Network Marketing has different names to it and it is possible that you might know this from one of its names that include MLM Multi-Level Marketing, Referral Marketing, Pyramid Selling, Direct Selling, and many more. Now Network marketing is a business model that depends on the person – to – person sales by independent representatives, mostly working from home.
In simple words, it is selling the products directly to the consumer instead of distributing the products to stores. The company uses a network of distributors, most of whom started as customers.
It is an easy way to sell their products with minimum marketing costs and no salaried workforce. Mainly companies go for this marketing because of low cost/budget or want to work from home with no pressure. Distributors who work from home have flexible working hours and people who are interested in small businesses that can be run by home usually goes with this.
Now, there is a whole chain or hierarchy of how network marketing works. At each level, there is a level of distribution and a level of payout, looks just like a flow - chart and this is the reason why it is also called Multi-Level – Marketing.
In this, the company first recruits a group of people who are passionate and well known about their products. The company then sells its products to them at a discounted price and asks them to sell this product to others with the full market price. Whatever profit they make can go directly in their pockets. The company, however, does not pay the salespeople any salary. They solely make a profit from the selling of the products at the full market price. Many of the distributors go on buying more products from the profit they received and then selling them again to the customers at a full price. In this way, they increase their income.
Moreover, the company encourages the current distributors to find new distributors by themselves and make a chain. For example- A is a distributor who is selling to B, he will approach B to become a distributor like him. Now every product sold by B, A will make a small percentage from the sale. These people are mainly called their downlines. This is the reason why it is called Referral Marketing because they are referred to the company from the primary distributors.
This doesn’t end here, the recruits are also encouraged to form their own downlines and this chain goes on. Thus, forming a whole pyramid of distributors. With this, every distributor is encouraged to turn the active customers into distributors of the company. So, an independent distributor makes income from the profit incurred by him and profit from the recruits he arranged.
The company gains profit by selling their products to the distributors and investing little to no money in marketing.
If you are looking to make big profits and big income, then the chances of this are very rare and minimum. It is not that no one can make big profits, very few people are lucky enough to make profits that are big enough. It is not an easy job; you have to work hard to make a profit. Also, you have to invest some amount before you can make an actual profit.
Having said that, network marketing is less pressure work that can be done from home. There are no strict rules to follow like a full – time job. It is convenient and can be done as a part-time job. You have a lot of flexibility in the working hours as you will be working from home. You can easily carry out your everyday work with this business. If you are someone who is looking for an extra side job to make an extra amount, then you can definitely start this way of marketing.
Of course, it has its own advantages and disadvantages that can help you to know more about Network Marketing and why you should or shouldn’t go with one.
However, there are many famous and known brands that have grown from this form of marketing and it has proven to be very beneficial for them and people are becoming a part of their company.
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