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Multi-Level Marketing Businesses and Pyramid Schemes

MLM companies sell their products or services through person-to-person sales. ... by selling the MLM's products yourself to “retail” customers who are not involved in the MLM, and. by recruiting new distributors and earning commissions based on what they buy and their sales to retail customers. corporate reputation management strategies.

Network marketing, also known as multi-level marketing, is a business model which involves a pyramid structured network of people who sell a company’s products. The participants in this network are usually remunerated on a commission basis.

Consultants involved in multi-level marketing usually sell products directly to consumers through relationships and word of mouth. Nearly 9 out of every 10 consultants are part-time, and work out of the home as distributors of a given line of products. Many multi-level companies also employ a “party plan” strategy, where consultants (and possibly also the consultant’s “upline”) invite friends and other interested customers in the area to a party at the consultant’s home (or other available location). Many products are demonstrated, everyone has a good time, and by the end of the party the consultant has hopefully made several sales—and possibly even recruited a new consultant (who in turn become that salesperson’s downline).Multi-level marketing (MLM) is known by a variety of names: network marketing, referral marketing—and more pejoratively (and/or when done unethically), pyramid marketing. In this structure, marketing and sales reps not only receive compensation for their own sales, but also receive a percentage of the sales generated by other salespeople they recruit (commonly known as one’s “downline

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