Network Marketing: Extended Definition


Entrepreneurial spirit is sweeping the Nation's interest at a phenomenal rate; people everywhere are exploring startup opportunities for a new home or internet-based business. Network marketing is the powerful engine turbo-driving this skyward trend. Most home (or internet) based companies share a common, sales-approach trait: they utilize network marketing techniques and skills to achieve business success.

This report provides a definition of what network marketing is. It also touches on some of the who, what, when, where, and whys associated with this often ambiguously interpreted phrase.

What is Network Marketing?

Network (v. intr.): To interact or engage in informal communication with others for mutual assistance or support.

Marketing (n.): The act or process of buying and selling in a market. (The American Heritage® Dictionary of the English Language)

Thus a laymen's term for network marketing could be: People helping people to prosper by the consumption of related products, information, and/or services, in a collaborative team-inspired effort of self-empowerment.

Network marketing is also referred to as Multilevel Marketing (MLM) or Cooperative Marketing. It is the process of selling products, services, information, or business opportunities through personal or individual relationships with family, friends, coworkers, and a variety of others. The main goal focuses not only on selling the particular commodity, but also encourages the purchasing party's involvement in selling the services or product themselves. In return, these people often receive discounted products or services as well as monetary compensation. Usually, the more people you get involved in this method of self-benefiting product distribution, the more benefits or rewards you yourself receive.

Network marketing is synonymously referred to as Multi-Level-Marketing or MLM.

MLM companies usually thrive on some form of tier structured compensation plan. Simply put, the more prospects [people] you get involved in your business, the more residual income you make. Residual income can be thought of as "money earned from your prospects' efforts". This type of income is called residual income and is often coined an intangible asset.

Over the years many different types of MLM companies have come and gone. Lack of standard business policies and procedures, accountability, and other reputable reference availability often drove these businesses to inevitable failure. Many were even dubbed illegal due to unethical practices. One fundraising source states: "Many MLMs were viewed as get rich quick scams and disregarded by the general population. These scams were often referred to as Pyramid schemes and were well planned scams". (Profit Quests Fundraising; The MLM File).

Who participates in Network Marketing?

Common people, such as you and I! We often share our excitement of a newly discovered product or service with our friends or relatives. This may have influence on their future purchase or use of that particular commodity. They in turn tell a neighbor, friend, or coworker, and BOOM!: we're participating in word of mouth referral, a common method of network marketing.

Entrepreneurs! Self-motivated people involved in a successful home-based or internet-based businesses use network marketing strategies to successfully thrive in the marketplace. These people connect with network marketing concepts and practices on a more advanced level, often as their sole source of livelihood.

Network marketing at it's peak or apex level of performance, boasts millionaires around the world. Successful network marketing companies include USANA, SFI Marketing, Mellaleuca, Mary Kay Cosmetics, Avon, and many others. (Susan Ward)

Why do people get involved?

There are many reasons why people get involved in network marketing. Some do it unknowingly for the self-satisfaction of helping others. Some stumble into the business by accident, getting 'hooked' on a particular brand or product. Others seek out the unlimited opportunities this type of self-sufficient livelihood can provide.

People working in this industry reap substantial tax benefits! According to USANA's marketing material, people can legally save thousands of dollars with home-based business deductions. (Usana Health Sciences).

"Every North-American Taxpayer who works a full-time job and does not have a side business is probably overpaying taxes to the tune of $3,000 to $9,000 a year!" (Sandy Botkin)

According to one popular newsletter, over 20 million people worldwide, are involved in cooperative marketing and their sales are in excess of one billion dollars. People turn to this type of livelihood for many factors, including current unfavorable economic conditions. (The MLM Watchdog).

When will it happen?

We subconsciously exchange information, ideas, and suggestions, to those around us every day. It probably hasn't been that long since you had a positive or negative impact on someone else's decision making. Maybe you revealed to your neighbor how much $$ you saved since you started shopping at the discount food store. Or how about last night's phone conversation with a friend relaying the HOT SALE he or she just stumbled upon at a particular salon. Without methodically thinking of it, you were sharing information that was self-rewarding and of mutual benefit. These are examples of network marketing occurring at it's simplest level.

"Either we take hold of the future or the future will take hold of us", Dr Patrick Dixon Chairman Global Change Ltd, (http://www.globalchange.com/captur.html).

How To Network Market

An in-depth view of the how to principles of network marketing is beyond the scope of this article. However, the internet has a growing stream of information: One simple Google search for 'network marketing' returns 83,900,000 entries on the topic. Today's technological advancements in sharing electronic information has made it easier than ever to explore network marketing, particularly through affiliated programs and sponsors.

Additional Resources

Carol Lynn Pearson.

"Dictionary." The American Heritage® Dictionary of the English Language, Fourth Edition

The MLM File, http://www.mlmwatchdog.com/Archives2004_3.html, date accessed 9/14/04

The MLM Watchdog Archives. "Discover Cooperative Marketing" http://www.discoveryourbusiness.com/index.php?13509, date accessed 9/15/04

"A New Trend In Fundraising ? Part 1", Profits Quest Fundraising http://www.profitquests.com/ArticleNewTrend.html, date accessed 9/15/04

Susan Ward. http://sbinfocanada.about.com/cs/marketing/g/mlm.htm>

Sandy Botkin. Usana Health Sciences, http://www.usana.com/opportunity/pres/index.shtml

Usana Health Sciences, http://www.usana.com

T.L. McMullen
Equity Zip Financial
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