NETWORK MARKETING DEFINED

 What is network marketing? Actually, every person in the United States has been involved in network marketing for many years, they just don't know it. You have probably read a good book, eaten at a great restaurant, or gone to an excellent movie. Did you tell anyone? If you did, then you are a network marketer. The only problem is that you never got paid to help promote that book, restaurant, or movie.

Network marketing is simply the movement of products or services from the manufacturer or producer to the end user via word of mouth marketing. It is conversational marketing. For example, you use products that are typically better than those you can find in a retail store. If you like them and get results, you tell other people. If they also want to use a product, you make arrangements with your company to get it for them. In exchange for making this arrangement, your network marketing company will pay you a commission.

MULTI-LEVEL MARKETING VS NETWORK MARKETING:

Many people ask what the difference is between multi-level marketing (MLM) and network marketing. Some people in the marketing industry say they are the same thing, and others say they are different.

The key difference is how marketers align themselves with the parent company. In MLM, multiple levels of people buy products from each other. As an example, look back at how Amway had leaders that would break off and now they have distributors who purchase products from them at a slightly higher price, which results in a wholesale profit for the leader. The company pays bonuses to the leader, and the leader redistributes to the distributors below.

Network marketing is different. Everyone who signs up is contracted directly to the company. They all purchase products directly form the company at the same price and receive their bonus checks directly from the company. This system eliminates the need for big inventories and sophisticated bookeeping systems, thus saving the new network marketer both time and money and giving them more time to build their business.

ILLEGAL PYRAMID SCHEMES:

One of the most common questions you will hear is, "Isn't this one of those pyramid schemes?" When it comes right down to it, all businessses are pyramids. The person at the top of the pyramid makes the most money, and workers at the bottom do the work and make a little bit of money. Do all the workers have the opportunity to rise to the top? Yes, one at a time. The government is a pyramid. Our school system is a pyramid. There is nothing wrong with a pyramid. It is one of the strongest structures in the world.

What these people are really asking is, "Isn't this an illegal pyramid?" According to Washington state law, a business venture is an illegal pyramid if a person receives monetary consideration for recruiting people, and if the new recruits must also make an investment and receive monetary consideration for getting people to join. All three of these requirements must be met in order for it to be illegal. A good example of an illegal pyramid is the chain letter where you send $5 to each of the five listed names, move everyone up, put your name in the #5 slot and mail out 1,000 flyers. There is an investment (with nothing of value received in exchange) and monetary consideration for recruiting. All 50 states have laws and regulations regarding multi-level or network marketing. Check with your State Attorney General's office.

A legal MLM or network marketing company will offer a legitimate product, which can be sold to earn a retail profit. The company will also allow people to recruit or sponsor other people into the program. Marketers receive no compensation until people buy products from the company, whether for their own use or to sell. Typically, people joining an MLM or network marketing company will purchase a starter kit, which contains training materials, brochures, forms, and video and audio tapes. The contents of this kit must be worth at least the cost of the kit. The requirement to purchase a large inventory of products up front is called "front loading" and is considered to be an investment by the State Attorney Council, which may make the company an illegal pyramid.

THE FUTURE OF NETWORK MARKETING:

Business analysts such as Robert Allen, author of Creating Wealth and Wayne McIlvaine, consultant and former marketing director for McCann Erickson advertising agency, agree that network marketing is the wave of the future. Economist Paul Zane Pilzer, author of Unlimited Wealth, expects network marketing sales to double every three to five years. The Direct Selling Association indicates that the direct selling industry accounts for annual sales of $50 billion a year of which network marketing contributes approximately $10 billion. In the May 1990 issue of Success magazine, senior editor Richard Poe wrote an article entitled "Network Marketing...The Most Powerful Way to Reach Consumers in the 90's". In March 1991, Success showcased network marketing in an eight-page article. The publisher of Success, Scott DeGarmo, sees network marketing as one of the growing home-based industries and has authorized a monthly column on the subject.

