Multilevel Marketing

Multilevel marketing (also called network marketing, network marketing, network marketing, MLM) is a business model and a good example of direct marketing in which a person is associated with a parent company as an independent or franchised and receive compensation based on the sale of goods or personal services and other members associated with that person. This resembles the franchise in the royalties paid by franchisees operations and those of your area or region.
Multilevel marketing has a serious image problem because of the difficulties of making clear distinctions between legitimate network marketing and ‘pyramid schemes’ or Ponzi schemes.
Amway, often considered the pioneer of the multilevel was processed by the Department of Justice of the United States in the 70’s and establishing laws to determine the legal network business. Today, many multilevel business legally operating in different parts of the world.
This strategy of suing multilevel companies has been repeated in different countries, sometimes this is taken as an attempt to discredit, but ultimately the judges have given rulings favorable to these companies, this has led to the fixing of the various laws regulate and differentiate between multilevel systems and illegal pyramid schemes. In the case of Spain is the Retail Trade Act itself that establishes the definitions of both systems and the illegal pyramid schemes.
vs MLM Pyramids
Critics contend that some companies get their profits primarily by attracting new participants, not by selling products, but the criticism against states that this is precisely one of the characteristics that differentiate the pyramid schemes that reward the incorporation of new members to the pyramid, while only paying for multilevel systems product movement. To determine whether or not the company pyramid, you should ask three questions:
1 Does the company that exists’ this will give you information to see if your only looking for money, and then escape. At least that is 5 years.
2 How many countries it operates, and who governs the country where you are ‘It is possible that the company managed to evade the laws of some countries, but it is very difficult to do in several.
3 Can earn more money than the person who is inviting, and with the same inversion ‘The answer must be yes.
Some significant multilevel marketing companies may be listed in dmoz (dmoz open directory project).
Compensation Plans
Over the decades the companies have different compensation plans designed for multilevel marketing. There is personal gain from the sale of products and, further, gains by a network configuration according to the following compensation plans:
Rolling plan. Also called Breakaway. It is the oldest and most used so far. Distributors earn a commission on personal sales (discount sales) and sales of their groups that are below them until the match on the stair (hence its name). Companies like Oriflame Cosmetics, Hexagon, Herbalife, Amway, Nature’s Sunshine, Forever Living and Omnilife, Nutriproducts Natural Forces, operating in Venezuela, Spain, USA, and many other countries, with this model.
Matrix Plan. This plan limits the number of sponsors that each person can have in your first level, ie its direct frontal. Depending on the company, may have different number of levels, and different numbers of front, and depending on the level of committees vary. For example, a 3×4 matrix, you can have maximum 3 people direct their own, one quarter to reach your computer, you must place it under one of its three-person committee however, as I mentioned above, vary depending on the level, by example, sales people do their level 1, you earn 10 , Level 29 Level 3 8 and as such to the level that has the company, which in the example were 4.
Binary Plan. This plan limits the width of each level to two front. The main advantage is that there are no steps or levels. The partners earn the same for all dealers regardless of the level where they are. It promotes teamwork. The binary plan has three types:
Pata loose, where the representative is paid commissions on the side that made fewer sales,
50/50 Binary compensation where the company pays to partners on both fronts, with the condition of the sales are evenly balanced, for example in a frontal 2 products were sold, and sold the other 3, the representative is paid a commission for 4 products (2 for each of its front), missing commission is paid when the other front makes a sale, that is compensated.
The other type of binary is that of compensation 1 / 3 – 2 / 3, which operates similar to 50/50, only this is a bit more flexible, for example in the above example if the representative would pay the full commission, in Then if one side sells 2 products, the other may sell up to 6 and would offset.