Network marketing, also known as Multi-Level Marketing (MLM), is a business model where independent contractors buy into a company and earn a commission on the products they sell. The profession appeals to many people because they can be their own boss, set their own hours, and work towards their own success. It is a big commitment, but network marketing can be a very lucrative career.
Definition: A business model in which a distributor network is needed to build the business. Usually such businesses are also multilevel marketing in nature in that payouts occur at more than one level.
Network marketing programs feature a low upfront investment–usually only a few hundred dollars for the purchase of a product sample kit–and the opportunity to sell a product line directly to friend, family and other personal contacts. Most network marketing programs also ask participants to recruit other sales representatives.
Network marketing, also known as multi-level marketing, is a business model which involves a pyramid structured network of people who sell a company’s products. The participants in this network are usually remunerated on a commission basis. That is, people in this network get commission every time they perform the specified task, like –
- Make a sale of a product.
- Their recruits make a sale of the product.
In simple words, this model involves a pyramid structure of non-salaried participants who get paid whenever they or a person below them in the pyramid makes a sale.
Benefits To The Participants
Participants are also the consumers of the network. Hence, they also get discounts and other attractive offers to when they join the network.
Examples of Network Marketing
Amway – been in business for around 57 years now, this company is one of the biggest examples of a successful MLM/network marketing company.
Other companies that use network marketing model include – Tupperware, Nu skin, Juice Plus, etc.
Difference Between A Pyramid Structure And Network Marketing
Pyramid structure is said to exist when you get paid to get a new recruit and there is no involvement of any product. It’s an ill-practice which makes a person earn money by taking advantage of his friends and family. Companies having a pyramid structure model tend to deceive people while making them believe that they’ll earn in future .. This is a money-making strategy of the company where the participants are at a loss