Network Marketing – Types, Working, and Examples
The word “marketing” alone carries a number of connotations. This word immediately brings up images of stores, large corporations, and everything else. We begin by considering the smallest grocery store in our neighbourhood and finish up at IT companies that offer services and create new software for internet marketing. Marketing encompasses everything that falls between these countless ideas.
Like everything else, marketing has changed significantly over time. It extends beyond merely consumers, sellers, salespeople, and businesspeople. With time, it has undergone rapid change. The realm of marketing has expanded as new types of marketing and new approaches have emerged.
Network marketing is one such form of advertising. In this blog, we’ll concentrate on the same.
Network marketing is a business model that relies on a network of distributors to help a firm develop. Three basic forms of systematic tactics must often be used in order to generate revenue: lead generation, hiring, and building and management. The three types of network marketing are single-tier, two-tier, and multi-level.
Network marketing is, to put it simply, a business model that relies on independent agents selling to other people, typically from their homes. If you start a network marketing business, you might need to build a network of business partners or salespeople to assist you in generating leads and closing deals.
Types of Network Marketing
- Single-tier Network Marketing
- Two-tier Network Marketing
- Multi-level Network Marketing
Single-Tier Network Marketing
To offer a company’s goods or services through single-tier network marketing, you enrol in its affiliate programme. You don’t need to find new distributors, and your only source of money is from direct sales. An established cosmetics company called Avon uses single-tier networking marketing.
Some affiliate marketing strategies on the internet compensate you for sending customers to the affiliate’s website. Affiliate programmes with a pay-per-click (PPC) or pay-per-lead (PPL) component are also a part of single-tier networking.
Two-Tier Network Marketing
Unlike single-tier network marketing, two-tier network marketing includes some recruiting, but it’s not fully necessary for your income. You get paid for both direct sales (or traffic directed to a website) and direct sales (or traffic recommended to a website) produced by affiliates or distributors you choose to employ.
Multi-Level Network Marketing
In exchange for a share of their recruits’ sales, some direct sales organisations use multi-level marketing (MLM) to entice current distributors to find new distributors. The distributor’s “downline” consists of the recruits. Direct product sales to customers are profitable for distributors as well.
A well-known direct sales company is Amway, a multilevel marketing company that sells products for health, beauty, and home care.
Network Marketing – The Working
Network marketing is also known as multi-level marketing (MLM), cellular marketing, affiliate marketing, consumer-direct marketing, referral marketing, and home-based business franchising.
Layers of salespeople are typically built by network marketing organisations, and the salespeople in these layers are rewarded for building their own networks of salespeople.
- The people who create a new tier (also known as the “upline”) receive commission on both their own sales and the sales of the people in the tier they created (also known as the “downline”).
- With time, a new tier might appear, giving the top tier and the middle tier more commission.
- A network marketing participant’s income is based on both product sales and recruitment.
Anyone joining a network marketing team must go through two processes: training is the first and sales is the second.
Training
As soon as you sign up, the first thing you do is become a distributor for the business, which means you are now in charge of selling the products.
The company you are joining or your sponsor will provide you with extensive product and sales training because the business comprises selling and recruiting distributors.
The Company provides you with extensive product information as well as promotional products like marketing collateral and Marcom tools to help you get started with the business.
You’ll discover the specifics of your company’s product line, the quality and safety standards they meet, how they stack up against the competition, what questions to anticipate from customers, and answers to frequently asked questions, among other things.
Sales
When the business has given you training in selling, provided you with product knowledge, provided you with the essential tools and materials, as well as a startup package, you are prepared to start working. Throughout your training and as you launch your business, your sponsor will be available to you.
Your sales process will now include prospecting, creating a list of prospects, qualifying the prospects, scheduling an appointment with the prospects, meeting them and presenting the MLM business proposal, responding to inquiries and assisting them in choosing to join the network, and following up with them on a regular basis to ensure a positive decision.
You are prepared to start working after the company has given you training in selling, provided you with product knowledge, provided you with the required tools and materials, and given you a startup package. Your sponsor will be there for you throughout training and will help you launch your business.
Your sales process will now include prospecting, creating a list of prospects, vetting the prospects, scheduling a meeting with the prospects, introducing yourself, explaining the MLM business opportunity, answering any questions they may have, helping them decide whether or not to join the network, and regularly checking in with the prospects to ensure a successful decision.
They sign up as distributors, receive product training, sell, and receive tools, marketing materials, and a starter package. The process also includes motivating and assisting them in expanding their network.
Along with expanding your distributor network and adding more employees, you’ll aim to boost retail sales. Making a list of potential customers for retail sales involves your friends, family, neighbours, and the neighbourhood as well as your coworkers, your company, and other companies with which you have established contacts. A straightforward Network Marketing business plan works like this.
Examples of Network Marketing
Tupperware
It is among the most well-known multi-level marketing companies worldwide. The company, which was established in the United States in 1938, has developed a reputation for the entire category of plastic food storage containers to an extent that is only matched by companies that use conventional distribution channels, such as Scotch tape or Hoover vacuum cleaners. There are almost 40 Tupperware parties happening worldwide every minute.
Amway
Amway will generate roughly $8.5 billion in revenue by the year 2020, making it the largest network marketing company in the world. The company has expanded to over 3 million salespeople selling health, beauty, and home care goods in more than 100 countries since it was founded in Michigan in 1959.
Advantages of Network Marketing
- A network marketing organisation can be as big as it wants to be. This happens because companies might join together with lots of people to become distributors. To boost the company’s sales, distributors might also collaborate with other sub-distributors.
- Businesses don’t need to rely on advertising to promote their goods because they have strong distribution networks that interact with customers directly.
- Retailer profit margins, which are regarded by businesses as an expense, are likewise impacted by distributor structure. Distributors receive these profit margins, and firms are relieved of their financial burden.
- Businesses don’t have to spend as much money on storage and shipping as they once did, which is an additional benefit. This is because distributors are in charge of paying these expenses.
- Because of this framework, distributors can profit indefinitely from their business dealings with the company. They can profit from commissions as well as their own earnings.
Network marketing is a unique type of marketing strategy. People who are involved in it think it is unique and that the market is growing astonishingly quickly. We might be able to see some significant expansions of the network marketing industry in the near future. We can see it grow happily in the interim.
