Differentiating Network Marketing From Pyramiding

Differentiating Network Marketing From Pyramiding

A newer business model is starting to gain popularity among so many company owners. They say the technique is simple, yet the benefits are enormous. If you are a planning to push your business further, you should consider network marketing as a mean to do such. However, side by side with its popularity, network marketing is also dubbed by so many critics as synonymous to the previously popular yet illegal business model, pyramiding. Is there really a difference between these two? This article will try to shed some light in this topic.

Most critics say that network marketing and pyramiding are the same because of the way used by the company to widen the scope of their business. Both of these business models try to encourage all the relatives, friends, and acquaintances of a single person to be involved in the overall business. By doing so, the original recruiter will merit some percentages in the income generated by the company from the persons he or she recruited. This may be true to the second, third, or higher degree of the recruited person. Say, you recruited five persons. Then, each of those persons recruited five persons themselves. All in all, you have helped 30 people to enter the company, and you can receive points for each of those. No wonder this method is succeeding in helping failing companies to recover their liabilities.

However, network marketing is not pyramiding. How is that so? As mentioned before, both of these models take advantage of the relationships of their employees when it comes to the width of the company's scope. The only difference is the catch for those recruitment's. In network marketing, a legitimate service or product is transferred in all the recruitment's. For example, you may encourage others to buy products from you. Afterward, you can also persuade them to be dealers themselves. In pyramiding, no products or services are circulated. It is as if you are recruiting everyone to join a group with the plan for him or her to recruit too. This method has been very shaky in terms of business deals and transactions and many long-time members of a certain pyramid experienced heavy downfalls in their income.

Now, as you consider a certain business plan for your company, try to research more on its nature. In that way, you can further increase its potential, just like the potential that you can get from network marketing.

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