MLM - Multi Level Marketing

by Rudolf Faix Thursday, July 9, 2015 1:15 PM

TV: Millions are being paid outMulti Level Marketing (MLM) is known for selling low quality products for a very high price. At WikiPedia you find the following definition about MLM:

Companies that use MLM models for compensation have been a frequent subject of criticism and lawsuits. Criticism has focused on their similarity to illegal pyramid schemes, price fixing of products, high initial entry costs (for marketing kit and first products), emphasis on recruitment of others over actual sales, encouraging if not requiring members to purchase and use the company's products, exploitation of personal relationships as both sales and recruiting targets, complex and exaggerated compensation schemes, the company and/or leading distributors making major money off training events and materials, and cult-like techniques which some groups use to enhance their members' enthusiasm and devotion.

If we take a look at the above definition, then we see that the product needs to be overpriced. Even if the company is saving the costs of having shops the company needs to pay the commission for the sales structure. If the commission is not high enough not one will sell something. Mostly you'll get low value products for a high price for financing their marketing structure.

In such a case MLM - Multi Level Marketing is hard at the border to become an illegal pyramid system. If the product has no value or the earnings for bring in new referrals are in average higher than the earnings for selling the products then the system is an illegal pyramid system or Ponzi scheme.

 

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I'm since more then 35 years in the computer business (programming and technical support) and using the Internet since it has started. Since 2002 I'm programming solutions for Asterisk and since 2004 I'm in the call center industry.

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