Now and then you must have come across the term “Network Marketing” where either a friend of yours was trying to recruit you to be a part of his network or you receive an email saying you can earn millions with the power of the internet. Whenever someone approached you with a business, you resisted getting involved as you were unaware of what exactly is Network Marketing and how your being a part of it will help your friend or how through Internet you can earn millions.
So, to make a decision you should understand what exactly Network Marketing is. And how it is changing the life of big businesses and individuals.
Network marketing, also known as multi-level marketing or affiliate marketing refers to a pyramid business model where people sell a company’s product or services through their network. Here the participant is referred to as Individual Business Owner (IBO). In this marketing model, a participant is remunerated on a commission basis. Every time the participant in a network acquires a sale, they and their upline are compensated with a commission on that sale.
In simpler terms, in this pyramid model, a participant is paid every time they make a sale or a person recruited by them in their pyramid makes a sale. There is no specific qualification required to be a participant in this model. Still confused? Here is an example:
A person “A” recruits a person “B” under him to sell the products of “X Company”. For every sale “A” makes he will get a commission on it. And for every sale “B” makes he will get a commission on it but a part of that commission will be credited to “A” as “B” was recruited by him. So, “B” further recruits “C” & “D” under him where “B” gets a part of the “C” & “D” sales commission. This way they create a pyramid.
Now, the question arises why someone should enrol in Network Marketing. How they will be benefited from it and why they should do it.
What’s there for an individual in Network Marketing?
No Specific Qualification Required
If someone is a people person and know how to persuade others, then they can make a good career in Network Marketing. The main requirement in Network marketing is how a person sells the product and recruits new people who can increase the sale.
- No Salary Cap
There is no fixed salary in Network Marketing. A person earns as much as he can sell. The more they sell, the more they earn.
- Be your own Boss
In-Network Marketing, everyone is accountable only to himself. They work as per their timings and as per their free will.
- Eligibility for Discounts on Services
A participant is also a consumer and once a participant is associated with any organization they get additional discount on products & services offered by the company.
How Network Marketing is benefiting the organizations:
- Direct Selling
In-Network marketing, Organizations sells the product directly to consumers without using any well-defined channel of distribution. The consumer is responsible to sell the product wherein for every sale they make they are compensated with a commission.
- No Advertising
Through Network marketing, companies save a ton of money which they would have spent on advertising to create a demand for their product in the market.
- No Employee Cost
An organization is bound to pay only when a participant makes a sale. In this way, they don’t bear any extra cost which they would have if they hired a salesman, where they had to pay the person’s salary, no matter if he/she makes a sale or not.
- No Distribution Cost
Through Network Marketing, a company saves money on storage and distribution because participants or IBOs end up bearing these expenses themselves.
Few Examples of companies who became the market leader through Network Marketing:
- Amway: Amway is the innovator in Multi-level Marketing (MLM) business and owes its success to the millions of people around the globe who have been converted into Independent Business Owners (IBOs).
- Oriflame: Founded in 1967, the Brand has its reach in nearly 60 countries and generating sales revenue in billions. Oriflame offers up to 20% profits on the orders collected from customers, which is attracting more customers to become its Beauty Consultants.
If done appropriately, Network Marketing is a great way to grow a small business into a million-dollar company and help an individual to become financially Independent.
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