Multi Marketing company Multan

  Multi Marketing company Multan                            Multi-level marketing (MLM), also called network marketing or pyramid selling is a controversial marketing strategy for the sale of products or services where the revenue of the MLM company is derived from a non-salaried workforce selling the company's products or services, while the earnings of the participants are derived from a pyramid-shaped or binary compensation commission system. An MLM strategy may be an illegal pyramid Scheme.

In multi-level marketing, the compensation plan usually pays out to participants from two potential revenue streams. The first is based on a sales commission from directly selling the product or service; the second is paid out from commissions based upon the wholesale purchases made by other sellers whom the participant has recruited to also sell product. In the organizational hierarchy of MLM companies, recruited participants (as well as those whom the recruit recruits) are referred to as one's down line distributors.

MLM salespeople are, therefore, expected to sell products directly to end-user retail consumers by means of relationship referrals and word of mouth marketing, but more importantly they are incentivized to recruit others to join the company's distribution chain as fellow salespeople so that these can become down line distributors  According to a report that studied the business models of 350 MLM companies in the United States, published on the Federal Trade Commission's website, at least 99% of people who join MLM companies lose money. Nonetheless, MLM companies function because downline participants are encouraged to hold onto the belief that they can achieve large returns, while the statistical improbability of this is de-emphasized. MLM companies have been made illegal or otherwise strictly regulated in some jurisdictions as merely variations of the traditional pyramid scheme, including in mainland China.

Terminology

Multi-level marketing is also known as pyramid selling, network marketing, and referral marketing.                    

Business model

Participants

The overwhelming majority of MLM participants (most sources estimated to be over 99.25% of all MLM distributors) participate at either an insignificant or nil net profit.Indeed, the largest proportion of participants must operate at a net loss (after expenses are deducted) so that the few individuals in the uppermost level of the MLM pyramid can derive their significant earnings. Said earnings are then emphasized by the MLM company to all other participants to encourage their continued participation at a continuing financial loss.        

Companies

Many MLM companies generate billions of dollars in annual revenue and hundreds of millions of dollars in annual profit. However, profits accrue to the detriment of the majority of the company's constituent workforce (the MLM participants). Only some of the profits are then shared with individual participants at the top of the MLM distributorship pyramid. The earnings of those top few participants are emphasized and championed at company seminars and conferences, thus creating the illusion that one can become financially successful if one participates in the MLM. This is then advertised by the MLM company to recruit more distributors in the MLM with an unrealistic anticipation of earning margins which are in reality merely theoretical and statistically improbable.

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Although an MLM company holds out those few top idividual participants as evidence of how participation in the MLM could lead to success, the MLM business model depends on the failure of the overwhelming majority of all other participants, through the injecting of money from their own pockets, so that it can become the revenue and profit of the MLM company, of which the MLM company shares only a small proportion with a few individuals at the top of the MLM participant pyramid. Other than the few at the top, participants provide nothing more than their own financial loss for the company's own profit and the profit of the top few individual participants.

Financial independence

The main sales pitch of MLM companies to their participants and prospective participants is not the MLM company's products or services. The products or services are largely peripheral to the MLM model. Rather, the true sales pitch and emphasis is on a confidence given to participants of potential financial independence through participation in the MLM, luring with phrases like "the lifestyle you deserve" or "independent distributor." Erik German's memoir My Father's Dream documents the author's father's failures through "get rich quickschemes" such as Amway The memoir illustrates the multi-level marketing sales principle known as "selling the dream".

Although the emphasis is always made on the potential of success and the positive life change that "might" or "could" (not "will" or "can") result, disclosure statements include disclaimers that they, as participants, should not rely on the earning results of other participants in the highest levels of the MLM participant pyramid as an indication of what they should expect to earn. MLM companies rarely emphasize the extreme likelihood of failure, or the extreme likelihood of financial loss, from participation in MLM.

Comparisons to pyramid schemes

MLM companies have been made illegal in some jurisdictions as a mere variation of the traditional pyramind scheme, including in china. In jurisdictions where MLM companies have not been made illegal, many illegal pyramid schemes attempt to present themselves as MLM businesses. Given that the overwhelming majority of MLM participants cannot realistically make a net profit, let alone a significant net profit, but instead overwhelmingly operate at net losses, some sources have defined all MLM companies as a type of pyramid scheme, even if they have not been made illegal like traditional pyramid schemes through legislative statutes.

MLM companies are designed to make profit for the owners/shareholders of the company and a few individual participants at the top levels of the MLM pyramid of participants. According to the U.S.Federal commission (FTC), some MLM companies already constitute illegal pyramid schemes even by the narrower existing legislation, exploiting members of the organization.

Lawsuits

Companies that use the MLM business model have been a frequent subject of criticism and lawsuits. Legal claims against MLM companies have included, among other things:

• Their similarity to traditional illegal pyramid schemes
• High initial entry costs (for marketing kit and first products),
• Encouraging if not requiring members to purchase and use the company's products,
• Exploitation of personal relationships as both sales and recruiting targets, Cult like techniques which some groups use to enhance their members' enthusiasm and devotion.

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  How Multilevel Marketing Works

• There are multiple layers of salesforce in multilevel marketing. The salesforce is known as distributors, who are independent non-salaried participants. There are two sources of income for a distributor. One is the Commission refers to the compensation paid to an employee after completing a task, which is, often, selling a certain number of products or services of selling products to customers directly. The other one is through recruiting new distributors.

• A distributor is not paid when a new (downline) participant is recruited. Yet, the sales from his downline distributors are also attributable to him. The distributor is compensated by a certain percentage of the sales from his downline team.

• Many distributors with large-scale downline teams even do not sell products by themselves. They can receive sufficient commissions from their downline teams’ sales. The commission system effectively motivates existing distributors to build up or expand their downline teams. It allows the company to employ a bigger salesforce, and thus, access to a larger customer base.

• Direct selling versus network marketing

• "Network marketing" and "multi-level marketing" (MLM) have been described by author Dominique Xardel as being synonymous, with it being a type of direct selling Some sources emphasize that multi-level marketing is merely one form of direct selling, rather than being direct selling. Other terms that are sometimes used to describe multi-level marketing include "word-of-mouth marketing", "interactive distribution", and "relationship marketing ". Critics have argued that the use of these and other different terms and "buzzword" is an effort to draw distinctions between multi-level marketing and illegal Ponziwords, chain letters, and consumer fraud scams — where none meaningfully exist.

• The Direct selling Association (DSA), a lobbying group for the MLM industry, reported that in 1990 only 25% of DSA members used the MLM business model. By 1999, this had grown to 77.3%.By 2009, 94.2% of DSA members were using MLM, accounting for 99.6% of sellers, and 97.1% of sales. Companies such as Avon, Electrolux, Tupperware, and Kirby were all originally single-level marketing companies, using that traditional and uncontroversial direct selling business model (distinct from MLM) to sell their goods. However, they later introduced multi-level compensation plans, becoming MLM companies.The DSA has approximately 200 members while it is estimated there are over 1,000 firms using multi-level marketing in the United States alone.