Network Marketing, Internet Marketing for Profits

 

Multi-level marketing, also called network marketing, involves business building by a distributor network. The top level of this distributor network features a parent network marketing company directly marketing their products to customers via relationship referral and direct selling. Direct selling means employing sales tactics such as presentations, demonstrations, and sales calls. These sales tactics are utilized in order to give further explanation about the product to a customer and the need for it. Direct selling methods are often used for off the shelves products and one sold door-to-door such as insurance.

 

The next level of the distributor network features salesmen. Representing the parent network marketing company, these salesmen, who are generally unsalaried independent contractors, earn commissions based on how much of the product they sell. While they represent the network marketing company, these salesmen remain independent. They are each essentially their own independent business organization. In network marketing, these salesmen are typically referred to as distributors, though sometimes they are also referred to as associates, independent business owners, franchise owners, sales consultants, or independent agents.

 

These distributors build their own customer base and sell the product directly or via the parent network marketing company. They can also recruit a downline of their own independent distributors working under them who will then each develop their own customer bases, thus expanding the business. Another way distributors might earn money is purchasing the parent networking company’s product at a wholesale price and then retailing it.

 

Network marketing businesses are completely legitimate and operate all over the United States of America and in other countries as well. Sometimes, however, a pyramid scheme might try to pass itself off as a legitimate network marketing business using branding as a ploy to mislead the public.

 

A pyramid scheme involves enrolling other people into the scheme without an actual product or service being offered. More modern pyramid schemes might actually offer a supposed product or service as a guise. Essentially, a person enrolls in a pyramid scheme with one payment and is, supposed, to reap great benefits from that. However the scam is only to get that first payment out of someone, who then receives nothing.

 

Essentially, a person enrolled in a pyramid makes one payment and from that is supposed to reap benefits, though it is actually all a moneymaking scam. Pyramid schemes are illegal in the United States and in many other countries.

 

There are a few tip-offs that a business is network marketing and not a pyramid scheme. A network marketing business will not earn from recruiting new distributors, only commission. Distributors might earn a piece of the commissions of those they recruit, but, again, that is all based off commission. The fact that distributors might earn extra commission off those they recruit is, in fact, one thing that attracts people to the job.

 

A good test of legality is the 70% rule. Since news salesmen might have to pay for their own training and marketing materials or buy some of the inventory, participants must sell 70% of the previously purchased inventory before ordering more. This prevents “inventory loading, which might be used to qualify for more bonuses.

 

There are multiple legal interpretations of this rule, mostly over whether the inventory has to be sold to non-participants in the business or if self-consumption (selling the product to one’s self) is allowed.

 

The Federal Trade Commission advises those interested in joining network marketing on whether certain businesses are legitimate or whether they are pyramid schemes.