, friends and acquaintances. A whole social and business culture is
built around the program with conferences, conventions and training products available -
at a price.
- The products, while of good quality could be obtained elsewhere under different brands
- The market is saturated with distributors, so only those who go in early really stand to
sell" tapes and attending expensive conferences than he was in the actual products.
- The people who go for the conferences get very hyped up; it was almost a religious
fervor. Even with that level of motivation, it might seem to be way to get rich quickly but
it requires dedication.
purchase and use the company's products; potential exploitation of personal relationships
which are used as new sales and recruiting targets; complex and sometimes exaggerated
compensation schemes; and cult-like techniques which some groups use to enhance their
members' enthusiasm and devotion. Not all MLM companies operate the same way, and
MLM groups have persistently denied that their techniques are anything but legitimate
business practices.
"Not all multilevel marketing plans are legitimate. Some are pyramid schemes. It's best
not to get involved in plans where the money you make is based primarily on the number
of distributors you recruit and your sales to them, rather than on your sales to people
outside the plan who intend to use the products."[28] and states that research is your best
• 3) Ask questions
check
• 8) Think about whether this plan suits your talents and goals[28]
MLM businesses operate in the United States in all 50 states and in more than 100 other
countries, and new businesses may use terms like "affiliate marketing" or "home-based
Because pyramiding (getting commissions from recruiting new members including "sign-
up fees") is illegal in most states,[ to remain legitimate in the U.S. a company that uses
multi-level marketing has to make sure commissions are earned only on sales of the
company's products or services if they cross state boundaries. If participants are paid
primarily from money received from new recruits, or if they are required to buy more
product than they are likely to sell, then the company may be a pyramid scheme, which is
The Federal Trade Commission of the United States of America cannot tell you whether a
particular multilevel marketing plan is legal. Nor can it give you advice about whether to
join such a plan. You must make that decision yourself. However, the FTC suggests that
Founded and managed since 1985 by highly experienced and successful Networkers,
the protection, support and promotion of the individual opportunites and entrepreneurial
aspects of the Network Marketing - MultiLevel Marketing - Direct Sales industry. From
MLMIA insures that its Members are represented by skilled, well connected
section of Corporate, Support and Distributor members from around the world whose
collaboration guarantees all functions of the Network Marketing mix are represented and
Malaysia, Hong Kong, Japan, Singapore, Spain, and Australia may have their own boards
MLMIA has been and continues to be a major force in defining the Network Marketing
industry its ethics, legalities and opportunities. Over the years, MLMIA has developed,
and outside influences that affect its operations, including regulatory agencies, educators,
the press and the general public. MLMIA is recognized as the leading source of unbiased
worldwide basis. although the association recognizes all ethical companies and people in
the industry, it strongly supports its members. however, neither the staff nor the board will
One of our goals is to provide a diversity of membership benefits and services. Updated
information is available throughout this Web site or by getting in touch with us through
the Contact Us button above or, if all else fails, try the old fashioned way and call us
during our business hours. We're here to serve our members! For non-members, there is a
slight fee for all services not supplied by this site or by email.
The easiest and most convenient source to locating legal industry multi level
marketing is the Internet. Using a major search engine or information website, a person
can look closely at the company's website to discern their intent, or call for more
information
Asking around to see if people know someone who is a MLM distributor can be a helpful
place to start searching as well. They may be able to recommend a good company.
That is, they're not readily available elsewhere (especially at a discount) and they're not
just another "me too" product that has loads of competition. Try out the products or
people should watch out for miracle products that promise instant results when it comes
Once the person is confident that the product or service is what the company claims, they
Take the time to understand the federal regulations and consumer rights as well
If something sounds too good to be true, it most likely is. Avoid companies that pay for
recruiting distributors. These companies are usually pyramid schemes and collapse when
People should stay away from those that require salespeople to purchase a large amount
Part of the job with legal industry multi level marketing companies will involve working
with others one-on-one, as well as having to push a product or service in various settings.
