Network marketing or Multi-Level Marketing has caught on the fancy of people across the globe and as on date, there are thousands who have made their millions through being a part of Network marketing. With the changing scenario of business, the organization has quickly and effectively synergized with the dynamics of modern business. Their orientation, their focus, their processes, and above all, their ways of marketing & sales management – everything has evolved. The success stories of such millionaires from US, Australia and UK etc are being published as a part of the case study in Universities and other Educational Institutions as well as Direct selling training institutes.
Network or Multi-Level Marketing may be defined as a distribution channel/sales method wherein the manufacturer directly sells to the customer at a preferred rate and also gives the customer rights of selling the same products for certain compensation/ incentive.
According to the concept, the company does not employ a full-time salaried person. A person, recruited by the company to sell a product, earns commissions; if that person recruits others, this second layer is called the person’s “downline.” The person earns a cut on the sales of people in the downline, called an “override.” But those in the second level may also recruit others and create their own “downlines.” The first person in the chain gets an “override” from every level, however many there may be, although always less the farther removed the source is. Often recruits are required to purchase an initial “starting inventory” of the product. In many cases, the MLM company will not repurchase this inventory or will do so at a very reduced price. These characteristics have caused MLM to be associated with pyramid schemes, and some techniques are such schemes. The term “network marketing” is in part used because “multi-level” marketing has at best an ambiguous reputation.
Advantages of Network Marketing:
- The 45 percent or more of the margin or markup, which was charged by the middlemen, is now given to the consultants.
- The consultant gets the product direct from the firm, hence the material is always genuine.
- The products will be of a superior quality at affordable prices and inappropriate packings. These products will not be available at retail outlets, hence there is the exclusivity of selling rights.
- A detailed computerized monthly statement of accounts, along with the payment is sent to the consultant. This statement also gives the names, addresses, and phone nos. of all the consultants in your group.
- The consultant gets a chance to do business without any investment or liability.
Examples of Network Marketing
Amway – been in business for around 57 years now, this company is one of the biggest examples of a successful MLM/network marketing company.
Other companies that use network marketing model include – Tupperware, Nu skin, Juice Plus, Modicare, Sunrider India, Avon Beauty, Oriflame etc
What attracts people to MLM is the dream of earning millions as income without having to invest anything but one’s efforts and time and without having to sacrifice one’s career or other priorities of life. MLM sells the concept of an individual aspiring and achieving one’s goals through additional income generation opportunity of joining and working through the network. As there are no entry barriers, it attracts thousands to take up this activity and pursue it diligently. Success stories are widely publicized and are there for all to see, for seeing is believing and this is what drives people to join the MLM networks.