What is network marketing? The pros and cons of network marketing

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2018-03-24 04:53:18

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Very often in the vast rapidly growing market industry you may hear the term “network marketing”. What it is, what features of the concept, how it affects the performance indicators of companies – the questions are interested in not only business sharks, but also those who are trying to start their own business or just looking for sources of income.

Learn the answers, and I read reviews of owners and employees of companies that have been able successfully to use the principle of network marketing in his work, from articles on.

What is network marketing

Multilevel, or network marketing (MLM) is essentially a specific implementation of the product that uses direct contact of the producer and the buyer. This process can be carried out both directly and through trained distributor. Its distinguishing feature is the fact that such means of communication can not only implement the necessary products, but also to involve other interested people.

principle of network marketing

The payout Scheme is completely open – money and benefit not only the implementer but also through which passes the product in the chain. The earnings is an official, real and depends only on the number of goods sold. While, for example, in the case of a pyramid scheme, which often compares network marketing, the pros and cons are not so obvious, because in this case the receipt of money at the expense of investments of other participants, and timely results and is not guaranteed.

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Advantages and disadvantages

As with every concept, MLM structure is not without its positive and negative sides. Select all the pros and cons of network marketing can be examined, what is the impact of this scheme business for each individual structure – companies, employees and consumers.

The Advantages for the company:

  • Unlimited earnings;
  • No advertising costs;
  • No costs for rent of premises for stores;
  • No costs for delivery of goods;
  • Minimal intervention from public services, the lack of documentary statements.

principle network marketing

The last item also can be applied to the payment of the minimum tax duties. Due to the fact that the product falls directly into the hands of the consumer, not through the stores, monitor sales extremely difficult.

What are the advantages you can allocate employees of the MLM companies

Trained and are happy earning distributors are the key to successful business building for MLM companies, so when you work with your leadership team offers him the following prerogatives:

  • Unlimited income (as can be seen, both for companies and for employees, this paragraph is General and osnovoobrazuyuschey);
  • Financial independence i.e. the possibility of implementing activities without the constant pressure of the employer;
  • Ability to raise your own business with minimal investment, regardless of age, education;
  • The availability of flexible convenient schedule of work;
  • Continuous improvement of personal qualities.

network marketing what is it

Incorrect organization of working process – a disadvantage?

Cons of network marketing are observed, if the head of corporations or each team there are people with lacking experience. In the process, they can hold up work processes, adversely affecting the level of sales. There are several reasons:

  • High moral burden of the staff with customers, other distributors;
  • The volatility of earnings (the levels of sales in different months can bring different profits);
  • The psychological pressure of feeling responsible for others and lack of organizational skills as a result of the high turnover of staff, dissatisfied with the quality of the workflow.

What is the benefit of MLM principles for buyers

For the consumer the pros and cons of network marketing are absolutely other features. For example, a disadvantage may be excessive obsession on the part of the distributor in an effort to induce the interest of the buyer and, in case of refusal, the priceless time spent for both. The advantages are the following factors:

  • Save time on trips to the store;
  • Complete awareness of the quality of the product;
  • Control of financial expenses;
  • Shopping is cheaper due to bonuses, discounts, sales;
  • Order and obtain the goods at any convenient time of the day.

Also, thanks to the concept of MLM there is an opportunity to compare, test compounds, to share their opinions, to earn, to receive guidance on purchased items. Well as set as the pros and cons of network marketing affect the efficiency of business and consumer activity, allow ratings.

network marketing what is it reviews

What isthe rating of the importance it has for network marketing

By Itself, the rating is a form of performance assessment of one kind or another activities. To generate the necessary data that can be obtained by social surveys. Doing this special company, which processes the received information and pass it on to customers for further use.

In the process of processing data becomes clear the pros and cons of network marketing applied to the development of certain firms in a certain region in order to promote certain products. Also the obtained results allow us to trace and record the financial results of corporate activities, and apply for business development of new strategic tactics in the further planning of the economy of the company.

Network

A Separate subject for ratings, allowing you to track how effective network marketing company, a list of which can be drawn as to the international arena, and for each country or region individually. The data included in the structure of these top ratings to characterize how the implemented product is attractive for consumers, as changes in the internal structure of the company or the introduction of a new product affect the sales performance and so on.

