All the industry run their business either by selling their product or service. So to promote the service or to sell the product we need to do Marketing. Marketing is a business process followed to satisfy the customer needs by maintaining a good relationship with the customers to sell the product or service of the business owner.
There are many types of Marketing. In that, we will discuss Direct selling and Multi-Level Marketing.
What is Direct Selling and Multi-Level Marketing?
Direct Selling and MLM ( Multi-Level Marketing) are two types of Marketing followed in the Marketing industry which promotes the business of the owner either by selling the product or service directly or by forming a network. The business owners may offer many plans to the customers. The plans offered by the business owner is to attract customers and to expand their business worldwide.
In detail, we will discuss these two types of Marketing.
What is Direct Selling?
"Direct Selling" the word itself refers to Direct. It means that here the business is promoted directly to the customers without any intermediaries. If a person or any business owner sells the product or service directly to the customers then it is called as Direct selling.
What is MLM?
MLM is Multi-Level Marketing. It is also a type of Marketing followed by many years to promote the business in multi-level. Multi-level itself indicates that there will be an intermediary between the business owner and the customer where the intermediary is non-salaried but gains a particular profit of the business depending upon the plans decided by the owner. It is also known as referral marketing.
Hope now it is understood about Marketing and the two main types of Marketing. Now will see the differences between Direct Selling Vs MLM.
Read more on: Understanding Multi-Level Marketing and Pyramid Scheme
The differences between Direct Selling Vs MLM
The word refers to direct, so no intermediary in Direct Selling business process. Whereas in MLM, the word itself refers to Multi levels, so there are intermediaries or third parties involved in multi-levels.
In Direct Selling no referral is required. The salesperson directly sells the product or service. Whereas in MLM, It is also known as referral business. Any user can refer another user to join the business and promote the same.
In Direct Selling, the whole profit of the product or service is gained by the owner or the salesperson. In MLM, the intermediaries are non-salaried but they gain some profit or commission in this business process according to the compensation plan.
No intermediaries in Direct Selling but there are multiple intermediaries or third parties involved in MLM business process.
Direct Selling resembles a straight line structure model since the business owner directly sells the product to the end consumer. MLM follows tree like structure. The tip of the tree refers to the business owner and it branches into the new users joined in the business. The newly joined users recruit another set of users to expand the business with multi-levels and so it is called Multi-Level Marketing.
The business profit is only for the owner of the business or to the salesperson in Direct Selling. In MLM, the compensation plan is decided by the owner of the customer.
No plan is followed in Direct selling. The compensation plan or commission for all the intermediaries or third parties are customized by the business owner or salesperson
In Direct Selling, the salesperson maintains a direct relationship with the customer by demonstrating the working model of the product or by describing the benefits of the product or service. In MLM, there is no direct relationship with end consumers.
In Direct Selling, they promote the business by meeting the end consumers directly. In MLM, it is called network marketing, they build a tree- like structure and the compensation plans like Binary plan, matrix plan, and Unilevel plan are followed.
In MLM, the products or service is promoted in each level of marketing and it is also known as network marketing. The promotion is done faster than the Direct Selling.
MLM marketing is considered more efficient than Direct Selling.
In MLM, the salesperson has to make another user join the business to earn the compensation or commission whereas the salesperson has to describe the product or service to the group of people directly to earn the profit.
The effort involved in Direct selling is more when compared to MLM. Here in Direct Selling the individual salesperson has to promote the business whereas in MLM there is a network to promote the business.
In MLM, the profit for the business owner is always multiplied when there is a sale of the product at any level of marketing. In Direct Selling, the profit is earned only once per sale of the product
Conclusion
These are the differences between Direct Selling and Multi Level Marketing. Both have their own advantages and disadvantages. Network Marketing is considered to be more efficient when compared to Direct Selling because there is a network of people to promote the business but still there are traditional business process like Direct Selling followed successfully in our country.
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