What is the difference between network marketing and pyramid schemes?
I am interested in learning the differences between multilevel marketing techniques and pyramid schemes to better understand my business approach. Thank you.
Network marketing in itself is an industry or business whereas pyramids schemes are just a single part of that network marketing or MLM which can vary from company to company.
Network marketing is the entire business while the pyramid scheme is just a type of network marketing.
Network marketing is a marketing strategy and pyramid schemes are illegal. In network marketing, paid commission distributors and at multiple levels. In Pyramid schemes, paid money upfront.
Network marketing is marketing or selling of products through channels and links. But in pyramid schemes, they build some hierarchy to sell product or services. Pyramid schemes limit the earning of an individual whether in network marketing it depends upon your selling skills.
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Network marketing is called as multilevel marketing or referral marketing. Before you understand, some bodies may describe network marketing is same as a pyramid scheme. But, it’s wrong. Actually, pyramid scheme means ponzi scheme. Who got cheated from any website owners; they called these sites likewise pyramid. At this time, HYIP and forex is mostly coming to ponzi.
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With "Network Marketing" your success is based upon what you put into the business.
Not so with a pyramid scheme, which is just what the name implies...a scheme. You scheme to trick others to join and you make money off of their joining, they in turn, must trick others to join so they can, in turn, make money. With network marketing you make money based upon your effort, your input into your business, not because you cause others to gain membership.
Its a Pyramid scheme when you invest to join the scheme. It is multilevel marketing when you invest in an actual product.
Network marketing is basically utilizing your network to share costs etc when possible in marketing endeavors, sometimes by marketing to and through their channels. A pyramid scheme requires people buy in to the right to sell things often with slim profit margins and shady products.
MLM has a product.You do not get paid when someone joins your Network. Pyramid is Illegal
Network Marketing is a broad subject that is often a quid pro quo arrangements like referral or affiliate marketing between enterprises or entrepreneurs or otherwise to sell their product.
Whereas Pyramid schemes is a concept in networking whereby it encourages membership and recruitment in their network for incentives rather than to sell products.
Please live your contact details i.e. phone numbers, and email addresses, for a quick reply
Legally, a pyramid scheme is when the revenue comes from getting new members instead of selling products. The ratio of revenue from selling products must be greater than from obtaining members under you.
Hi Emmanuel...this link to this article from Entrepreneur magazine best describes the differences. They are by NO means the same thing, and people do tend to lump them together.
LINK TO ARTICLE: http://www.entrepreneur.com/article/35744
If you have any other questions on this feel free to reach out to me at firstname.lastname@example.org!