In this case, the rating identification of competitiveness on the market and how the company has grown over a period of time. Also the data obtained on the basis of lists of companies allow for a full detailed analysis of the financial opportunities in the future, to understand what to do to double/triple the performance in the future.

network marketing cons

List MLM companies

The following is the list, which includes major domestic applying effective network marketing company. Russia is on the basis of their activities for the year and includes various economic, technical, cultural and social factors. In the top 5 leading network companies with a high percentage of sales and profit growth for 2015 include:

  • Avon Prod. Inc.
  • Amway Corp.
  • Oriflame Cosmetics SA
  • Mary Kay Inc.
  • Faberlic OAO.

If you compare this top list of indicators, for example, 2012 will be an important trend on the decline to the increase in sales of the company Oriflame (in 2012, she took 2nd place). To sum up, the economic crisis influenced the decline in sales to any and all companies. However, the Avon Corporation is able to retain its leading position: its sales volumes, as before, be one third of the perfect turnover of all listed firms. This means that as a result of rating research company Avon is one of the most competitive and promising networking companies on the Russian market.

How to improve sales and rankings

Naturally, with difficult economic situations by escape from difficult financial regulations of the companies is to encourage employees to improve sales. This is called "motivational network marketing". The essence of this program? It allows you to place the company up at the top of the list due to the additional financial security of the employee and build them own scheme of profit due to the involvement of third parties.

network marketing is the essence

In Other words, in such cases a reward is introduced:

  • For selling large quantities of products;
  • For attracting additional employees who will realize large volume production and seek new customer base.

Verified that the scheme of network marketing can significantly improve the net profit of the company and to recoup the costs. And we need to do just a desire to give the additional earnings and effectively present your product to the buyer. That is why the number of people involved in this business structure is already more than 6 % of the Russian population, and these figures are growing from year to year.

How to avoid becoming a victim of network marketing and succeed

Naturally, to achieve success in the MLM business for the strength not to everyone, but there are 3 rules by which you can avoid fraud and financial failure and to understand the principle of network marketing:

  • The company must be registered (to verify the ownership of the company to the applicant Association by using the resource rdsa.ru), it greatly increases the factor of trust to the company and is an indicator of its official activities;
  • For employment, you must choose a company with a high sales ranking, occupying the leading positions on the market – is the key to its preuspewajushi, efficient, self-improvement, and hence prospects;
  • Maximum active manifestation of personal qualities (ability to work, desire to learn, improve their communication skills and persuasion), the position of the leader – that's the key to success in the conduct of network business.

the pros and cons of network marketing

The Main thing to remember: the buyer should have the right impression about the kind of activities of the company. It should not resemble ahard-to-explain confusion, a Scam or a pyramid scheme. Everything has to be as transparently as possible, just to meet the stated requirements.

Reviews of the active users of the concept of MLM

Allow a better understanding of how network marketing, what it is, the reviews of those who are faced with the principles of his work. Many employees of these companies noted the presence of difficulties in the initial stages of familiarization with this method of doing business. This was due not only to learning large amounts of information, but also with the emerging sense of alertness.

To Cope with all the prejudices as well as easier to understand all of the processes allows the presence of workshops, lectures, trainings, catalogs, which detail told about features of offered products, policy and financial plans of the company. Such periodic consultations help to develop the necessary skills to become more confident.

By the Way, thanks to the staff of the network companies MLM concept since the beginning of 2014 is no longer perceived as a means of deception, and considered solely as a proven source of income, the effectiveness of which depends on personal qualities.

network marketing pros and cons

Tips for novices

Based on all the reviews, to successfully build a career, guided by the principles of network marketing, it is possible in the presence of:

  • An experienced mentor;
  • Desire to develop;
  • Good product, confirmed by certificate of quality;
  • Decent salary;
  • Close-knit team.

You Can find countless number of both positive and negative opinions about how does network marketing. The pros and cons of each of these methods of doing business. The main thing - from all of the above to draw the correct conclusions, based on the already existing experience of predecessors, to skillfully use the acquired knowledge and successfully implement them.

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