1.General 1. Marketing simply means moving a product orservice from the manufacturer or provider to theconsumer. 2. Multilevel refers to the system of compensationprovided to the persons who are causing theproduct to move or the service to be provided."Multi" means more than one."Level" means generation. Multi-level marketing (MLM, now sometimes called network marketing) is a business model that combines direct marketing with franchising.Multi-level marketing businesses function by recruiting salespeople (also called Distributors, Independent Business Owners, IBOs, Franchise Owners, Sales Consultants, Beauty Consultants, Consultants, etc.) to sell a product and offer additional sales commissions based on the sales of people recruited into their downline, an organization of people that includes direct recruits, recruits' recruits, etc. This arrangement is similar to franchise arrangements where royalties are paid from the sales of individual franchise operations to the franchisor as well as to an area or region manager, but in some MLM programs, there can be seven or more levels of people receiving royalties from one person's sales2.For almost everyone who invests MLM turns out to be a losing financial proposition. This is not an opinion, but a historical fact. Consider some notable examples from among the largest MLMs.In the largest of all MLMs, Amway, only 1/2 of one percent of all distributors make it to the basic level of "direct" distributor, and the average income of all Amway distributors is about $40 a month. That is gross income before taxes and expenses. When costs are factored, it is obvious that nearly all suffer a loss. Making it to "direct", however, is not a ticket to profitability, but to greater losses. When the Wisconsin Attorney General filed charges against Amway, tax returns from all distributors in the state revealed an average net loss of $918 for that state's "direct" distributors. 3.Multi-level marketing is system of marketing which puts more emphasis upon the recruiting of distributors than on the selling of products. As such, it is intrinsically flawed. MLM is very attractive, however, because it sells hope and appears to be outside the mainstream of business as usual. It promises wealth and independence to all. Unfortunately, no matter what the product, MLM is doomed to produce more failures than successes. For every MLM distributor who makes a decent living or even a decent supplemental income, there are at least ten who do little more than buy products and promotional materials, costing them much more than they will ever earn as an MLM agent. The most successful MLM scheme is Amway. It has millions of distributors worldwide with sales in the billions. At the turn of the century, the average Amway distributor earned about $700 a year in sales, but spent about $1,000 a year on Amway products. Distributors also have other expenses related to the business, e.g., telephone, gas, motivational meetings, and publicity material (Amway.com; Klebniov 1991).The reason MLM schemes cannot succeed is because MLM marketing is, in essence, a legal pyramid scheme. The basic idea is for a sales person to recruit more sales persons. This is very advantageous to those who own the company and supply the products, especially since the sales persons in MLMs are also customers. But it is puzzling why a sales person would think it is to his or her advantage to increase the number of competing sales persons.

I understand that a networking group is different from a multi-levelmarketing group. A friend was telling me about Destiny, a networkinggroup that sells phone cards. She said the difference between the two isthat the network marketing group is much more lucrative. As an example,she said that Destiny uses 75%-80% of their profits to pay the marketerswhereas multi-level groups such as Excel, a similar long distance phoneservice, uses only 35%-40% of profits to pay their marketers.What do you know about this?

Answer:

Anyone who says Network Marketing and Multi Level Marketing is differentis very misinformed. The two terms are interchangeable.