Thought For The Day
Strength does not come from winning
Your struggles develop your strength.
When you go through hardship
and decide not to surrender,
that is strength-
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General information - Multi-Level Marketing
Legitimate Network Marketing versus Illegal Pyramid Selling
Legitimate network marketing consists of selling unique products for a commission. A percentage of the commission is available to the uplines as well for the sales done by the downlines. Network Marketing is a business that comprises of both selling of the products as well as recruiting sales people. The commission is made available to both the new comer as well as the upline. In MLM, people pay an entry fee for joining the network, as well as to put up the product for sale, and finally to recruit others to work in the same way.
In Pyramid scheme, the people at the lower level of the pyramid make a payment for the monetary gains of the people at the top. This payment enables them to join the pyramid system. For an individual to make a profit, a lot of new participants, each contributing a preliminary investment, is necessary. Pyramid schemes are deceptive and risky. Illegal pyramid plans tempt people to invest in apparently rewarding schemes with the guarantee of effortlessly earning fortunes. The schemes in general do not deliver on these assurances and finally cheat the contributor. MLM and pyramid schemes have multilevel disbursement systems, but there ends the similarity. Network marketing is a lawful mode of conducting the business. Pyramids are unlawful, deceitful con games. In MLM, you have the role of a legitimate supplier of a service, product, and business opportunity. In a pyramid scheme, you are little more than a charlatan
Featured below are the salient differences between network marketing and illegal pyramid scheme.
• The products offered in MLM are commercially viable while in pyramid scheme this is not the case.
• In MLM, though the products offered are costly, the products will be worth the price. But in pyramid scheme, the products offered will be very costly and the quality is not assured.
• Only a nominal investment is necessary to enter the network marketing business. But in pyramid scheme, the whole business is built upon the recruitment fee collected. Therefore, this fee remains high.
• In network marketing it is not necessary that a new comer must maintain stock of the product. But in pyramid scheme when a new person joins the business they must purchase a stock of the products.
• Income is generated from the commission made from sales in MLM business. Earnings are completely generated from recruiting new people in the lower level and not from sales in pyramid scheme.
• If the customer is not satisfied with the product, there is a buy-back policy in network marketing. But in pyramid scheme there is no policy of re-imbursement or withdrawal, in case the customer is dissatisfied.
• When you register people under you, you should be actively involved in managing and training them to sell the goods in MLM. In network marketing, training is important to make the business flourish from top to bottom, all through the network. On the contrary, training has no place in pyramid scheme.
• In network marketing the distributor is given great importance. In pyramid scheme distributors are given no importance.
• There is a long- term business opportunity in MLM business. Pyramid scheme does not aim at long-term business growth. At times, the entire set up may vanish within few months.
• Even the nominal entry fees are refundable if the new direct seller chooses to quit in MLM. But no such option is provided in pyramid scheme.
• There are strict rules to forbid the distributors from charging high fee to participate in MLM. In pyramid scheme, on the contrary, high fee is charged for joining the business.
• In network marketing a network of distributors is built up for selling the products. There is no need for building up a network of distributors in pyramid scheme as no importance is given to the selling of the products.
• Efforts of each individual involved in business are of great importance in MLM. But in pyramid scheme there is no importance for the efforts of an individual as the income in this business is completely generated from recruiting people at the lower level.
• In MLM a good rapport is maintained with Better Business Bureau (BBB) and consumer protection agencies. MLM is enrolled with local Chamber of Commerce. In network marketing detailed information is provided in the Website. Copies of marketing materials, business plans and quarterly and annual reports are made available on demand for no charge or for a nominal fee. Pyramid schemes on the other hand are not registered and information about it is not made available on the internet also. Lastly, MLM does not employ high-pressure sales tactics. But such tactics are common in pyramid scheme.
Legitimate network marketing consists of selling unique products for a commission. A percentage of the commission is available to the uplines as well for the sales done by the downlines. Network Marketing is a business that comprises of both selling of the products as well as recruiting sales people. The commission is made available to both the new comer as well as the upline. In MLM, people pay an entry fee for joining the network, as well as to put up the product for sale, and finally to recruit others to work in the same way.
In Pyramid scheme, the people at the lower level of the pyramid make a payment for the monetary gains of the people at the top. This payment enables them to join the pyramid system. For an individual to make a profit, a lot of new participants, each contributing a preliminary investment, is necessary. Pyramid schemes are deceptive and risky. Illegal pyramid plans tempt people to invest in apparently rewarding schemes with the guarantee of effortlessly earning fortunes. The schemes in general do not deliver on these assurances and finally cheat the contributor. MLM and pyramid schemes have multilevel disbursement systems, but there ends the similarity. Network marketing is a lawful mode of conducting the business. Pyramids are unlawful, deceitful con games. In MLM, you have the role of a legitimate supplier of a service, product, and business opportunity. In a pyramid scheme, you are little more than a charlatan
Featured below are the salient differences between network marketing and illegal pyramid scheme.
• The products offered in MLM are commercially viable while in pyramid scheme this is not the case.
• In MLM, though the products offered are costly, the products will be worth the price. But in pyramid scheme, the products offered will be very costly and the quality is not assured.
• Only a nominal investment is necessary to enter the network marketing business. But in pyramid scheme, the whole business is built upon the recruitment fee collected. Therefore, this fee remains high.
• In network marketing it is not necessary that a new comer must maintain stock of the product. But in pyramid scheme when a new person joins the business they must purchase a stock of the products.
• Income is generated from the commission made from sales in MLM business. Earnings are completely generated from recruiting new people in the lower level and not from sales in pyramid scheme.
• If the customer is not satisfied with the product, there is a buy-back policy in network marketing. But in pyramid scheme there is no policy of re-imbursement or withdrawal, in case the customer is dissatisfied.
• When you register people under you, you should be actively involved in managing and training them to sell the goods in MLM. In network marketing, training is important to make the business flourish from top to bottom, all through the network. On the contrary, training has no place in pyramid scheme.
• In network marketing the distributor is given great importance. In pyramid scheme distributors are given no importance.
• There is a long- term business opportunity in MLM business. Pyramid scheme does not aim at long-term business growth. At times, the entire set up may vanish within few months.
• Even the nominal entry fees are refundable if the new direct seller chooses to quit in MLM. But no such option is provided in pyramid scheme.
• There are strict rules to forbid the distributors from charging high fee to participate in MLM. In pyramid scheme, on the contrary, high fee is charged for joining the business.
• In network marketing a network of distributors is built up for selling the products. There is no need for building up a network of distributors in pyramid scheme as no importance is given to the selling of the products.
• Efforts of each individual involved in business are of great importance in MLM. But in pyramid scheme there is no importance for the efforts of an individual as the income in this business is completely generated from recruiting people at the lower level.
• In MLM a good rapport is maintained with Better Business Bureau (BBB) and consumer protection agencies. MLM is enrolled with local Chamber of Commerce. In network marketing detailed information is provided in the Website. Copies of marketing materials, business plans and quarterly and annual reports are made available on demand for no charge or for a nominal fee. Pyramid schemes on the other hand are not registered and information about it is not made available on the internet also. Lastly, MLM does not employ high-pressure sales tactics. But such tactics are common in pyramid scheme.