What is network marketing - the path to success or a mythical way to make money? Historical facts about MLM + pros and cons + TOP 5 companies in the Russian Federation.

What is network marketing?

Most people agree that these are some kind of fraudulent schemes that allow only a few lucky people to make money.

Such thoughts are related to the main problem of MLM - these are extremely high promises to clients.

Today, after reading the article, you will learn what the essence of network marketing operations is.

And, of course, you will get an answer to the question: is it possible to get real income using such a business scheme.

What is network marketing: historical background

Network marketing (MLM) in its current form was not a separate business development model. It appeared as a manifestation of the need to sell goods.

Who was the first to discover such a scheme and become the founder of a network business?

The founder of the first network sales scheme is Karl Rehnborg.

If you thought that this person had been building his policy for decades before opening a business, this is not so.

All complex things began with a banal approach.

Karl Rehnborg grew alfalfa on his property. At that moment, an idea struck his bright head:

“What if all the beneficial substances from alfalfa can be converted into an edible form for humans, so that its intake can increase the vitamin tone of the body?”

Undoubtedly, Karl had a good goal.

Later, he opened his own line of healthy food and began to offer it to friends and work colleagues, explaining all the usefulness of the new product.

It is interesting that out of the kindness of his heart (this cannot be explained by other reasons), Karl gave away goods just like that, without demanding any money in return.

Do you think there was an effect from promoting free useful products?

No. Nobody believed Karl. Everyone was very confused that a person could simply give away a useful, worthwhile product.

Carl Rehnborg came to an unexpected conclusion: if a nutritional supplement was sold at the average market price, and not just given to friends, demand would appear.

And he hit the nail on the head!

Karl began to use this business scheme, giving birth to one of the main tenets of MLM - mutual assistance and team support.

Rehnborg's friends began buying his product. They no longer thought it was a cheap deception for one simple reason - it was no longer cheap.

Then Karl began to look for new ways to expand his network of buyers. And again I came to the correct conclusion!

They consisted of a percentage of sales of the dietary supplement. Now do you recognize how a standard network company works? That's how it all started.

The result of the work of Karl Rehnborg:

• 1934 - Carl founded the California Vitamins company, thereby expanding the range of products sold.

In 1934, Rehnborg renamed the company Nutrilite Products.

The operating principle remains the same.

A whole network of product distributors, so-called partners, has formed.

Each partner attracted new employees by offering a percentage of product sales and dividends for quality organizational activities.

Karl Rehnborg is known throughout the world as the “father of network business.”

After a short historical sketch, it’s time to turn to the realities of modern MLM business.

What is modern network marketing: terms and definitions

Network marketing- This is one of the types of retail sales of products, based on immediate, direct interaction between sellers and consumers.

A feature of network marketing is the opportunity for each client to become a marketer.

It would be most correct to compare a network business with a multi-level dealership. MLM also consists of several levels.

It’s not for nothing that such organizations are often called financial pyramids!

Let's look at the main components.

The first stage of the pyramid: manufacturer – distributor

The first stage of activity under the MLM scheme is that the manufacturing company provides its products to the partner.

A partner is an individual who enters into a cooperation agreement with a supplier.

In the CIS, this agreement is not included in the labor format, i.e. does not provide you with social guarantees and has a special form of taxation.

The terms of the contract have similar clauses in any area of ​​network business:

• mandatory use of the manufacturer's products by the partner;
• attracting new partners to the organization;
• work according to a clear scheme defined by the organizers;
• unquestioning adherence to the moral principles and policies of the company;
• minimum monthly sales volume.

Subject to fulfillment of each clause of the contract, according to the MLM company, you get access to unlimited earnings.

Second stage: second-order partners

The whole essence of the MLM activity scheme begins with the second order.

Each partner who was invited by a participant of a higher level (1st level) performs all the same functions as his supervisor.

There is only one difference - part of the income from sales remains in the pocket of the superior curator.

Each participant, in the end, strives to form his own structure, since this brings real income in the form of dividends from his own sales and the activities of his “subordinates.”

P.S. The word “subordinates” is deliberately placed in quotation marks: in the structure of network marketing there is no concept of line management.

All relationships between colleagues at various levels are based on mutual assistance - this is simply beneficial for all partners.

Third stage: entry-level partners

Lower-level partners differ from founders only in that they have less income. At the same time, functional responsibilities, as units of MLM, remain unchanged.

Work at the first or second level involves manifestations of maximum activity not in selling products, but in promoting and forming one’s own structure.

An interim summary should be made:

The interaction pattern of network sales involves the development of the structures of each employee.

The explanation of this process is very simple - each subsequent seller receives a percentage of sales + dividends from the entire network organized by him, in the form of a percentage of the profits of “new” participants.

Network marketing - is it that simple?

The concept of network business and MLM structures has negative associations, especially in the CIS, where people have learned from the bitter experience of financial pyramids.

This section provides the reader with a comprehensive overview of how network marketing works - an unbiased assessment of income opportunities.

Positive aspects of network marketing

Lack of a linear management system.

You work for yourself, which is very similar to entrepreneurship.

Close-knit team.

Each partner is interested in supporting “junior colleagues”, as this brings him financial benefits.

There will always be someone who can help organize your networking activities in the right direction.

Supervision is the basis of a network business.

Possibility of constant growth.

Another positive aspect of MLM.

Everything depends only on your abilities, including earnings.

Very significant experience in interacting with people.

This is a useful skill for everyday life and the development of your own entrepreneurial project.

A network business can be considered as a platform for the further implementation of your own.

Flexible schedule.

Representatives of MLM structures can devote from 10 to 30 hours a week to work, thereby combining it with work or study.

You must understand that an online business cannot replace your main source of income.

At least in the first stages of activity.

Negative aspects of network marketing

Possible destabilization of the network structure at any time.

This process may be triggered by the activities of individual partners, which will not meet the company’s standards.

You should consider the possibility of the collapse of the entire structure, since many years of experience of MLM participants proves this possibility.

Uncertain payment standards.

An example is the American company Starcom, whose representatives promised high payments to each participant.

The result is that the partners took out loans, pledged property, and the company paid less than 25% of the announced amount.

It is not difficult to guess what kind of material damage the clients suffered.

Opportunity to get into a financial pyramid.

Imagine a situation in which you invested in an MLM structure by purchasing an initial package of products.

Several months pass, the customer structure expands, they also make deposits and purchase products.

Another month passes, you have not yet been able to cover even your own expenses, since the product is not in demand.

The company is closing...

In this situation, approximately 50% of participants remain without profit.

They were unable to sell the product, but made a significant investment.

If you have never dealt with entrepreneurship, it will be very difficult to “stay” in the MLM operating mode.

The specificity of the activity lies in the constant moral tension, since you are responsible for your sales and the entire organized structure.

