Network marketing is a business concept that grows a company by creating a network of distributors. Earning money by three fundamentally types- lead generation, hiring, and building and management. Network marketing is divided into three categories: single-tier, two-tier, and multi-level marketing.
How Network Marketing described..
- Plan: It Makes a list of all the many methods salespeople may earn money. The plan also demonstrates how pay varies based on sales volume and the number of partners recruited. For their staff, reputable organizations make the strategy as open as feasible.
- Direct Sales: Network marketing companies sell their products directly to customers. The participants are given the job of selling the items, and they are paid a commission for each sale they make.
- Distributor: Most multi-level marketing companies refer to their members as distributors.
- Upline: All distributors in the hierarchy above a member’s personal sponsor. All the way up to the Head of Sales is the upline. On sales made by downline partners, all distributors in the upline get a commission.
- Downline: Members recruited by the distributor or fresh recruits registered by these members make up the distributor’s downline. All distributors profit comes from their downline’s sales/business.
- Recruit or collaborate: An individual who is brought into the company by a sponsor. The sponsor is compensated for the sales of the partner.
What are the Types of Network Marketing?
Network marketing functions on different tiers. This makes three types of it-
- Single-tier Network Marketing
- Two-tier Network Marketing
- Multi-level Network Marketing
1.Single-tier Network Marketing
You join a company’s affiliate program to sell its products or services through single-tier network marketing. You don’t need to recruit other distributors, and direct sales are your only source of income. Avon, a well-known cosmetics firm, employs single-tier networking marketing.
Some internet affiliate schemes pay you for driving traffic to the affiliate’s website. Single-tier networking also includes pay-per-click (PPC) and pay-per-lead (PPL) affiliate schemes.
2.Two-tier Network Marketing
In this Two-tier network marketing, requires some recruitment, but your compensation isn’t entirely dependent on it. You get compensated for direct sales (or traffic driven to a website) as well as direct sales or recommended traffic generated by affiliates or distributors you choose to work for you.
3.Multi-level Network Marketing
The MLM refers to a strategy used by some direct sales companies to sell products and services. MLM encourages existing members to promote and sell their offerings to other individuals and bring on new recruits into the business. Distributors are paid a percentage of their recruits’ sales.
RCM, Amway, a well-known multilevel marketing organization that offers health, beauty, and home care items, is an example of a well-known direct sales organization.
Questions asked ? What Is MLM, and Is it Legal?
MLMs are often legal, legitimate businesses whose distributors earn money from the sale of actual products and from commissions on products sold by distributors that they recruit.
How does Network Marketing work?
1.Training
The first step after joining is to become the distributor of the company i.e. you will be the one selling the products from now. Because the business entails selling and recruiting distributors, the firm you are joining or your sponsor will offer you comprehensive product and sales training.To assist you in getting started with the company, the Company supplies you with thorough product information as well as promotional items such as advertising materials or products. You’ll learn about your company’s product line, the quality and safety requirements that they satisfy, how they compare to the competition, what inquiries to expect from customers, and solutions to commonly asked inquiries, among other things.
Most of the companies provide sales training along with the training to recruit new people, generally they organize a short workshop for that.
2.Sales
You are ready to begin working when the Company has instructed you on selling, product knowledge, and equipped you with the necessary tools and supplies, as well as a startup package. Your sponsor will be available during your training and will also assist you in getting started with the business.
The process continues with them signing up as distributors, receiving product training, selling, and supplying them with tools, marketing materials, and a beginning kit, as well as inspiring and working with them to help them grow their network.
You’ll strive to increase retail sales in addition to hiring and developing your distributor network. Making a list of prospects for retail sales includes your family, friends, neighbors, and the local community, as well as your coworkers, your firm, and other firms with which you have known contacts. This is how a simple Network Marketing business model functions.
Examples (Case studies) of Network Marketing
1)RCM:
RCM started its operation way-back in 2000 and today, it is a leading direct-selling company of India with more than 20 Million Direct-Sellers. RCM offers Indian citizens a matchless opportunity to run and operate their own business by selling over 400+ quality products.
R.C.M. satisfied all the rules of the Indian constitution, and because of that, they have become a legal private limited company. Still, if you notice their business plan, you will find that their direct sellers have contact with many young people. They tell them false stories like if they join R.C.M.Currently, RCM serving the whole country with more than 180 depots and 10,000 stores.
RCM company have consistently proved its mettle as a manufacturer of innovative products and has grown from strength to strength. Currently, we stand fully manufacturing in 3 cities – Bhilwara, Guwahati and Roorkee. All the manufacturing units are outfitted with cutting edge technology, backed by robust processes and skilled workers. Also, the corporate hub has a magnificent floor space of about 17,00,000 Sq. Ft.
Along with this, RCM run the “RCM Udhbhav” initiative, which emphasizes on value-based education, women’s empowerment, conservation of water and electricity, prohibition of fireworks, DE-addiction.
2)Amway:
Amway is a well-known direct sales company that uses MLM to generate revenue.Amway is renowned for its safe, effective and high-quality plant-based vitamins and dietary supplements.
Advantages of Network marketing
- Companies do not need to rely on advertising to advertise their products since they have a solid and powerful distribution network that engages customers directly.
- Unlimited size of a network marketing organization. This occurs because businesses may form partnerships with a large number of people to become distributors. Distributors can also work together with other sub-distributors to increase the company’s sales.
- Another benefit is that corporations do not have to spend as much money on storage and delivery as they once did. This is due to the fact that distributors are responsible for these costs.
- Distributors can make an endless amount of money from their business transactions with the organization because of this framework. They can make money from both their own earnings and commissions.