Stem Cell Research Breakthrough
Stem Cell Research Breakthrough
| What is Multi Level Marketing? Pt1 | ||||||||||||||||||||||||||||||||||||
| Multi-level marketing, also known as MLM or Network Marketing, is an alternate
channel for a manufacturer to advertise, sell and deliver its products to
market. The other channels include retail storefronts; catalog shopping, and
door-to-door sales. Depending on the particular company, the MLM channel may
provide both word-of-mouth advertising and distribution. Q: Why would a company choose the MLM route to product distribution? There are several good reasons: The first is low overhead. There are virtually no up-front advertising costs. Unlike a typical retail company, the MLM Company doesn't have to spend massive amounts of money to obtain customers. Instead, it pays consumer/Members to "expose and push" the product out into the marketplace. In addition, the company only has to pay the Members for "results" -- that is, a percentage of products actually sold. The Typical National Brands Company spend from 30% to 45% of their gross annual sales for advertising. Therefore, a company that does 25 billion dollars in sales may spend up to 10 billion dollars on advertising. MLM companies typically pay from 40% to 60% of their sales volume to their Members for their consumer-to-consumer sales efforts. This is basically their form of advertising. MLM companies have low distribution overhead. Typical retail companies generally use a series of national, regional, state, and local warehouses to distribute their product to the retail stores. Each of these intermediaries wants to make a living, and marks up the cost of the product. Many products which cost no more than 15 cents are sold retail for as much as $3.00. This retail price is necessary to offset all intermediary costs from production to retail. If a typical MLM company sold a product that cost 15 cents, the retail would be about $1.35 and the company could still show a reasonable profit after paying a total commission of 50% to it's Members. A well-managed MLM company can grow at an amazing rate -- as much as 20%, 50%, and even 100% per month in the beginning. (In fact one of the biggest reasons for MLM company failure is inability to keep up with explosive growth.) It would be difficult or impossible to generate this kind of growth in an overcrowded retail market. There are hundreds of thousands of products cramming the shelves of retail stores. It's almost impossible for a new product to make a dent in the market, unless the company spends megabucks on advertising. Also, many MLM products need more explanation than can be done in a 30-second TV spot. A person-to-person word-of-mouth campaign can solve both of these problems. For the individual, MLM can offer an opportunity to build a part-time income source that can, with the proper effort, grow into a significant income. With hard work (and a little luck) a person can earn incredible incomes. MLM is all about "a lot of people doing a little bit." In MLM you are rewarded for the sales you create, not only directly, but indirectly as well. You get profit for any retail sales you make, plus you get a bonus or override on the sales made by people you enrolled into the company, and people they enrolled, and people they enrolled etc. By getting a small percentage of many people, your income can grow to a very large number. For example: let's say your company sells Widgets, and the average person in the company buys $100 in Widgets each month. (This might be for resale or for personal use, depending on the company.) Now let's say you get 5% override bonuses, and your plan pays 7 "levels" deep. Watch what happens if you find 5 hard workers, who each find 5 hard workers, who each find 5 more hard workers...... |
||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
| So, if each person found 5 people, and each bought $100 each month, you would
earn almost $500,000 per month! This is hypothetical and unrealistic but proves
what could happen and what has happened in the past with a few MLM Members. But wait. It's not that simple. It takes a lot of time and work to build up a group (called a "downline") in any MLM. What's more, even if you're a real hard-working go-getter, you can't do all of it. You can't enroll the 97,655 people in this group by yourself. Each person has to find 5 of his own and the sad truth is, most people are not that ambitious. It's hard to find people that really want to work even if they are in bad need of extra income. So it's almost unheard-of for someone to actually build an idealized group like this. Some "legs" in the downline will build faster than others, and some will grow slower. If you don't work hard yourself, you might never start any legs that go anywhere. But that's the concept. A large number of people doing a little bit each, and you getting a small reward on each one. If you have the initiative and work ethic to build that group, you can make a very nice income in MLM -- maybe even get rich. But MLM is not a get-rich-quick deal. It does take a lot of work, and most people won't put in the work it takes. The large majority of people will never get rich and in the past many never made any money due the product, program or company. But the beauty of it is, as long as you pick a good company with a good and unique product, the size of your success is up to you. |