After analyzing the pros and cons of network marketing, we can assess the degree of risk of such business activities as quite high.

A special feature of working under a network scheme is constant responsibility for one’s own work + training and control of lower-level partners.

You already know what network marketing is and can independently assess the prospects for development in this direction.

If you are confident in your organizational talent, as well as the abilities of a manager and financier, it’s time to move on to choosing an employer.

Network marketing: choosing an employer

Your network income and confidence in stability depend on the right choice of employer.

First, we need to consider possible options for the Russian business space.

Top 5 Russian MLM market

Network company name	MLM market share (%)	Description of activity
	~30	Sale of cosmetics, pricing policy - acceptable for the middle class. Be prepared to meet a huge group of women and find your place in it. Networking activities at AVON are more suitable for girls.
	~30	Marketing area: cosmetics, souvenirs, healthy food. One of the leaders of the Swedish MLM market. The advantages include increased loyalty to your employees. Working in this network company will allow you to have a small but stable income.
	8	Stability is the most suitable word to describe the activities of the AMVAY company. The scope of marketing is from household utensils to dietary supplements. Unlike the companies mentioned above, it provides equal chances for development, regardless of the gender of the employee. This fact is derived from the wide range of products offered.
	5	A company that only accepts women. Specialization: cosmetics, beauty care products. One of the most experienced network organizations, but still not widespread on the Russian market.
	4.5	Large manufacturer of natural cosmetics. It is one of the most progressive companies on the Russian market and has a strong base for network marketing.

The main criterion for choosing an MLM company is experience in the market. The explanation is very simple: you will get the expected result, verified by others.

Working for “newbies” in the MLM market is dangerous, because you cannot be 100% convinced of the veracity of all obligations.

You can learn about the many benefits of network marketing from the video:

What is network marketing? After reading the article, you are already able to independently determine the meaning of this term.

Network marketing evokes a subjective attitude in every reader.

Only one thing can be said with 100% confidence - it is possible to make money working in the MLM system and you cannot argue with that.

A completely different question: will you be able to do this?

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What is network marketing, what are its pros and cons? Which MLM business companies are popular in 2018? How to make your first money in a network business?

Hello, friends! With you is Alexander Berezhnov, an entrepreneur and one of the authors of the website HeatherBober.ru.

Today, the network marketing industry is gaining a new wave of popularity, and the development of the Internet plays a significant role in this.

However, this concept still causes controversy in society. Some call network marketing almost the only opportunity to open your own business without investment, others are sure that this is all a financial pyramid, a scam and deception.

Some time ago I was involved in network marketing myself and I know firsthand what it is. In this article, I decided to dot all the i’s and cover this topic from all sides, including taking into account my experience in this industry.

After studying this article, you will firmly decide for yourself whether it is worth doing MLM business, what the pros and cons are, and you will also find out which companies are better to start with and why.

So, let's begin!

1. What is network marketing (MLM) and what is its essence?

I'll start with a definition and then expand on it and give examples.

For example, the production cost of ORBIT chewing gum ranges from 20 to 50 kopecks per package of 10 pads. However, while the chewing gum is on the shelf in the store, its cost increases by several thousand percent! It's all because of the intermediaries - large and small wholesalers who sell chewing gum to each other.

But it doesn’t end there, because, as you know: advertising is the engine of trade and intermediaries spend a lot of money on advertising.

Fact

In large companies, up to 50% of the final cost of a product consists of advertising and promotion costs.

Thus, we buy Orbit packaging for 20-50 rubles. Yes, this price, of course, includes the trade markup of the manufacturer itself, but the intermediaries also want to eat. So it turns out that the end consumer suffers, who overpays exorbitantly.

About a hundred years ago, people began to think about the problem of unreasonable markups by resellers and intermediaries.

Network Marketing Idea

Make the process of promoting goods (services) more convenient, cheaper and faster. Remove intermediaries and expensive media advertising from the promotion scheme.

This can be done if people themselves tell each other about the product of the network company, and their motivation will be the percentage they receive from sales of the MLM company's products.

But you just can’t earn much from interest. Therefore, multi-level marketing allows you to build your own business by creating a wide network of product consumers.

It is assumed that a person who has developed his network structure will receive a percentage of the entire turnover of his structure. This is how he can create tens of thousands of dollars a month for himself.

To learn how you can create such an income in MLM, be sure to watch the video below. This is a cartoon about Pablo and Bruno - ordinary guys who chose different ways to gain financial freedom, and both wanted to become millionaires. Let's see what they came up with.

Network marketing was designed to solve the following problems:

1. Reduce the cost of goods for the end consumer. This can be achieved by eliminating expensive standard advertising on radio, TV and the Internet.
2. Speed ​​up the process of delivering goods to the end consumer. This is achieved through well-thought-out logistics (a network of our own warehouses in different cities and countries).
3. Eliminate counterfeit goods. In the process of resale of goods, substitutions and falsification of large quantities are possible. An MLM company works directly with the end consumer, so the likelihood of product counterfeiting tends to zero.
4. Motivate company employees with money and business opportunities. In multi-level marketing there is an opportunity to make good money and build your business from scratch.

2. How network marketing works

First, I’ll tell you about the general principles of this industry.

The manufacturing company has its own factories for the production of goods.

She sells these products without stores; the products are distributed thanks to a built-in recommendation system. In everyday language this system is called “word of mouth”.

A large number of people like this principle and are happy to buy products from the company.

Nowadays, all orders of an MLM company can be placed via the Internet, and paper catalogs, which were popular some time ago, are fading into the background with the development of information technology.

The client uses the products and can start building a business with a direct sales company. To do this, he needs to find several people who will constantly buy products and attract new partners to the business to develop the network. That is why this type of marketing is called network marketing.

Having its own warehouses and delivery services, the network company delivers products to the warehouse, and then these products are distributed to offices that the company’s partners (distributors) have personally opened for themselves. Sometimes the company delivers the order directly to the client’s home, which is very convenient.

Now I will talk about the features and principles of multi-level marketing for the manufacturer of goods (company), for the end consumer (client) and for the person who decided to open his own business (entrepreneur) using the capabilities of mlm.

From an MLM company's point of view

A distinctive feature of promoting goods online is the reduction in advertising costs for your products. The company cares more about promotional materials for its distribution partners (sometimes called independent entrepreneurs) and building a system of professional training (mentoring).

It is on the high-quality transfer of the MLM idea from person to person that the business of the enterprise ultimately depends.

From a consumer point of view

It is convenient for the client to receive products with a quality guarantee; he likes affordable prices, samples, and catalogs. Direct selling companies often have exclusive products and accessories that cannot be found in regular stores.

