Pros And Cons of Multi-levelmarketing Or Network Marketing
Multi-Level Marketing (MLM) system or Network Marketing system is a sales strategy in which products are marketed through non-salaried workforce and works based on commission system. MLM companies recruit distributors to sell products and also encourage them to add on more distributors. Doing so it forms multiple layers of workforce where the top layer participants benefit from the sales that the lower layer participants do and also by direct marketing of the products.
Even though MLM is an efficient sales strategy it is not that established in the global market. In this digital era where we have distinguished opportunities, it is necessary to know the pros and cons of things we are planning to venture on.
Here are 10 Pros and Cons of MLM.
Advantages & Disadvantages of Network Marketing
Advantages of MLM Disadvantages of MLM MLM offers opportunities to entrepreneurs. Threaten of scams MLM is a cost effective strategy Low MLM income Flexible schedule Slow growth rate Helps in development of communication skills Rejection and discouragement Mentorship Lack of sales training and support
Pros of Multi Level Marketing
- MLM offers opportunities to entrepreneurs
Multi-level Marketing is a golden opportunity for entrepreneurs. It is easy to start an MLM with low start up cost. One can either make your own product and sell it through your MLM company or opt for distributorship of an MLM company and earn money by selling their products and by canvassing others to the business.
- MLM is a cost effective strategy
Through MLM one can access large customer base with less investment. Since MLM works in multiple layers and the distributors are independent, the company need not pay fixed salaries to the participants and they are benefitted through sales commissions, this makes the sales expenses very low for MLM.
- Flexible schedule
Participants in Multi-level Marketing are free to choose their working time. One can adjust the work time according to the convenience of both the customer and the distributor. In short one can work from anywhere and anytime in MLM business.
- Helps in development of communication skills
Since MLM is a sales strategy and significantly face-to-face marketing is important it helps in the development of communication skills of the participant. Number of presentations and dealings with a lot of customers helps you grow personally. Thus personal development is a side benefit of MLM.
Multi-Level Marketing as the title itself suggests consists of multiple layers of participants. The performance of each participant is very important in making profit. Participants of each layer has a mentor in the upper layer and these mentors helps and guides the participants of the lower layer to make more profit which will ultimately benefit the mentor itself.
Cons of Multi Levl Marketing
- Threaten of scams
There are number of Multi-Level Marketing companies in the market. However this business is affected by number of scams associated with this field. People are afraid of such scams and are reluctant to join such firms. More than the positives the scams diminish the value of this business.
- Low MLM income
The income through Multi-Level Marketing is very low. High competition between MLM firms makes it more complicated for the participants to make profit. The reluctance of people to join and buy MLM products is also a challenge for the participants.
- Slow growth rate
It takes time for the MLM companies to make profit and to become a success. It is a time consuming process to conduct presentations and canvass people to join your firm. This too does not guarantee that the task achieves its aim. People either join or reject the proposal.
- Rejection and discouragement
MLM is not that well established and well received. It takes time for such a business to acquire peoples trust. One can foresee a lot of rejection and discouragement if you are planning to be part of an MLM. You must make believable presentations to persuade people in order to make profit out of your Multi-Level Marketing.
- Lack of sales training and support
MLM does not demand highly professional participants. And also the companies do not provide any specialized training for the participants. This results in the lack of well equipped work force. Knowledge of the business tactics and being updated about the changing market values is necessary to succeed in a business. Well equipped employers are the backbone of a firm and the lack of this requirement will affect the firm very badly.
Pros & Cons of MLM – Conclusion
It is essential to know the Pros and Cons of MLM to know the potential of this field. From these points it is evident that MLM has the potential to succeed in future. Knowing the strengths will help you and motivate you and knowing the cons will help you to focus on the necessary improvements that you need to make in order to succeed in an MLM business.