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Herbalife might be seen as a multi-level selling approach company, which leads to creating a downline of distributors and a hierarchy of multiple levels of compensation. It is based many times ondirect selling to consumers by sales people, by means of relationship referrals and word of mouth marketing.
As in every company with this type of selling approach, in addition to profits from productsales, Herbalife distributors might earn additional commissions from sales by their “downline” distributors. Many people support this MLM (multi-level marketing system), arguing that it is a faircompensation system, while others criticize this one by pointing out similarities between it and the pyramid scheme. The pyramid scheme, which sometimes is confounded with the multi-level one can be seena non-sustainable business model, which involves promising participants some payment or services, primarily for enrolling other people into the scheme, rather than supplying any real investment orsale of products or services to the public. It is considered illegal in almost every developed country.
Well, as said before, multi-level marketing is marketing system which puts more emphasis upon therecruiting of distributors than on selling products. As such, it seems to be intrinsically inconsistent. MLM might seem very attractive however, due to the fact that it sells hope and appears to beoutside the mainstream of business as usual. It promises wealth and independence to all. Unfortunately, no matter what the product, MLM is doomed to produce more failures than successes. For every MLMdistributor who makes a decent living or even a decent supplemental income, there are at least ten who do little more than buy products and promotional materials, costing them much more than they willever learn as an agent. The reason why multi-level marketing and selling schemes cannot succeed many times is that it consists, in essence, of a legal pyramid scheme. The basic concept is for a...