From the point of view of the distributor (entrepreneur)

People who want to start their own business without investment can succeed here. After all, the entire system has already been built, the market has been formed, most large companies are already well-known among the population. In addition, the powerful system of training and mentoring in network marketing companies makes the opportunity to build your own business more than real.

3. MLM business industry - history and development trends

Network marketing originated in the West in the USA.

In 1945, American entrepreneurs Lee S. Mytinger and William S. Casselberry opened their own business, becoming national distributors of Nutrilite Products. The basis of their activities was the principle of recommendation (network) marketing.

Further, in the late 1950s, two companies were created in the United States: Shaklee and Amway. In Russia and the CIS countries, people are widely familiar with Amway products and the features of its business. The company itself was created in 1959 by Rich DeVos and Jay Van Endel, and was originally called American Way Corporation.

The industry developed especially rapidly in the 1980s - 1990s. The range of products grew and by the mid-1990s, mlm-manufacturers offered their customers literally everything: from cosmetics and detergents to automotive products, household appliances, long-distance communication services and computers.

Today, the network marketing industry has undergone great changes and almost all mlm companies have gone online in one way or another.

In 1996, it was created in Russia Direct Selling Association(rdsa.ru), which contributes to the development of the industry, its self-regulation and maintaining the reputation of the network business at a high level.

According to the Association for 2015-2016 in Russia, multi-level sales are involved in one way or another 6% of the total population(distributors), and these are millions of people, not counting consumers.

The Internet space has allowed the industry to develop at a rapid pace. And this is quite logical.

Example

You can now build your business in a network marketing company not only through face-to-face meetings at home or in a rented office, but also via the Internet, using the capabilities of Skype, electronic mail and social networks. Advanced entrepreneurs create their own websites.

This is exactly how “networkers,” as distributors of multi-level companies’ products are usually called, are now actively processing the online space in order to expand the number of participants in their group (branch).

However, the development of digital technologies has also given rise to another side of this industry - the emergence of fraudulent companies and financial pyramids, which, under the guise of investment funds or simply respectable mlm firms, drag honest people into illegal and immoral schemes.

Below in the course of the article, I will also touch on the issue of fraud and tell you what not to do and how to distinguish a reliable network company from a scam.

4. Why do many people today associate network marketing with a pyramid?

In continuation of the previous paragraph, as promised, I will reveal the “pyramid question”.

The association with pyramids, deception and fraud among people arises rather out of inexperience.

I’ll say right away that there is the concept of “classical marketing” and “network marketing”, although it is very conditional. Let me tell you how they differ for completeness.

1. Classic marketing

These are all the ways and means of promoting goods that we are used to seeing around us - advertising on TV, radio, outdoor advertising, and so on.

Selling goods in stores is also a standard way of promotion. As a result, all this can be attributed to the concept of “classical marketing”.

2. Network marketing

This is simply an unusual way of distributing goods for the majority of people. As you know, it is also called multi-level marketing.

In this promotion concept, there are no retail stores that are familiar to many, there is no standard advertising in crowded places, and the products themselves, as a rule, are of higher quality in comparison with our familiar analogues.

The model of distribution of goods, which is unusual for many, instills fear in those who have heard about various kinds of deceptions or have already fallen into financial pyramids.

Dear readers, remember!

Network marketing has nothing to do with a pyramid scheme, fraud or illegal activity.

Associations with the pyramid arise because in both a pyramid and an MLM you need to attract people in order to make money.

Only in the first case do you receive money for the “heads”, that is, your earnings depend depending on the number of people involved who invested money in the pyramid, and in the second, the income depends on the turnover that the clients you attract will make.

That is, if we are talking about normal multi-level marketing, you can sign up at least 1000 people into your structure, but if they don’t buy anything, then your income will be zero.

In a pyramid, everything is the other way around, where everyone involved is required to make a contribution, usually quite significant (from 500 to 5000 dollars) and you are guaranteed to receive a percentage of his money, but your client will not receive the real goods. He pays only for the opportunity to make money by attracting new “victims”.

Below, in the answers to frequently asked questions, I clearly outlined the criteria with which you can distinguish a good mlm company from a financial pyramid.

5. Network marketing on the Internet without investment - myth or reality?

There is no myth here and there cannot be. Building your own network business via the Internet is a new trend that is gaining momentum every day.

How to find a client for your MLM structure via the Internet - 5 proven ways to attract:

1. Social media. One of the most popular methods. You can create a group (community) here on the topic of making money and self-development. The people who join will be your potential clients. You can also “spam”, that is, send messages to everyone, but then you risk getting your account blocked by the administration of the social network.
2. Thematic forums. On forums about earnings and personal growth, you can also find future partners in your multi-level structure.
3. Contextual advertising. You can create a website and set up contextual advertising on it, thereby attracting targeted visitors. There is already an article on our website. However, this method can be quite expensive for such a purpose.
4. SEO - promotion. By analogy with the previous method. You can make your own Internet resource and write articles on it containing keywords related to success, earnings and network marketing. Gradually, these articles will be promoted through the subscription form located on the site, and you will receive people loyal to your activities.
5. Lead generation. This method consists of creating a flow of contacts (applications) of potential clients whom you will attract using various advertising tools. You can learn more about what advertising is and what types of advertising exist from. You can process applications from potential clients (leads) and attract them to your multi-level marketing company.

You can use these and other ways to attract potential participants from the Internet to your network structure.

6. Pros and cons of network marketing - an overview of the main advantages and disadvantages

Network marketing, like any phenomenon, has a number of advantages and disadvantages.

This is why there are people who vehemently campaign for mlm, and there are those who are afraid of “networking”. To make the picture clearer, I have compiled a corresponding table that reflects almost all aspects of the SM:

Pros and cons of network marketing:

№	Comparison criterion	pros (+) criterion	Minuses (-) criterion
1	Opportunity to open your own business	An MLM business can be opened with virtually no investment and create passive income over time	Many beginning distributors abandon their business in SM, as it grows slowly and they often hear refusals
2	Doing business via the Internet	The unlimited possibilities of the World Wide Web provide practically limitless opportunities for the growth of your business	Not all people will agree to cooperate with you and do business with your company, since reaching an interested audience through cold contacts is small
3	Buying quality goods at an affordable price	In online companies you can buy really high-quality goods; often their analogues on the open market are either unavailable or are much more expensive.	Sometimes the products of multi-level marketing companies are unreasonably expensive, even if they are of high quality.
4	Party, team	For many people in this industry, the very atmosphere of running an MLM business is a way of life and they feel “like a fish in water” here.	For most people, spending time at various seminars, trainings and events of such companies is tiring and does not suit their nature and psychological type.
5	Skill development, personal growth	Good skills in interpersonal communication, planning, leadership and management can be acquired through the process	There are not many people constantly striving for development; most prefer much more understandable ways of earning money, for example, regular hired work
6	Reputation	It is believed that people with leadership and well-developed communication skills will certainly achieve success here	In society, the reputation of network marketing has been significantly damaged, so finding like-minded people, much less turning them into your clients or business partners, is not easy.

