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Understanding the Operations of Multi-Level Marketing Companies

Jul 15, 2008
The global economic recession of the 1980s has resulted in the emergence of a unique and non-conventional marketing strategy that has come to rise as a popular sales scheme.

During that time, companies from around the world had struggled to keep up and survive the seeming peril of global trade economy. Sales of almost all merchandise had been declining, probably because people's incomes were not sufficient for even basic purchases.

Multi-level companies began a widespread expansion during that era. The multi-level startups had really boomed. Profits were reaped unexpectedly and to the level that exceeded analysts' wildest expectations.

Thus, multi-level companies became an instant trend, as business scheme that prevails and continues to dominate world markets even up to now.

Multi-level scheme

Multi-level companies' basic businesses are relying on the scheme to create a wide network for the distribution of products. Multi-level companies are promising significant revenues to members by motivating them to recruit as many members as they can.

Thus, the more, the merrier. Sales teams have been recruiting people from all walks of life to participate in the distribution network. The multi-level companies' businesses work as follows.

First, the multi-level company manufactures goods that they claim are of superior and premium quality. These products would then be sold directly to sales teams. By that, it can be assumed that the multi-level companies' role in the network recedes.

The sales team would them aim to reap profits by selling the products to other people at costlier prices. The recruits would then aim to sell the products to other people. The recruitment and selling process goes on.

Multi-level schemes are based on the principle of infinite networking, but through time, that proves wrong.

Problems at multi-level companies

Because the multi-level companies reap their revenues and profits when they sell the products to the sales team, they are left with no control over how the products would really get into consumers.

Because of the never-ending and trailing networking scheme, one logical result would be bloated prices of products. Of course, people would impose commissions on the products they sell, which would in turn be sold further to other buyers, who can still opt to resell the products.

The companies and the first level managers would surely benefit from the scheme. Alas, those at the lower spectrum of the pyramid could hardly realize and get hold of the profits.

Thus, through time, such pyramid schemes fail to last. But the emergence of such businesses come like cycles. The death of one multi-level company would give way to another one, with a different name, different products, different people but same sales schemes.

The cycle goes on until too may people are involved. Others already realize what a hoax the scheme is, but they keep mum and falsely make good testimonials so they could recruit more people and in turn, keep their hopes that profits would be reaped from this business strategy.


Multi-level companies' businesses are so wide-spread that one would surely be surprised at how people never seem to learn from other people's mistakes.

From the United States, multi-level companies are emerging in other countries just like fire that spreads out rapidly. And people swoon to participate and anchor hope of lucrative profits.

Multi-level companies are basically like that. The top of the cake consists of the icing sweeter and more attractive compared to the bottom part of the cake, which is less preferred and tasty.
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