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What is MLM marketing system?
Multilevel marketing (MLM) is a strategy that sells products and services through a non-salaried workforce in a pyramid-shaped commission system. … Companies that implement multilevel marketing encourage existing distributors to recruit new distributors, known as the “downline” of the existing distributors.
Multi-level Marketing (MLM) or network marketing, is individuals selling products to the public – often by word of mouth and direct sales. The main idea behind the MLM strategy is to promote maximum number of distributors for the product and exponentially increase the sales force. The promoters get commission on the sale of the product as well as compensation for sales their recruits make thus, the compensation plan in multi-level marketing is structured such that commission is paid to individuals at multiple levels when a single sale is made and commission depends on the total volume of sales generated.
First up is the word “direct selling.” It’s generally used as an umbrella term for all types of companies in the industry, and it’s one of the only names with a general dictionary definition. Merriam-Webster defines direct selling as “the selling by a manufacturer, producer, or agent to someone other than a wholesaler or intermediary: selling directly to a consumer.”
So, in a direct selling company, a distributor (or “agent”) markets and sells products directly to consumers. In our industry, we usually understand direct sales companies to have multiple levels of distributors. But the official term can mean both single- and multi-level marketing and sales structures.
In South Africa, multi-level marketing (MLM) business models are legal as long as tangible products or services are ‘sold’ through their tiered (pyramid-like) network of independent distributors (or ‘agents’) whose job it is to promote and sell these products or services
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