What is Multi-Level Marketing (MLM)?

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Multi-Level Marketing has been around since ancient days. Send out street urchins to sell stuff and take a big chunk of their income. Get them to recruit other homeless kids and let them have a share of what their protégé earns.

Now, Multi-Level Marketing (or MLM) is big business. One estimate put it at around the US$200 billion per annum mark, worldwide, in 2018.

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Marketing for Managers
This video is part of course module number 8.3.2
Program 8: Managing Customers & Clients
Course 3: Marketing for Managers
Section 2: Marketing Strategy

Other videos in this section include:
🎬 What is Market Research? https://youtu.be/a9wa1-_2R9E
🎬 What is a Marketing Strategy? https://youtu.be/cpPjuKfswOo
🎬 What is Market Segmentation? https://youtu.be/7FtiPAlBdto
🎬 What is a Customer Persona? https://youtu.be/DJWftQwPtAk

Multi-Level Marketing is selling goods or services through a network of distributors or sales agents. These agents also earn an income from the efforts of any new agents they recruit.
So, as a sales agent, or distributor, you can earn money in two ways:
• Your own sales
• A share of the revenue earned by agents you have recruited
The proportion of income from each source is important in understanding the nature of the MLM scheme.

In the USA, the Federal Trade Commission defines Multi-Level marketing as:
“Multi-level marketing is one form of direct selling, and refers to a business model in which a company distributes products through a network of distributors who earn income from their own retail sales of the product and from retail sales made by the distributors’ direct and indirect recruits. Because they earn a commission from the sales their recruits make, each member in the MLM network has an incentive to continue recruiting additional sales representatives into their ‘downlines.’”

Downlines and Uplines
The agents a MLM organization or any of its agents recruit are their ‘downline’. A share of any money these agents earn goes to recruiter. And if those agents recruit more agents, your recruits earn a share of the revenue from their recruits. And you earn a share of that.
For the distributors at the bottom of the MLM downline, everyone above them is taking a share of their revenue. Those people are their ‘upline’.

How Does Multi-Level Marketing Work?
Clearly, the small number people at the top of the pyramid – the top of the upline – earn a lot of money from the huge spread of downline distributors.
The greater the focus on recruiting and the less on sales… the more alarm bells should ring for you. Because this also means others will be reaping a greater reward from your own efforts.

Therefore, as a MLM distributor has two roles:
• Sell to end consumers
• Recruit further salespeople

What Else are Multi-Level Marketing Schemes Known as?
You’ll find them loosely referred to as many things, the most common of which are:
• Pyramid selling
• Network Marketing
• Social Selling
• Referral Marketing

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📖 Very quick overview
Marketing: A Very Short Introduction https://geni.us/ozSJF
📖 Good general overviews
Kotler on Marketing https://geni.us/JNeVHy
Positioning: The Battle for Your Mind https://geni.us/kGj4KCA
The 22 Immutable Laws of Marketing https://geni.us/RVU1
Marketing For Dummies https://geni.us/sZXAw
📖 Small business marketing
The 1-Page Marketing Plan https://geni.us/Xb4wBk
📖 For a textbook, you can’t go wrong with Kotler’s name on it!
Marketing: An Introduction https://geni.us/q4gzVOw
Principles of Marketing https://geni.us/gsFeMT5
Marketing Management https://geni.us/i3FO

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Management Courses - Mike Clayton says:

There are instances of good and bad multi-level marketing. But it is wise to know what it is and what the pitfalls are, before you get involved. Here, I take an objective look at what MLM is and how it works.

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