If you have not yet decided whether to engage in SM, then the criteria described in this table will help you once again understand whether it is for you or not.

7. Rating of network companies in Russia - list of TOP-5 market leaders for 2017-2018.

The most interesting thing is that the first two companies Avon and Oriflame occupy 31% and 30% in this ranking, respectively. This means that these companies are by far the leaders among our citizens in the MLM industry.

As you can see, Mary Kay and Faberlic occupy almost the same market share, and Amway is somewhere in the middle.

In any case, I am sure that you have heard, if not about all of these companies, then about most of them.

I consider them reliable and it is these companies that I advise you to work with if you decide to start an online business.

8. FAQ - answers to frequently asked questions

These questions are often asked to me, and here I present them with answers as the most popular.

Question 1: Should a beginner start his own network marketing business?

Yes, it’s worth it, but only if you are willing to wait a long time for results (from 6 months to 3 years) and have a cash reserve that will “feed” you during a cash-strapped period. I also advise you to analyze your strengths and weaknesses, objectively assessing your capabilities.

But if you get tired of communicating with people and have a hard time with rejection, then it’s better not to rush into this pool headlong.

Question 2. How to make your first money in network marketing?

To do this, find 2-3 clients and simply sell them your company’s products, having first registered as a partner.

Then you will feel the “taste” of your first money. Perhaps it will be a very small amount: from 100 to 1000 rubles, but this will already be your money earned in direct sales.

If you want to get a more serious amount, then find 3-5 people who plan to build a business with you. Help them find 3-5 more people for each and in a few weeks your income will grow to several thousand rubles per month and will increase as your “branch” grows.

Question 3. What and how can you attract people to network marketing today?

Today, as always, you can attract people to network marketing with the idea of ​​earning prospects, creating passive income and a free (flexible) work schedule.

The quality of products and the range of direct sales companies is constantly growing, so to say that our products are of high quality is no longer so appropriate.

But if you show the ease of working with the company’s website and the possibilities of doing business via the Internet, this will definitely not leave your potential partners indifferent.

Question 4. How to distinguish network marketing from a financial pyramid?

It is no secret that some fraudulent companies discredit the honor of decent MLM enterprises and disguise themselves as them.

How can you spot scammers? There are some characteristic signs of dishonest companies:

Here they are:

1. Unreasonably high entry fee. As a rule, it is from 100 to 5000 dollars. It is from this money that the remuneration to the “distributor” is paid.
2. The product as such either does not exist at all or has no market value outside this organization.
3. There is no documentary evidence of the receipt of money and other appropriate documents (invoice, agreement, checks, etc.);
4. You are told that you will receive money from number of attracted participants , and not from the turnover of the structure.
5. The main point in the organization’s work is the emphasis on make money quickly , and the product (if it exists) is needed only as a cover in the activities of the pyramid.

If you notice at least one of them in the company where you are invited, it is worth thoroughly studying it for deception and the legality of its activities.

Question 5. How to choose the right company to start an MLM business?

To do this, you should pay attention to the following criteria:

• Duration on the market. You should not cooperate with companies that are less than 5 years old on the market.
• Demand for products. If this product is really in demand and has regular consumption, that is, it is often consumed. For example, cosmetics and household products, food.
• The site of the company. How convenient, functional and presentable it is.
• Training and support. Does it exist, how professional is the mentoring system and do you like it.
• Marketing plan. Is it fair and what type does it belong to:

1. Stepped with compartment.
2. Matrix.
3. Linear (single-level).
4. Binary.

It is best if it is a step-by-step marketing plan with a department. This MP is used by most reliable companies, for example Oriflame.

Hello, dear readers of the online financial magazine “RichPro.ru”! The topic of today's material is network marketing (MLM): what it is, which MLM companies in Russia have a high rating, how network business works, and so on.

After all, for many centuries the model of distribution of goods and services “ manufacturer – large wholesale – small wholesale – retail – buyer"was the only possible one.

ButV30's years XX century The product distribution system was born in the USA and subsequently developed. manufacturer – distributor — buyer».

At the same time, the activities of MLM companies for many years have been surrounded by various rumors, comparisons with financial pyramids and ambiguous public opinion. Based on this, for an objective look at this type of business, you should consider in more detail all aspects and nuances of network mlm marketing.

So, from this article you will learn:

• What is MLM - the history of the network business industry;
• The main advantages and disadvantages of network marketing;
• Which MLM business network companies are the most popular (ranking by sales volume in the world).

After reading this article, you will decide for yourself whether it is worth engaging in network multi-level marketing, find out which companies are better to choose and why, and read reviews from “experienced” mlm marketers.

What is network marketing and how does it work, what is the basis for the scheme of cooperation with MLM business, which MLM companies have high ratings and much more, read below in the article

1.What is network marketing (MLM business): essence and objectives 📌

Network marketing is a system for selling goods and services from manufacturer to buyer, which is carried out through recommendations from person to person.

The essence of MLM business is in non-store retailing, in which the distributor independently establishes contact, advertises and sells the product to a potential buyer.

In addition to earnings from retail sales, the sales agent offers consumers, for a percentage of sales established by the company, find new buyers , which “attract” new clients under similar conditions. As a result, a multi-level network is formed.

Network Marketing Objectives

• Product pricing optimization. Before 70% The retail price of everyday goods consists of the costs of the distribution network and advertising. Changing the distribution structure allows you to reduce costs.
• Providing customers with high-quality, authentic products. With traditional product promotion, there are obvious prerequisites for the appearance of counterfeits on the market, but in the direct sales method they are absent: the product is not as widely known as analogues from the traditional market, the manufacturer, distributor and buyer are not interested in the appearance of counterfeit products.
• Improving the product delivery system. The manufacturer's control over the logistics and storage of goods allows us to provide the consumer with a product of appropriate quality and in optimal time (read the article at the link).
• Improving the distribution of profits of the manufacturing company. Reducing costs allows you to direct financial resources to incentive programs for sales agents, various bonuses and incentives, as well as improve product quality.

Below we will consider the principle of network marketing.

2. How network business (marketing) works - the operating principle of MLM companies 🗺

Multi-level marketing is the interaction of a manufacturer, an entrepreneur and a buyer.

How multi-level network marketing works - 3 sides of profitable cooperation with MLM

2.1. Network marketing from an MLM company

The MLM company produces products at its own factories. It also develops a marketing and sales plan, based on which revenue from product sales is distributed.

As a rule, a business plan motivates distributors in several areas:

• a) consume the products themselves;
• b) sell goods to customers;
• c) create a network of entrepreneurs.

