{"id":7325,"date":"2008-11-09T09:07:32","date_gmt":"2008-11-09T15:07:32","guid":{"rendered":"http:\/\/magic1host.com\/blog\/2008\/11\/09\/how-network-marketing-works\/"},"modified":"2008-11-09T09:07:32","modified_gmt":"2008-11-09T15:07:32","slug":"how-network-marketing-works","status":"publish","type":"post","link":"https:\/\/magic1host.com\/blog\/?p=7325","title":{"rendered":"How Network Marketing Works"},"content":{"rendered":"
by Matt Hellstrom<\/div>\n

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.<\/p>\n

What do you mean by “No Middle Man”?<\/p>\n

One of the benefits of this is that more money can be spent on research, development and manufacturing, which usually results in much higher quality, unique products.<\/p>\n

Another plus of the Network Marketing business plan is that some of the money that formerly went to the middle man – advertising, wholesalers, and retailers – is now available to compensate the people who actually promote the products by their word-of-mouth advertising.<\/p>\n

This person is referred to as an associate, independent agent, or distributor. He or she is a salesperson who has their own business or distributorship. They create income by building up a customer base that buys the products directly from the parent company, or by recruiting other entrepreneurs<\/a> who in turn build their own customer base, or usually a combination of both. This increases the size of the overall organization.<\/p>\n

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.<\/p>\n

There is also a term called “multi-level marketing” or “MLM”. What’s the difference between MLM and network marketing?<\/p>\n

Basically, nothing! The two terms network marketing and multi-level marketing refer to 2 different aspects of the same business.<\/p>\n

First, network marketing. This term describes how the products are promoted, which is through a bunch of different people talking to each other, or networking.<\/p>\n

Leverage is created by paying commissions on multiple levels of associates as compensation for their efforts. This is what is referred to as the term “Multi-Level Marketing”.<\/p>\n

What exactly is leverage?<\/p>\n

When you are talking about leverage in this context you are talking about earning money from somebody else’s efforts.<\/p>\n

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<\/a> of the company gets to keep the difference. He is leveraging his income by making profit from the efforts of his employee.<\/p>\n

This is kind of the same as network marketing compensation plans, but there is a big difference: In a network marketing plan, the ones that are being leveraged off of are other independent distributors instead of employees. Therefore, there are no employee costs involved and hopefully these people will be more motivated because they also own their own business.<\/p>\n

Is This What’s Called a “Pyramid Scheme”?<\/p>\n

A company is a pyramid if the distributor mainly makes money from new signups or they have to buy more products than they can sell or use. Pyramids are illegal everywhere, but network marketing is legal in all states and most countries.<\/p>\n

Network marketing companies are not pyramids, though some pyramid schemes try to pass themselves off as legitimate MLM businesses. In most legitimate MLM companies, commissions are earned only on sales of the company’s products or services. No money can be earned from recruiting alone, as in sign-up fees. <\/p>\n

Here are a couple of good resources for learning more about the Network Marketing Industry.<\/p>\n

The two resources are The 45 Second Presentation That Will Change Your Life by Don Faila, and Brilliant Compensation by Tim Sales. These are both excellent third-party tools that are not only informational, but extremely useful for showing to prospects that are dubious.<\/p>\n

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About the Author:<\/div>\n
Learn the new methods of social network marketing<\/a> today! Network marketing not for you? Then you’ve got to visit our online home-based business<\/a> website for other money-making web-based businesses.<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

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.<\/p>\n","protected":false},"author":1612,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[15],"tags":[88],"class_list":["post-7325","post","type-post","status-publish","format-standard","hentry","category-mlm","tag-mlm"],"_links":{"self":[{"href":"https:\/\/magic1host.com\/blog\/index.php?rest_route=\/wp\/v2\/posts\/7325","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/magic1host.com\/blog\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/magic1host.com\/blog\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/magic1host.com\/blog\/index.php?rest_route=\/wp\/v2\/users\/1612"}],"replies":[{"embeddable":true,"href":"https:\/\/magic1host.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=7325"}],"version-history":[{"count":0,"href":"https:\/\/magic1host.com\/blog\/index.php?rest_route=\/wp\/v2\/posts\/7325\/revisions"}],"wp:attachment":[{"href":"https:\/\/magic1host.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=7325"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/magic1host.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=7325"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/magic1host.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=7325"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}