What is Multi-Level Marketing or NETWORK MARKETING?
Multi-Level Marketing or Network Marketing and sometimes called Direct Selling is the distribution of product or service through word of mouth on a person to person basis. Direct selling do away with fixed retail location or storefront. Distribution is done by independent sales representatives, sometimes referred to as consultants, distributors, sales agents or other titles, by communicating directly to the costumers by going to their homes, offices or through internet, phones, or other form of communication. Direct sellers are not employees of the company. They are independent contractors who market and sell the products or services of a company in return they earn mark up profit, bonus, commission, overrides and other incentives. Almost all kind of goods and services can be sold this way. It is a market distribution model wherein the Multi Level Marketing Company distributes the product or services through an Independent Representative (IR) who also recruit and train another Independent Representative, creating a hierarchy of IR's. This representative earns from his own sales and that from the sales of his recruits or down lines. As members of the MLM company, the IR's get discounts on the products they buy from the company and sell it with a margin of profit. Aside from the mark up profit from their sales, they also earn commissions, bonuses, overrides, etc. from the sales of their downlines, downline downlines and from their group several levels down.
Why We Choose Networking?
Among the different market distribution models, MLM is the most effective model in distributing products and or services. This is the reason why the MLM industry creates more millionaires out of ordinary people without formal business training and education than in any industry combined. However because of its effectiveness, some use it in Pyramiding activity creating a bad reputation to the Multi-Level Marketing industry. To dissociate themselves from companies doing illegal activities, legitimate Multi-Level Marketing Companies organized an association among themselves with strict regulations to be followed. This way, pyramiding companies pretending as legitimate MLM company are identified and separated from legitimate MLM companies for they could not abide with the strict criteria adopted by the association. Worldwide, we have the World Federation of Direct Selling Association (WFDSA)and Multi Level Marketing International Association (MLMIA). In the Philippines, the mother association of legitimate Multi-Level Companies is the Direct Selling Association of the Philippines (DSAP).
Why We Choose Networking?
Among the different market distribution models, MLM is the most effective model in distributing products and or services. This is the reason why the MLM industry creates more millionaires out of ordinary people without formal business training and education than in any industry combined. However because of its effectiveness, some use it in Pyramiding activity creating a bad reputation to the Multi-Level Marketing industry. To dissociate themselves from companies doing illegal activities, legitimate Multi-Level Marketing Companies organized an association among themselves with strict regulations to be followed. This way, pyramiding companies pretending as legitimate MLM company are identified and separated from legitimate MLM companies for they could not abide with the strict criteria adopted by the association. Worldwide, we have the World Federation of Direct Selling Association (WFDSA)and Multi Level Marketing International Association (MLMIA). In the Philippines, the mother association of legitimate Multi-Level Companies is the Direct Selling Association of the Philippines (DSAP).
NETWORK MARKETING - THE PERFECT BUSINESS
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Guide to FILIPINOS who wants to be involved in Multi-Level Marketing.
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8 Point Test Proving that the MLM Company is Legitimate.
1. Is there a product/services involved?
2. Is the earning from product sales and not from entry fees from recruits?
3. Is the main purpose is to sell product and not to recruit?
4. Is the main source of earning from product sales and not from recruiting?
5. If recruiting is stopped, will the members still earn?
6. Is there an investment back policy?
7. Is the product has a fair market value?
8. Is the product has real value?
The answer must be true to all of the questions above. If you have no as an answer to any of the questions, BEWARE!!
The Securities Exchange Commission of the Philippines (SEC) requires every MLM company to abide by the Anti-Pyramiding Law (RA 5601) (na nagsasabing dapat hindi bababa sa 73% ang produktong kapalit ng pinuhunan n'yo). that requires at least 73% of the amount invested must be given to the investor in the form of product and service.
Proof of Legal MLM Company in the Philippines.There are many companies in the Philippines claiming that they are not into PYRAMIDING activities. They show proof that they are registered with the Securities and Exchange Commission, the Department of Trade and Industry, they have Mayors Permit, an office and a product. All these does not prove that they are legitimate Multi-Level Marketing (MLM) company allowed to operate in the Philippines. All these proves is they are allowed to operate a business but not a MLM business. Article 53 of R.A. 7394 of the Consumer Code of the Philippines states "Chain distribution plans or pyramid sales schemes shall not be employed in the sale of consumer products." and RA 5601 or the Anti-Pyramiding Law requires that at least 73% of the amount invested by an investor in a MLM company must be given back in a form of product and services.
Therefore, aside from the legal requirements of establishing a business, a legitimate MLM company must provide product and service to an investor equivalent to at least 73% of the amount invested to the company. If say the entry fee is Ten Thousand Pesos (Php 10,000.00) at least Seven Thousand Three Hundred Pesos (Php 7,300.00) must be given back to the investor in the form of product and service.
Another requirement is that the company must not be into PYRAMIDING activity. Pyramiding is a fraudulent moneymaking scheme in which payments of recruits are given to others above them in a hierarchy while expecting to receive payments from people below them. Recruiting is done to increase sales not as a main source of income.