What Is Network Marketing?

Network Marketing is a way that companies market their products to the consumer. It is different from most other types of businesses because it doesn't have any advertising, wholesaling, or retailing costs involved in it. It is done entirely by direct selling and referral, word-of-mouth type of advertising. This eliminates the middle man.
What do you mean by "No Middle Man"?
When companies use "middle men" they spend money, and lots of it, on things that don't enhance the product. If they don't have these costs, they can spend more on research and development. This means that they can produce a higher quality, more unique offering.
The benefit that probably means the most to you? It's the fact that some of that money that's freed up by not paying for advertising, wholesalers, and retailers, can go in the pocket of the person who is promoting the product by telling his friends and family about it.
These people have their own business, generating income by recruiting like-minded individuals who want to work for themselves, or customers that just want the products and purchase them directly from the parent company, or a combination of the two. They are called associates, distributors, or independent agents, depending on the company. All three mean the sam.
Distributors earn commissions based on the sales efforts of their organization, which includes their efforts as well as the efforts of their downline. Commissions are paid to distributors according to their company's compensation plan. There can be multiple levels of people receiving commission from one person's sales. In addition, distributors can earn profit by retailing products which they purchase from their parent company at wholesale price.
I've heard of multi-level marketing, or MLM. What's the difference between this and network marketing?
In a word, nothing! The terms Network Marketing and Multi-level Marketing refer to two aspects of the same type of business.
Network marketing is just how it sounds: a network, or group of people, communicate with each other and products are marketed this way.
Multi-level marketing is simply the means by which the people in the network are paid for their efforts. Commissions are paid to multiple levels of distributors, which creates leverage.
What exactly is leverage?
Leverage can mean different things. In this context, it means the ability to earn commission on something that someone else sells.
This leverage concept is used by any traditional business with employees. The company pays the employee a salary, which hopefully isn't is as much as he brings in. The owner of the company gets to keep the difference. He is leveraging his income by making profit from the efforts of his employee.
Network Marketing compensation plans are similar in the leverage aspect, but different in one major way: There are no employees, or the associated costs and hassles. They are leveraged off other independent associates instead. These people are also going to work harder, because they own their own business and are more motivated to succeed.
Hey, this sounds like a "Pyramid Scheme"!
If distributors are paid primarily from money received from new recruits, or if they're required to buy more product than they are likely to sell, then the company may be a pyramid. Pyramids are illegal in all states and most countries. Legitimate Network Marketing companies are not only legal, but thrive in every state and in most countries.
The way to tell if a company is a pyramid scheme is if you can earn commission from sign-up fees. If there is no product or service obtained for this fee, then it's a pyramid. All legitimate network marketing companies pay commission only on sales of the company's products or services.
Here are a couple of good resources for learning more about the Network Marketing Industry.
First is Brilliant Compensation by Tim Sales. Second is The 45 Second Presentation That Will Change Your Life by Don Faila. Both of these tools are highly recommended for your own knowledge and to show to skeptical prospects. They are both created from a third-party perspective and not for any particular company.

Article Source: http://www.wowfreearticles.com

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