Manufacturers organize delivery of products to their own warehouses in different countries and cities, and also ensure that distributors receive the goods at home.

For proper efficiency, entrepreneurs receive all the necessary materials on products, master classes and seminars are held aimed at developing a variety of skills.

2.2. Network marketing from the consumer side

A distinctive feature of the direct sales method is the creation of convenient conditions for the buyer:

• Delivery. Entrepreneurs, as a rule, deliver goods to their homes.
• Service. Before purchasing, the buyer receives all the necessary information about the product. Also during operation it is possible to consult with the distributor.
• Quality guarantees. Most MLM companies guarantee the quality of their products, with the possibility of a full refund if the client is dissatisfied.

2.3. Network Marketing from the Entrepreneur's Side

Multi-level marketing - a very attractive type of activity for people who do not have large initial capital and business experience.

An entrepreneur has the opportunity to independently plan his employment based on his capabilities. Students, housewives and retirees are most involved in this type of business.

Some terms and definitions used in the network marketing business:

Distributor - a sales agent who has an agreement with a direct sales company and receives a remuneration for product sales, as well as a percentage of commissions for the turnover of the network created by this entrepreneur.

Sponsor (partner) of the 1st level – a sales agent who introduced the consumer to the possibilities of this business and helped to conclude an agreement with a network marketing company.

Sponsorship (affiliate) line – a list of entrepreneurs directly interested in the success of the distributor’s activities, which includes a 1st level partner, his sponsor, etc.

Side Entrepreneurs – a set of distributors that do not belong to either the sales agent’s subnetwork or the sponsorship line.

Bottom line partners – a list of agents included in the distributor’s network.

Organization width — a set of partners of the 1st bottom line.

Depth of organization — all agents of the 2nd and subsequent lower lines in the distributor’s subnet.

Active income – monetary reward for work performed by a person. Income depends only on the quantity and quality of labor invested.

Passive income- profit received by a businessman constantly, for one-time work performed. To obtain this income, a prerequisite is the presence of assets, which can be real estate, bank deposits, shares, etc.

8. Advantages and disadvantages of network marketing - an overview of the main disadvantages and advantages of the MLM business 📃

MLM business has a number of advantages and disadvantages. The assessment of this type of activity in the media, among reputable businessmen and politicians varies greatly.

Advantages of MLM business and its advantages

Let's consider the main ones:

1. Low barrier to entry into the market. When opening any business, an entrepreneur evaluates the resources he needs to start in the market. In a direct sales business, you need little money to start your own business. There are also no costs for renting premises, warehouses and other fixed costs.
2. Possibility of doing business on the Internet. Since the end of the twentieth century, more and more consumers, manufacturers, and businessmen have been making purchase and sale transactions on the World Wide Web. Doing business online is an undeniable advantage of business.
3. Product quality. Thanks to the peculiarities of MLM marketing plans, companies have the opportunity to allocate large sums for the production of quality products compared to competitors who use traditional marketing to promote goods.
4. Training programs. To develop the skills of sales agents, direct sales companies introduce training programs that include books, CDs, seminars and a variety of trainings and presentations. This information allows you to develop not only in sales, but also contributes to personal growth, improvement of family relationships, etc.
5. Part-time employment. The opportunity to work in your free time and at the same time have income from your main activity.
6. affiliate program. The sponsorship (affiliate) line is interested in the success of the distributor. More experienced partners support, help and advise newcomers in every possible way. Relationships are built on equal terms, regardless of income.

As you can see, there are significant advantages for which you should start this business. We also suggest you read the article “”, perhaps you will find useful information there.

Disadvantages and disadvantages of network marketing

Let us now consider the main disadvantages:

1. Reputation. Due to the lack of restrictions and selection of agents, sometimes new entrepreneurs conduct business incompetently: they impose products and the business itself, give false information and thereby compromise this type of activity in every possible way.
2. High likelihood of deterioration in relationships with friends and family. The majority of the population prefers to work for hire. If you run a business without an office, warehouse or employees, friends and relatives have a negative attitude towards this business.
3. Slow or no business growth. As a rule, an entrepreneur receives the first significant results within a period of six months to two years, subject to systematic work and training. A very large number of distributors have not been successful in this business.
4. The vast majority of proposals for cooperation are rejected. With active participation in building a business 80 — 95% of the work does not bring results.
5. Only a few entrepreneurs achieve significant success. On the path to success, a sales agent encounters many difficulties, which require perseverance, education and self-improvement to overcome. Not everyone is ready to overcome all possible obstacles.

Above we presented the main disadvantages and disadvantages of cooperation with MLM companies.

9. Rating of network companies in Russia - list of the most popular MLM companies 📑

The first mentions of network marketing in Russia are dated 90s of the twentieth century and are associated with the company " Herbalife" The company's products were rapidly distributed throughout the country. Tempted by the possibilities of new business, thousands of people decided to cooperate with this organization. Expecting quick success many distributors suffered collapse , attributing to the fact that the activities of this company are illegal .

At the same time, many financial pyramids have appeared in our country that have an external resemblance to MLM companies. All this affected the reputation of this type of activity.

Despite these factors, the direct sales business in Russia has grown significantly in the coming decades.

By the beginning of the new millennium, all the global leaders in network marketing were present on the Russian market.

In this table you can consider the most popular network companies in Russia.

No.	Company name	Brand country	Products	MLM market share in Russia (%)	Global sales volume, $ billion
1.	Amway	USA	Wide range of products: household goods, cosmetics, vitamins, dishes, water filters.	8,1	9,5
2.	Avon	USA	Inexpensive cosmetics for the middle class	28,8	6,16
3.	Oriflame	Sweden	Wide range of products: from cosmetics to dietary foods	27,4	1,35
4.	Mary Kay	USA	Cosmetics	4,9	3,7
5.	Faberlic	Russia	Oxygen cosmetics made from natural ingredients	4,8	no data
6.	Herbalife	USA	A variety of products for balanced nutrition, weight control and appearance care	3,0	4,47

The table shows that the world leader in this industry is the company “ Amway"in Russia it ranks only third in terms of sales.

Corporations have the largest market share " Avon" And " Oriflame».

Is it possible to make money in MLM, what do you need to make money in network marketing?

10. Is it easy to make money in network marketing, and what is needed for this 💰

Due to its advantages, network marketing is a fairly popular activity.

According to the Russian Direct Selling Association based on the results of the last five years 6% population was employed in business based on multi-level marketing.

Distributors' earnings vary significantly, which does not depend on the level of education, profession, number of children, marital status and other factors.

A small percentage of sales agents achieve results quickly and easily. This is because success requires knowledge and experience.

To achieve significant results in business, you should follow the following tips:

A dream is the main factor that allows an entrepreneur to overcome difficulties and achieve success. To maintain motivation, you should “break the path to your dream” into intermediate goals.

