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Ron Kaiser
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Get the scoop on MLM – Distributor – Network Marketing. Is it legitimate or Pyramid in Disguise?

Published on 10/1/2011
For additional information  Click Here

What’s your reaction when you hear the word “Direct Selling”, “Multi Level Marketing” or “MLM”? A lot of people swear they’ll never try a MLM product. Some have encountered one or two MLM companies that disappointed them; or bad reps/distributors that have misled them. Consequently, they tell others that all MLM companies are bad, bad, bad news.. Why do MLMs give people such a bad impression? Multi Level Marketing is an unconventional marketing method. It offers new concepts for two business aspects: namely advertising and distribution network. Challenges with conventional marketing Conventional marketing uses mass advertising such as television, radio and huge billboards. Needless to say, this type of advertising is very expensive and costly to maintain. You often need to: Hire superstar/celebrity for product endorsement Hire professional advertising firm for advertisement design Advertise on mass media Who pays for all these advertising costs? You, the consumer of course! Also, the competition for advertising is becoming less effective and more expensive as the medias are cluttered with increasing ads. Low Advertising Costs Pure MLM company spend very little on advertising. With the money it is able to save on advertising, it pays its distributors. In other words, MLM company pay for “advertising” through distributor effort and sales are secured. Seems like solid business sense to me. Conversely, for a conventional brick and mortor company, advertising may not always work. Ultimately it’s money down the drain with no guarantee for sales conversion. Benefits for the distributor A good MLM offers opportunity for anyone to grow their business through a distributor network. This means you can leverage not only on your own, but also on other peoples’, effort to build your wealth. With MLM, some people have attained tremendous success with creative, effort, ingenuity, determinaion and perseverence. MLM offers equal success opportunity for anyone, disregarding their education background, races or ages. It rewards those who are hardworking and willing to learn. Some MLM companies even provide high quality educational seminars with minimal fee. In high quality MLMs, you’re not alone in your quest for success. Your upline team will do their best to help you grow and prosper. Their strong encouragement and guide are invaluable for your long term success. It’s very important for you to follow what works with your upline team and learn from their proven and often duplicatable methods. After all, their success often hinges on making sure you are successful. Benefits for the consumer Consumers can receive direct service, product, and usage guides from their distributor. Some distributors even send the products directly to their client. In health care, the consumer may receive encouragement and support in each stage of their health improvement. This often results in a lifelong friendship. The dark side of MLM While MLMs sounds like an ideal system, there are some inherent drawbacks to consider. First, let’s take a look at the problems some MLM companies face. At the core of any MLM company is the founder. Their vision for the company often affects its direction and growth. Some founders care more about their own pocket than the product they are providing. They create a system, get some products and recruit distributors to market it. They may be selling the products at excessively high prices or the products may be quite inferior in quality. Soonafter, usually within 3 years or so, when the false promises are never materialize, problems begin. Eventually, the company closes and disbands. The founder gets rich, leaving behind frustrated and disillusioned distributors and customers. Pyramid or MLM? Watch out for the pyramid company masquerading as a MLM company. What’s the difference? Pyramid companies are illegal and and typically rely on high joining fees for various levels without products or services or materials in hand. Does this scheme sound familiar? Become a member for $500. Recruit three new members and you’ll get $800. Well, your investment is back with $300 profit. Sounds simple doesn’t it? But now your three new members must go on to recruit other new members to profit. Theoretically, when everyone in this world became a member, no new membership is possible. The cycle must end eventually. And people at the top of that pyramid scheme profit the most. Their money is from people at the bottom of the pyramid who have received no benefit, no product, no direction, no training or development. Greedy people always get caught in this scheme. Today, many people are more educated to avoid this trap. However, a different breed of pyramid scheme is still lurking around. Pyramid masked as MLM Now the pyramid company has become clever by offering some products to sell! Those products are usually poor quality, low-value products selling at high prices. Members often don’t even use those products. They must keep recruiting new members in order to effect any profit. To spot this type of company, you need to watch out for 3 points: The product is too expensive with little to no value. You just don’t need it and you wouldn’tt buy it if not for the money-making opportunity. You must continue recruiting new member to profit since there is no repeat purchase from initial sale. There is no retail value in the product. The membership fee is quite high comparatively and is justified only with the opportunity to make money with no receipt of product or service. At some point, the company will eventually disappear like athief in the night with all your effort and money. Now let’s look at what challenges you may face working with a real and reputable MLM company. Distributor pestering Have you ever met a MLM distributor who never stopped talking about their products? I have and frankly, it makes me want to go into witness protection. This type of distributor turns and scares off many people and gives MLM a bad name. By and large, most distributors are really professional. They offer good service, product and advice for the consumer. Their words can be backed by action. If a distributor is not willing to put his/her money where their mouth is, BEWARE! Distributor vs Distributor Within a MLM network, distributors can argue with each other over issues like member recruitment. Two distributors may know a new prospect at the same time. Competition over who recruits that prospect can arise. Some conflict and misunderstandings among distributors can cause them to give up and leave the company. Price gouginis another issue of concern in MLM company. The company can terminate the membership of a distributor who violates the law. But it’s still impossible to have total control of the pricing issue. When in doubt, look at the value in the pricing. Is shipping included? is it warranteed? Is it bundled? What are the shipping terms/ Are there other hidden after the fact fees? How responsive is the customer service? Should you join a MLM? Good MLM companies offer good opportunity for you to: Enjoy quality products at lower price Build your business with proven and duplicatable system and product Learn important self improvement skills such as leadership and health care Network with other successful entrepeneurs who enjoy mentoring others If you intend to build your MLM business, it is better to start small at first. Keep your full time job and slowly build your network. Usually, you may not see any profit during the first few months, but your risk minimized in the event you change your mind. Don’t get sucked in by the hype. All businesses – brick and mortor or network marketing – take time to cultivate and grow. With continuous effort and grooming, your product and sales skill will improve. At this point your network will grow. When your profit is significant and stable, you can put even more time and efforts into your MLM business. Don’t put yo
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