MLM. Network marketing - great swindle or business of new generation?
Think, everyone in the life anyway faced such concept as “network marketing“. Who did not see the people running on offices offering these or those goods? Who did not meet at himself on a threshold of sellers about “a miracle - goods“? Different sources are full of information: someone promises the moon, someone warns against it.
But actually if to understand... What is network marketing? Whether business it in general? Whether it is possible to trust the people who are offering “a miracle - goods“ or promising the moon?
Network marketing (multi level marketing) - the concept of advance of goods from the producer to the consumer through so-called “distributors“ who earn money on a difference between retail and wholesale price and also is received by additional bonuses for a certain sales volume of goods the members attracted in the company in the form of percent from a turn (in most cases - the turn is higher, the there is higher than a percent of return).
In what feature of this concept? The main idea of its creation proclaimed minimization of number of intermediaries on the way from the producer to the consumer that has to, in - the first, to reduce the final price, in - the second, to simplify control of sale.
As we know, wholesale and retail dealers in traditional concept advances of goods (the producer - the wholesaler - the retail dealer - the buyer) raise the price so that, buying goods on a counter, the consumer can overpay up to 1000% of the cost of the price of the producer... In some spheres of production this figure is much lower, in some maybe above this!
For anybody the fact that at trade according to this concept the greatest benefit is received by intermediaries is not a secret. For example, according to the estimates of the famous marketing specialist Filip Kotler, the greatest part of money settles at “mass“ wholesale distributors and in retail networks - supermarkets. And the buyer pays for all this.
On the other hand, the nonconventional (network) concept advances of goods (the producer - the marketing agent - the consumer) minimizes the number of participants of this chain that allows to lower the price for the buyer, in comparison with the analogs in the market sold according to the traditional concept. In - the second, it as much as possible saves the consumer from fakes as he buys goods, one may say, from the producer.
Both in one, and in other concept there are pluses and minuses. But we will stop on network marketing. Unfortunately, this market is full also of unfair people (marketing agents) who unreasonably exaggerate consumer properties of goods, and sometimes for the sake of sale even lie to the buyers, hire new people in the network, promising the moon to them for it which those allegedly will receive, without doing anything, overstate the goods price, ignoring the margin recommended by the producer. Therefore MLM - the market learned emergence and fast falling of many network companies.
Anyway, you should not confuse network marketing to “a financial pyramid“. Network marketing provides receiving profit from a turn (that is from quantity of the sold goods) while the financial pyramid does not mean either sales of goods, or rendering services. If it is good to understand, network marketing can become a good opportunity as for receiving additional earnings (at sale of goods), and for creation of business (on condition of sponsoring and attraction in the structure of new distributors).
For those who already faced it or thinks to be engaged in MLM, it is necessary to know some things:
- always attentively check information provided by network distributors;
- in attempt of “recruitment“ you in business check completely information on the company and on its goods (year of foundation, turnover of the company for last years, existence of confirmation of a refund on business - to the plan, certification of production, responses of other buyers whether the company left the markets in other countries);
- never listen to those people who will say to you that you can become the rich, without selling anything as the income in network business grows only from increase in sales volume; - you do not judge
this or that company by hearsay (or to single responses on the Internet), actually at the market there are many worthy network companies which give qualitative goods and good opportunities.
If you decided to be engaged or are already engaged in network marketing, it is worth estimating the companies by such criteria:
1. Goods (existence of qualitative goods);
2. The plan of a refund (the honest and having confirmation plan of a refund from turnover of structure);
3. System of training (it is, perhaps, the most important point);
4. History of the company.
Finally I cannot but recommend books of one of financial teachers of the present of Robert Kiyosaki which will give deeper understanding of this subject.