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What is Network Marketing?

What is Network Marketing?

Network marketing (also known as multi-level marketing) is often wrongfully associated with the pyramid structured schemes but its functionality is a little different from pyramid structure organizations.

Network Marketing – Types & Examples

What is Network Marketing?

Network marketing (also known as multi-level marketing) is often wrongfully associated with the pyramid structured schemes but its functionality is a little different from pyramid structure organizations.

It is a direct selling method where the company’s products and services are sold by the group of independent salespeople, these people create and manage a link or chain by recruiting and training others. It means every time a sale is made, all the upper-level chain members get their commission out of it. The interesting thing is that those sale people aren’t employed on a salary basis; sale personals earn money

  • Either by direct selling or sale made by other members
  • Or recruitment of new members & making the chain bigger, the longer the chain is, the more money you’ll earn.

How Network Marketing Works? 

There are many names for network marketing; for instance, affiliated marketing, cellular marketing, direct-customer marketing, referral marketing, home-based business franchise or multi-level marketing.

Mostly networking marketing business model creates different types of tiers such as, single tier, two-tier and multi-level marketing. Now, we’ll discuss them one by one;

Single-Tier Network Marketing

Single-tier network marketing is very simple, you sign up for the program, then you start selling the company’s or services and get your commission based on your sales. However, it doesn’t require you to recruit other sales agent to do the work for you. You just have to focus on your sales and customer relationship building.

Betterware, Kleeneze, Avon, beauty cream company follows this single-tier marketing. Some online platforms also follow the single level marketing where you drive traffic into their website and get paid like pay-per-click (PPC), or pay-per-lead (PPL).

Two-Tier Network Marketing

Double-tier or Two-tier network marketing requires from its members to recruit others. In this model, you get paid both ways; direct sale of product or service (or bringing traffic into their website) and recruitment of other members to work under you. Ken Evoy Site sell is a very good example of two-tier network marketing.

Multi-Level Marketing

As the name implies multi-level marketing (MLM) involves two or more tiers and it’s based on the distribution marketing based network. MLM allows its members to earn money when the tier is five or more times deep and there some other incentive for recruitment. It has two other types of network strategies like name-driven network marketing and market-driven network marketing.

Characteristics of Network Marketing

Some of the important characteristics of network marketing are as follows;

Low Cost

Even though we’re living in the 21st century, the age of information & technology, still the cost for starting, running and managing a business is very high like taxation, registration of a new business, monthly overhead, documentation, administrative expenses and so on.

On the other hand, the initial cost for network marketing business is very low as compared to the other regular type of businesses. Even starting a business with a very low budget through this model, you can compete with the other global multibillion-dollar businesses like McDonalds. Amazing, isn’t it?

Flexibility

Time flexibility is the most important feature of the multi-level marketing business. It starts with the part-time business while you keep focusing on your full-time job. Time flexibility provides you an opportunity to learn and grow while keeping your financial side secure until your business is fully established.

A team comes when you’re in a position to quit your full-time job. People with families and having no business experience use this approach. They become very successful businessmen with the passage of time.

Self-Accountability

Having said earlier that network marketing is a non-salaried based business, which means the more you contribute, the more you’d earn. It’s a platform that trains people to be self-accountable of their own performances.

Direct Sales

Like many other business, product goes through a chain of distribution and then finally reaches the consumer.

Through this model of network marketing, there’s no channel involved, sellers are non-employed people who receive their commission when the product is sold over time.

Organizational Hierarchy

The hierarchy of network marketing is very systematic. Like you’d only receive your commission when you recruit a new member who will work under you. However, the new member would only get his commission, the same way when he would also recruit other people. That’s how a link or chain is established and system of hierarchy is developed.

Proven System

The functionality, hierarch, and channel of distribution of every business is different, which takes so much time to learn and set up your business.

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