Network Marketing

                               Network Marketing

Definition: A business model in which a distributor network is needed to build the business. Usually, such businesses are also multilevel marketing in nature in that payouts occur at more than one level.

Network marketing is a type of business opportunity that is very popular with people looking for part-time, flexible businesses. Some of the best-known companies including Avon, Mary Kay Cosmetics, and Tupperware, fall under the network marketing umbrella.

Network marketing programs feature a low upfront investment--usually only a few hundred dollars for the purchase of a product sample kit--and the opportunity to sell a product line directly to friends, family, relatives, and other personal contacts. Most network marketing programs also ask participants to recruit other sales representatives. The recruits constitute a rep's "downline," and their sales generate income for those above them in the program.

Things can get sticky when a network marketing network compensates participants primarily for recruiting others rather than for selling the company's products or services. A network marketing system in which most of the revenue comes from recruitment may be considered an illegal pyramid scheme.



Since network marketing programs are usually exempt from business opportunity regulation and aren't defined as franchises under state and federal franchise laws, you'll need to do your own investigation before investing any money.


What Is Network Marketing?
Network marketing is a business model that depends on person-to-person sales by independent representatives, often working from home. A network marketing business may require you to build a network of business partners or salespeople to assist with lead generation and closing sales.
There are many reputable network marketing operations, but some have been denounced as pyramid schemes. The latter may focus less on sales to consumers than on the recruitment of salespeople who may be required to pay upfront for expensive starter kits.
Network marketing appeals to people with high energy and strong sales skills, who can build a profitable business with a modest investment.
A network marketing business can be a single-tier program, whereby you sell the products, or a multi-tier where you recruit salespeople.
Beware of network marketing companies that create many tiers of salespeople and thoroughly research the company before you join.
 Network Marketing How It Works:
Network marketing is known by a variety of names, including multilevel marketing, cellular marketing, affiliate marketing, consumer-direct marketing, referral marketing, or home-based business franchising.

Companies that follow the network marketing model often create tiers of salespeople—that is, salespeople are encouraged to recruit their own networks of salespeople. The creators of a new tier (or "upline") earn commission on their own sales and on sales made by the people in the tier they created (the "downline"). In time, a new tier can sprout yet another tier, which contributes more commission to the person in the top tier as well as the middle tier.

Thus, the earnings of salespeople depend on recruitment as well as product sales. Those who got in early and are in a top tier make the most. 
Experience shows that that single-tier network marketing operations tend to be more reputable than multi-tier schemes.
  
 Network Marketing  Advantages and Disadvantages: 
There is some stigma attached to the networking marketing business, especially those with multiple tiers, which can be characterized as pyramid schemes—that is, the salespeople in the top tier can make impressive amounts of money on commissions from the tiers below them. The people on the lower tiers will earn much less. The company makes money by selling expensive starter kits to new recruits.

The appeal of network marketing is that an individual with a lot of energy and good sales skills can create a profitable business with a modest investment.

A good rule of thumb, according to the expert's opinion that single-tier network marketing operations tend to be more reputable than multi-tier schemes, in which people make money based on the number of distributors they recruit.

Some reputable examples of single-tier network marketing operations include Avon Products, Mary Kay, and Excel Communications.

Special Conclusion:
Anyone considering joining a network marketing operation should do their research before making a decision. Consider these questions:

Was it pitched as a chance to make money by selling products or by recruiting others? What is the track record of the company's founders? Are you personally enthusiastic about the products? Are people you know enthusiastic about the products? Is the product being promoted effectively? Do you foresee a relatively fast pathway to profits or a long time treading water?

   Thank you for reading