In the game of Multi-level marketing and Network marketing there are several types of structures. A few examples look like these:
The main theme of Network marketing and/or Multi-level marketing is basically to follow the leader. In other words, do what your upline (the person who brought you into the company) does. If he/she buys 4 packs of vitamins a week then you should do the same. If you follow that premise then the wheel will roll as expected. Why try to reinvent the wheel when you already know that the wheel works.
According to Wikipedia Multi-level marketing (MLM) is a marketing strategy in which the sales force is compensated not only for sales they personally generate, but also for the sales of the other salespeople that they recruit. This recruited sales force is referred to as the participant's "downline", and can provide multiple levels of compensation. Other terms for MLM include pyramid selling, network marketing, and referral marketing.
MLM companies have been a frequent subject of criticism as well as the target of lawsuits. Criticism has focused on their similarity to illegal pyramid schemes, price fixing of products, high initial start-up costs, emphasis on recruitment of lower-tiered salespeople over actual sales, encouraging if not requiring salespeople to purchase and use the company's products, potential exploitation of personal relationships which are used as new sales and recruiting targets, complex and sometimes exaggerated compensation schemes, and cult-like techniques which some groups use to enhance their members' enthusiasm and devotion.
Most commonly, the salespeople are expected to sell products directly to consumers by means of relationship referrals and word of mouth marketing. Some people use direct selling as a synonym for MLM, although MLM is only one type of direct selling, which started centuries ago with peddling.
Network marketing and Multi-level marketing have been described by author Dominique Xardel as being synonymous, and as methods of direct selling. According to Xardel, direct selling and network marketing refer to the distribution system, while the term "multi-level marketing" describes the compensation plan. Other terms that are sometimes used to describe multi-level marketing include "word-of-mouth marketing", "interactive distribution", and "relationship marketing". Critics have argued that the use of different terms and "buzzwords" is an effort to distinguish multi-level marketing from illegal Ponzi schemes, chain letters, and consumer fraud scams. Some sources classify multi-level marketing as a form of direct selling rather than being direct selling.
MLM VS Pyramid Schemes According to the website Direct Sales Aids companies that require a minimum purchase to remain active and receive commissions on recruitment can be potentially labeled as a pyramid scheme. The structure of the company is the deciding factor. If the company has little or no product or the product is excessively expensive, it is a red flag. Also a definite red flag is if the main or only focus is bringing in new members that pay a fee for no products. Once you've established what type of structure the business model is, then you want to do what your upline does to achieve the same results that your upline creates. By doing this you are probably (but by no means guaranteed) assured to generate the desired results.
A short introduction to MLM and Network Marketing.