This Video Explains Which Statement is True: Celebrity Endorsements Improve Marketing or Celebrity Endorsements are a Double-Edged Sword.

In the conventional advertising world, celebrity endorsement is very effective. Among the factors for effectiveness includes the fame of the celebrity, the connection with the product or service, whether or not the celebrity is a user and whether or not the statements of the celebrity appear as truly authentic or merely a “pay for endorsement.”

The use of celebrity endorsement is far less successful in the direct selling industry. In fact, the advertising model for MLM is quite different than conventional advertising. In conventional distribution, such as retail stores, internet or broadcast media, companies pay advertising dollars and endorsement fees to promote the brand. However, in direct selling, the commissions and rewards paid to distributors are effectively the advertising dollars that would be paid in other channels of distribution. Instead, the branding, in direct selling, is accomplished by the promotion of the sales network of the direct selling company. Looking at the success of major companies such as Avon, Mary Kay, Tupperware, Herbalife, etc., the branding task has been accomplished by the distributor force, and generally without the use of celebrity advertising.

One final note on celebrity advertising is that the Federal Trade Commission (FTC) has adopted significant rules on endorsements and testimonials to require clear disclosure to consumers of relationships between endorsers and the advertising company. For a detailed discussion, see www.mlmlegal.com article on this subject:

FTC Guidelines on Endorsements and Testimonials Resource Center.

If you are interested in attending the Starting and Running the Successful MLM Companyconference visit our conference page, view our speaker list, or get more details. All executives/owners of direct selling companies are welcome to attend. Call 800-231-2162 to register.

Visit us at www.mlmlegal.com to learn more.

Your cost of goods is calculated as your acquisition or manufacturing cost. The more frequent question we come across relates to pricing. Most MLM experts agree that you must have adequate margins to pay commissions and to make a profit. Different products and services carry different profit margins. In addition, smaller margins may be satisfactory with high-priced products because there is still room for profit. Most MLM companies are likely to pay total commissions equal to between 30 and 45 percent of the price sold to distributors for resale, or prices for which consumers buy directly from the company. A typical company will try to achieve a minimum 5-7 times markup to allow for commissions, overhead and profit. Typical markup for resale by distributors is 25% of their purchase price. A good place to visit this issue is at the MLM Startup Conference, offered by www.mlmlegal.com, where experts discuss margins, pricing, profit, proformas, and a whole lot more.

Learn more business tips at www.mlmlegal.com and www.mlmattorney.com.

If you are interested in attending the Starting and Running the Successful MLM Companyconference visit our conference page, view our speaker list, or get more details. All executives/owners of direct selling companies are welcome to attend. Call 800-231-2162 to register.

Visit us at www.mlmlegal.com to learn more.

Front loading generally refers to a process in which a MLM company, or a sponsoring distributor, encourages a new distributor to purchase far more product than is commercially reasonable under the circumstances. Often the “push” is explained to the recruit as necessary to qualify in the plan. This is an unacceptable practice is often one indicia of a pyramid scheme.

On the other hand, virtually all regulatory agencies recognize that a purchase of an “at cost” sales kit is an acceptable practice in the mainstream of leading direct selling companies. Such mandated kits are typically in the $50-$100 range. They generally entail “hard copy” or online supply of sales and marketing materials as well as ongoing sales and marketing materials updates for a year. Typically the mandated sales kit does not include product and generally a company offers an optional deluxe kit that may include product. Such an optional kit, which is often referred to as a “fast start” kit, may contain several hundred dollars of product. This is not unusual. Although the same regulatory standards on upfront mandated purchases are applicable to party plan companies as they are to other companies, it is not unusual to see party plan companies mandate a beginning starter kit that contains a wide array of products, with a price tag several hundred dollars. Regulatory agencies are very liberal in their view of such mandated purchases in party plan companies because party plan companies are so overwhelmingly retail oriented and the movement of product to retail customers is the norm, and not the exception, for party plan companies.

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Learn more about the network marketing business at www.mlmlegal.com.

Visit us at www.mlmlegal.com to learn more.

Your cost of goods is calculated as your acquisition or manufacturing cost. The more frequent question we come across relates to pricing. Most MLM experts agree that you must have adequate margins to pay commissions and to make a profit. Different products and services carry different profit margins. In addition, smaller margins may be satisfactory with high-priced products because there is still room for profit. Most MLM companies are likely to pay total commissions equal to between 30 and 45 percent of the price sold to distributors for resale, or prices for which consumers buy directly from the company. A typical company will try to achieve a minimum 5-7 times markup to allow for commissions, overhead and profit. Typical markup for resale by distributors is 25% of their purchase price. A good place to visit this issue is at the MLM Startup Conference, offered by www.mlmlegal.com, where experts discuss margins, pricing, profit, proformas, and a whole lot more.

