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An Introduction To Network Marketing

May 9, 2008
Marketing as a whole can be classified into two main categories - 1-Traditional Marketing and 2-Direct Marketing. The Traditional Marketing system is the one which all the businesses have been using since the beginning. Whereas the Direct marketing is a recent phenomenon developed before less than a century ago. Direct Marketing is also known as Multi-level Marketing or Network Marketing. The Direct Marketing or MLM is essentially a marketing system in which the buyer is also the franchisee at the same time. The MLM system does not use the formal systems of Traditional marketing, viz. mass advertising, wholesaler and retailer network, etc.

This system was essentially derived from the prevailing fact that whenever we buy or acquire something, our near and dear one's also feel like doing the same by inquiring about it from us. In other words we send more buyers to the product that we acquired. Ofcourse the referrer did not benefit from extending the sales to it's circle of influence.

So some prudent business persons naturally derived a principle from this practice. And they created a professional system of marketing based on this principle. Thus, one refers the other and the other refers another. This creates multilevels of chains of buyers and distributors known as networkers. They made the system work easily by training some persons and made the system attractive to them by distributing appropriately attractive compensation plans to the active networker. It also became easy due to internet popularity and advanced software techniques.

In this system the cost of the mass advertising and wholesaler/retailer network is completely redundant, which cost in the most of the cases around seventy to eighty percent of the sales price. Thus by saving this amount by avoiding the formal expenses of the traditional marketing, an MLM system is able to allocate thus saved funds for paying appropriate commissions to the buyer who does refer other buyer(s).

In this way every buyer who refers more buyers is able to earn appropriate amount of commissions, The MLM compensation systems are devised in such a way that the buyer has enough incentives to refer more and more buyers to the company. This way every active buyer is able to create own team of dedicated networkers. This opportunity is equally available to each buyer.

The networker is also known as associate or Independent Representative. The ultimate target in any marketing system is sales. In the absence of all the formal systems of traditional marketing, a Buyer (who is also a seller) in MLM system has to refer more buyers to the company in order to receive commissions and incentives from it.

Most of the MLM companies organize seminars, training sessions and pay special incentives to enhance the leadership qualities in the networker so that he/she is able to organize his/her own team on a fast track. Sometimes the networker may also be required to pay for high quality trainings and seminars.

This system has many advantages. It is assumed that every human being has some basic qualities of leadership. So even the masses who were unable to acquire formal education, could join such programs and with trainings and guidance available in abundance, can earn handsomely. This is also far more suitable to ladies who are mostly unable to join formal jobs due to family and children's responsibilities. Being able to supplement income by part time work at home is another advantage. Due to all these advantages, this system has become an industry in itself and is the fastest growing at present.

However, due to ease with which it can be started by a netpreneur, many unscrupulous and cunning persons have caused heavy losses to the gullible and unsuspecting newbies. This has brought some bad name to the industry. So caution is required by any newbie to select an MLM program. I have some very horrifying experiences about this aspect. Lastly I have been able to find a program that has all the good aspects of the MLM. Like systematic training and guidance, high earning affiliate programs, auto set-up, etc.
About the Author
Shaukat Khan is owner of http://www.ModelHomeBiz.comm and writes on a variety of subjects. To learn about the best way of doing network business Shaukat recommends you visit: ModelHomeBiz.com
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