Pyramid Promoting vs Community Promoting
De BISAWiki
From time to time when trying to clarify Network marketing (or Community advertising and marketing) to your possible recruit you are going to hear the words "ah but is just not that pyramid marketing?
Some people confuse Pyramid Promoting with Multilevel marketing due to the framework from the payment prepare with its a variety of levels, tiers or positions within the organisation. Prior to I attempt & explain 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 of your pyramid would be the founder or founders from 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 men and women 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 people & get them to buy product at a further mark- up. This method would be duplicated, creating many amounts or tiers.
The major flaw in this type of organisation was that most in the 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 check out & get more recruits to buy from them. This is why lots of men and women ended up with garages full of product that they couldn't get rid of. The only people today who benefitted from this type of scheme were the founders on 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 Network marketing? It's due to the layers or tiers of reps or recruits that may spark a long distant memory from the bad publicity that surrounded Pyramid Promoting. When these companies many years ago held recruitment events they would draw out the framework with the organisation in a Pyramid Shape showing the different concentrations 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 Network marketing business composition today you will still see that it has amounts 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 Marketing. One thing to bear in mind is that if you draw out the framework of any company you might find it's in the shape of a Pyramid!
Multi-level marketing today is a much respected form of direct offering & has worldwide sales of $167 Billion, a far cry from the old days of Pyramid Marketing. 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 Community Internet marketing.
If as a new recruit to Multi level 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 advertising, if they make clear 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 Multi-level marketing way of advertising then simply agree with them & say yes that's correct only it's not called Pyramid Marketing anymore as that name was associated with an illegal form of promoting.
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