Question

Chris Cole is a salesperson for Green Scene Lawn Care products. Chris' job requires him to sell Green Scene products, but he is also expected to recruit more salespeople for the company. He will earn a commission on all of the sales earned by the salespeople he recruits. Green Scene is using a retail distribution strategy known as multilevel marketing.

a) True
b) False

Answer 1

A) True

Step-by-step explanation:

Multilevel marketing is used by companies that engage in direct sales marketing and where each new salesperson or distributor must recruit more sales people to expand their activities. Some of the most famous multilevel marketing firms in the US are Avon and Herbalife.

The salesperson or distributor earns a fraction of the sales commissions that his/her recruited sales people sell. It is called the distributor's downline, and is shaped like a pyramid. In some countries this type of business is illegal because it works like a Ponzi scheme where new salespeople are recruited every time and in order to start working they must buy a certain amount of products. So a large percentage of the sales are made to other salespeople instead of customers.