Pyramid Promoting Vs Mlm
De BISAWiki
Sometimes when wanting to explain Multilevel marketing (or Mlm) to a possible recruit you'll hear the words "ah but isn't that pyramid selling?
Many people confuse Pyramid Promoting with Multilevel marketing because of the structure network marketing review of your compensation plan with its numerous levels, tiers or positions within the organisation. Prior to I attempt & clarify why this confusion occurs lets first discuss what exactly Pyramid Selling is (or was, since it's been illegal for many years).
A typical Pyramid Promoting scheme would work like this; at the top from the pyramid would be the founder or founders of the organisation who would have a product that they wanted to get to market (or that's what they would tell recruits) so they recruited other individuals to sell the products. These new recruits would be required to buy a certain amount of product at a "wholesale price", its more than likely that the price would be determined by how much product they bought, therefore encouraging recruits to buy lots of product to get it cheaper. There would be a "retail price" for the product which was the price for the general public, however recruits would be encouraged, often through incentives, to recruit others & get them to buy product at the "wholesale price" plus a mark-up, these 2nd tier recruits would be encouraged to do the same i.e. recruit more persons & get them to buy product at a further mark- up. This method would be duplicated, creating many levels or tiers.
The major flaw in this type of organisation was that most of your product was bought by recruits & not customers & if a recruit was on a low tier they would be buying product at a wholesale price that was greater than the retail price, meaning that the only way they could get rid of product would be to attempt & get more recruits to buy from them. This is why lots of individuals ended up with garages full of product that they couldn't get rid of. The only individuals who benefitted from this type of scheme were the founders in the organisation & possibly the top couple of tiers of recruits. As this system was mainly focused on recruiting reps & not customers, plus the way it was inherently unfair on most reps it was made illegal in most countries.
So why do persons still confuse this illegal system with Multilevel marketing? It's as a result of the layers or tiers of reps or recruits that may spark a long distant memory with the bad publicity that surrounded Pyramid Selling. When these companies many years ago held recruitment events they would draw out the structure in the organisation in a Pyramid Shape showing the different levels or tiers that recruits would be placed upon depending, often on how much product they bought or how many persons they had recruited. If you see someone explaining a Multilevel marketing business structure today you are going to still see that it has levels or tiers within the shape of a Pyramid & so this is where sometimes - I have to say not very often - someone will confuse it with the old illegal Pyramid Promoting. One thing to bear in mind is that if you draw out the structure of any company you may find it's in the shape of a Pyramid!
Multilevel marketing today is a much respected form of direct selling & has worldwide sales of $167 Billion, a far cry from the old days of Pyramid Promoting. Exponents of Network Marking include Robert Kiyosaki, Donald Trump, Bill Gates, and Warren Buffet. Indeed Bill Gates is quoted as saying "If I would be given a chance to start all over again, I would choose Network marketing.
If as a new recruit to Multilevel marketing you come across the "Pyramid Selling" question, you should handle it like this; first of all ask the person what they mean by pyramid selling, if they explain it like the illegal method above, simply say - I can understand why you might think that, however, no it's not like that at all, as that is illegal & you know I wouldn't be involved in anything illegal. If they describe it as the legitimate Mlm way of marketing and advertising then simply agree with them & say yes that's correct only it's not called Pyramid Promoting anymore as that name was associated with an illegal form of selling.
