What Is Network Marketing?

Network Marketing : Marketing networks have positioned themselves today as a great business model due to the abundant benefits they provide and the little risk involved. The principle on which network marketing is based is independent distributors who obtain and sell products directly from the manufacturer, and in turn these distributors can associate other people and obtain rewards from the sales of these new associates. Learn much more with us in this article.

The most characteristic element of what a marketing network is, is the ability to associate new individuals through distributors who are already working and by this association generate extra money. This model makes it possible to eliminate most of the advertising expenses and also cut the chain of intermediaries between the manufacturer and the final consumer, which is why many of these products had a high price.

What Will You Find Here?

Know what a marketing network is

• Operation of what is a marketing network
• Difference between a network  and a pyramid scheme

Operation of what is a marketing network

Now understanding what a marketing network is , we can define a little the internal mechanics of this business model that consists of generating a network of consumption of a certain product, where all the distributors involved obtain benefits.

Let’s take an example of a shoe manufacturing company that, despite having several stores, is looking for a way to expand its sales network with minimal investment. In these cases, considering a marketing network seems the most viable option.

The product , in addition to being in certain stores, can be in the hands of independent distributors, who receive an incentive for each sale and, in turn, can receive more commissions if they create their own distribution network, which is a great benefit for the manufacturer since it did not have to invest a significant sum of money, in, say, setting up a shoe store. It should be noted that there is a lot of confusion regarding MLM and pyramid schemes.

Difference between a network marketing and a pyramid scheme

Due to their similarities, it is often difficult to differentiate whether the proposal we receive is a business model with an mlm (multi level marketing) company or is just a pyramid scheme, despite the fact that the latter is prohibited in countries such as the United States.

It is classified as a scam if some kind of commission or compensation is received for the entry of a new user to the plan, on the other hand it is not defined as a scam if the compensation received is for the sale of a product or service.

We have already clarified that in the marketing network, the benefits obtained are from the sale of the products and if it is associated with more people, the benefit obtained will be based on the sales of the products of those people and not for having them.