The Network Marketing Business Model
An Introduction to Network Marketing
What is Network Marketing? A question that is asked thousands of times a day, but one that isn't always properly answered. It is asked so frequently because while many people have heard of network marketing, those that are not in the industry are not 100% sure what network marketing really is.
Network Marketing, also known as Multi-Level Marketing (MLM), is a business model that has been around now for just over 60 years. What makes the network marketing business model different from a traditional business model is that a network marketing business uses direct sales and relationship referrals as the method of selling its products and/or services. This is accomplished through the network of independent distributors / associates working with the parent network marketing company.
These independent distributors / associates are paid commissions for their sales based on the network marketing company's compensation plan. As a distributor / associate's organization sells the products / services the volume that is generated by these sales determines the distributor / associate's income - the more volume the more money that is earned. One of the greatest benefits of a network marketing business is that the distributor / associate is able to leverage the efforts of other people to increase their income. See the bottom of this page for more benefits.
Why Companies Choose the Network Marketing Business Model
Regardless of industry or products, a company's goal is to increase sales and customer base year over year, and from those sales turn a profit. For a traditional style of business the products and/or services that are being sold are marketed and sold through traditional means.
For marketing the traditional company will have an advertising budget. This is used to get the product and/or service in front of the public so that they are aware that it exists and the benefits of using this product and/or service. The company than has to have the proper channels for their products and/or services to be sold, and for this they turn to retail outlets. The retail outlets are what a customer goes to, whether in person or online, and purchases the products and/or services that they saw advertised.
In following this traditional business model, money is spent on manufacturing the product, advertising, distribution to the retail outlets and the retail outlet's mark-up. In a network marketing business model, the money that would have been spent on advertising, shipping and retail outlet mark-up is saved. Instead it is paid out in commissions to the independent distributor / associate.
In today's environment with multiple sources of media everywhere we look, it is becoming more and more difficult to engage people and share a new product and/or service. Network marketing allows companies to get through the multiple levels of distractions and work with an individual's referrals to sell their product. No longer does the biggest advertising budget win, as it can be very difficult, if not impossible for new start-ups to compete with their larger, corporate competition.
Network marketing levels the playing field and allows start-ups the chance to build their customer base. Also as the network marketing model is more directly in contact with it's customers, better customer service can be achieved and thus increased customer loyalties also. Everything from developing new products / services as requested by the customers, to saving the customers money as the "middle man" is no longer present in the business model. It is a win-win situation for the company and it's customers!
Why Network Marketing is Attractive for a Home-Based Business
People are starting their own Network Marketing home based business every single day. There are many benefits to having your own network marketing business. While the list is extensive, here are some of the major reasons:
- Low investment that can yield a high income with extremely low risk.
- A part-time income can be generated without leaving current job.
- Major tax advantages to save money on current household bills.
- Residual income can be created to improve lifestyle.
- Leveraging your efforts and those of others to increase your income.
- Personal development that enhances all aspects of your life.
- Cooperation and friendship bonds that cannot be achieved in other styles of business.
- and many more . . .
If you are just starting your investigation into a home based business that involves Network Marketing, or you are new to the Network Marketing industry, congratulations! You are taking the first steps to creating a life that you create based on your rules.
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