Therefore, marketers need to keep in mind that there will be some pressure both from the
company to meet the minimum sales requirements and make commission. Take time
reading over the proposed contract. Never sign on the dotted line under pressure. Insist on
more time to make the decision about becoming involved as a distributor for a legal
network marketing opportunity. If you can, talk to other MLM distributors and ask them
Take it all the way to the top. What do you know about the person who introduced
you to the opportunity? Can you trust what they tell you? Are they willing to divulge
exactly how much they've been making? And what about the founders of the company
(assuming it's a newer company)? Have they been successful and reputable in their
previous businesses? Investigate your entire upline just like you would a business partner
opportunity", or was the primary pitch about the business opportunity? The ethical way to
build a downline is to sign people up as customers first, and then if they like the product,
they'll be drawn to become a rep. A hard-sell on signing up as a rep right at the outset
If you want the efforts you put in today to pay off for many years in the future,
choose a company that has proven that it will be around for the long term. 90% of all
network marketing companies FAIL within their first 2 years. You don't want to invest
your precious time and resources (not to mention your future) in something that may not
In other words, does it have the cash that it will need to grow, to maintain a solid
course, to pay your commissions! (I prefer publicly traded companies because they're
required to disclose their financial condition in DETAIL every 90 days to the SEC and
other governmental agencies. You may not be able to obtain this information on a private
You've probably heard horror stories about people ending up with a garage full of
expensive water filters - the reason that happens is because only other distributors will
purchase the product at that price! Your product or service must fill a REAL need at a
fair price - and there should be a large untapped market for it. In other words, it MUST
You can't build long term residual income (i.e., your retirement!) if the product or
service only has short term appeal (e.g., beany babies, etc.). Think long term instead. Is
the product or service something that your customers will continue to use for a long time?
Not everyone is a sales type, but ANYBODY can plug into a system and tools
Is there a way to build your business part-time without losing your full time
income?
The company must have automated systems that can do the heavy lifting (i.e.,
selling and sorting) for you so that you can use your limited time efficiently.
Although this may not be an element of your current JOB, we think it's important!
You should have a lot of fun with your business partners while you work together to
build a long term business and your financial army. This is perhaps the most important
question of all. If you're doing it because you think it's going to help you out of a cash
crunch, forget it. If you're doing it because you think you're going to be rich in a year,
well, it's fine to have a vision, but don't bank on it. On the other hand, if you really
believe in the product, that gives you the best likelihood of success with it.
As soon as you have made your choice, concentrate on your method of lead generating.
Have fewer quality downlines instead of trying to sell to everyone your MLM company.
Avoid placing all your recruits in your first level. It is better to have only 3-5 quality first
"Internet marketers and network marketers share a common, terminal disease," Fogg
says. "If you think of the whole process like dating, we bring someone to our Web site,
and then we ask them to have sex immediately. There has to be some courtship first."
One of the delicate aspects of network marketing is that people leverage their personal
relationships to sell a product. Although that leverage makes some people queasy, the
success of the network marketing model shows that many people do comfortably build
multiplex relationships: Their friends are their customers, and vice versa. With delicacy,
One mistake some network marketers make, as do many other sales people and
known as the "Three-Foot Rule", i.e., anyone within three feet of you is a prospect. But
top network marketers don't do this. Max Steingart, creator of the "Success Online"
training course for network marketers, says that it's not just about figuring out when to
make your pitch, but even if to make your pitch. "You just build relationships with a lot
of people. Some will become prospects and some won't," he says. "There's no timetable.
The network marketing industry is a particularly good industry for leveraging online
networks. Steingart teaches people how to "make the world your warm market,"
to start a conversation about potentially joining his distribution network, 50% of the
people he contacts will respond to the conversation. More and more sales and marketing
particular, if we were to single out one of the driving forces behind many of the economic
trends over the past 60 years it would have to be that of the baby boomers. Since the time
they were born they contributed to the rapid increase in sales of baby food and nappies
back in the 50s, schools and education in 60s, car sales in the 70s, the real estate boom in
the 80s and the fast food chains and mega supermarkets in the 90s. Leading economic
forecasters have used these trends to predict where the baby boomers will spend their
money next and in particular were able to forecast the current emerging business trends in
changing business environment. For example, the telephone has been a primary source of
communication for over a century, but utilising our telephones to trade stocks, to send
and receive photos and to surf the internet, is a new business trend that is a result of
synergistic technologies. Although the elements of these trends have been around for
years, the trends themselves emerge when the timing is right and when several factors
come together. The health and wellness industry for example, has been with us for
centuries, but it took the convergence of the aging baby boomers, with advancements in
the customer’s needs) and choice. As the products that we consume become more
sophisticated and complex, consumers are demanding a quality relationship with the
provider of these goods and services. They want the products to deliver what the
advertising promises. Educated consumers are now choosing to go direct, building a
relationship directly with the parent company, which is fundamentally a different concept
Going direct through referrals is a concept that has been around for years, but the
opportunity for financial advances through access to global networks is enormous and
immediate and one that business-minded people should not miss out on.
