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 Multilevel Marketing

What is the definition of a multilevel marketing campaign?

A multilevel marketing campaign is an organization that recruits sellers to sell its goods or services. The organization provides these products and/or services at a wholesale or retail value and then profits from the difference in price by enlisting more sellers (known as distributors) to expand as well as from the sales made by each seller. This approach is also called pyramids, networks, matrixes, hierarchies, and other forms of referral-based business models.

A multilevel marketing campaign is also differentiated by the presence of a compensation plan by which the organization gives commissions to both its centralized seller and lower ranked seller. The compensation plan can be either bonus-based or non-bonus based. If a bonus-based is present, a seller receives commission from his own sales in addition to commissions from the sales of those he has enlisted below him. The degree of commission received from one's own sale as well as that received from all other sellers in one's downline, determines one's rank within the downline.

If a non-bonus based compensation plan is present, then the seller is paid out only from the sales he has personally made, and not by any commissions made by those below him. The degree of commission received by one's downline defines their rank as well as that of the level they are able to recruit.

What are the characteristics of a product or service associated with multilevel marketing campaigns?

A product or service associated with a multilevel marketing campaign is either consumable or non-consumable. If it is consumable, it can be defined as either material or non-material. A material consumable is any product that can be used up to complete consumption i.e. it can be consumed entirely; whereas a non-material consumable is considered to be any product that undergoes at least some degree of change in form but maintains its capacity to function as it did in the beginning.

Products such as food, beverages, health care products, and more are typically considered consumables. Non-material consumable are defined as products like fax paper and office supplies where the capacity of the product is maintained throughout its life span. Products that facilitate communications can also be considered consumables but only if they are functionally necessary to carry out a particular operation (e.g. telephone services).

If a non-consumable product or service associated with multilevel marketing campaigns is defined, then it can be either tangible or intangible. A tangible consumable is any material object that can be used up to its complete consumption; whereas an intangible consumable is any non-material object that has the capacity to function without being used at all.

What are the two types of commission plans?

There are two commissions plans in a multilevel marketing campaign—the bonus plan and the compensation plan.

A bonus plan gives commission based on the sales made by one's own downline, whereas a compensation plan gives commission from the sales made by those below one in their respective downlines.

What are the distinctive features of multilevel marketing campaign?

The distinctive features of a multilevel marketing campaign are as follows—unlimited marketability, flexible and responsive work environment, as well as an efficient business model to generate high profits.

What is the difference between multilevel marketing campaigns and network marketing?

"Multilevel Marketing" (MLM) is an approach to direct selling that employs independent distributors who receive compensation for selling products directly to consumers. It is sometimes referred to as pyramid selling, network marketing, and referral marketing. Network marketing consists of a direct sale from the producer to the customer. Independently developed Web sites are used to make announcements about special offers or sales that are presented frequently, and web content is used for further contacting the public. Personal selling is also employed.[7]

Multilevel marketing (MLM) is an approach to direct selling that employs independent distributors who receive compensation for selling products directly to consumers. This article discusses only multilevel marketing (MLM) in general terms and does not address specific legal issues such as whether a MLM enterprise can be classified as a pyramid scheme or other illegal form of direct sales.

Multilevel marketing is the fourth largest of the seven direct selling methods recognized by the International Organization of Standardization (ISO), which comprises three other direct selling methods: the direct sale, independent distributor/Vendor, and franchisee/Franchisee.

Multilevel marketing as a legitimate business practice involves no promises of wealth or income beyond what an individual can achieve himself by his own action. Given that this business model incorporates sound business practices that do not depend on a mechanism to guarantee purchases to an individual, it does not fall within the scope of this article.

In 2015, the Federal Trade Commission approved changes to improve disclosure for multilevel marketing companies .

While the FTC does not require MLMs to disclose their compensation structure, it does require MLM advertisers to disclose the average amount of the commissions paid. The Federal Trade Commission advises that three out of four MLM ads contain misleading earnings claims.

What is one business model of a multilevel marketing campaign?

A business model of a multilevel marketing campaign can be based on compensation as well as non-compensation-based plans. A non-compensation-based plan is one in which the sponsor receives no reward or compensation for those who do not make sales, which means they must have enough faith in their product or service to be able to sell it themselves.

The compensation model is when a sponsor receives compensation from his downline for every unit sold to a customer. Typically, the compensation plan is based on pure commission, where a seller will receive an amount of money equal to the sale price. This can be based on a percentage of revenue or an amount of time that the product or service is used. In some cases, there are bonus points offered or incentives provided in addition to a flat rate per sale that can be awarded to the seller.

Conclusion

If someone wants to work for multilevel marketing campaign, he has to be very careful about the financial aspect and business model of it. Any person looking for a career in the multilevel marketing, especially those who want to start their own multi-level marketing business should learn about the best multilevel marketing company which can help people make money from home.

I hope you will find this article useful. I would love to know your thoughts, comments and suggestions in the comments section below.