Pyramid Schemes – Part 2

In the last installment we looked at what exactly determines a pyramid scheme to be just that. In this article we will look at the opposite, network marketing and why it differs immensely from pyramids. Network marketing is a business run by individuals working for a common goal: to sell and market a particular product. The business of network marketing is flexible, rewarding and often based around a lot of fun with fellow team members. A network marketer works from home and many familiar brands are based on the network marketing business model. Network marketing is in no way a pyramid scheme.

So how can we make the difference between a network marketing business and a pyramid scheme?

• Network marketing is based on real products. As a distributor you sell a product or a range of products.
• Network marketing business owners buy their products from the company and sell it to their customer with a profit margin. That is their payment for marketing somebody else’s product.
• Network marketing companies sell directly to their distributors rather than trying to set up a traditional retail environment. They reinvest the money they save into their products and distributors.
• Many network marketing companies are international success stories. They help everyday people like you and me to become very successful and with the potential of making a lot of money.
• As a network marketer your main aim is to buy and sell on products. The practice of recruiting new team members is only secondary.
• Network marketers are part of a bigger team. They normally receive lots of support in the form of training and personal development.

If you are still unsure about the difference between a pyramid scheme and a network marketing company look at their compensation plan. Does it reward new participants for:

1) Mainly introducing others to the program without a product = pyramid
2) Are the marketers paid for selling products = network marketing

A network marketer is normally passionate about their product as it is the key to their success. In building a loyal customer base they enable themselves to earn a recurring monthly income. By sponsoring others into their business as a secondary method they will eventually earn a residual income from the effort of others.

Many network marketing companies work at creating a name brand for themselves right now. They understand the importance of recognition in the marketplace and are working toward achieving this by advertising on TV, sponsoring athletes, actors and other well known people. Don’t become a victim of false perceptions about pyramid schemes and network marketing. It might stop you from becoming a potential high earner by thinking that the respectable network marketing company you are looking to get involved in is in fact a pyramid scheme.