A sales agent must realize that the result of his activities depends only on his efforts and dedication to the business.

Tip 3. Learn and develop

Most network marketing companies have training programs. They include business literature, CDs with recordings of speeches by business leaders, and training seminars are also periodically organized.

To be effective, you should write a list of your acquaintances in a notebook and update it periodically.

Tip 5. Present business and product

Based on the list, you should “get in touch” with potential partners or clients. The number of presentations influences the final result.

Tip 6. Consult sponsorship line

It's better to learn from other people's mistakes. Top line partners have more experience and are always ready to help the distributor, as they are personally interested in the success of the entrepreneur.

Tip 7. Build a business based on the developed strategy

A stable, long-term result can be achieved only if there is a balanced development of the “width” and “depth” of the structure.

Tip 8. Repeat the actions and methods of achieving success used by higher-level partners.

It is also worth noting that downline partners also observe the distributor and will repeat his actions.

11. FAQ - answers to frequently asked questions

Before engaging in multi-level marketing, potential distributors have a number of doubts and questions.

Question No. 1. Should a beginner start?

It's worth it, but you shouldn't expect quick success. No risk of being in the red, small initial investments, high-quality educational programs, help from partners - factors that can influence success.

Question No. 2. How to make your first money in network marketing?

When starting cooperation with a “network” company, sales agents strive to do so as quickly as possible. The activity should begin with simple retail sales.

Buying a product at a wholesale price and selling at a retail price - distributor makes money . First of all, products should be offered friends, relatives and acquaintances, since they will be more loyal to an inexperienced seller, and in the future they will be able to become regular consumers or business partners.

Question No. 3. Network Marketing: Is it Legal?

The direct sales business is a legal activity, which is confirmed by the very fact of the existence and development of these companies for decades.

Many illegal structures disguise their activities under the guise of network marketing companies.

Important! The potential client is asked to deposit an initial fee, pay for mandatory training and purchase a minimum quantity of goods. This is accompanied by the absence of receipts and invoices confirming the purchase of products or the provision of services.

Also the consumer should be wary of poor product quality or lack thereof.

Network companies offer good quality products and do not require significant financial investments to open their business.

Question No. 4. What reviews does network marketing have - is it possible to really make money from it?

There are many different reviews about network marketing on the Internet.

Here are some of them:

Review 1."At first 2000s a colleague at work suggested trying the company’s products “ Oriflame" I really liked the product and became a regular customer. A couple of months later, she invited me to become her partner in business and told me how to make money.

At the first stage, I managed to have a fairly large income, but then everything changed. I am raising two children alone, and as my network grew (at that time I had 34 people on my team), it became increasingly difficult for me to combine household chores and business.

As a result, income began to decrease, and at a certain point 12 people “left” my network. Later, I decided to switch to the classic business. In order to have great success in this direction, you need a lot ambition, determination and activity. One girl from my structure achieved great success in " Oriflame" I don’t regret anything, the knowledge and experience gained at that time allow me to now successfully do my business.

Olga, Samara»

Review 2.“In the second year of university, our stream was “swept by the virus” of network marketing. Earning opportunities from " Faberlic» fellow students discussed everywhere. I've never been a fan of sales, but I still decided to give it a try.

Over time, I realized that it’s hard to make money in this business; the bulk of the income from your turnover goes to your higher-ranking partners. To achieve success, you must be able to sell products.

I do not advise anyone to engage in network marketing.

Alina, Rostov»

Review 3." IN 2009 I had to close my own business and ended up owing money to the banks $40,000, of which 2 000 it was necessary to pay every month. I urgently needed to get out of this situation. I was in search of a solution, considering various options for making money.

Unexpectedly, an old friend, whom he had not seen for many years, approached me with an offer to do business in collaboration with the company “ Amway" At the presentation, he told me about the possibility of decent earnings in a year or two. But I was told as quickly as possible that I should focus on personal sales of expensive products that have a significant margin. So I started in business by selling water filters and cookware sets.

I have enough wealthy friends and, to get out of my situation, I had to actively promote the products. During my first year in network marketing, I spent about 2-3 meetings with clients, and on weekends - 6-7. The result was not long in coming - I paid off my debts and, without actively “attracting” partners, achieved 9 – 12 % levels of achievement.

Next, I studied the company’s marketing plan in more detail and began to more actively develop my own network of distributors. I'm currently at the level Platinum Independent Entrepreneur.

I agree that making money in this business is not easy, but if you have the motivation, then anything is possible.

Andrey, Peter»

Question No. 5. How to distinguish network marketing (MLM business) from a financial pyramid?

Most conduct their illegal activities under the guise of direct sales companies.

The table presents the comparative characteristics of these organizations.

Comparison criteria	Network marketing	Financial Pyramide
1. Initial investment	Typically a small initial investment. For this money, the distributor receives “tools” for his activities: catalogs, information about the company, product and detailed description of the business plan. Many companies, with a certain volume of initial purchases, provide these materials for free .	Impressive start-up investment from 100 to 6,000 dollars. From this money “bonuses” are paid to higher “agents” of the pyramid.
2.Product	All activities are based on the sale of products. The product is of high quality and is in significant demand in the market.	The product is unavailable or has little value to consumers.
3.Priorities in the organization's activities	Receiving profit from the sale of products and its fair distribution between distributors and the manufacturing company.	Attracting new participants and distributing profits from their contributions between higher-level “distributors” and the organizers of the pyramid. The emphasis in activities is on making quick money.
4. Paperwork	Registration of depositing money in a legal way: support of purchases with checks, invoices. Drawing up an agreement between the company and the sales agent.	Lack of documents or their improper execution.
5.Distributor motivation	The business plan is based on promoting the manufacturer’s products to the market and corresponding remuneration for sales agents.	The plan only involves attracting new “agents”.

Question No. 6. How to choose an MLM company to start?

Beginners who consider the direct sales business to be a suitable activity are faced with the question of choosing an organization for cooperation.

For an optimal solution, a number of aspects should be taken into account:

• Reputation and age of the company. It is better to choose an organization with a good reputation and significant experience in this field.
• Products. The basis of any trade is the product. Its quality will directly affect the result. It is also worth paying attention to the features of the product. It is important that it ends after some time, and clients turn to the sales agent again. The diversity of the product range is also a significant factor when choosing a company.
• Tutorial. The education system has a significant impact on business success.
• Availability of the company's business on the Internet. Not being online significantly reduces opportunities for business growth.
• Business plan. It is important to evaluate the company's marketing and sales plan against the criterion of fair distribution of the organization's profits. You should also find out if there are restrictions. The best type of business plan is " multi-stage plan with compartment».

Question No. 7. I want to try myself in network marketing at Oriflame, Faberlic, Amway - what do I need for this?

