Network marketing – consumer distribution system
Network marketing is a way of distributing goods and services through an organized network of consumers. The network is organized by satisfied customers themselves, with personal recommendations, ie. mouth-to-mouth advertising, which makes the essence of network marketing.
Also called MLM (multi-level marketing), but due to the numerous misuse and misinterpretation of this name, the name network marketing that we will use here is now more in use.
Networking, or network marketing, is a natural, evolutionary track of direct sales that arose as a response from the manufacturer to the disadvantages of classical trade (but there is no need to identify network marketing with direct sales – read about the differences between direct sales and network marketing)
So, the network trade was designed by the manufacturer (not consumers, wholesale or retailers, advertisers …) to protect himself and his consumers.
What the manufacturer wanted to provide was two things
– To receive his money in time and in full,
– That there are satisfied consumers who are always returning to him
We have seen, briefly, in the classic trade model, with how many challenges manufacturers face in this distribution system. The essence is that they are hard to get to their money, which affects the quality of their products and, ultimately, the satisfaction of the customers themselves.
Therefore, in direct sales, manufacturers have bypassed traders and connected directly to their consumers. But in the online store, the manufacturers went a step further. Realizing the basic habit of people talking about things they are satisfied, they have used it in their own and the benefit of their consumers.
They simply decided not to advertise through classical marketing (commercials on television and other media, billboards, etc.), and that money, as well as the money that went into the retail distribution system for wholesale and retail expenses and margins, offers its consumers whose oral recommendations lead to an increase in their turnover.
Just imagine how many times you have recommended something you are satisfied with, or how many times did you buy something just because of a friend’s recommendation, at a dinner in a restaurant that your friend recommended, on a vacation in a place recommended by your friend, watching a show or a movie who recommended your friend, etc., etc. … Our daily recommendations increase our business circles around us, but it is much wider, and we only have an emotional reward that we helped a friend, because in the classical business there is no system that follows some recommendations.
Network marketing is a system that closely monitors every recommendation we make and is rewarded appropriately depending on the traffic it generated.
In this way, manufacturers, in addition to quicker billing, provided for themselves a closer connection with their customers by offering them the opportunity to start their own business. In network marketing you do not work for the company, for the manufacturer, you are an independent owner of your business and you receive commissions based on the company’s marketing plan with which you have signed a business contract.
It looks simple … really it is. But do not be fooled and easy.
Unfortunately, we live in a complicated world, so it’s hard to realize that a big business can be born out of such a simple idea. But genius lies just in simplicity. This is business, and it’s big. But we repeat it is not easy because it is working with people and demands what is most difficult for people (the majority), which is a constant work on itself.
So, let’s see how network trading essentially works:
We are all consumers, this is our common feature, regardless of all the differences that share us. There are some products without which life simply does not work. The only thing we choose is where we will buy them.
In classical trade, we have only one option, we go to a retail facility, buy what we need and carry home.
And what does it look like in the online store? Let’s say you like some products of a company that operates in this business model. You can buy as a regular customer at 100% of the price of the product as you buy in any store. But there is no retail sale here and you can not buy directly from the company if you are not a registered customer. That’s why you buy from registered customers who are partners of the company (distributors).
If you connect with someone who is serious about this business, it will not only supply you with the products you want, but also provide advice and information about the news related to the company and products that interest you.
Another option is to become a registered customer yourself and to get a number of benefits that bring it to you. By registering you get the opportunity to purchase discounted products (membership, purchase, wholesale price …) and the possibility (but not the obligation) to build your business.
First and foremost, you should understand that registration (or membership) does not oblige you to do anything. It should also be under warranty for your personal satisfaction, i.e. you have the ability to check the company for a certain period of time and, if you are not satisfied, receive a refund of your money. Also, there should be no obligation for any purchase. Simply, you in this distribution system buy as anywhere else, what you want and when you want. Purchase directly from the manufacturer’s company. Today, at a time of accelerated Internet technology growth, every serious company opens your online store as part of the registration, so that everything you want can be purchased on-line in it. Of course, there are other ways, if that does not suit you.
In return, the company provides you with delivery to your home address, so save time and money. In addition to the guarantee of membership, from a serious company you will guarantee the satisfaction of getting on the same products. And of course, if you want (and only if you want) you have the opportunity to earn.
Regarding the membership, that is, registration, we will immediately solve one thing that makes many mislead. In network marketing, you do not earn from joining people (ie, you should not, and if you hear of a system that is presented as network marketing, and the earnings are based on bringing in and joining new people, while the products are put on the other plan, there are only formal or in the worst case even do not exist, know that the thing is at least suspicious).
A quality product is the basis of the business of any serious online networking company, and you are paid from the traffic of these products.
Of course, you are joining people, i.e. you transfer information to them and they join themselves if they want to, but if those people do not buy anything, no traffic is created and you are not paid. You receive bonuses or commissions from the specific turnover of specific goods. Each company has its own compensation plan for the bonus payment, but the essence is the same, as the higher turnover occurs through your recommendations, i.e. The more you buy people you’ve come to know with this idea, the higher your commission.
If one day becomes big enough and stable enough (according to the given criteria of the company), then that consumer network that you organized is separated from you, and you get a permanent, passive, residual income in the form of a certain percentage of traffic generated by the network and if you no longer have to invest time into that group and even be active at all in the business.
These people simply created a habit of buying, and inevitably appeared a few already built and experienced leaders who can function without you and transfer their knowledge and experience to new people in business, and they will all continue to build this work, of course for themselves , not for you. You simply grab the fruits of your past work. The company rewards you for the stable market you created. Fair. You have invested time and energy, of course, hard work, and if you did a good job for the company, you earned an adequate reward.
In addition to the commissions that you generate on the basis of the generating turnover of the group you created, you can also realize a retail margin, i.e. earnings from selling products to end customers who want to buy these products, but not as registered customers, but want to get supplies through you at a 100% price. To some, this is a way of earning a primary income, which in many people creates a confusion that this business is door-to-door, many identify it with direct sales. Although there is nothing wrong with it, although serious money can be earned in this way, of course, with serious work, such income is however limited by your time engagement. The essence of network marketing is not in sales, but in the transmission of information and duplication, time and knowledge, so that one day you can gain passive income, i.e. Tenties for one job done.
However, no matter how simple it is or indeed it is, do not expect it to be easy and you will become rich overnight. Network marketing does not really have a limit, you can earn as much as you like, you can achieve time and financial independence, but it requires dedicated work, patience and perseverance, and consistent adherence to a proven system of success.
The trip can be shorter or longer, but in the end, the prize is the same for everyone who gets to the finish line. In network marketing there are no unsuccessful ones, there are those who have succeeded, those who are on the road and those who gave up.