How does multi level marketing works?

Answer 1

Multi level marketing, commonly referred to as MLM, also known as network marketing, is simply one of many ways of selling products or services by a company to customers. It is based on the belief that word of mouth promotion is superior to more traditional advertising, and more efficiently moves company products dollar for dollar than most other advertising means.

By offering monetary incentives far greater than you would find for a company salesman selling the same product, the lure of wealth and riches is usually the carrot that brings people into the MLM or network marketing business. Even though the products and services may be purchased directly from most companies without becoming a distributor, most people opt for spending a small amount for a "business kit" from which they can derive their products for free if they just refer a few people. Thus, network marketing companies make a great majority of their sales to distributors, as opposed to customers who are not involved in the business even though many of those distributors many never refer a single person or even sell a single product.

Answer 2

Multi-level marketing allows a person to earn not only for their own sales but also for the sales of people that they recruited or referred. Pyramid schemes are a type of multi level marketing.