Network Marketing:

A Marketing Model For The Future

Network marketing, also commonly known as multi-level marketing pyramid selling, or pyramid marketing, and called by several other less frequently used names, is a popular sales and compensation concept that has been in use for years. With increased growth of the Internet as a sales and marketing tool, it has helped many small to medium businesses reach out to customers they otherwise could not have. It helps get free exposure for any business.

Network marketing relies on the concept of relationship marketing as a tool to make products visible to the buying public. Sales personnel attempt to make sales to buyers with whom they have an existing relationship, such as family members, neighbors, social friends and church members. Usually joining some sort of business group such as a Chamber of Commerce can help a business build relationships in hopes that it will result in a sale.

Compensation for the work performed and sales made is derived not only from sales of products, but also by simply referring additional sales. Otherwise referred to as the down-line, the percentage of their sales will go to you. Some companies call this earning residual income, which means you will earn money even when you are not working.

Some of the primary concerns voiced about this sales-and-marketing model are its legality, dependence on relationship based selling, potential price fixing, high start-up costs, and valuing recruitment of sales force members over actual sales. The difficulty posed by such systems is that placing emphasis on relationship-based recruitment rather than sales often results in the recruitment pool drying up. Then this results in there being no income coming in to pay the existing sales force. Additional problems arise when compensation hinges on transactions between a salesman and his or her own downline, rather than focusing on money from newly-acquired sources.

While the network marketing form of business organization is common worldwide. Despite all of the concerns about its ethics and operations, when conducted properly, this business form provides mentoring for its workforce and relationship-based sales opportunities that are unparalleled throughout the world economy, as long as its workers continue to keep their eyes open for abuses.

Network Marketing: A Marketing Model For The Future

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Michael Pound

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