What are network marketing and how do they work?
When you look about internet based marketing networks, two somewhat quickly opposites show up between them: one will be the pyramid selling and other media or marketing network (or multilevel advertising and marketing). This article will help you to distinguish between these terms and to analyze if you are interested in placing a method based on advertising networks in your business.
Marketing networks The so-called marketing networks refer to a set of independent distributors which sell products directly from the producer; These distributors can, in turn, associate others and reach a specific benefit for every sale of these.
These networks are getting to be quite popular in recent years on account of the proliferation of freelance profiles, freelancers or even, simply, folks who want to reach a secondary source of revenue. But, it is considered that the pioneer brand of this sales strategy was the American beauty products brand Avon (born at the conclusion of the 19th century) and that today there are more than 6 million distributors worldwide.
Differences between pyramid selling and network marketing How much controversy around the phrase "network marketing"! Often it's hard to distinguish whether a network marketing is legal or behind it is a scam. Pyramid selling is actually prohibited in Spain, but not network marketing or maybe network or perhaps multilevel marketing.
Spanish law is actually clear about this: the point of receiving compensation for the entry of owners or customers to the strategy is actually regarded as a fraud; but it is not considered fraud if that compensation derives from the sale made of a product or even service. This's the crux of the issue.
If you feel that network advertising might be an alternative for the company of yours, make sure before fleeing the concept of pyramid selling, as well as moving away from aspects such as:
that pricing isn't done without taking into account its market value and competition
that the primary price of participation of the distributor is actually zero or very low
that distributors are not driven to consume the company's products
that compensation schemes are actually clear for distributors and for those who can reach the future levels
How Network Marketing Works
Let us take an example: let us say you've a business which manufactures cleaning solutions (or possibly you import them). You're clear that your item is not the typical fundamental necessity, since it offers something more to the customer. Thus, you're not searching for a grand distribution, but a more discerning one. You have a couple of stores but you'd like to expand your sales network with a little investment. You might possibly think of network marketing and advertising.
The products of yours, in addition to being in your stores, could be in the hands of independent distributors who help promote and advertise the items. They would receive a commission for each sale and you'd not have to invest in, for instance, the creation of a new shop.
advertising networks
Of course, just as it doesn't require a similar investment, a distributor doesn't have a similar degree of sale as a department store. Thus, one way to incentivize and grow your network is actually for that distributor to create, in turn, its own network and profit from the sales of the distributors in that second network.
After reading this information, do you believe you will use a network marketing to your marketing and sales strategy? Tell us your opinion!
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