Multi Level Marketing Vs Business Concept

Before we persuade ourselves to join any MLM company we need to at least understand that its concept is opposite to what a business concept is.

You see, if we are to venture into business, one of the factor that we need to consider is the location where, as much as possible the location we choose have less competitor.

Where in MLM, assuming that the product is consumable such as supplement, beauty product, foods or whatever. Instead of mainstream advertising, the company use the method of direct selling to those who become a member or join the company. The problem sometimes is that, the product that you need to buy or consume regularly to be an active member exceeds your personal usage. So now, you have the option to either sell or give it to whoever might need it. But, if you sell it, you might as well persuade that person to join as you will gain more via points/commission or whatever they call it. So, instead of having a potential customer or buyer you are encouraging the person to become your competitor of the business. So next time, if that person join, he/she doesn't need to buy from you anymore, instead that person becomes like you and he/she will likely do the same as what you did and so on.

This type of system allows you to earn commission from those person you recruited and even earn more if those recruited under you also do the same and so on, but the products requirement to be bought in a regular basis so as to be an active member is as good as only for personal usage. Unless otherwise you only want to become a consumer, the driving force for you to earn actually becomes the recruitment which pose a problem sometime because, for you to persuade other people to join you tend to exaggerate the product result. Well, I guess it will not become a problem if you join because you need the product and need to maintain it in a regular basis, in this case, joining will be to your advantage. But, I think many who were persuaded to join MLM did not join mainly because of the product rather because of the potential to earn as quickly as possible through recruiting.

I'm not saying that MLM is not good in general in fact, It's a good training for someone to learn how to sell something, how to overcome rejection, how to overcome shyness, etc. In Robert Kiyosaki Book " The Cashflow Quadrant", multi level marketing is one of the option should someone wish to venture into business with little capital. According to him, there are three main types of business system commonly in use today.

1. Traditional C Corporation - Where you develop your own system
2. Franchises - Where you buy an existing system
3. Network Marketing - Where you buy into and become part of the existing system.

Each business has strength and weakness, yet each ultimately does the same thing. In the case of network marketing, one of the advantage perhaps is that, it's a lot more cheaper than developing your own system (building a business) and/or buying a franchise. On top of that, if you do it right, your network of people will increase and should the time come where, you have enough passive income to create or develop your own system, at least, you've already establish a broad base of people where you can share, offer, market the system you develop.

With all honesty, I also am into MLM marketing type of company (I'm not active though), the difference is that the products they offer by affilation are different type of financial products available in Philippines such as mutual funds, insurances, real estate and other similar products. Obviously, these type of products are not consumable so, even if I avail one of these investment services in a regularly basis, say mutual fund, since it's not a consumable product, it will not diminish every time I buy or subscribe in it rather the value will increase further plus the possibility to earn interest beating the inflation. And, It's not possible to exaggerate the result of these products since its publicly available.

Disclaimer: This is just my own opinion based on how I understand MLM. I maybe wrong