What Is Network Marketing Business All About?

“Home-based businesses are one of the fastest-growing segments in our economy, and that trend will only continue, as the age of the corporation, which began barely a century ago, now gives way to the age of the entrepreneur.” – Paul Zane Pilzer

What is network marketing business all about?

whats-network-marketingNetwork or multilevel marketing is a type of business opportunity in which a distributor network is needed to build the business. Other terms that are sometimes used to describe multi-level marketing include “word-of-mouth marketing”, “consumer direct marketing”, “interactive distribution”, and “relationship marketing”

In network marketing company independent distributors, also called affiliates, develop their organizations by either building an active consumer network, who buy direct from the company or by recruiting a downline of independent distributors, who also build a consumer network base, hence expanding the overall organization much faster than an organic growth. Additionally the affiliates can also earn a profit by retailing products they purchased from the company at wholesale price.

What are advantages of network marketing?

sailingThere are countless benefits of network marketing over traditional business models. Of all the advantages of network marketing, freedom is probably the single most important.

A major disadvantage of traditional business and 9 to 5 job is lack of freedom and yet freedom is instinctively craved by all humans, who wouldn’t enjoy to do as they please every day?

Yet most people work in traditional 9 to 5 jobs, eight hours a day in a job they sometimes don’t even like. In exchange for their time, employers pay a set fee per time spent at work. Some employers pay employees for units of a product produced. Their income is limited by the number of hours they can spend on work and by the number of units they can personally produce in the given time, because in a traditional job you sell your time for a given income.

Besides the fact that you are not free to come and go when you want, your employer determines when you should work. Aside from the occasional time off that you can get, you have to be at work when your employer wishes to. People feel trapped and battle with a constant struggle to make enough money to pay the bills.

Network marketing offers an escape with a promise of less flexible working locations, reduced working hours as it promises much higher return for each hour you invest in your business and of course you are your own boss. There is even a distinct possibility that you hit it big time and actually become rich with your chosen network marketing program.

Work done in network marketing companies is based on work done by whole organization of distributors or affiliates. So by systematically increasing the number of active affiliates in your downline, you can simultaneously increase your income, as you receive a small part of the income they produce to the company often on multiple levels. You can do this without increasing the number of hours you spend at work. You can actually reduce your working hours after the initial effort, sit back and enjoy watching your income steadily grow.

Owning a traditional business is no different. While you enjoy some of the benefits of being your own boss, you are likely to end up working much longer hours than you would had you been an employee, as the success often depends on your personal effort at least in the initial stages of setting up a business. You become a slave to your customers, working late into night trying to balance the books. Network marketing on the other hand changes the game entirely.

You choose your style of working: person-to-person, through email, over the phone, in small groups over coffee and cake or huge gatherings of thousands of people. Every single aspect of your business is up to you and you can easily adjust it to your lifestyle and personality. It’s your choice because it’s your business!

The other benefit of network marketing is ability to meet new people and socialize. People appreciate that they can work flexible hours schedule and it is a good way to own a business and earn extra money.

Network marketing is usually based on personal recommendations and introducing new people to the system. Word-of-mouth marketing is a far more powerful and effective method of marketing, especially, when that message comes from those whom we know and trust!

Problems and concerns with the Network Marking Programs

problem

Companies that use multi level marketing models for compensation have been a frequent subject of criticism and lawsuits. Criticism has focused on their similarity to illegal pyramid or ponzi schemes. They are also prone to price fixing of products, which in itself is illegal. Besides there is often high initial entry costs to obtain the marketing kit including banners, presentations and landing pages, not to talk about the purchases of the initial products.

The emphasis tends to be on recruitment of others over actual sales, encouraging if not requiring members to purchase and use the company’s products or having certain sales quotas in order to receive their commissions. The moral dilemma of exploitation the personal relationships as both sales and recruiting targets makes some people very negative towards network marketing. This can cause some frictions with friends and family members. The complex and exaggerated compensation schemes based on ranking, the truth remains that the people on top of the pyramid tend to make the most money and many people who join earn hardly anything.

Besides the legal and moral problems, the reality is that setting up a successful network marketing business requires a lot of hard work and a completely different set of skills than performing a typical desk or factory job. It’s easy to get discouraged and give up before achieving any success.

Finally the possibilities offered by online marketing mean that people no longer have the need to leave their house in order to create their networks, which can lead to social isolation. Despite all it’s problems multi level marketing remains the most popular type of home based business.

Balancing Act

balancingThere are some good things about network marketing as well as some disadvantages, but one thing should be kept in my mind that network marketing is profitable if you use it for the right product in the right way and to the correct buyer at the right time. Network marketing has tremendous growth in the market but requires some good communication and interpersonal skills.

Network marketing helps and assists others in running their own business. It is the best way to turn your passion, hobby or personal desire into extra money in your pocket!

Read through the reviews of the recommended programs on this website to find out which one fits best your needs. Or just try out one of my recommendations: Beginner’s Guide To Affiliate Marketing

 

15 Comments

    • No he is not. In fact he is a full time blogger and not part of any affiliate program as far as I am aware. He does however have many friends who are network marketing pros, this gives him a unique look into the struggles of network marketers.

    • Hi Chris. Indeed, pyramid schemes are illegal although NW or MLM in itself is not. It can be difficult though to separate the legal ones from the scams. Wealthy Affiliate is a great choice, happy you decided to join! Good luck with everything!

  1. A lot is said about MLM businesses and most of the times these jobs are scams or perhaps that’s because those are the ones we hear most about. However, not all MLM businesses are scams. I have been introduced to more than one successful MLM business. It was a jewelry business that’s been in business a long time. recently, United Games has come out with a sports app. I happen to be involved in that one. I al also an affiliate marketer for Amazon and Wealthy Affiliate.
    Thank you,
    Edward Mijarez

    • Hi Edward and thnx for your insights. Indeed, not all network marketing businesses are scams. Think of the famous Tupperware, who sells sealable plastic containers. They started out as MLM company only, even though today you can find their produce in every shop.

  2. I don’t like MLM marketing, because it looks so much like a pyramid scheme, especially when theres no product to sell. Also with the fact that my success is dependant on the people I can convince. I have also noticed with all MLM that the introo is not always the full story.

    • Hi Queen, thnx for your comment. There are some legitimate and very successful MLM companies out there, but also a lot of Ponzi scams, also called pyramid schemes out there, which unfortunately gives the whole concept a bad name.

  3. I honestly have yet to see a MLM companies that I like maybe for tupperware and herbalife.

    Many Network marketing is just a sanitized word for MLM nothing more. A legal MLM should focus on selling the products itself and recruting should be secondary.

    However, there many snakes and liers in MLM manipulating people into joining their scheme by selling them a dream.

    • Hi Arthur 🙂 Do I sense some hostility here? 🙂 No reason for that! Did you know that Herbalife got convicted in US for being a pyramid scheme? They had to pay huge fines and then make many changes in their program. Wealthy Affiliate, Recyclix, Amazon are actually affiliate programs and not MLM as such 🙂

  4. I really think network marketing is not a good business especially when they concentrate on MLM and not the products. That’s why I like affiliate marketing better but it’s really a personal taste.

    You’ve given a great explanation here on what network marketing is and if someone likes then that’s awesome for them. I’m sure anyone interested in it can also build a successful business. 🙂

    • Hi Grace, you are right, I also personally like affiliate marketing better personally.

      However many MLM companies DO sell products, the only difference being that you actually earn on multiple levels, meaning not only people you sponsor directly, but also people they sponsor and so on…this is the main reason a lot of people like it, as you can easily earn more than in affiliate programs.

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