Other business analysts such as Burke Hedges, author of Who Stole the American Dream, are comparing the growth patterns of network marketing to those of franchising. Over 30 years ago franchising was a revolutionary new system that people hated. The media called it a scam and rip-off. The papers were filled with stories about people who had lost their life savings in a franchise. Major Fortune 500 companies involved in franchising tried to conceal their identity. Hedges, in his book, indicates that there was even a strong movement by Congress to outlaw franchising. Today franchising contributes over one-third of the Gross National Product.

Why the change? A man named Ray, with a dream. He dreamed about hamburger restaurants with golden arches in every city throughout the U.S. Ray believed in that dream and went on the road to sell it. He sold his initial franchises for $500 to $1,000 each, and many people turned him down saying it was a pyramid scheme. In hindsight, how many of those McDonald's franchises would you have bought?

Business consultants such as Marc Barrett are saying that network marketing is where franchising was about 15 years ago, going into its second stage of growth. During this stage, the network marketing industry will experience popular growth or momentum. During the popular growth stage, an industry becomes so popular that almost everyone is impacted in some way or another. It is during this stage that network marketing, now being called the people's franchise by nearly all involved, will eclipse franchising. It will become the most powerful way to reach consumers in the 90's and beyond.

A SERVICE-BASED ECONOMY:

One reason for the bright future of network marketing is the U.S. evolution from a production-based to a service-based economy. Network marketing is the growth industry of the future because it best fits this emerging society. More people now work in the white collar segment of the economy than in the blue collar. Economists such as Paul Pilzer say that distribution is the secret to wealth in the future. A service-based economy depends on efficient distribution. Network marketing is the easiest way for average people to get involved in distribution.

CASHING OUT:

You can find even more evidence that Americans will turn to network marketing as a popular new career choice. Faith Popcorn writes about how the baby boom generation, because of the glut of middle management and corporate downsizing, is cashing out. They are leaving the corporate world by the tens of thousands to start home-based businesses, to experience less work-related stress, and to spend more time with their families. They are seeking time freedom and financial security. Because baby boomers number 76 million in the U.S. and one billion worldwide, a baby boomer flight from the corporate world is a major phenomenon that will last for several decades.

WHY NETWORK MARKETING

Why are so many of the boomers choosing network marketing? Consider some of these benefits:

*A home-based business

*A business with national and international scope

*A business involved in distribution-one of the most important facets of a service-based economy

*No required start-up costs

*Almost no risk

*A business you can operate part or full time

*A business with no employees and minimal overhead, and

*The possibility of financial security and the time freedom to enjoy life.

What other business offers this list of benefits? Most network marketing companies offer comprehensive training and support, so you don't even need to know how to run a business. Network marketing offers you a way to take control of your financial future. When you work for someone else you get paid what other people think you are worth. You trade your time for other people's money. Unfortunately, you don't have enough time to make enough money to create long-term financial security or any level of time freedom.

A traditional job or business only allows you to earn money based on your efforts, or the efforts of a few closely managed employees-a salary, hourly wage, or profits. Network marketing offers you the ability to leverage your time by finding other people to work with you. If you build a large network, you can earn bonuses based on the efforts of thousands of downline distributors. The best part is that you don't have to invest any more time, this is called "time leverage". Your sponsor, the person who introduced the network marketing opportunity to you, will help you become successful and you will in turn do the same for the people you sponsor.

Many distributors consider network marketing to be an excellent personal growth experience. As a network marketer, you will learn how to run a successful small business, how to work with all types of people, improve your communication skills, learn to speak in public, establish some successful habits, and have a heck of a lot of fun all the while. Network marketing is challenging, rewarding, difficult, and at times frustrating. But you will probably have more fun and meet more great people in network marketing than in all your years in the corporate and traditional business world.

Info pulled from website: Why Networking Marketing Today