In this article I’m going to look at some of the problems with Multi level marketing (MLM) and the reasons why most members will never earn more than a couple of hundred pounds a month. Multi level marketing in some cases has some fantastic products but unfortunately for the unsuspecting masses that join these programmes it has a few inherent flaws. These flaws are however it seems very cleverly, and purposely, put into effect to profit certain individuals of the programme whilst the majority can only dream of nonexistent riches. I am going to break this article down into four paragraphs from which you can decide the values of MLM. i.) The business module of MLM and why it fails. ii.) Advertising and return on investment. iii.) Who profits from MLM. iiii.) Is MLM in fact legal and moral or just another pyramid scheme?
The business modal of MLM is a very simply one, to sell as much of a product as possible to profit, it seems, an endless number of online retailers. The question you need to ask yourself is why this product, that can sell itself so easily, needs an army to market it. Why wouldn’t the people that had resale writes to this product not try and keep them to themselves, instead of advertising the right to sell the resell rights of the product to others for a fee? If the product is so great why isn’t it in the average shop on the high street? The answer to these questions is simple it is not the product itself that is profitable but the ability to market the resell rights to the budding entrepreneur. So the business model is not to sell the product in itself but to oversell it in the terms of having as many retailers in your down line as possible. The obvious inherent flaw in this business plan is you are going to have more retailers than consumers. The fact is any company that that chooses this marketing strategy is only going to squash the value of the product itself by flooding the market.
A simple example would be if, Gucci where going to continually make a certain type of sunglasses knowing that last year they only sold 5000 pairs of that brand. When they hit 20000 in production the next year, but they have not sold anymore that 5000 what is going to happen to that extra 15000? Unless they sell them cheaper they are going to run over into next year’s brand hence making the previous year’s stock invaluable and almost unsalable. Also the customer will realise that they can get the same product at a cheaper price at a later time in the year hence making optimum launch sales obsolete. Because of the very clever marketing strategies used in MLM these very basic points of business are overlooked.
Advertising on the internet can become expensive especially when there is adverse competition in the same field. Anybody that has knowledge of keyword research will know that pay per click advertising, although very effective, can be very expensive. If you where to advertise a MLM business on Google and wanted to be on the first page with sponsored search you would be paying anything between £1-£3.00 per click that means it will cost you that amount to drive a potential customer to your website whether they sign up or not. I know from experience that marketing in today’s competition is a numbers game, in other words traffic is everything. Say you drive 100 prospects to your website and 1 person signs up for a fee of £100 that has just cost you £150 to get that prospect. In effect you have made a loss on return on investment which is bad business. There are of course all the free methods of advertising, articles, videos, press releases and forum signatures, but who in your up line after the usual pass ups is going to teach you these methods with enthusiasm when it is longer of any financial benefit to them.
So who in fact does profit from MLM? Well first of all as we have already established the profit is not in the product but in the exploitation of people lower down in the organization. So it is the executives of the programme that profit from the losses of affiliates lower down, with all their unrealistic return on investment advertising, by selling a dream of unrealistic riches. Which in the past such Multi level marketing executives have been imprisoned for such promises, it is only now with their expensive lawyers that they are kept out of prison.
Could you knowingly hold meetings around your home and hold meetings at hotels knowing that all the people you are about to enroll in your business are going to spend a fortune willingly in advertising to make you money and leave themselves broke. No you couldn’t do it too friends and family right? Well is that not what MLM teaches you to do? How many people in your family have you already confronted with promises of riches when you have made none yourself? I am going to leave this open for people to think about, but what I can tell you is compare any MLM scheme to any illegal pyramid scheme advertised on the net and compare the compensation plans. Do they seem similar in respect to return on investment?
make money on the internet and that is with a good solid compensation plan that guarantees ongoing support and a product that people are knocking your door down for.
Article Source: http://EzineArticles.com/?expert=Adam_Woods
Author: Adam Woods
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