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    What Is MLM Marketing

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    Ali
    MLM, or multi-level marketing, is a marketing strategy where companies sell products through independent distributors who are not salaried employees. Distributors recruit others to become distributors underneath them, creating a pyramid-like structure. Distributors earn commissions both from their own sales and from the sales of those they recruit. However, MLMs are controversial because many collapse as a pyramid scheme when new recruits dry up. A legitimate MLM sells primarily to consumers rather than recruiting members to buy products. Sharia law allows MLM as long as selling is to customers and earnings come from referrals rather than recruiting a downline.

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    What Is MLM Marketing

    Uploaded by

    Ali
    76 views2 pages
    MLM, or multi-level marketing, is a marketing strategy where companies sell products through independent distributors who are not salaried employees. Distributors recruit others to become distributors underneath them, creating a pyramid-like structure. Distributors earn commissions both from their own sales and from the sales of those they recruit. However, MLMs are controversial because many collapse as a pyramid scheme when new recruits dry up. A legitimate MLM sells primarily to consumers rather than recruiting members to buy products. Sharia law allows MLM as long as selling is to customers and earnings come from referrals rather than recruiting a downline.

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    MLM, or multi-level marketing, is a marketing strategy where companies sell products through independent distributors who are not salaried employees. Distributors recruit others to become distributors underneath them, creating a pyramid-like structure. Distributors earn commissions both from their own sales and from the sales of those they recruit. However, MLMs are controversial because many collapse as a pyramid scheme when new recruits dry up. A legitimate MLM sells primarily to consumers rather than recruiting members to buy products. Sharia law allows MLM as long as selling is to customers and earnings come from referrals rather than recruiting a downline.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    76 views2 pages

    What Is MLM Marketing

    Uploaded by

    Ali
    MLM, or multi-level marketing, is a marketing strategy where companies sell products through independent distributors who are not salaried employees. Distributors recruit others to become distributors underneath them, creating a pyramid-like structure. Distributors earn commissions both from their own sales and from the sales of those they recruit. However, MLMs are controversial because many collapse as a pyramid scheme when new recruits dry up. A legitimate MLM sells primarily to consumers rather than recruiting members to buy products. Sharia law allows MLM as long as selling is to customers and earnings come from referrals rather than recruiting a downline.

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    MLM Marketing?

    What is MLM?
    Multi-Level Marketing (MLM) has various names such as Network Marketing, Chain Marketing,
    Affiliation Marketing, Referral Marketing, Pyramid Selling or Home-Based Business Franchising etc. it
    has variety of names. Well as it is said what’s in the name. let us first understand what exactly is Multi-
    Level Marketing or MLM.
    MLM is a Marketing Strategy adopted by a company, where in they don’t hire a staff for sales of
    products/services & sale is done by non-salaried staff. Company had to pay commission to these non-
    salaried staff for efforts made by them or by their team.
    Generally, its like a hierarchy, where in top person is called as “ Independent distributors/seller” &
    he encourage people to join his team & start selling his product. This team of his is known as
    “Downline”.
    Each person adding in downline can act as “Independent distributors/seller” & appoint/create
    his/her own downline. Thus, creating a multi-Level or Pyramid.
    MLM is a sales strategy deployed by companies to encourage existing independent distributors to
    recruit new distributors.
    How Income is generated?
    Independent distributors make money by two way firstly through sales made by downline appointed
    by them, basically a percentage of sales made by downline & secondly by making direct sales of
    products to customers. It's a low-cost option for people to earn an additional income by selling
    products companies product.

    Type of MLM compensation plan?

    There are three broad category of MLM 

    1. Binary MLM - Binary MLM Plan known as (2 x n) Matrix Plan whereas the 'n' represents
    infinity.
    2. Uni Level MLM -  as name sugget it allows you to sponsor only one line of distributors.
    3. Matrix MLM - the basic formula of this plan if calculated in width & depth of plan, i.e no of
    distributors & their downline.

    “A report by FICCI-KPMG predicts that with adequate regulatory support, retail sales in direct selling
    could reach Rs 645 billion by 2025 and provide self-employment opportunities to 18 million Indians
    by 2025, of which 60 per cent could be women.” – source bit.ly/Direct-selling

    What is the Evil side of this Marketing strategies is when recruiting new Independent distributors
    inevitably collapse or when no new distributors can be recruited most people except perhaps those who are
    at the very top of the pyramid, end up with almost nothing. So every person in the chain is important.

    How is it MLM different from Direct Sales Marketing (DSM)?

    MLM is a different form of DSM, where is an Independent Distributor goes and market a product/services
    to a particular person & end up in creating either a downline or and end point. It depends the way entire
    role play is performed.
    It is more sort of relationship Marketing or Mouth Publicity.

    There are various companies using this Marketing strategies’, to name some big brand we have Amway &
    Tupperware and many in line

    The Legitimacy of Multilevel Marketing?

    Generally speaking, there are two school of thought, one who believe that MLM is Legal & other who
    don’t. MLM is a legal business in INIDA if done within framework. Even a legal MLM end up in an
    illegal one, by unfair trade practices & exaggerated misrepresentations by certain distributors makes this
    industry so controversial.

    There are numerous illegal and fraud MLM that operate in India to lure more people to buy their products
    and scam them for their money.

    An issue in determining the legitimacy of a multilevel marketing company is whether it sells its products
    primarily to consumers or to its members who must recruit new members to buy their products. If it is the
    former, the company is likely a legitimate multilevel marketer. If it is the latter, it could be an illegal MLM
    scheme.

    That is why MLM is also known as DIRECT SELLING.

    Instead of using traditional distribution channel (manufacturer – distributor – wholesaler – retailer –


    consumer), Direct Selling companies sell their products and services directly to consumers. That is why it
    is called ‘Direct Selling’.

    When these consumers or customers like their products and services, naturally they start sharing it with
    others. Direct Selling companies pay you when people buy their products and services from your
    recommendation.

    A legal MLM is one which make a direct selling to its customers & not to its members who in turn end up
    making a big investment in product/services.

    A legal MLM never promises a quick return rather make you work or train you to obtain new sets of skills.
    An Illegal MLM pay you for appointment of downline & selling product to members itself.

    Any program offering big money but claiming “no selling required” is illegal.

    What does Shariyat say about MLM?

    Till the point selling is done to direct customers & people in chain are earning for referrals
    it ok. In any other format it is not as per shariyat kanoon.

    PS: plz consult before you setup or invest in a MLM scheme & ensure it is legal within term of
    respective Land of Law.

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