A number of young entrepreneurs have already spotted this trend. Michael Dell,
founder and chairmen of 'Dell' computers is destined to become the new Bill Gates in the
next decade, and is the richest person in the world under the age of forty today. One of
the most admirable CEOs in America, Michael Dell, has a philosophy that is brilliant,
uncomplicated and right online with this emerging economic business trend. He creates a
relationship directly with the customer and sells high performance products. Using this
direct, relationship model, 'Dell' sells approximately $25 million per day, directly to the
consumer, by-passing the middleman, saving the consumer money and creating better
customer loyalty.
manufactures and consumers is the essence of the principles of network marketing. More
relationships to introduce new customers to a parent company so that they can buy direct
from the manufacturer. Although this network marketing business environment is not yet
so obvious and many will miss its significance, those people that adopt this system early
Not everyone will see the rise of network marketing as a main stream method of
doing business, just like 50 years ago people dismissed the business concept of
franchising. Not too long ago people use to laugh at franchises, just as some people shy
away from network marketing. Congress almost outlawed franchises with a bill nearly
making them illegal, falling short of passing by only 11 votes. Today this vehicle is
responsible for over a third of retail sales in America. Of course franchising was not for
everyone, but those people who were open and willing to consider new ideas and who
had the courage to take action in a changing business environment profited handsomely.
Today people are willing to risk hundreds of thousands, even millions of dollars
to open franchises, hoping to capitalise on a business trend that if they acted on decades
ago would have rewarded them enormously. Network marketing in the new millennium
has entered the main stream and may become more prolific and popular than that of
franchises. Unlike franchising however you are only risking your time and effort and not
your fortune or a mountain of debt. With network marketing you don’t need inventories
and you do not need to create and manufacture the goods and services yourself, you are
dominant market trend and one that cannot be stopped. The real question people should
millionaires today than the dot com boom industry did before the bubble burst. As with
any opportunity timing is half of the success and execution is the other half. You have no
control over the former as the business trend will emerge without you. The jet is leaving
the ramp, you can either be on it or miss out. The second half to capitalising on this trend
is in the execution, by doing your homework and finding the right company, all you need
then is commitment and the desire to learn from those who came before you.
to the internet era. Clearly the marketing discipline needs an injection of communication
effectiveness and distribution efficiency. Network marketing can accelerate the speed of
product entry, rapid market trial and consumer acceptance. The channel can also provide
more direct and lower cost distribution between the manufacturer and consumer.
This has seen both rigid and traditional corporates in America and the world over
adapting this means as a medium in marketing. Examples include Watkins, Fuller Bush
Moving parallel with the growth in network marketing infrastructure, there has
been strategic mergers, acquisitions, joint ventures and formation of alliances reported
across leading companies. The increasing number of merging networking companies and
thus bringing a more business like demeanor to their organizations. Companies are
smaller firms are upgrading their management tools within their financial resources
GLOBAL EXPANSION
Network marketing companies and participants alike will look overseas for their
greatest sales and recruiting opportunities, building exciting and lucrative multinational
businesses from their headquarters. Opportunities for foreign travel, exposure to different
cultures and sophisticated international commercial transactions will further enrich the
opportunities.
based industries that reach the international level. The internet has made businesses grow
because payments are made with a click of the button. The internet is making the
execution of the business more efficient and user friendly and thus more desirerable for
new professionals. Orders and downline applications are done electronically thus making
part of the economic mainstream, as evidence by its growing recognition in the media
and professional arena. Some schools have gone a notch higher by offering the course as
a diploma, certificate or even full time career path in their academia. The subjects taught
are engineered to fit with current trends in the network marketing field.
The network market has three highly organized and well funded trade associations
companies are entering the financial market in pursuit of capital and market share. This
not only pulls the industry from the shadow but gears some to even enlist in the stock
market.
The company going public must complete an arduous planning process though.
SERVICES.
firms are starting to play a major role in improving and increasing the line of products
available to consumers.
RECOMMENDATIONS
We would like an intensive study to be done in this field because we have new
trends that emerge in the market every day. It is a vast topic with a lot of information
though what makes it problematic is that many companies do not make themselves public
and this may raise questions from potential investors who require to be furnished with all
the information they may need for them to get involved in the business. Therefore we
recommend more studies to be done in this business that is not known to many.
CONCLUSION
creation of a new business and professional model that will change the culture of
commerce and work in companies that are both in and out of the industry. Network
marketing is having a profound impact on the entire business world. Face to face
marketing is ideally the best method of marketing products which is done in network
marketing.
REFERENCE LIST
Http://www.moniqueschlossser.com
Http://www.ask.com
Http://www.ruwealthy.com
http://en.wikipedia.org/wiki/Multi-level_marketing