Learn more business tips at www.mlmlegal.com and www.mlmattorney.com.

If you are interested in attending the Starting and Running the Successful MLM Company conference visit our conference page, view our speaker list, or get more details. All executives/owners of direct selling companies are welcome to attend. Call 800-231-2162 to register.

Our next Starting and Running the Successful MLM Company Conference takes place in Las Vegas. View our conference flyer and speaker list online.

Visit us at www.mlmlegal.com to learn more.

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Vocal critics are abundant in the direct selling industry, but the positives drown out the negatives. It’s not hard to find a loud voice criticizing the direct selling industry through a quick Google search. And it is true… there are many pyramid/Ponzi schemes, primarily internationally based, that parade themselves as MLM/direct delling… and they are not. They are merely pyramid headhunting recruitment schemes that often use bogus products and services as an excuse to move money. The entire emphasis of such organizations is to cause investors to pay money and cause others to do the same, with a thin veneer of an actual product or service. In fact, the revenue to pay commissions instead comes from distributor payments and not sales to the ultimate user.

Despite this, the facts remains MLM and direct selling are a major part of the fabric of commerce. Statistics on 2014 sales, compiled by the World Federation of Direct Selling Associations, indicate global sales of $183 billion and 100 million distributors. In the U.S., there are 18 million distributors posting $35 billion in sales. Numerous direct selling companies are traded on the NYSE.

Many direct selling companies have histories dating back to the 1800s (see our MLM company profiles page to read over 700 MLM company profiles). Avon, alone, dates back 130 years. Companies like Avon, Mary Kay, and Tupperware have long and credible company histories and support thousands of households in the U.S. and internationally. Network marketing has a lengthy history of reputable companies. This industry supports millions of independent consultants in the United States and abroad.

Finding a Good MLM Company

How do you find a good MLM company for you? There are ways to make sure that a direct selling company is a good business and ethical. First, contact the industry association websites, such as the Direct Selling Association (DSA), to see if the company is a member and if they abide by the DSA’s Code of Ethics.

Secondly, if you’re considering becoming a part of a startup network marketing company, learn how to recognize some red flags. Is the company offering a tangible product or service? Make sure that the company offers a product or service, and not something intangible, such as prayers or wishes. Does the company ask for an unreasonably-high investment to join? Startup kits average anywhere from $50-$150. If a company is asking for $500 for their startup kit, perhaps you should begin asking more questions. This alone is not a sign of a company operating illegally, but can be a sign to look for additional clues for questionable practices. Does the company focus its mission on primarily recruiting new members and not focus on the sale of product (or service) to the end consumer? A legally-operated MLM company will have a primary focus of selling products (or services) to the consumer, not just in recruiting new consultants.

Be sure to investigate any opportunity that you are considering joining and due your own due diligence. And, if you are starting your own network marketing company, it would be wise of you to hire a credible MLM attorney that specializes in direct selling law.

And probably your best educational resource: check out the hundreds of articles, videos, company profiles, etc. at MLMLegal.com.

If you are interested in attending the Starting and Running the Successful MLM Company conference visit our conference page, view our speaker list, or get more details. All executives/owners of direct selling companies are welcome to attend. Call 800-231-2162 to register.

Visit us at www.mlmlegal.com to learn more.

For more information, visit mlmlegal.com.

Visit us at www.mlmlegal.com to learn more.

For more information, visit mlmlegal.com.

Visit us at www.mlmlegal.com to learn more.

A Conversation with Jeff Babener Video Series: Learn about the difference between the various compensation plans and how distributors are compensated with each plan. It’s called multi-level marketing since distributors are compensated at each level as they recruit more consultants. How many levels are distributors compensated at? Learn about breakaway compensation plans. Learn the difference between sponsors and recruits. Get the definition of each unique compensation plan and which plans are most common and which are less successful. How many levels deep is it most common to go, and legal, to go?

When does a compensation plan become a lottery, which is considered legal by many states? Which programs have stood the test of time, and which have gone by the wayside? Which compensation plan should you choose so that your company is legal and stands the test of time? Learn how to ask the right questions to determine a legitimate operating MLM company vs. a pyramid scheme. Watch the video.

Keep yourself educated on the legal aspects of the MLM industry. Visit MLMLegal.com. Are you starting a MLM company? Make sure you have your legal aspects covered. Contact legal MLM expert Jeff Babener for your free legal consultation today.

Visit us at www.mlmlegal.com to learn more.

Watch this video and more here.

Visit us at www.mlmlegal.com to learn more.

A Conversation with Jeff Babener Video Series: Some companies face issue of manipulation by distributors, with distributors signing up their spouses, children, even pets. This is not so much a legal issue but a standard in best practices for network marketing companies.

Watch the video!

To learn more about the direct selling industry, visit MLMLegal.com!

Visit us at www.mlmlegal.com to learn more.