Network marketing vs. multi-level marketing

Are You Just A Glorified Sales Rep...in Network Marketing or MLM?

As there are myriad cases in which the term "network marketing" is used interchangeably with "multi-level marketing" the true meaning of the two terms becomes misunderstood.In many cases a multi-level marketing structure is used in combination with a network marketing strategy, so it is possible to refer to one particular company as using network marketing as well as multi-level marketing; however this is not always the case.

It is important to make the distinction that the term "network marketing" describes a particular marketing strategy, while "multi-level marketing" is a specific characteristic that is a large part of, and speaks to an overall business model. While the two are often seen implemented within the same company business plan, they need not be and in many cases one is used without the other.

It is possible confusion arises from the hierarchical structure created in a multi-level system: because of its nature, the system itself results in the formulation of a tree networkstructure of the company; it is a description of the nature of the strategy used to market the company products. In other words, the "network" adjective is not referring to any company-related attributes; it refers to how the marketing itself takes place: through the social networks of individuals. Put yet another way, network marketing is not marketing which necessarily creates a network within a company, it is marketing that is performed through the social networks of independent people. within the scope of the company. The term "network marketing" however is not in reference to the

Multi-level marketing

Main article: Multi-level marketing

A typical MLM binary tree structure. The blue individual will receive compensation from the sales of the downline red members.

What gives multi-level marketing it's name is the unique compensation structure. In such a company independent sales representatives (individuals who market company products) are contracted by the company in what is more or less a subcontractor position (however the company usually has no general contract with any client). Because of such a relationship, the sales reps are not employees of the company, they are independent from it. (An example of this in the United States would be in any situation in which IRS Form 1099 is used.)

What makes a structure qualify for the term "multi-level marketing" is the specification in the contract between the company and the representatives that the representatives will receive compensation (also called commission) for their own personally generated sales of company products as well as for sales of other promoters they introduced to the company. This ability to receive constant remuneration from the efforts of others creates an incentive for the representatives to personally recruit teams of other sales representatives (who will ideally do the same), thus creating a downline of distributors and a hierarchy consisting multiple levels

The requirements for earning the ability to receive such compensation can differ widely between companies and are specified in each company's compensation plan document.multi-level structure the company utilizes. In other words, there are many different ways to set up the structure and specify how individuals are compensated from downlines, but the principle stays the same: an individual can receive renumeration from the efforts of those he recruited (and those recruited by his recruits, carried out to a specified level). These specifics of requirements needed to receive different kinds of compensation and exactly what the compensation amounts are are essentially what determines the type of pay plan is involved.

The Direct Selling Association

The Direct Selling Association (DSA) is the national trade association of the leading firms that manufacture and distribute goods and services sold directly to consumers. Approximately 200 companies are members of the association, including many well-known brand names. The Association's mission is "To protect, serve and promote the effectiveness of member companies and the independent business people they represent. To ensure that the marketing by member companies of products and/or the direct sales opportunity is conducted with the highest level of business ethics and service to consumers." The cornerstone of the Association's commitment to ethical business practices and consumer service is its Code of Ethics. Every member company pledges to abide by the Code's standards and procedures as a condition of admission and continuing membership in the Association. This is a great site to check out online business prior to joining them.

What is Direct Selling

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Direct Selling is the sale of a consumer product or service, person-to-person, away from a fixed retail location. These products and services are marketed to customers by independent salespeople. Depending on the company, the salespeople may be called distributors, representatives, consultants or various other titles. Products are sold primarily through in-home product demonstrations, parties and one-on-one selling. DSA's 2000 Direct Selling Public Attitude Tracking Survey, conducted by Burke Marketing Research, assessed public attitudes toward the direct selling industry. This study updates the findings of an earlier DSA study conducted by Wirthlin Worldwide (1997). Data from both surveys indicate that direct selling remains a vibrant marketing method that engenders considerable loyalty among its representatives and customers. Recent marketing innovations such as use of the Internet and mall kiosks, while less prevalent than traditional direct selling approaches, are gradually increasing in importance. Some particular points of interest include: The direct selling industry has touched a majority of adult Americans. •The direct selling industry has touched a majority of adult Americans: In 2000, 55 percent of American adults reported having, at some time, purchased goods or services from a direct selling representative. This represents a slight increase over the Wirthlin figures. •In the 2000 survey, one in five American adults (20%) reported they are now (6%) or have been (14%) a direct selling representative. •Among direct selling customers, three out of four (77%) have attended an in-home demonstration or party. The market potential for direct selling. •Thirty-eight percent of adult Americans surveyed in 2000 have some interest in purchasing a product or service in the future via direct selling, but only 27 percent had actually made a direct selling purchase in the past year. Both figures are about the same as in the earlier survey (Wirthlin Worldwide, 1997). •With public interest in purchasing through direct selling (38%) exceeding those who have purchased (27%), these recent figures suggest there is an opportunity for growth! Are America's shopping patterns changing? •As reported in 2000, the 55 percent of American adults who have ever purchased by direct selling is exceeded only by the percentage of those who have ever purchased via retail stores (96%) or through mail order catalogs (83%). •The percentage of American adults who are somewhat, very or extremely interested in using the Internet as a method of purchasing products and services in the future has increased from the 30 percent of American adults reported in the 1997 survey to the 50 percent reported in 2000.

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7 Tips For Choosing a Network Marketing Company

These seven tips will help you when trying to choose a network marketing company to join. No two companies are exactly alike, so know what you are looking for when making your selection. 1. Direct delivery to your customers. Make sure you will not have to deliver products to your customers, unless you want to. Direct delivery will save you time and money. 2. No inventory requirements. Join a company that does not require you to keep boxes and boxes of inventory in your garage or home. You will be expected to purchase and use the products, and that only makes sense. You should be your own best customer. However, you don't want to end up with a garage-full of inventory that you are unable to sell. 3. Free online ordering. Your customers should be able to order directly from your online store, and the only cost should be shipping and taxes. People appreciate the convenience of being able to order from the comfort of their own homes, any time of the day or night. 4. Support from your upline. Your upline should be available to help you. If you make money, they make money. It is always in their best interest to help you along the way. If your sponsor does not help you, go up the line until you find help. This is not usually a problem because everyone knows that if their team members do well, it helps them, too. 5. Low-priced membership. Joining a network marketing company should not break the bank. There are many companies you can join for under $100. If the membership fee is high, it could mean the products are over-priced, too. Fair prices draw team members and customers. 6. No sponsoring requirements. Network marketing companies who set sponsoring requirements have a hard time keeping associates. No one can be forced to join, so sponsoring can be sporadic. 7. No sales quotas. Consultants should not be forced to meet sales quotas. This puts pressure on people and no one wants to join a business that brings on stress. You should be able to work your business in your own time and at your own pace. Consider these tips when searching for a network marketing company to join. Don't get yourself into something you will not enjoy because you can't keep up with the requirements.