|
Network
Marketing or Multi level marketing (MLM). Many people has heard about it, but
what is it exactly?
Network
Marketing is a different form of marketing instead of the traditional way to
market products. Network Marketing (hereby called NM) is a system where happy
costumers personally recommend products to other costumers. In this way the
company you represent a turnover, where much is given to the distributors in
form of provisions in both direct and indirect sales.
Network
Marketing is an industry
that has a turnover of approximately 140 billion dollars a year around the
world. NM must not be confused with pyramid schemes, which is
illegal.
Quality products/services
Personal
recommendations are already a part
of your daily life. For example we will recommend a good movie we have seen or
a product we are especially happy with. After seeing the movie or trying the
product, our friend may recommend it forward. This depends on the person liking
the product, just like we did. Recommendations are then spread on in a network
of people. This is the principle that Network Marketing uses, and the companies
are dependent on their products/services being liked. If this is not the case,
distributors have a hard time recommending the product/services to other
people. Therefore big and serious companies usually offer products that are
satisfactory, cheaper than other products/services with the same quality or
even better.
Fewer
turnover links
The products that NM companies offer is usually cheaper than the once you find
in your local market. A product you buy in a regular shop usually goes through
different links that makes it more expensive. With retailing up to 90% of the
price you pay goes to cover marketing, advertisement as well as different link expenses
the company has. (See illustration below) A product bought from a NM company
goes right to the consumer. The only thing that is added is the package postage.
Instead of using money on traditional advertisement and expensive links, NM
companies use their money for provisions payment and product improvement.
.
Image:
In ordinary retailing the product goes through many links that make it more
expensive before it reaches the consumer. In Network Marketing the product goes directly
to the consumer, this makes the product more affordable.
Procedures
The procedure
different NM companies use vary to some extent. Often you must invest in a licence
to use their concept. You receive with this also a position in the company
network. After this you are often required to buy products or services from the
company. The company reckons this to be necessary for you to be able to
recommend the products to others and then bring turnover to the company. You
then get provisions of the products you convey to your costumers. The
interesting part is that you also get provisions of the products your costumers
convey forward. So you get provisions from both direct and indirect sales.
What you do as a
distributor in a NM company can be summarized into three points.
1)
Presenting
the company’s product to friends and acquaintances
2)
Presenting
the company’s concept
3)
Teaching
your distributors to do point 1 and 2
“MLM strengthen our lands,
our economy, by giving the opportunity to other people. I have ensued the
growth of this industry for some years now. (…) MLM gives people a chance to
the most of their lives.”
Bill Clinton
|
