The simplest way to describe network marketing is that it is a business model where a distributor network is essential for building the business. It is a model that is most often in place in multilevel marketing schemes where payouts occur at various different level. Let’s take a closer look at network marketing including its pros and cons and which types of people are likely to use this business model.
The network marketing business model is the the type of opportunity that is very popular with individuals who are looking for a part time business with flexibility. The kind of thing that is going to appeal to a stay at home mom perhaps. The most common examples of this type of opportunity include the likes of Avon, Mary Kay Cosmetics, Tupperware, Jamberry and most recently LuLa Roe. The most common hallmarks of network marketing tend to be that the opportunity has a very low upfront cost to get started. In the majority of cases you can expect to pay no more than a couple of hundred dollars for your starter kit which is usually a bunch of sample products for you to use in demonstrations. The individual is then expected to sell the product line directly to their friends,family and anyone else they have contact with. The majority of these network marketing programs also require – or at the very least advise – participants to recruit other consultants or sales representatives to the program. These people serve as the original person’s ‘downline’ and their sales generate income for those above them in the program.
There are some very profitable network marketing opportunities available, but there are also more than a few who seem to put most of the emphasis on recruiting a downline rather than actually selling the product or services. In these situations, a network marketing program can begin to stray dangerously close to becoming an illegal pyramid scheme! Network marketing schemes are more or less exempt from the usual business opportunity regulations and are not classed as franchises under either state or federal law, so it is very important for anyone who is looking to participate in one of these business models to do extensive research before getting involved.
There are a number of advantages that can be associated with network marketing and these are used heavily in the recruitment process. The majority of these benefits appeal to parents looking to spend more time at home which is why so many of those involved in network marketing are mothers of young children. One of the key advantages is working from home which is a dream for many people. It is typically possible for people to run a network marketing business entirely from home, although some may require going out to host party style events at customers’ homes. It is also a great way to start a business with little to no financial risk. Many people turn to this type of business opportunity when they get hours cut back at their day job or after having been made redundant. Another advantage is that if you are passionate about the product then it is easier for you to sell, because you know how great it is and that shows in your sales pitch. A great example of this is Younique make up. If you already use the make up when you sign up to be a seller, then the chances are people will naturally comment on your make up giving you the perfect opportunity to make a sale!
Of course, there are also the downsides to Network marketing. One of the big ones is that very few people actually make a decent living through these opportunities. In fact, most do not even make a part-time wage. There are no territorial restrictions with most of the programs, so your area could be oversaturated with consultants leaving you with no buyers. One of the only ways to really make money form one of these programs is to get in early so that you have more chance of creating a strong customer base, or of creating a good downline to earn money from other consultants.
In conclusion, network marketing is a business model that appeals to many people looking for a way to earn money working from home. However, it is also a heavily saturated market and it can be difficult to earn money from it. It is important to research the opportunity thoroughly in order to avoid those that focus only on recruitment.