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In this post, we will be looking at what is network marketing and how does it work
As defined by Investopedia, “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.”
I will like you to understand that network marketing is the modern term used for multi-level marketing (MLM).
In order to understand network marketing, you must understand multi-level marketing
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Let’s break it down. Marketing simply means “moving a product or service from the manufacturer or provider to the consumer.”
Multi-level refers to the system of compensation provided to those persons who are causing the product to move or the service to be provided.
Multi means “many or we can say more than one.” Level refers to what may better be termed as “generation.” We can simply say level by level which is tantatmount to generation by generation.
Are you still following?
However, we can as well term “multi level marketing as multi-generation marketing.”
In network marketing, manufacturers deal with a large number of distributors who develop ‘networks’ to operate at various levels and thereby encompass a larger section of the society.
They often act as independent representatives of the company and result in curtailing the large costs involved in traditional marketing. These distributors earn profit at their levels and also expand the earnings of the conglomerate per unit sold.
As said by Don Faila, There are really only three basic methods of moving products.
- RETAILING—I’m sure everyone is familiar with retailing. The grocery store, the drug store, the department store … you go into a store and buy something.
- DIRECT SALES—This would usually (but not always) includeinsurance, cookware, encyclopedias, etc. Fuller Brush, the Avon lady, Tupperware home parties, etc. are some examples of direct sales efforts.
- NETWORK MARKETING—This is the one we are looking at. It should not be confused with the other two, especially with the direct sales method, with which network marketing commonly is confused.
He further went ahead to list a fourth and fifth type of marketing.
“A fourth type of marketing that is sometimes added to the list is mail order. Mail order can be a network marketing type but most generally is included in the direct sales category.”
“A fifth type, often confused with network marketing, is pyramid sales.”
“The fact is, pyramids are illegal! One of the main reasons they are illegal is their failure to move a product or to provide a valid service. If a product doesn’t move, how can you even call it “marketing,” let alone “network marketing”? Pyramids may include networking—but MARKETING THEY ARE NOT!”
“Most objections that people have about getting into network marketing are due to their not realizing the diff erences between network marketing and the direct sales method of marketing. Th is confusion is understandable because most reputable network marketing companies belong to the Direct Selling Association.”
“You have been conditioned, perhaps, to think of them as door-todoor direct sales programs because your fi rst encounter with them was when a distributor knocked on your door to sell you something.”
However, there are some features that diff erentiate network marketing from retail and direct sales companies. One very signifi cant difference is that in network marketing you are in business for yourself but not by yourself.
By being in business for yourself, whether or not but especially if you are operating out of your home, you may be entitled to some substantial tax breaks. We won’t get into tax advantages herein. Just be aware of this benefit.
Being in business for yourself, you are buying the products wholesale from the company you are representing. Th is means that you can (and should) use these items for your own consumption. Many people get involved in a company at first for this reason alone, to buy wholesale. And many of those will get “serious.”
In his book, 45 seconds presentation, Don Faila stated that Since you are buying your products wholesale, you can, if you wish to, sell those products at retail and make a profit. The most common misunderstanding about network marketing is the notion that you have to sell retail to be successful. Th ere is a lot to be said for selling retail and it should not be ignored. Some programs even require that a retail quota be met in order to qualify for a bonus. You may sell if you want to or have to but in regard to making the larger sums of income, the real success is in building the organization.
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“When you build an organization, you are actually building a network through which to channel your products. Retailing is the foundation of network marketing. Sales in network marketing come from distributors sharing with their friends, neighbors, and relatives. They never have to talk to strangers.
To build a large successful business, you need a BALANCE. You need to sponsor and teach network marketing, and in the process of doing this, you can build a customer base by retailing to your friends, neighbors, and relatives.
So you see, it’s not going door to door every day calling on strangers. All network marketing programs that I know of teach that if you simply SHARE the quality of their products or services with friends, that is all the “selling” that is involved and that selling is the sharing part, this is why network marketing is the business of sharing and not selling.
In network marketing, you don’t need to “sell” the products in the traditional sense of the word but you have to share! In this context, selling is “calling on strangers trying to sell them something they may neither need nor want.”
In network marketing programs, you can make a lot of money. It takes a little longer with some companies than it does with others, but making a lot of money comes from building an organization, not by just selling the product.
Most people don’t realize that network marketing is big business! Network marketing has been in our midst for more than thirty-fi ve years now. Some companies that have been around for twenty years or so are already doing a billion dollars per year by themselves.
Now that you are aware of what is network marketing
How Does It Work?
Network marketing works by you sponsoring someone then teach him how to do what you are doing—building a business of his own.
When you sponsor someone, you are making a COMMITMENT to him. If you are not willing to make that commitment, then you are doing him a disservice by signing him up.
At this point, all you need to be is willing to help someone build a business of his own. You can reach out to me on whatsapp via 08030609917 to know how to do just that.
It is a responsibility of sponsors to teach the people they bring into a business all they know about that business—things such as ordering products, keeping records, how to get started, how to build and train their organization, etc.
Sponsoring is what makes a network marketing business grow. As your organization grows, you are building toward becoming an independent, successful businessperson. You are your own boss!
Now that you are aware of what is network marketing and how does it work.
I will like to stop at here.
I hope it adds value to you
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