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Multilevel Marketing (MLM) and pyramiding

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  11. Multilevel Marketing MLM) and pyramiding  MULTILEVEL MARKETING Multilevel marketing is a system of selling in which one signs up other people to assist him, and they, in turn, recruit others to help them. It is the system of selling through many levels of distributors, thus the word “multilevel marketing.” Each gets a percentage on the price of the product being sold. This is also known as direct selling companies.  PYRAMIDING In the classic “pyramid” scheme, participants attempt to make money solely by recruiting new participants into the program. The hallmark of theses schemes is the promise if sky-high returns in short period of time for doing nothing other than handling over your money and getting others to do the same.Pyramid schemes focus on the exchange of money and recruitment. At the heart of each pyramid is typically a representation that new participants can recoup their srcinal investments by introducing others to make the same investments.  Difference Between an MLM and Pyramiding MLM    Pyramiding 1.Legal1.Illegal2.Income generated only on product sales2. Income is generated solely on the process of recruiting others into the pyramid.3. Provides a training program3. No trainingprogram.4. Consumable, reasonably priced quality products.4. Few retailsales and high cost, slower moving products.5. Serveslegitimate economic function such as a channel of distribution for relatively small or new companies with excellent products.5. No legitimate economic function such as no economic benefits, but amere transfer of money from one person to another without legitimate business.6. Sponsoring participants earn nothing by mere sponsoring.Recruitment is optional.6. Recruitingparticipants get benefits from recruitment.7.Earnings are ultimately tied to product consumption of end-users.7. Earnings are tied to the act ofrecruitment.8. Enormousefforts are sold to the consuming public. 8. Littleeffort or no effort is being made to sell to the public.10. Bonusesare based on sales to final users who are not members of the scheme9. Products are consumed internally within the organization.10. Bonus entitlementsare based on goods absorbed by members within the structure.
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