Network Marketing is NOT the same
as pyramid selling. It is firmly established in many countries as
a respected means of achieving an income.
In the UK, Network Marketing is regulated
by The Direct Selling Association (www.dsa.org.uk).
The DSA’s Code of Practice was endorsed by the Director of Fair Trading
in 1987 and is administered by an independent Code Administrator.
The DSA aims to ‘protect, serve and promote the effectiveness of member
companies and the independent direct sellers marketing their products
and assure the highest level of business ethics and service to customers’.
Any company can choose to use Network
Marketing to reach its customer base and any product or service can
be sold this way. Network Marketing started in the USA and some of
the longest-standing companies using this method include Amway, Ann
Summers and Kleeneze. A more recent entrant is the award-winning Dorling
Kindersley Family Learning closed down by new owners Pearson in July
2000). Cabuchon is an example of a successful Network Marketing which
subsequently failed. As with any business, there are no guarantees
of success and rational preliminary research is essential. For a special
free report on the subject
you can email the Homeworking
Parents ezine
.
Not all DSA members use Network Marketing
to expand their distributor base. Some are purely party plan, such
as Tupperware, and others are purely person to person, such as Avon;
others use a mix of all of these to sell their products.
Network Marketing is based on the
concept of ‘networking’. We all have a circle of people we know through
the circumstances of our daily lives and each of these people will
have their own circle of acquaintances, colleagues, family and friends.
Network Marketing involves tapping into these networks not only to
sell product but also to offer the business opportunity to potential
new distributors who then start the process of developing their own
networks for selling and recruiting.
As the networks widen, so the individual
leader benefits not only from their own sales but also a percentage
of the sales from their network. As more people join the network,
so residual income increases.
So, what is MLM (multi-level marketing)?
This is network marketing which allows its distributors not only to
network outwards in order to sell the product but also to benefit
from their downline's downline, either to a limited depth or ad infinitum.
However, the two terms tend to be used fairly indiscriminately.
As with any other home-based business,
distributors need to work hard and have courage and determination.
Finding a good sponsor is just as important as finding an interesting
product and a good compensation plan which offers flexibility and
just reward for effort. Contrary to expectation, the newcomer has
the same potential for success as the long-term sponsor provided that
the necessary research and skills training takes place. It is not
necessary to be ‘in at the beginning’ and in some cases it may prove
more difficult and risky to join at the beginning than to join a plan
which has reached a more mature phase. Network Marketing is particularly
suited to married women with family commitments as it offers them
an opportunity to start a business on a part time basis with very
little capital. The opportunity now exists for enterprising women
to use their talents and the skills gained from motherhood to build
businesses based both on selling and on finding and supporting the
efforts of others.
Network marketing businesses close
down every year (Bookbiz went into receivership earlier this year)
- but still more product-based businesses are turning to network marketing
as a means of getting their products out to their customers and cutting
out the wholesalers and retailers. We are also finding lots of US
companies crossing the Atlantic and bringing their products and greater
razamatazz with them. It's a high risk business but the rewards can
be substantial. A lot will depend on you, but a lot will also depend
on the business acumen, personalities and perhaps sheer luck of the
people you're signing up to do business with.
Be warned! As you attend the training
courses provided by the parent company, you will probably find that
the 'product' becomes a way of life – so choose carefully!
