One of the most controversial distribution channel strategies is multi-level marketing. In this method, anyone can become an independent distributor for the product if they pay a membership fee. Distributors earn commission both from selling the product and from recruiting new distributors. In general, distributors recruited into a multi-level marketing network are not trained marketing professional. Instead multi-level marketing companies typically try recruit average individuals with low or moderate incomes who wish to earn some extra money. In turn, these individuals are then encouraged to recruit friends, family members, and coworkers into the network. Well known multi-level marketers include Amway and Herbalife.
Many of you have likely had direct experience with multi-level marketing. Have any of you been a part of a multi-level network? Or has a friend or family member tried to recruit you into one? Or have you purchased a product from one of these types of companies? Explain what kind of experience you might have had, and your overall impression of multi-level marketing. What advantages and disadvantages do you see for this type of distribution channel strategy?
If you haven’t had any direct experience with multi-level marketing, do some research and find a new company that uses this strategy. Does this company seem credible, or does it look sketchy?
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