What is Network Marketing and How does it work?

What is Network Marketing?

Let us first clarify separately what does Network and marketing means.

Network means to connect and operate with a group or a system of interconnected people or things.

And Marketing means the activity or business of promoting and selling any product or service. 

So stitching both, Network Marketing means getting connected with a system for the purpose of interconnecting with people in the business of promoting any product or service.

In a much simpler term, Network Marketing is a business model that involves a group of people in a specific structure who consume, sell and promote the products/services of a company. 

Network Marketing is often mistaken by various other terms; like Multi-Level Marketing (or MLM), Pyramid Structure Marketing, Ponzi Scheme, Referal Scheme, Binary Network etc. But ideally, each one is different and has its own specified characteristics. Even a few are scam schemes as well. 

Network Marketing is a very simple easy and dependable kind of business that anyone can think of starting at any stage of their life. However, one has to be aware of the right kind of ethical business that a particular network marketing company can offer. It is mostly seen that network marketing companies are into product selling than offering services. 

How does Network Marketing Work?

To understand how Network Marketing works, it is necessary to understand the features of an ideal network marketing company.

  1. There is a fixed business plan for each and every network marketing company. It might vary from company to company, but there always should remain a specific plan.
  2. The business plan is based on the marketing of products. Along with a specific business plan, there always remain certain products that the company’s business module is dependent upon.
  3. Network marketing companies directly sell their products to the participants/individuals who join the company based on the plan. These individuals are also known as Independent Business Owners because it is their responsibility to further sell and promote the products of the company. This is a process that decides a participant’s income earned depending on the business generated by the individual.
  4. Mostly, network marketing companies do not spend on advertisements, unlike traditional marketing companies. However, few companies are exposed to limited promotional activities.
  5. As the participants are not the employees of the company, hence, there is no fixed income commitment given by any of the network marketing companies. However, there remains the scope to earn unlimited depending on the participant’s performance.
 So, in simple terms, network marketing works in the following manner.

For Example:

  • There is a Company named Modicare. (Indian Network Marketing Company with a certain Business Plan and offering certain products)
  • Then there is someone already joined as an individual/Independent Business Owner (IBO) in the company named Madhumita.
  • Madhumita(upline for Mrinal) Introduces someone named Mrinal (Downline to Madhumita) and Julie (Downline to Madhumita). 

Madhumita would be entitled to earn a commission on the business generated by both Mrinal and Julie along with her own.

  • Now, Mrinal (Downline to Madhumita but Upline to Aparajita) introduces someone named Aparajita (Downline to Mrinal and Madhumita). 

Here, Mrinal would be enjoying the commission on the business generated by Aparajita and his own. And as Aparajita is in Mrinal’s network, and Madhumita is entitled to a commission from Mrinal’s business, so her(Madhumita’s) scope of earning also increases.

  • Again Aparajita (Downline to Mrinal and Madhumita but Upline to Sanjay) introduces someone named Sanjay (Downline to Aparajita, Mrinal and Madhumita).

Here, Aparajita earns a commission based on her own and Sanjay’s business performance, but the scope of earning increases for both Mrinal and Madhumita because the network has grown to further steps of downline.

  • Then Sanjay also introduces someone and so on goes on…And everyone is accountable to himself. The more he sells the more he earns.
  • This way the business spreads and the network is built. The bigger the network, the bigger the chance of generating income.
  • As everyone has the highest possibility to introduce new individuals in their own network, there always remains an unlimited earning opportunity for any individual.

How network marketing works?

An example to show how network marketing works.

Network marketing scope and future in India?

To inform you, Network Marketing is at the baby stage in India. India is now in the process of becoming Digital India and hence the scope is huge in India for Network Marketing. The early you start, the bigger your network will be. Once everyone becomes aware and starts understanding the business, it will spread like a virus and then the scope of generating business will shrink and become limited. Each and every day, people are exploring new things and network marketing is the next big thing in the market. 

Networking is a very simple business if you understand it and utilize your connections to grow together. It is a business of growing together. The more you help your network the more is your income. You get to learn about products, business strategies, prospecting leads and promoting business. You become a more disciplined and responsible person if you decide to be a good networker. And if you have the focus, you are bound to succeed in Network Marketing. 

Benefits of Network Marketing: 

Like each and every business, Network Marketing business also has some benefits to note;

  1. You can start your business as a part-timer.
  2. With negligible or no investment you become an Independent Business Owner.
  3. You get to know and interact with different kinds of people
  4. You get trained to become a leader and inspire others
  5. You become your own boss
  6. You can work on your own time and place
  7. You get to enjoy holidays and vacations
  8. You can live your dreams
  9. You get to know about your products
  10. You become more responsible and help others to start their own business too.

Well, these benefits depend on a particular individual’s thought process hence varies from person to person on how they look at the opportunity of joining any network marketing company.

Who can Join this Business?

Network Marketing Business is a great opportunity to explore and earn passive income for a lifetime. Yes, you read it right…for a lifetime and beyond. No matter what your educational qualification is, how experienced you are or what background you come from; you have an equal chance to make money as a networker. Anyone can join this business and get the scope to explore a galaxy of opportunities

A proper business plan and some effort can inspire you to leave the 9 to 5 job and enjoy financial freedom while earning passive money. Network Marketing business is a business of duplication. You don’t have to do anything new of your own. The business plan is there, the products or service is also there; you just need to build a network and introduce them to the existing system. Everything works out on its own.

Different Companies

Network Marketing Business is most prevalent in other countries like the USA, UK, China, Japan, Brazil where the business turnover is in Billions of US dollars. There are 100 of Network Marketing companies offering different products and services worldwide. Starting from lifestyle products such as garments and jewelry to home care, personal care, nutritional and agricultural products, the range is huge and comes with their own pricing depending on the quality and the brand I suppose.

Few names of Network Marketing companies are Modicare, Amway, Avon, Herbalife, Oriflame, Tupperware, Forever Living, Vestige, etc.

While there are several options to choose from and you have the freedom to join any or multiple of them, it is necessary to explore the 5 P’s of any company. Analyzing and identifying the 5 P’s will help you to make your decision in selecting the right Network Marketing Company. 5 P's of Network Marketing

Diagram to show the 5 P’s of Network Marketing

  1. Profile – The first thing you need to focus on is the Company Profile for any Network Marketing Company you choose. The past history, the background and the mission of the company says a lot about the strength and solidarity of the company. Company PROFILE is the base of this business.
  2. Products – There are different products that different companies are promoting, but you need to select the company that is focused on customer-centric PRODUCTS. Daily usage of fast-moving consumer items would be the ideal category to penetrate and expand your network.
  3. Price PRICE of the products should be within the reach of the masses. Plus the quality should not be compromised. If the product quality and pricing have a balance then the sale would be more automatically.
  4. Plan – The business plan should be an easy yet valuable one and not complicating. It is the PLAN that sells in Network Marketing. So, the more engaging and attractive the plan the more scope of expanding your business.
  5. People – It is the people that comprise the business in the network form. Look at the success stories of the company to identify what people have achieved from the business. It is all about the PEOPLE in the network marketing business.

While there is the scope of joining International Network Marketing companies, I personally preferred to stay Indian and I joined Modicare. 

Read: Why Modicare is the best Network Marketing company according to me.

How to Join?

Get a Sponsor and your job is done. Almost in each and every Network Marketing Business, there is a concept of UPLINE and DOWNLINE. So whoever sponsors you into the business is your upline and in this business, your upline is your mentor, guide and philosopher. You become the downline of the individual who sponsored you. You follow the paths of your upline, copy the system and you will become a successful networker. 

Wish You All The Best!!!

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