Network Marketing

See what Robert Kiyosaki says about Network Marketing

Network Marketing

is a generic term for any business model that is about building a networks of customers and distributors to generate sales of products and services.

Typically a customer will be recruited into a network marketing company from a current distributor through the purchase of a business start-up kit. This kit would include, for example, starter product and information on the company's marketing system.

This type of marketing has earned a poor reputation from over-aggresive recruiters and un-ethical practices of independent distributors desparate for that next sale. Renegade distributors take liberties to get their recruits that the parent company may not endorse. The actions of this poor judgment can get a company in hot water and potentially cause irrepairable harm to its image. When this happens, distributors jump ship and the company could end up collapsing.

Even though there are 100's of well run network marketing companies, people still associate them unfairly as a pyramid or ponzi scheme. Even when franchises first emerged they where labeled a scam, illegal etc. As the network marketing industry matures, more and more of these un-ethical issues are addressed and controls are put in place to remove these practices.

One of the best ways to judge how well the parent company is run is through the actions of the distributor. Look for integrity. If a distributor is bad-mouthing another product or opportunity -STAY AWAY. If you feel they are over-exagerating claims, approach with caution. Only work with people who stick to the benefits and features of their product.

Today, many traditional businesses embrace this form of marketing, it allows them to reach customers they might not otherwise. The massive appeal of this business model is the ability to work from home, the relatively low cost to get involved and the potential for above average income.

Let’s take a look at few types of business models within the scope of that you could be involved in or approached with:

"Top Tier" Direct Sales

Top Tier Direct Sales is a relatively new term, and it classifies premium network marketing companies that have chosen to promote their products utilizing affiliate representatives. A Top Tier Direct Sales strategy does not require the affiliate to keep any inventory, be liable for the products, or be in charge of shipping/handling.

While many of the network marketing home based business opportunities are based on the sales of wellness products, the best and most lucrative opportunities are in top tier direct sales. Generally, top tier direct sales companies have only three products that are tiered with increasing profit levels. The entry level cost is higher but so is the compensation.

This is where your research pays off handsomely.  With a top tier direct sales opportunity, your main goal is to pitch your product, but you can also earn a very healthy residual income through the sales of others who join your team so real products are essential!

Multi-level marketing (MLM)

These companies typically though not always offer reasonably priced products and services that people consume in a short time. Generally, the commission structure is less up-front then the direct sales companies, but it has a benefit that most direct sales companies do not have which is the leverage from building an organization.

Today there are hundreds of companies you can look at, they cover everything from: Beauty products, Communication Services, Internet Access, Nutritional Products, Weight Loss Programs, Water Filtration Systems, Financial Programs, Electrical Power, Solar Power.

Some of the benefits:

• Typically costs less to get involved, from free to a few hundred dollars.
• Easy to follow Marketing system in place.
• Products already in place.
• Ability to work from home.
• It allows more people to become directly involved.
• It can build lasting residual income.
• Leverages the time, experience and knowledge of others.

This business model is about sales and distribution; the ability to sell is an important business skill, however the most successful network marketers don't "sell". They simply provide information based on the customer's needs to allow them make a decision. The hard-sell tactics are old school.

Direct Sales Companies

Direct Selling is a retail channel for the distribution of goods and services. At a basic level it may be defined as marketing and selling products, direct to consumers away from a fixed retail location. Sales are typically made through party plan, one to one demonstrations, and other personal contact arrangements. A text book definition is: "The direct personal presentation, demonstration, and sale of products and services to consumers, usually in their homes or at their jobs."

Industry representative, the World Federation of Direct Selling Associations (WFDSA), reports that its 59 regional member associations accounted for more than US$114 Billion in retail sales in 2007, through the activities of more than 62 million independent sales representatives.

According to the WFDSA, consumers benefit from direct selling because of the convenience and service it provides, including personal demonstration and explanation of products, home delivery, and generous satisfaction guarantees. In contrast to franchising, the cost for an individual to start an independent direct selling business is typically very low with little or no required inventory or other cash commitments to begin.

The United States Direct Selling Association (DSA) reported that in 2000, 55% of adult Americans had at some time purchased goods or services from a direct selling representative and 20% reported that they were currently(6%) or had been in the past(14%) a direct selling representative.

Most direct selling associations, including the Bundesverband Direktvertrieb Deutschland, the direct selling association of Germany, and the WFDSA and DSA require their members to abide by a code of conduct towards a fair partnership both with customers and salesmen. Most national direct selling associations are represented in the World Federation of Direct Selling Associations (WFDSA).

Direct Selling is distinct from Direct Marketing because it is about individual sales agents reaching and dealing directly with clients. Direct Marketing is about business organizations seeking a relationship with their customers without going through an agent/consultant or retail outlet.

By far the majority of Direct Selling companies use a multi-level compensation plan, where the agent is paid not only for their own sales but also a percentage of the sales of other representatives they introduce into the organization and help train.[5]

Some of the world's largest direct selling companies include Avon Products, Amway, NuSkin and Tupperware.

These companies are known as seller-based, they market higher priced, usually one time sales items. The benefits of these programs are you make higher commissions, yet often they have very little if any residual income.

Essentially if you stop working so does your income, you are paid directly on what you personally sell, you have to sell lots and lots of merchandise. This also limits you to the type of people you can bring into your business as the “salesperson” type.

Affiliate Marketing

Affiliate programs fall under the direct sales company model. You only get paid when someone orders a product. There is nothing wrong with affiliate programs, some of them do produce a residual income as customers order the products or services on a continuous basis.

The only issue, I really have with many but not all affiliate programs, is the company then has the customer contact information and they really no longer need you anymore. It then becomes a one time sell for you, a long term contact for them.

If You Are Looking For A Business Education, Network Marketing Might Just Be For You!

Starting and running your very own business is not an easy task. If you’re willing to put in the time to educate yourself, to learn the most important skill you’ll need in life, the ability to sell, then it just might be right for you.

If you not only like working with people, but also helping them get more out of life, then this might just be for you! On the other hand, if you’re only in it for the money, odds are you’ll probably fail!

Doing your "due diligence" is worth it - in fact, it's essential. A few hours of online digging will unearth the few hidden gems of the home business industry. The best organized companies will give you the ability to become well trained in network marketing and use the support from a top notch corporate team to assist you in building your own home business. This combined with a lucrative compensation model and real stand alone products give you a very competitive advantage when you begin to market your products.

This can be a very rewarding career choice, the freedom from punching someone else’s clock, and now having to punch your own is really an eye opener. With todays economy the way it is, uncertain energy prices, working from home makes more sense then ever before.

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