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Network marketing is a business structured in a way that contractors are paid not only for the products they sell but they are also rewarded for their recruit’s sales. network marketing can also be referred to as MLM (Multi Level Marketing), Matrix plan businesses, and pyramid schemes.
Network Marketing companies try to distance themselves from the pyramid scheme reference by ensuring that they sell products that their target market want to purchase. Many pyramid schemes sell useless eBooks that often contain information of no use to the reader, as they are simply trying to cash in on the membership fee.
Successful network marketing companies like Mary Kay Cosmetics, Tupperware, Amway, and Avon have received good publicity from the media over the years. These are the best of network marketing companies as they have a good customer base, they have defined their target market, and their products are quality items that their customers need and want.
Compared to a franchise the startup costs for a network marketing business are incredibly low. To enter business as a McDonald’s franchisee you’re looking at startup of costs of at least AU$1 million and that’s before you’ve even sold anything. A network marketing distributer business has a substantially lower start up cost of less than $2,000, sometimes much less than that. Like a franchisee you still need to buy your product from the supplier before you resell it for a profit. But unlike McDonald’s you have an extra income stream which is earning from your down line (recruit’s sales).
But not all network marketing businesses sell physical products. Some network marketing businesses sell web products. Examples of this include web hosting, auto responder services, link shortening services, and domain sales. Then there are businesses that sell advertising with a matrix compensation plan. Most internet marketers need advertising.
What are the benefits?
One of the benefits of network marketing is that no office or shop is needed to sell their products. It is what they refer to as a home business, and it can be run using a number promotional methods. The internet is one of these mediums. Network marketers can sign up people to an email list and market their wares to them in a number of ways. One of these is to send them samples of their products to get them on board as customers, or invite them to a house party to learn more about the product, and get them to place an order. This is why a customer list is important for network marketers as they can repeatedly market to their customer list. Their customer list can also be a list of recruits which means they can make even more income.
What is needed to be successful in network marketing?
As with any business the important thing to remember, to be successful, you need to have a hungry crowd for a quality product. If your product isn’t in demand or you’re not marketing to the product’s target market, you won’t make any money. Another important thing to note, is that you need to treat you network marketing business as a business to make it profitable.
Being paid for your recruit’s sales as well as your own sales is very lucrative and is one of the hooks that attract many network marketers. Selling a product that is in demand enables reputable network marketing companies to distance themselves from pyramid schemes, as many of these network marketing companies get good publicity because of this. As network marketing’s startup costs are low and can be operated from home many people find network marketing to be an attractive option. But to be successful with your network marketing business, you need to work at it like you’re running a business.