What is MLM?

Nowadays, the dominance of traditional (retail/shop-based) commerce seems to get weaker and weaker, and new, modern forms of marketing take a stronger position. The most dominant form is multi-level or network marketing. But what is the difference between these two forms?

According to traditional patterns of thinking, customers usually acquire a product by going to a shop and purchasing the product they need. That is the reason for the increasing price of the product, since the producer’s/manufacturer’s product reaches the customer through the importer, the wholesaler and the retailer, and all the members of the traditional marketing structure want to finance their companies from the same product and have their own profit.

In traditional marketing, there is no personal contact between a customer and a seller in most cases. There is no personal experience or good advice but people are told in well-planned, terribly expensive commercials why that product is the best for them.

Contrarily, the concept of network marketing is based on the idea that, if people consume a product with joy and use it with good experience, they will be happy to recommend it to others in their environment. Thanks to this new method, the distance between the producer and the customer is shortened and huge commercial costs are replaced by word of mouth advertising. Therefore, a producer can spend more money on the development of their products and the money previously used for commercials can be allocated among members of the network according to their performance.

Multi-level marketing (MLM) is a modern method of selling consumer goods and services. MLM companies sell their products to the members of the network composed of the customers. They are distributors at the same time, building their own network by recommending the products, or the MLM system itself, to their acquaintances.

When a product appears on the market, it is up to the manufacturer to decide how it should be marketed. One solution is to choose the classic marketing system. In this case, the product goes from the factory to logistic centers or to wholesale networks, then to retailers and shops. In the case of network marketing, the product is allocated to people who are in personal contact with their clients (customers), instead of shops. The difference is that it is not me who goes to the shop to buy what I want but I call that acquaintance of mine who recommended the product to me based on his/her personal experience. So, which system is more developed?

Advantages of the network marketing:

- Qualification is not necessary
- Requires only minimum investment of money
- Anybody can do it
- Flexible time-management
- Risk-free
- You are your own boss
- Can be pursued part-time and full-time
- Possibility to earn more
- There is no entrance or membership fee

The network marketing gives the chance for average people to earn more.It is necessary to have of course determination, persistency and diligence. Network marketing has never promised results without efforts. What it did promise was the following:

"While investing the same amount of time and energy, marketing business can bring results that are significantly better than those of any other new business."