What Is Network Marketing?

By Author: Rob Parker
Total Articles: 312
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In the business world of today, marketing is perhaps more important than ever before. While traditional means of marketing continue to be popular in several areas, alternative marketing methods are becoming increasingly popular, particularly for businesses which are seeking to establish themselves.

One business distribution model - a method by which word of a business and selling of the products a business has for sale - that appears to be working well today is the idea of network marketing. In this article, we will take a look at what network marketing is and how it works.

Network marketing

Networking of all kinds is popular in the cyber age, and whether we are talking social or sales, the idea is the same: using connections that are already in place, an individual (or business) creates a wider web of contacts through connections that their connections have. It operates along the same way our social lives do; a friend you know from work invites you out with some of their own friends, and at the end of the night you find (hopefully) that you have met a couple more people with whom you get along.

When ...
... it comes to network marketing, the idea is to have the contacts sell a specific product. A parent company will start out with an idea or a product that they wish to sell, and will recruit individuals to do so. These individuals will receive a percentage of the sale of the product every time they make a sale. In addition, they may recruit other individuals to sell the same products, and they will receive a percentage commission every time the individuals they recruited make a sale as well.

Isn't that a pyramid scheme?

Most people will have heard of a pyramid scheme, and may think network marketing operates along the same lines. However, there is an important difference; in network marketing individuals are paid only for actual sales, not for recruiting. The money changing hands, in other words, is real money made from sales (in a pyramid scheme, fees are paid for recruiting, but without sales to match recruitment, companies would often renege on payment due; this is why they are for the most part illegal).

Obviously, network marketing works very well the higher up one is on the sales chain. As more and more people are recruited, the commission fees will drop considerably. If you are looking into getting involved in network marketing, therefore, it is important to know where in the chain you are coming in (although thanks to the Internet, there is a customer and distributing recruitment base that is virtually limitless). Employed correctly, network marketing can mean huge profits for parent companies and individuals alike.