Network Marketing is a business distribution model that allows a company to market their products directly to consumers by means of direct selling and referral, or word-of-mouth advertising. It differs from most other types of businesses in that there are no advertising, wholesale, or retail costs involved (no middle men!).
What do you mean by "No Middle Man"?
One of the benefits of this is that more money can be spent on research, development and manufacturing, which usually results in much higher quality, unique products.
Another plus of the Network Marketing business plan is that some of the money that formerly went to the middle man - advertising, wholesalers, and retailers - is now available to compensate the people who actually promote the products by their word-of-mouth advertising.
These people have their own business, generating income by recruiting like-minded individuals who want to work for themselves, or customers that just want the products and purchase them directly from the parent company, or a combination of the two. They are called associates, distributors, or independent agents, depending on the company. All three mean the sam.
Associates can earn money in the form of commissions based on the efforst of their organization, which includes themselves and everyone in their downlines. These commissions are calculated based on the individual company's compensation plan, which determines how an associate gets paid. There are usually many levels of people getting paid from one person's sales. Also, associates can earn money by retailing products that they buy from the company at wholesale prices.
I've heard of multi-level marketing, or MLM. What's the difference between this and network marketing?
In a word, nothing! The terms Network Marketing and Multi-level Marketing refer to two aspects of the same type of business.
Network Marketing describes how the products are marketed, through a network of people in communication with one another.
Leverage is created by paying commissions on multiple levels of associates as compensation for their efforts. This is what is referred to as the term "Multi-Level Marketing".
What exactly is leverage?
Leverage in this instance refers to being able to earn income on someone else's efforts.
This leverage concept is used by any traditional business with employees. The company pays the employee a salary, which hopefully isn't is as much as he brings in. The owner of the company gets to keep the difference. He is leveraging his income by making profit from the efforts of his employee.
Network Marketing compensation plans are similar in the leverage aspect, but different in one major way: There are no employees, or the associated costs and hassles. They are leveraged off other independent associates instead. These people are also going to work harder, because they own their own business and are more motivated to succeed.
Is This What's Called a "Pyramid Scheme"?
If distributors are paid primarily from money received from new recruits, or if they're required to buy more product than they are likely to sell, then the company may be a pyramid. Pyramids are illegal in all states and most countries. Legitimate Network Marketing companies are not only legal, but thrive in every state and in most countries.
Network marketing companies are not pyramids, though some pyramid schemes try to pass themselves off as legitimate MLM businesses. In most legitimate MLM companies, commissions are earned only on sales of the company's products or services. No money can be earned from recruiting alone, as in sign-up fees.
Want to learn more about the industry of Network Marketing?
First is Brilliant Compensation by Tim Sales. Second is The 45 Second Presentation That Will Change Your Life by Don Faila. Both of these tools are highly recommended for your own knowledge and to show to skeptical prospects. They are both created from a third-party perspective and not for any particular company.
What do you mean by "No Middle Man"?
One of the benefits of this is that more money can be spent on research, development and manufacturing, which usually results in much higher quality, unique products.
Another plus of the Network Marketing business plan is that some of the money that formerly went to the middle man - advertising, wholesalers, and retailers - is now available to compensate the people who actually promote the products by their word-of-mouth advertising.
These people have their own business, generating income by recruiting like-minded individuals who want to work for themselves, or customers that just want the products and purchase them directly from the parent company, or a combination of the two. They are called associates, distributors, or independent agents, depending on the company. All three mean the sam.
Associates can earn money in the form of commissions based on the efforst of their organization, which includes themselves and everyone in their downlines. These commissions are calculated based on the individual company's compensation plan, which determines how an associate gets paid. There are usually many levels of people getting paid from one person's sales. Also, associates can earn money by retailing products that they buy from the company at wholesale prices.
I've heard of multi-level marketing, or MLM. What's the difference between this and network marketing?
In a word, nothing! The terms Network Marketing and Multi-level Marketing refer to two aspects of the same type of business.
Network Marketing describes how the products are marketed, through a network of people in communication with one another.
Leverage is created by paying commissions on multiple levels of associates as compensation for their efforts. This is what is referred to as the term "Multi-Level Marketing".
What exactly is leverage?
Leverage in this instance refers to being able to earn income on someone else's efforts.
This leverage concept is used by any traditional business with employees. The company pays the employee a salary, which hopefully isn't is as much as he brings in. The owner of the company gets to keep the difference. He is leveraging his income by making profit from the efforts of his employee.
Network Marketing compensation plans are similar in the leverage aspect, but different in one major way: There are no employees, or the associated costs and hassles. They are leveraged off other independent associates instead. These people are also going to work harder, because they own their own business and are more motivated to succeed.
Is This What's Called a "Pyramid Scheme"?
If distributors are paid primarily from money received from new recruits, or if they're required to buy more product than they are likely to sell, then the company may be a pyramid. Pyramids are illegal in all states and most countries. Legitimate Network Marketing companies are not only legal, but thrive in every state and in most countries.
Network marketing companies are not pyramids, though some pyramid schemes try to pass themselves off as legitimate MLM businesses. In most legitimate MLM companies, commissions are earned only on sales of the company's products or services. No money can be earned from recruiting alone, as in sign-up fees.
Want to learn more about the industry of Network Marketing?
First is Brilliant Compensation by Tim Sales. Second is The 45 Second Presentation That Will Change Your Life by Don Faila. Both of these tools are highly recommended for your own knowledge and to show to skeptical prospects. They are both created from a third-party perspective and not for any particular company.
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