In order to become a distributor of direct sales companies, it is necessary to draw up a cooperation agreement with this organization; the age of the applicant must be at least 18 years old.

To register an agreement, it is necessary for the newcomer to have a sponsor who will help prepare the documents.

12. Conclusion + video on the topic 🎥

In recent decades, various methods of product promotion have been rapidly developing in Russia, one of which is network marketing. Despite its controversial reputation, this method of trading has become convenient and popular among customers.

Possessing thorough information about what constitutes direct sales business , the consumer can make the best decision about its use - to access quality goods that are not available in retail stores, receive additional income or develop their own online business with the prospect of significant income.

In conclusion, we also suggest watching an interesting video about online business:

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* The calculations use average data for Russia

It is unlikely that anyone now does not know what MLM is, also known as network marketing, from the English multilevel marketing, which can also be translated as multi-level marketing. At its core, network marketing is the concept of distributing its product, that is, virtually any enterprise can engage in network marketing, regardless of its field of work. However, distributing services in this way is not entirely convenient, so this principle usually applies to the sale of any goods. In civilized countries, where network marketing originated long ago, and then through thorns came to an adequate organization of its work, there are special laws that regulate this very specific method of product distribution, which has its own unpleasant characteristics. In the same country, no similar legislative acts were found, and when applied to the Russian mentality and economic situation, this had an unexpected effect.

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It must be said right away that network marketing, in general, is a very progressive concept, which has its own not only disadvantages, but also important advantages, it’s just that in the end they began to implement it crookedly, and in Russia this generally led to a particularly obvious stratification of the “top” and “referrals”, when the first, rubbing their hands with contentment, received huge profits, and the second were forced to spend their own money on a product they did not need. But first things first. So, network marketing is the concept of distributing goods and (much less often) services, when sales are carried out by attracted employees who also have the right to attract new people to expand the network and transfer similar rights to new members. However, the foreign definition is somewhat more accurate, because in the end what is built is not a network of interdependent and equal participants, but rather a pyramid, at the top of which the leader has a good income, and employees at the very bottom are forced to resort to all possible methods and exclusively at their own expense to sell the goods. They are proudly called distributors, less often sales agents, and therefore the latter consider themselves almost independent businessmen. To some extent, this is true, only the principle of operation is slightly different.

For a Russian person, MLM is warningly consonant with MMM, both are pyramids, only the genius of Mavrodi went too far, and therefore failed. However, at present, people are entering the labor market who simply heard about vouchers from their parents, and therefore have little idea of ​​the dangers of financial pyramids. Especially if the pyramid is headed by a person focused only on his short-term profit. This is the primary problem of many modern MLM companies, although from the outside it may seem that the company has its own corporate style and employee support. In fact, everything is different - it’s just marketing... aimed at its own employees in order to deceive them. Moreover, it came to the point that a very negative image was created for network marketing, and on both sides at once - and the population disliked the meticulous referrals, trying to almost forcefully force the purchase of their miracle powder, and the disappointed referrals themselves, who spent all their savings and a lot of time, Having sat surrounded by purchased vacuum cleaners and understood the essence of the deception, they began to quite naturally be indignant against such a marketing concept. It all started back in the fun 90s, when Zepter pots and Herbalife dietary supplements appeared, then the unprepared market saw unreasonably expensive Kirby vacuum cleaners, and currently the negative image of network marketing is supported by a huge number of Chinese companies that operate exclusively in Russia and some other countries. countries, because in China there is a serious prison sentence for MLM. In connection with all this, a company that decides to engage in direct sales and network marketing in particular will be forced to face a huge number of problems and mistrust of both consumers and potential employees. Although many of these organizations are thriving to this day, using the same dishonest methods of selling their miracle goods, because a certain contingent of people are not mammoths and do not die out.

Let’s try to consider the possibility of organizing our own MLM concept, which will use only “honest” methods, work the way all progressive humanity works now, but taking into account Russian realities. In principle, any company that is focused on selling its products to a large number of consumers can use the concept of network marketing. The simplest and most striking example of the use of network marketing is in large manufacturing companies, but at the same time producing a mass consumer product. If we do not take into account the long-suffering vacuum cleaners (because trading equipment is generally a more complex process), then most often through network marketing they sell cosmetics, non-medicinal products that are presented as medicinal supplements (dietary supplements) and other frying pans. That is, this is a product that can be bought, in general, spontaneously, without planning the purchase initially.

So, the owner of the company produces a product and decides that cooperation with distributor companies, retailers and other usual market participants is not profitable for him or is simply impractical, and it is much easier to use the direct sales method. An entrepreneur attracts employees to his staff who should be engaged in these very direct sales, that is, in fact, he needs sales agents. This is where the differences begin. In a simple case, a sales agent receives a percentage of products sold, often has a small but fixed salary, receives all social benefits and is fully employed by the enterprise. He's protected. In a company that practices network marketing, the sales agent quite often does not even get a job, but is simply listed as an external employee. Therefore, he is initially deprived of all his rights according to the labor code of the Russian Federation. If a company does not hire its sales agents, then they are at great risk because they are in fact engaged in illegal business activities, because it is unlikely that any of them, after starting work in an MLM company, go to register as an individual entrepreneur and are generally ready to do so also pay taxes. At the same time, the parent company itself legally acts legally - it transferred its goods on a reimbursable basis and paid the profit from this. At the same time, she does not keep employees on staff, to whom she has to answer and generally pay them money.

This is the essence of network marketing - all referrals in fact work only for themselves, providing their managing manager in the process of their work. The fact is that today the vast majority of companies that work on the principle of network marketing require paying for a shipment of goods out of your own pocket to get started. That is, the manager does not give it away for sale for a fee, he literally sells his product to his own employees. In critical cases in network marketing, there is also a “validity period” for this trial batch (usually a month), that is, if during the reporting period the agent did not sell anything, this becomes exclusively his problem, because he paid for the product with his own money, and the next month is obliged (yes, exactly obliged) to buy a new batch. Sometimes in the first month they offer a “trial” batch, which costs him a little less, but subsequently the amount increases. So it turns out that the employees themselves buy the goods. “Black” MLM companies make money from this. In principle, they are not interested in promoting their product to the masses, they do not need to engage in marketing in general and maintaining the image of the company and product, because income is generated exclusively from sales to their referrals. This is how, in general, the implementation process takes place in “normal” MLM companies, the only difference is that a normal one tries to push a product onto the market and support its employees, and does not make money solely at their expense.

