Multi-level-marketing (MLM) is also refer as network marketing.MLM or network marketing is a term that describes a marketing structure used by some companies as part of their overall marketing strategy. Where by some other companies uses retail outlet as a form of distribution channel.
Why choose network marketing, Multi-level-marketing (MLM)?
- It is the most affordable way for a person to start a business.
- With no knowledge of business back ground
- No overhead to maintain
- No employees
You can start a business part time with out quitting your current job, which your family or you need the pay check to sustain your monthly bills and expenses.
How does the Multi-level-marketing (MLM) members earn money through it’s compensation plan?
MLM or network marketing companies started of with a product and a compensation plan to award it team members. The compensation concept is to save millions of advertising dollars and through a well designed pay plan distributed to its members.
To start the business every members have to be a royalty customer. Independent distributors develop their network or distribution chains by either building an active customer base, who buy direct from the company, or by building a downline of independent distributors who also build a customer base, thereby expanding the overall distribution networks.
Different type of Multi-level-marketing (MLM), network marketing complan
Unilevel plans
This type of plan is often considered the simplest of compensation plans. As the name suggests, the plan allows a person to sponsor one line of distributors, called a “frontline.” Every distributor the person sponsors is considered to be on that sponsor’s frontline and there are no width limitations, meaning there is no limit to the amount of people one can sponsor in the frontline. The common goal of this plan is to recruit a large number of frontline distributors and then encourage them to do the same. This is due to the fact that commissions are normally paid out on a limited depth, which typically means sponsor can earn commissions on sales between 5 and 7 levels deep.[29]
Stairstep Breakaway plans
This type of plan is characterized as having representatives who are responsible for both personal and group sales volumes. Volume is created by recruiting and by retailing product. Various discounts or rebates may be paid to group leaders and a group leader can be any representative with one or more downline recruits. Once predefined personal and/or group volumes are achieved, a representative moves up a commission level. This continues until the representative’s sales volume reaches the top commission level and “breaks away” from their upline. From that point on, the new group is no longer considered part of his upline’s group and the multi-level compensation aspect ceases. The original upline usually continues to be compensated through override commissions and other incentives.
Matrix plans
This type of plan is similar to a Uni-Level plan, except there is also a limited number of representatives who can be placed on the first level. Recruits beyond the maximum number of first level positions allowed are automatically placed in other downline (lower level) positions. Matrix plans often have a maximum width and depth. When all positions in a representative’s downline matrix are filled (maximum width and depth is reached for all participants in a matrix), a new matrix may be started. Like Uni-Level plans, representatives in a matrix earn unlimited commissions on limited levels of volume with minimal sales quotas.
Binary plans
A binary plan is a multilevel marketing compensation plan which allows distributors to have only two front-line distributors. If a distributor sponsors more than two distributors, the excess are placed at levels below the sponsoring distributor’s front-line. This “spillover” is one of the most attractive features to new distributors since they need only sponsor two distributors to participate in the compensation plan. The primary limitation is that distributors must “balance” their two downline legs to receive commissions. Balancing legs typically requires that the number of sales from one downline leg constitute no more than a specified percentage of the distributor’s total sales.[30]
Hybrid plans
Hybrid plans are compensation plans that are constructed using elements of more than one type of compensation plan.
