| By :
Jeanette McVoy
Network marketing, sometimes called MLM or multi-level marketing has been thought by some people to be a pyramid or scam. In fact, although it has had a poor reputation in the past, network marketing is really just another way to distribute products from the manufacturer to the consumer. Network marketing is regulated by the FTC, just like expensive franchises, and is a legitimate way to bring products to market. Where franchises opportunities can cost tens of thousands to over $1 Million, most network marketing opportunities provide the same kind of systems and infrastructure provided by a franchise for less than $500. This is why network marketing is the best, and only, way for most people to have a business of their own. Both Warren Buffett and Donald Trump and have purchased network marketing companies and famous authors like Robert Kiyosaki (Rich Dad, Poor Dad) endorse network marketing as the best way for the average person to achieve financial independence? You already know the two most common ways companies bring products from the manufacturer to the consumer: 1. Through retail stores (or online retailers) 2. Through direct marketing (mail order, TV home shopping or infomercials) Network marketing is just a third distribution method. While manufacturers must provide large discounts to retailers, wholesalers, distributors and direct marketers to get their products sold, network marketing uses those same margins to pay commissions to their reps (distributors) instead. It is very expensive for a manufacturer to launch a consumer product through traditional retail or direct response channels. Doing so also puts the manufacturer into direct competition with the largest consumer product companies in the world for shelf space or TV time. Network marketing offers a manufacturer a word-of-mouth distribution channel without the start up or advertising costs of retail or direct response. You might have noticed that network marketing makes the most sense to distribute products that need a more complete explanation to be sold rather than just sitting on a shelf. In fact, more nutritional supplement type products are sold with network marketing than are sold in stores! Due to the cost of finding and keeping customers or distributors, you will also see that most products sold this way are consumable and are ordered and reordered each month on some sort of "auto-ship" program. (think cosmetics, household supplies, nutritional & health products). So what about that "pyramid" reputation? Actually, think about the military, the government, the church or any corporation. How are they structured? They all have someone at the top who has a limited number of people directly reporting to them, who each have a set number of people reporting to them, and so on. All these types of structures are pyramids! Network marketing is closer to a diamond shape because, although there are a lot of people toward the bottom of the structure, there are a lot more in the middle levels. In businesses, government, and the military, it is unlikely that you will make more money than your boss and the norm is for those at the top to make the most. Network marketing is different. To comply with the FTC laws, no matter how many people are already in a network marketing company, it must always be possible for any new distributor to surpass the earnings of the very top people without replacing them in the structure. Another feature of network marketing that makes it quite different than all the other structures mentioned above, is that your success is dependent on your ability to help others succeed. Unlike a corporation where you may be competing with your peers for a promotion, in network marketing, it is in your own best self interest to help others because by doing that you increase your own earnings. In fact, my definition of network marketing is a business structure where. . . "You have a team of people that are helping you get whatever you want". How cool is that? So, if you have been thinking about having your own business and do not have the large investment required to buy a franchise or an existing business, take a look at network marketing.
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