A logical question is: if no one buys the products of a network company, and a person is forced to buy something that he does not need and cannot sell, then where does the income come from, because even in the most advanced cases, after 3-4 months such people simply leave. This is true, although there is a percentage of those who are confident that “from next month everything will be very good,” but in most cases the income is generated by neophytes. A huge number of students, housewives and other similar elements want to find a simple job with a flexible schedule (and you don’t have to sit in an office with a nasty boss), for which they would also pay well. Network marketing promises it all, while hiding some important details. Therefore, it is often enough for a manager in network marketing to conduct interviews monthly (or even more often) in order to attract newcomers who will simply pay once and then leave; anyway, in the new month there will be more people hungry for easy money.

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A normal company (of which there are practically none on the Russian market) acts differently. The founder attracts direct sales specialists to his staff, formalizes them in accordance with the Labor Code of the Russian Federation, and then instructs them to find people who will also sell goods under the same conditions. This way, similar rights are formed for all network participants, that is, even the founder is actually equal to his employees, his only advantage is that he receives the goods directly. At the same time, no one in network marketing obliges anyone to buy a product right away; a person is hired precisely as a sales manager, and not a “distributor” who is promised huge profits literally tomorrow. It is very important that the founders are experienced and competent people who are engaged not only in sales, but also in training new employees.

It may seem that providing employees with free (and in a normal company it should be free) training, social benefits, and support, combined with equal rights, will entail losses, but in fact this is not the case. Here you need to know what TQM is, which generally goes very well with MLM, but due to the fact that TQM (total quality management) is focused on the long term and requires a lot of investment, which, although it will pay off many times over, is not very widespread soon. It's simple - network marketing was perceived precisely as a tool for quick and not entirely honest profit. The modern progressive concept has fallen victim to human greed. In this regard, you need to develop your network marketing only in combination with even more advanced economic and management solutions (not only TQM, there are other good ideas in economics), because all this will lead to an increase in the organization’s income, and in the end you will be able to receive even greater profits, but only in an honest way. Unscrupulous entrepreneurs need to remember that this will allow them to earn, albeit a little later, more money, and the company will enjoy a good reputation among the population, and therefore among potential employees.

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There is an important thing to note here. In most cases, network marketing is used by companies that produce, to put it mildly, not very high-quality or simply unclaimed products. Unpopular products can sometimes be sold only in this way, because several advertising laws that are inconvenient for a dishonest enterprise do not apply, but more often it is low-quality products that are sold through network marketing. Which are sold at a price that is sometimes several times higher than higher quality analogues. Of course, it’s easier here to deceive your employee, force him to buy something of his own, and then send him by hook or by crook to sell this something to at least someone. In particularly advanced cases, referrals at lower levels go so far as to simply call every apartment and literally try to sell their product on the doorstep. This method of selling has a number of disadvantages (any person with even a little understanding of marketing knows this), but in the case of network marketing, it shifts all the problems onto the shoulders of the referral. Some of them try to sell goods via the Internet; strictly speaking, the manager doesn’t care who or how the product is sold to, but given that a “black” MLM company focuses only on the number of its referrals (the more of them, the higher the income), then She hires absolutely everyone more often than always. And 99% of these people know absolutely nothing not only about marketing, but about the principles of simple trading in general. Moreover, often in network marketing there are trainings on “personal growth”, “mastering sales skills” and other nonsense, which aims not at training, but at brainwashing. It is not for nothing that the Russian Orthodox Church opposes network marketing companies - it has realized that such companies form their own church with the messiah as the founder. In general, the bread is taken away. And in many cases, this is true; during trainings, stories are told about successful referrals (most often fictitious) who eventually built their own business, because in fact, only the founders who were good at driving the ideas they needed into other people’s heads were able to make a profit. Yes, meetings of employees in network marketing who are really inspired by the idea, have worked for several months and still cannot afford to be disappointed, are similar to a gathering of witches and even more like a gathering of religious fanatics. Here it is impossible not to note the good psychological skills of managers and network marketing employees who have achieved some results (these are those who were able to attract many of their referrals), because not everyone can brainwash this way either.

As a result, the chain is simple - at the top is the manager, a little lower down are smart psychologists, even lower down are those who were able to do disgusting work with the wrong hands, and at the bottom there is a sea of ​​​​desperate people who believe that if you buy a product that no one needs every month and force it on everyone in every possible way, then success will definitely come. Due to the fact that the product is being sold, its price increases many times at each level of this rotten pyramid. Especially advanced cases, when in this chain there is no way to rise to a higher level, but you can only form levels below you. You don’t need to have an economic education to understand that at each subsequent level the price of a product will increase, and the end consumer (if there is one) will receive it with a markup of several hundred percent, or even more than a thousand.

Thus, a company that wants to engage in network marketing must produce a truly high-quality or at least liquid product. The product must be bought, and bought constantly, but what is very important - it must have a competitive advantage. The network marketing scheme itself allows you to save in many ways. The first is the absence of the need to maintain your own trading platforms; in some way, the need for advertising is reduced, because a positive image of the product is formed by agents, and this image is reinforced by the positive experience of using it by the consumer. Hence the good reputation of network marketing and the demand for the product.

Through network marketing, you can sell even an elite product that can only be obtained “through friends”; this will generally create an excellent perception of the product and, ultimately, may even lead to the fact that the price increase will not come from the manufacturer, but from the consumer, who I am willing to pay more for a unique item. Such marketing techniques are much more effective.

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But the most important thing is the high consumer value of the product, even if it is a completely new product on the market or even innovative. But it must be innovative not only in words. Next, the company itself must engage in network marketing, not just network marketing. That is, there should be information about the product on the market, a good image of the product should be formed, presentations and some kind of advertising campaigns should be held. Then the person will know that the Internet offer from the referral includes the sale of a really good, high-quality and proven product. If you have your own recognizable brand (recognizable with a positive connotation), then it will be much easier for the referrals themselves to sell the product. And hence the profit of the organization itself. As for trainings, maintaining the loyalty of your employees and other work with personnel, then again, everything is described in the TQM concept. Then you can get people no less zealously serving the company’s goals, only not zombied by empty promises, but motivated by real results. And you need to constantly train people and, yes, do it for free. This is the company's own money.

Correct use of network marketing will lead to the fact that the manufacturing company will form a chain of its own relatively independent distributors who have good sales, perform some of the responsibilities independently, build their own successful business, and at the same time are employees who act very effectively. The sales growth will clearly be many times higher than the level of sales growth of the “black” MLM company. At the same time, the social benefits are obvious - employment of the population, promotion of business to the masses, formation of modern entrepreneurs who know how to trade. Yes, for this you will have to invest a lot of money, because this way of organizing a business requires much higher costs, you will have to hire competent managers and fully support your own development strategy, helping your employees achieve a common goal. Then we can say that this is a truly progressive company that was able to correctly apply the concept of network marketing. This is what can be called a network marketing company, and not a financial pyramid with empty promises, in which everyone works to achieve a common goal, and does not deceive and deceive consumers for the short-term profit of the founders.

Matthias Laudanum
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