Rus Articles Journal

Again network marketing?

Search on the website of the magazine in the key phrase “network marketing“ yield 2200 results. The great interest, is a lot of practices too.

Misunderstanding of essence of this economic event is natural and is covered in it... entities. I Offer

definitions of terms and their justification. Can boringly seem...

Ya in network marketing since 2003. In 2006 I was enticed on the Gatchina forum at which distributors suffered insults from aggressive Dunnos. Participated, has been through a lot. Saw the reference to the website with the pretentious name “Encyclopedia of Network Deception“. In process of studying began to understand that “network deception“ is a deception of Internet users by means of this website. With the author corresponded. Unfortunately, there are people according to A. Humboldt who “do not know and do not know about it“...

In 2007, in the course a forum - wars on Blagoveschensky a forum, definition was born: “Network marketing is a way of advance of goods and services by means of creation and expansion of a set of uniform sales outlets“. As points are connected with the company, with “top“ and with “lower“, the set is more correct to call “a network of uniform sales outlets“. Then it stayed in Wikipedia, but did not keep, xenophobes removed though one student with the head even wrote the paper where this definition was used.

What gives this definition? It allows to hope for the termination of dissociation of economists from network marketing and a sanctimonious heap of “ terms network approach in marketing“.

It is clear, that uniform sales outlets can be both shops, and cafe, and hairdresser`s, and peddling sellers, and distributors of direct sales. Uniformity (goods, surroundings, corporate rules of customer service) and connectivity (deliveries, compensation or remuneration for services, training) determines a correctness of use of the term “network marketing“ both by the attitude and towards distributors of the network companies, and in relation to distribution networks. It is not a trick to parry negative reviews of network marketing, and objective reality: functioning of distribution networks and networks of direct sales as networks of uniform sales outlets differs in nothing - both there, and the goods exchange for money is carried out there.

But the difference nevertheless is, it essential, and from - for it there are “all troubles“ of network marketing. It is even not single...

It is all about Basic Element - a way of the organization and implementation of sales. It is about retails, however the habitual phrase “retail trade“ is no good here.

Even the Russian association of direct sales got confused in terms, calling direct sales a kind of retail trade, and it absolutely not so. Direct sales not trade.

A difference between trade and direct sales in a way of informing potential buyers, in offer type - offers on sale.

In trade the offer is addressed to all who will respond, it is the public offer, advertizing, informing an uncertain circle of people, it accustoms to information freebie and quite often generates indignation when to the person for information transfer the condition is laid down: only at personal meeting.

How much is information? Network marketing - information, but not “trade“ business therefore any information arriving from the distributor to his candidates for partners or for clients - costs money. Unsuccessfully transferred information deprives of them. So it is better to work and receive, than to work for nothing.

So the second stage of definition of terms is a definition of retail trade and direct sales.

Retail trade is a way of implementation of retails on the basis of the public offer. All the rest - from the evil, and is heaped up including in BSE, there is a lot of.

Direct sales are a way of implementation of retails on the basis of the offer.

I will make a reservation that these definitions are limited to area of retails. In wholesale trade, in direct marketing it is used, generally the offer - first of all for protection of commercial secrets.

What give these definitions? They show a difference, antagonism from the point of view of a way of informing potential buyers (both goods, and an enterprise opportunity). They show

why there are “information collisions“ - misunderstanding of essence of network marketing, reckoning of network marketing to certain bad organizations, etc.

Information collisions in conditions when information is carried not to all, and to part of potential buyers (to their subset), are very simple, these are mistakes 1 - go and 2 - go the sorts known in mathematical statistics at check of statistical hypotheses. Let`s formulate them in a situation of informing potential clients or partners:

A mistake 1 - go sorts are “informing uninterested“, that is “untimely“ attempt to suggest to become the buyer of goods or business - the partner - to the one who is not ready at present, does not hear, does not see for himself and so forth

the Mistake 2 sorts is “not informing interested“, that is as most often happens, not inclusion someone from acquaintances in the list for the invitation to the presentation (when for it thought and decided that “it is not necessary to it“).

The error of the first sort can lead to the fact that uninterested become generators and messengers of the distorted, unreliable and negative information which gets to those to whom it is necessary reliable at this time, and they became “the victims of an error of the second sort“.

A little more on similarities and distinctions. Direct sales remind trade on protection - in both cases the seller and the buyer aspire to the long-term relations (“constants“ for each other the buyer and the seller). But in trade on protection by the initiator of sale the buyer, and on direct sales - the seller is.

And, at last, third stage of creation of definitions.

the Offer for direct sales has character of the recommendation, and the recommendation is an informing the potential client or partner on the basis of own positive response from use.

From use of production and business - opportunities, though... in the beginning there was only production.

If itself or the family is relatives - uses that it is the recommendation as you are responsible for results. If itself or the family - relatives do not use - it, alas, a vparivaniye, the offer to buy what is not necessary (definition, however).

In this sense advertizing in noticeable part represents a vparivaniye … If itself use

whether then the rich range of the same functionality is necessary? Why in general on shelves of shops a variety? On different purses that “to increase liquidity“. And on direct sales the product has to be one, but such that another was not necessary. And as direct sales are not only a way of consumption, but also business, on the first place the factor opposite to behavior of the buyer acts: the distributor is interested in a question not “how much?“, and “how many it is possible to earn from it?“. Therefore when goods in the network company expensive, it is possible to earn from it more at the same efforts (the number of meetings). Therefore the companies using direct sales and network marketing look for high-quality goods - either buy, or will organize production. If buy, then agree that at any deal the price in retail trade and at the distributor was identical that the buyer looked for other factors for the choice of the seller.

So, the range on direct sales has to be single that the distributor could use everything personally and recommend responsibly. Therefore personal commodity turnover of the distributor of direct sales is the range of the company multiplied by the number of clients plus “unit“ - his own family. Whether the big range is useful in this regard? No. Whether it is possible to expect from the distributor of big commodity turnover? And what for? it is simpler to make so that there is a lot of distributors, and at each several regular customers. How to solve a problem of knowledge of goods, merchandizings? Personal consumption. How to solve a problem of shots? To grant the right of search of candidates for distributors to distributors and to reward them for the end result - commodity turnover of the “subnet“ created by them. It follows from this that

Multilevel marketing is a network marketing of direct sales in the presence at all distributors of the right of “sponsoring“, that is search of candidates, representation to their company for signing of the agreement and training in their all what is able itself - a such recursion …

the Reservation “in the presence at all …“ notes that not all companies grant such right at once. Some allow sponsoring only with acquisition of a certain experience which is defined by the end result - amount of remuneration.

Article, perhaps, is rather big. Though here still many consequences from the organization of direct sales are not shown. For example, goods in MLM - network marketing of direct sales - it is absolute, are absolutely protected from fakes: big personal commodity turnover demands efforts much bigger, than the organization of group. Therefore all choose creation of a network, and “the victims of an error of 1 sort“ do not understand from where in MLM money undertakes. If to build a network with which for commodity turnover remuneration can repeatedly exceed a salary “above average“ then the distributor has no need to look for kulibiny for production of a counterfeit: only the company pays for advance of its goods... not to earn by any fakes so much, and risk any.