What Does Information Giant WIKIPEDIA Say About MLM (Multi-Level-Marketing) and Network Marketing? Xocai Healthy Chocolate and MXI Corp are Leading the Legitimacy Revolution With Adam Paul Green as a Key MLM Leader and Top Earner
“Multi-level marketing (MLM) is a marketing strategy in which the sales force is compensated not only for sales they personally generate, but also for the sales of others they recruit,” thus creating an organization of distributors and a hierarchy of multiple levels of compensation. Other terms for MLM include network marketing and referral marketing.”
“Most commonly, the salespeople sell products directly to consumers by means of relationship referrals and word of mouth marketing. Some people equate MLM with direct selling, although MLM is only one type of direct selling. MLM companies have been a frequent subject of criticism as well as the target of lawsuits. Criticism has mainly been focused on their similarity to illegal pyramid schemes, price-fixing of products, high initial start-up costs, emphasis on recruitment of lower-tiered salespeople over actual sales, encouraging salespeople to purchase and use the company’s products.” Xocai (Mxi Corp) is not a pyramid scheme. However, not all MLM companies operate the same way, and MLM groups have persistently denied that their sales techniques are anything but legitimate business practices. In contrast to MLM is single-level marketing. In single-level marketing, the salesperson is rewarded for selling the product, but not for recruiting or sponsoring other salespeople.
~Direct selling, Network Marketing, and Multi-level Marketing…
“Network Marketing and Multi-level Marketing are generally considered to be synonyms, and a subset of direct selling. While “direct selling” and “network marketing” refer primarily to the distribution system, the term “multi-level marketing” emphasizes the compensation plan more. Network Marketing tends to be modern preferred term, however many other terms are also used, including word-of-mouth marketing, interactive distribution, relationship marketing and others. Critics have argued that the use of different terms and “buzzwords” is an effort to distinguish multi-level marketing from illegal Ponzi schemes, chain letters, and consumer fraud scams.” Xocai (Mxi Corp) is not a pyramid scheme.
“The Direct Selling Association (DSA), a US industry body, reported that, in 1990, 25% of members used MLM, growing to 77.3 percent in 1999. Companies such as Avon, Electrolux, Tupperware, and Kirby all originally used single level marketing to sell their goods and later introduced multi-level compensation plans. By 2009, 94.2% of members were using MLM, accounting for 99.6% of sellers, and 97.1% of sales. The DSA has approximately 200 member (companies) while it is estimated there are over 1,000 firms using multi-level marketing in the US alone.”
“It’s generally accepted that the first multi-level marketing plan was introduced in 1945 by the California Vitamin Company (shortly afterwards to become Nutrilite). The plan allowed Nutrilite distributors with at least 25 regular customers to recruit new customers and draw a 3% commission from their sales. Unlike traditional direct selling, this was an ongoing payment whenever the customer re-ordered, allowing direct sellers to build a sales organization that could generate a residual-like income.”
“Independent, unsalaried salespeople of multi-level marketing, referred to as distributors (or associates, independent business owners, dealers, franchise owners, sales consultants, consultants, independent agents, etc.), represent the company that produces the products or provides the services they sell. They are awarded a commission based upon the volume of product sold through their own sales efforts as well as that of their organization. Independent distributors develop their organizations by either building an active customer base, who buy direct from the company, or by recruiting of independent distributors who also build a customer base, thereby expanding the overall organization. Additionally, distributors can also earn a profit by retailing products they purchased from the company at wholesale price.
~Legality and Legitimacy…
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 business franchising.” However, many pyramid schemes ALSO try to present themselves as legitimate MLM businesses. The FTC states: “Steer clear of … illegal pyramid schemes.” Xocai (Mxi Corp) is not a pyramid scheme. Pyramids are NOT MLM companies all the time – they are bad pretenders! Why is pyramiding dangerous? Because pyramid plans … inevitably collapse. How can you avoid a pyramid? Look for companies that have been in business at least 5 years – that’s your best measuring stick.
In a 2004 Staff Advisory Letter to the Direct Selling Association, the United States Federal Trade Commission (FTC) stated: “Not all multilevel marketing plans are legitimate.” In fact, some are pyramid schemes. Xocai (Mxi Corp) is not a pyramid scheme. It’s best not to get involved in plans where the money you make is based primarily on the number of distributors you recruit, rather than on your sales to people outside the plan who intend to use the products. The FTC also warned, “… that research is your best tool,” giving eight (8) steps to follow:
1) Find — and study — the company’s track record
2) Learn about the product
3) Ask questions
4) Understand any restrictions
5) Talk to other distributors
6) Consider using a friend or adviser as a neutral sounding board
7) Take your time
8) Think about whether this plan suits your talents and goals
~However, there are certain people who hold that all MLMs are essentially pyramid schemes even if they are legal.
The United States’ Federal Trade Commission (FTC) issued a decision, In re Amway Corp., in 1979 in which it indicated that multi-level marketing was not illegal in the United States. However, Amway was found guilty of price fixing one time (by effectively requiring “independent” distributors to sell at the same fixed price) and making exaggerated income claims. This incident was decades ago and the laws in the USA have since been changed (updated) to better monitor, control and police the MLM Industry. The FTC advises that multi-level marketing organizations with greater incentives for recruitment than product sales are to be viewed skeptically. Xocai’s comp plan complies with these requirements 100%. Xocai (Mxi Corp) is not a pyramid scheme. In April 2006, it proposed a Business Opportunity Rule intended to require all sellers of business opportunities—including MLMs—to provide enough information to enable prospective buyers to make an informed decision about their probability of earning money.
In March 2008, the FTC removed Network Marketing (MLM) companies from the proposed Business Opportunity Rule.
~MXI Corp currently operates in 25+ countries and has over 200,000 distributors.
~Archived press releases can be found at www.AdamPaulGreen.com
~Join Xocai Today!
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