Is Network Marketing As an MLM a Legitimate Business Model As Compared to Modern Corporations?

Network marketing is regarded as a specific kind of a direct marketing business model comprised of a tiered or multi-level organizational and compensation structure. It is also a blanket term used to include what is commonly called Multilevel Marketing or MLMs. It is my goal to dispel some common misconceptions and redefine the term, network marketing, to a more accurate and acceptable usage. To do this, we need to understand the elements that contribute to its less than stellar reputation in some circles and compare the business model with typical corporate structures.MLMsYour typical MLM structure works by building a marketing and sales organization of independent company representatives. This is referred to as your downline. As a distributor, this model allows multiple branches, legs, and levels of compensation based on your personally generated sales and for building your own downline of distributors. This hierarchy of multiple levels takes a form similar to a family tree. Your sales and downline growth of other distributors introduced into your downline contribute to your levels of compensation also.It is legitimate and honorable if you, as a distributor, are just trying to sell products you believe in. But to actually earn sustainable and passive income in most MLMs, you need to build your downline, regardless of how much product you sell. So, training tends to focus on emotional hype to motivate you into aggressive prospecting which can cause you to lose sight of the actual products you should be marketing.Where do you suppose you are told to start your MLM business? Your warm market, of course. That is, all your family, friends, and any people you know and associate with. Many people are uncomfortable with that, often putting strain on your personal and relationships and associations. That is what turns people off. Once you tread through that warm list, cold calling is what you are left with. If you actively promote your business opportunity in an off-putting and unrelenting manner, you may soon discover folks wanting to run and hide when you show up.MLMs are legal and legitimate entities as long as there is emphasis on product sales and delivery. However, these are characteristics of MLM systems that can undermine their reputation and desirability. Virtually every MLM company has been historically limited to practices that require face to face contact (a.k.a. personal networking). MLM network marketing itself is a good thing and if done respectfully and politely is beneficial toward driving a vibrant economy.MLMs vs Typical CorporationsWhen you look at businesses as a whole, multi-tiered style organizations are just the way of civilization. Let us take a peek at a typical corporate organizational structure:- CEO - President- CFO - CIO - COO - Exec. & Sen. Vice Presidents- General Manager and/or Department Directors- Mid-Level Managers- Lower Level Managers and Supervisors- Assistants and EmployeesCorporations operate under this type of management structure with all the employee levels. Each has its own degree of responsibility and financial compensation. Each department is essentially its own entity with its own specific roles. Usually, these roles do not crossover to other departments.Take a look at your own employer's organization tree or chart and you will be enlightened. See the family tree form? It is very important that you notice this overall structure is a multi-level structure similar to MLM systems.Each pay rate is generally negotiated or, at least, agreed upon at hiring and remains within a given range regardless of how long you are employed or how much production is achieved. There is a ceiling on your income and promotion opportunity is severely limited.Revenue for operations and profit come from the efforts of marketing and sales departments. This is a direct result of the advertising campaigns and sales personnel. The revenue goes to overhead, salaries, and wages first, then the bottom line profits are benefiting, primarily, the owners and stockholders.Multi-Level-Marketing companies also utilize a multi-tiered structure. Here, this structure combines the organization's levels, marketing, and sales into very financially attractive compensation plans. A major difference is that instead of having huge marketing and advertising departments, the company's independent distributors undertake those roles through networking with people and their own marketing efforts.In an MLM, the advantage is that revenue is spread out to those distributors according to their production and downline performance. The traditional ceilings put on corporate salaries do not exist due to the multi-levels of compensation. This also provides for potential earnings without actual involvement in sales transactions.In the industry, this is known as residual or passive income where you get paid from sales and efforts of people in your downline. Although there are inherent risks and no income guarantees, the income potential is exponentially greater than the traditional salary.MLMs are multi-level organizations, and are perfectly legitimate ways to do business. Face it, every company has a multi-tiered structure with a variety of specific organizational trees and layouts. But, traditional MLMs have acquired a less than desirable reputation in many circles due to the often persistent and sometimes irritating prospecting techniques that have been taught and practiced.Network marketingThe category of network marketing has inherited a bad rap. Mostly this is due to the common questionable tactics that many MLM companies are in the habit of using.Often people have bombarded their friends, family, churches, and their other associations with their MLM business. Once they get to the end of their list, they are relegated to cold calling. People are not bothered by the product promotion, but they are turned off by the over-zealous prospecting techniques. The way warm market and cold call prospecting is done is the main cause of network marketing, as an industry, to often be looked upon with suspicion. Unfortunately, many MLM companies still limit their distributors to this way of promotion.True network marketing is simply a natural flow of conversation and interaction between people. Actually, all marketing is really based on networking. True network marketing is the basis for a robust economy or lack thereof. (People talk, you know.)A company and its product reputations are based on networking. The most effective advertising counts on networking for people to talk about and tell friends and neighbors about. The job of any salesman would be significantly more difficult if it were not for people telling others about their positive experience with their products.Hollywood movie producers count on people telling others how much they loved that last film. Auto manufacturers count on people telling others how great their car is. When the stock market grows, people invest based on what others are doing and advising them to do. The reverse of these is true also. These are examples of how networking works. It is universal.It is when companies or systems take undue advantage of human interactions for the sole purpose of profiteering that MLMs and the network marketing industry get embroiled in controversy. And I am sure you realize that regular corporations are not immune from financial controversy. That lack of integrity and less than ethical way of conducting business is the root of popular distrust of the industry.It is sad when bad people screw up good things. That is what has happened to the term network marketing. If it were really a bad thing, we should just never want to leave our house or interact with others. So, you need not worry. Take a deep breath and relax; networking is a good thing.Solutions?Human beings are flawed. There will always be potential for disruptive conduct and dishonest business practices. It is the nature of humanity to have choices. There is no solution to the human problem other than death. And there is no choice in that. Since there is no solution, at least, there are ways to minimize and counteract the damage. Modern technology has provided some tools we can use to go around the sticky problems of the undesirable MLM practices. I introduce to you the World Wide Web (a.k.a. the internet).Internet technologies have given you many ways to do business, even MLMs and other types of networking, in an electronic arena. You are no longer bound to prospect through your list of family, friends, and associates and do the dreaded cold calling to have a vibrant enterprise. I urge and recommend you check out these electronic possibilities online. These opportunities have never existed prior to the birth of the internet. Electronic networking opens up whole new vistas of potential social engagement and money making ideas.You and I network every day and we never think about it. Society will continue to go on with its networking ways. If we stop networking, whether it be in marketing or social interaction, society will come to a grinding halt! All you can do as an individual is to act with integrity and behave ethically in all your human relationships, including all your internet activities. You will reap what you sow. If you sow happiness, honesty, and some empathy, you will cultivate great relationships. And hopefully make some money while you are at it.