What is Network Marketing and How Does It Work

What is Network Marketing and How Does It Work

With the harsness of the economy continuing, people are still looking towards the Internet as a way to find some financial relief by possibly finding a business opportunity to become involved with. As people revisit some business models and coming across some MLM opportunities, some are asking, "Just what is network marketing?"

A good explanation of Network Marketing or Multi-level marketing is that it is a business model that utilizes independent representatives to reach and increase their customer base by "word of mouth" marketing. These members "own" their own businesses and market and promote the services and products of the company they are associated with on their own as well.

Like many other companies out there, network marketing businesses sponser others to work their businesses and promote the companies products. While network marketing is not the only industry to increase their sales force this way, each person is an independent business owner themselves. While you see traditional businesses recruiting others to get involved in selling their products or services, like insurance sales people.

While there are similarities to some more traditional businesses like the insurance industry, some particular differences between these and the network marketing companies have to do with marketing and advertising. In a more traditional business, much of your overall budget is spent on advertising your services.

In a network marketing business model, the money spent on a typical marketing or advertising budget is saved by the company and paid back to its "sales force." This is primarily what makes a network marketing company different and is also one of the many reasons why a person can enter this business at a very reasonable price range.

One way to look at all of this is if you were able to earn a percentage of the retail price of the products and services that you recommended people. If you recommended a music CD, DVD, clothes, real estate...whatever the product, whatever the service you got paid a percentage of the retail price. You could also expand your business by adding others that recommend products and services creating a larger volume of products recommeneded and sold.

Ultimately, if someone asks you, "What is network marketing," you will be able to tell them that it is a model for business where your recommendation to use a product or service earns you a commission and you can increase your business volume and the percentage of your commissions by adding a "network" of sales people by sponsoring additional members to your program. Not really that difficult to understand when you think about it.

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