There is a slight difference between network marketing and multi-level marketing. Today, however, more and more people are grouping both business models together so they are almost thought of as interchangeable.
It is important for you to fully understand the concept of network marketing and the power behind it before you are introduced to the multi-level marketing business plan, which takes it a step further.
Network marketing, sometimes also called direct sales, is a business model that does away with the middleman. The manufacturer markets products directly to the consumer without having to pay the costs of advertising or having to build and train a large sales force.
To do this, the manufacturer uses independent distributors to promote its products at the distributor’s own expense.
Since the manufacturer has saved huge sums of money by not having to advertise and build a sales force, it passes the savings on to the distributor in the form of bonuses and commissions.
The independent distributor promotes the products by networking with friends, relatives, and acquaintances.
In a sense, all that the distributor does is recommend the product to others, and if they decide to buy it, he/she gets paid.
What a concept! Wouldn’t you have loved being paid by the film studio or theater every time you recommended a movie to someone that they went to see?
Think of all the people to whom you have referred a product or service! You would be in a different financial situation today if you had received a commission for every referral you made.
Network marketing is a win-win-win situation. The manufacturer saves money and lowers his overhead and risk. The distributor promotes the products and earns some extra income. The consumer purchases a product that has been recommended to him as having value, rather than buying something because of slick advertising.
Now onto multi-level marketing (MLM). In a nutshell, it is network marketing on steroids!
As an independent distributor in the MLM industry, you are allowed – no, you are encouraged – to build your own sales force of people who will also promote the products.
This is the key difference between network marketing and multi-level marketing. You not only build your own team (sales force), but you teach your team members to duplicate your efforts and become leaders of their own teams.
When members of your team recruit independent distributors and become leaders of their own sales force, they still remain under your umbrella and you earn money from their efforts.
All distributors, even those brought in by someone else on your team, are considered to be part of your business and are placed beneath you on your business chart. In MLM language, they are considered to be your “downline.” This downline is made up of many layers or levels – hence the name multi-level marketing.
As with network marketing, multi-level marketing is also a win-win-win situation – only the wins are greater! The manufacturer sells many times more products, the income potential of the distributors is unlimited, and the consumer saves money on a superior product.
For further details on multi-level marketing, click here.