Network Marketing -3 important types , Advantages and Disadvantage of network marketing

In this blog,we are going to discuss about network marketing, types of network marketing , advantages, disadvantages and working model of network marketing.

What is network marketing ?

Network marketing, often known as multilevel marketing (MLM).

Network marketing is a business method in which distributors join and sell the company’s products. As a distributor, you receive a commission on your items as well as a share of the sales of other distributors you have persuaded to join your team.

It is a method to create a team of salesperson around you, and you get a percentage of their sales as well as your own.

It is a business model that combines direct selling and the recruitment of new salespeople, resulting in a network in which everyone has the capacity to gain from sales at several levels.

Network marketing produces sales through independent representatives that establish a network of business partners or salespeople to help with lead creation and closing.

In a typical network marketing structure, each sales representative is encouraged to recruit a network of salespeople, creating multiple levels of recruits. The founders of a new tier or “upline” earn commission on their sales as well as the sales of the people in the tier they formed, known as the “downline.”

Famous network marketing company names are, Amway,Forever living products , Herbalife,Avon.

How network marketing business model works ?

Network marketing runs on a hierarchical structure model, with participants earning money by selling the company’s products or services and establishing their own network of downstream distributors.

Network marketing business model works mainly on seven steps .These steps are given below.

1.Individual Join a Network Marketing Company

This is a first step of network marketing,when Individuals register as distributors for a company, typically acquiring a startup kit or initial inventory.

2.Sell Products

Network marketers sell products and services directly to clients, frequently relying on connections and recommendations.Distributors sell products directly to clients and earn a commission on each sale.

3.Recruitment of New Distributors

Recruiting new distributors into your “downline” is an important element of network marketing.Distributors are encouraged to acquire new members for their network.

4.Earn Money From Downline Sales

Distributors make money not only from their own sales, but also from a percentage of the sales made by the individuals they recruit, and possibly even from the sales of those hired by their recruits, and so on.

5.Grow Network

The success of network marketing is dependent on developing a strong network of distributors and clients, developing connections, and providing training and assistance to individuals in your downline.

As the distributor’s network grows, so does their income also increases.

6.Training and Support

Companies frequently provide training and support to new recruits to help them learn about their products, sales approaches, and recruitment initiatives.

7.Monitoring of Performance

Distributors monitor their sales and recruitment activities, making adjustments as necessary to improve their performance.

Advantages of Network Marketing

1.Personal Development

Network marketing is a word-of-mouth business in which we present to others and hope that they would join our company. Communication is critical when it comes to building a network marketing company.

As a result, one of the biggest advantages of network marketing company is the opportunity to improve your communication skills and it helps you to develop your personality.

Network marketing can help you improve your communication, leadership, and sales skills while also increasing your confidence.

2.Easy To Start

Network marketing is an excellent business concept for getting started. A large amount of capital is required to make any other firm profitable. However, you can start a network marketing business with very little capital and scale it to great heights.

3.Flexibilty

Distributors can typically choose their own hours, making it a desirable alternative for people looking for part-time work or a side hustle.

4.Good Source Of Income

If the team grows and sales are high, distributors can make passive money without having to directly participate in every sale.The more actively the distributor works in this industry, the more likely he or she will profit from it. You pick how big you want your network marketing company to get.This is not a job where you work for a set amount of time and then take a salary.

Disadvantages of network marketing

1.Time Consuming

Building a successful network marketing company takes time and effort, particularly in the early stages.

The enrolling process is easy, but approaching a huge group of individuals and asking them to pay for goods and services from a company whose name they have never heard of is challenging. It is definitely time-consuming, and there is no assurance that the individual with whom you are discussing the concept will become your partner.

2.No Guaranteed Income

Income is directly related to sales and team performance, hence there is no guaranteed income.

The truth is that most people do not even generate a part-time income from network marketing. The problem is that most MLM companies have no limits of jurisdiction. If you wish to become a representative, simply pay the cost. This produces pockets of conflict that fill markets with the represented goods or services, reducing profitability.

3.Rejection

Rejections are a normal part of life, making them the most major distinction of network marketing. If you do not face rejection, you are not growing. Prepare for this if you wish to devote your time.Network marketing includes a lot of rejection from potential customers and recruits, which can be emotionally draining.

4.Marketing Scam

There are many genuine network marketing Companies out there, but there are also some fly-by-night operations that take advantage of the public. People lose faith in the network marketing industry as a result.

Types of network marketing

There are 3 types of network marketing.

1.Single-Tier Network Marketing

Single-tier network marketing, also known as direct sales or single-level marketing, is a company strategy in which sales representatives earn commissions only based on their own sales performance. Unlike Multi-tier or Multi-level Marketing (MLM), the salesperson has no downlines or levels from which to earn extra commissions or bonuses.

2.Two-Tier Network Marketing

Two-tier network marketing is a structure that falls under a broad category of network marketing or multi-level marketing. In this approach, participants get paid not only for their own sales, but also for the sales of the individuals they directly recruit.

3.Multi-Level Network Marketing

Multi-Level Marketing (MLM), often known as network marketing or referral marketing, is a sales method utilized by some businesses. This business model involves a pyramid-shaped network of individuals who sell the company’s products directly to consumers while also recruiting others to join the network as sales representatives.

Challenges in network marketing

• Getting a successful and dedicated lead for your MLM business will propel you to the top. It is difficult to find a lead at the start of your business.Lead generation is a big challenge for MLM business.
• Recruits may not stay with one MLM company for long,they move around based on the commission offered and the business’s services.We must retain recruits in our MLM business.
• Work-life balance is essential for everyone who wants to live comfortably while still running a successful business or career. It is also a challenge in the MLM industry.
• To be reputable in Network Marketing is a huge challenge. It is not simple to be content with the cash you earn through Network Marketing. To preserve a reputation, you must commit both time and effort.