MLM and Pyramid Diet Pill Marketing Schemes

There are a number of diet supplement companies that actively look for distributors and seem to provide a start up business plan around multi level marketing. Skinny Fiber, Plexus Slim and Secret Diet Drops are just three diet pill suppliers we have recently looked at who offer a way into network marketing.

Probably the most famous company who follows an MLM business plan is American Company Herbal Life who sell nutritional products, and of course many people have heard of Amway – which does the same for household cleaning products, Avon and Tupperware!

Home Based Business – Sounds Like a Good Idea!

It sounds great and looks like an easy way to make extra cash or even provide a full time income but you need to be careful. Money and marketing is not always as straightforward as it seems and of course, the product you are looking to sell, needs to be something that customers may want.

If you are considering marketing diet pills yourselves, you need to think carefully before you commit.

Source: http://www.cnbc.com/id/100364484

Which Product?

Your friends and family will not thank you if you sign them up to diet pills that don’t really work. You need to keep a clear head and not be taken in by persuasive sounding schemes that may not work as advertised.

In addition, if your friend or relation has just started selling diet pills and makes a convincing argument about why you should buy, you need to be careful because their interests may not be the same as your own. They may need to sell, but do you need to buy?

Choosing a diet pill product can be a minefield. How do you know it works and even if it works for you, do you thoroughly understand it? Can you answer questions and do you understand the ingredients? Some supplements cause side effects or interactions with other medication and you need to be confident that you are staking your reputation on something that deserves this belief. Sometimes it is easy to lose sight of the product because of the business opportunity so you need to be sure it really deserves all your time and effort?

The world of network marketing can be extremely cut throat and competitive. If you join an MLM, you are encouraged to sell to your family friends and workmates so you are soon going to strain relationships.

Even if you really believe in the product, you need to consider how much of it you can sell. You might think it is not a problem because there are plenty of online sites, such as eBay where you can sell your diet pill, but of course, you are likely to face some competition from other distributors.

A market can become saturated extremely fast and when you join a multi level marketing scheme, you do not get any exclusive distribution rights.

When this happens and you run out of places to sell, you have only one option and that is to recruit other people to sell. You need to establish your own network.

If this is the only way to make any money as a distributor then you have just moved from network marketing or MLM into the world of pyramid selling.

Source: http://www.mlmwatch.org/13Victims/wary.html

Multi-Level Marketing (MLM) Pyramid Selling, Network Marketing

Multi level marketing, pyramid selling, network marketing are all business models that some people think are one and the same thing.

They do have similarities but are not identical and the important point to remember is that pyramid selling is illegal and MLM and network marketing is not. According to many economists, they should be but at the time of writing MLM or network marketing is a perfectly legal business set up.

The similarity comes in the shape of the business model, which is shaped like a pyramid. The company sits at the top and below the supplier is a network of distributors.

Imagine the company starts with three distributors at the top of the pyramid. They all recruit two new distributors so now there are six at the next level down. Carrying on at the same rate it expands rapidly.

12
24
48
96
192
384

Essentially, it works like this. You are recruited as a distributor and you pay for training, in some cases “official” publicity materials such as leaflets. You have to invest in some stock as well. This will be at a discounted price leaving you room to make a profit.

You might receive motivational messages and attend seminars that will help you. Many MLM ers become fanatical and work extremely hard to achieve perceived targets and levels and if the promised success is not met, many people are likely to blame themselves and just try harder.

Many MLM distributors do not have much experience of selling but a feature of MLM is the network-marketing angle. Network means your personal network, your friends’ family, colleagues, neighbours, the leads you find, and the people you meet.

It can work. If you simply focus on selling your stock, you might stand a chance of making your money back. This is the way that you are supposed to do it and it may be possible, but the feature of MLM is that you are also encouraged to establish your own network or “downline”.

You recruit people to sell the product as well and you receive a percentage of their initial payment to enter the scheme and in some cases a share of their takings.

This means that you now may have just initiated a whole network of sellers, and they are all indirectly working for you. Sounds great, but hang on!

They have to make money too and so they in turn recruit people, who all need to make their investment back and sell the product. If they cannot manage to do this, their only option is to recruit new distributors.

The big problem is that in some cases you don’t make money from selling the product, so your best return comes from recruiting other people and this is where direct marketing or MLM turns into pyramid selling.

It is like a chain letter, most people are going to lose. Once an MLM scheme is open to the public, the likelihood is that the lucrative positions at the top of the pyramid are sewn up by the company.

The problem for many people who are working in the network marketing scheme is that they cannot see it. It is easy to get caught up in the scheme and believe in it, especially if you have already established a downline. The MLM business never says, “We have enough distributors, let’s stop hiring people at this point,” More and more people sign up as distributors and very soon the supply completely outweighs the demand.

Source: http://www.vandruff.com/mlm.html

So What’s The Difference Between Pyramid Selling and MLM?

A pyramid selling scheme relies solely on recruiting new members in order to continue. It is all about establishing a network and earning money from the commission on start up fees, whereas an MLM scheme sells a product via a network of distributors. The fact that commissions are usually involved in MLM schemes too often blurs the distinction.

The FDA offers the following advice.

Steer clear of multilevel marketing plans that pay commissions for recruiting new distributors. They’re actually illegal pyramid schemes.

Why is pyramiding dangerous? Because plans that pay commissions for recruiting new distributors inevitably collapse when no new distributors can be recruited. And when a plan collapses, most people – except perhaps those at the very top of the pyramid – end up empty-handed

So What Is A Realistic Estimate Of The Money You Can Make?

According to financial advice, 5% of the people involved in MLM schemes make 90% of the money and despite the promises of getting rich quick; you have to be lucky to achieve this. There are over 700 plus registered MLM companies currently operating in the USA and business is flourishing in light of job losses and unemployment.

Source: http://www.financetwitter.com/2008/12/mlm-pyramid-scheme-to-join-or-not-to.html

According to the Times, a Government investigation of Amway revealed that in the UK less than 10% of distributors made any money at all.

Roland Whitsell is a former business professor with over 40 years experience in researching MLM said in an article in USA Today;

You’d be hard-pressed to find anyone making over $1.50 an hour, the primary product is opportunity. The strongest, most powerful motivational force today is false hope

Source: http://usatoday30.usatoday.com/money/industries/retail/2011-02-07-multilevelmarketing03_CV_N.htm

So What About Diet Pills and MLM Marketing?

You may be lucky and find a great diet supplement product that you can sell, and you may make some money at it but it is likely to be short lived. Most products sold via MLM schemes are not going to be able to sustain a high level of customer interest for very long. When it comes to diet pills, this is an extremely competitive market with thousands of products on sale. You are up against the rest of the world as well as your MLM competitors and you need to ask yourself why anyone is going to choose your product over another.
The FDA has composed a series of questions you need to consider, before signing up to a network marketing scheme.

• Investigate the company’s track record
• Learn about the product
• Ask questions
• Understand any restrictions
• Talk to other distributors (beware of shills or rings that try to get you on board for their own profit)
• Consider using a friend or adviser as a neutral sounding board. What’s your gut reaction?
• Don’t be rushed into making quick decisions
• Think about whether this plan suits your talents and goals

Source: http://business.ftc.gov/documents/inv08-bottom-line-about-multi-level-marketing-plans

For diet pills you also need to consider the safety of the supplement you are considering selling.

• Is it safe and does it work?
• Does it look like a scam
• Would you feel comfortable recommending it to people you care about…honestly…
• Are you confident that the supplement has been manufactured according to strict legal standards and safety measures

After all if you are recommending people take a supplement, you are not going to feel great if it all backfires. You might lose money yourself and even worse if the diet pill is revealed as a scam or even dangerous, you will need to consider how this will implicate you and how you will feel if your customer’s health is compromised by your pills.