The Network marketing business growth – a significant solution to any financial crisis.
The above statement has stood the test of time and is relevant for today and the future. Dubbed the business of the 21st century and proving to be the choice of many, despite the stigma it carries as a pyramid scheme or a scam, paradoxically, network marketing business is the fastest growing business around the world! Continue reading to find out why!
Being in network marketing for several years with a reputable and one of the top ten companies in the world, I want to shed some light on the business. This is from my experience with some facts. In addition, I hope I’ll be able to show you the global trend in the industry and why it has become the fastest growing business in the world. On the other hand, there are a few misconceptions to clear up about the whole network marketing business.
So how did network marketing start? A brief history
The concept of Network marketing is said to be born out of direct selling. Direct selling was used by Carl Rehnborg the founder of California Vitamin Company (later renamed Nutrilite) in 1934 as a means to distribute its products directly to the customer. The basics of this idea were that the company sign up salespeople that would use the product for their personal use and sell it to their family and friends. In the process, they would earn an extra $50 per month which was a substantial income at that time.
Consequently, their friends and relatives not only liked the product but they realized that they too, could benefit financially from buying the product at the wholesale price and in turn selling it to others. This early form of network marketing through direct sales was the shape of things to come on a grander scale. (Source betterhealthworx.com)
It’s through these means of sales that the concept of multi-level marketing was born. The distributors at this point realized that they were generating more sales for the Company by referring their friends, families and people they knew to the opportunity; hence a structured bonus system was put in place to reward them. This system, however, paved the way for the network marketing business model and has evolved to what we know it as today; Particularly when Jay Van Andel and Rich DeVos became distributors of the company in 1949. They took the company’s sales to new heights.
Network Marketing Explosive Growth
Ten years later Rich DeVos and Jay Van Andel, realizing the true potential of the marketing plan and business opportunity it presented to individuals, left Nutrilite and started their own company Called Amway. Today it’s the largest network marketing (M.L.M) business in the world. The network marketing compensation plan is tailored to suit individual business needs.
Multi-level marketing branded as a pyramid scheme and scam
The term multi-level marketing business, when used conjures up the thoughts of pyramid schemes and scams in a lot of people’s minds. Not surprisingly, this has come about by unscrupulous sorts using the business model to cover up their scams and illegal schemes. Hence, team marketing, network marketing are euphemisms for multi-level Marketing. The terms are used to separate legitimate network marketing from the stigma of multi-level marketing.
Furthermore, To truly know what networking marketing is; We need to know what it’s not. First and foremost, it is not to be confused with pyramid schemes. However, on the surface, it’s hard to tell the difference between them. That’s because they’re all built on the business model of multiple levels of distributors and recruits. Some critics of MLM claim that all of them, even the supposedly legitimate ones, are pyramid schemes in disguise.
Conversely, here is food for thought!
A little humour is effective to make a point. I hope this will give you a glimpse of the makeup and structure of our society with reference to the pyramid.
We all have an idea of what multi-level means. None the less, let’s look at the definition. According to Wikipedia, multi-level is a system that is composed of several layers or a hierarchy system where items (in this case people) are arranged in an above-below relation. The key factor here is System with emphasis on hierarchy.
In my opinion, it’s fair to say that there are many structures of our society, when studied, that are based on a multi-level system. The economic structure is evidence of this. In fact, where it is multi-level, it is a pyramid. Therefore does that make it illegal or a scam?
Consider this well-known catchphrase while you continue reading: “It’s only those at the top that makes all the money”! That being said; where do you fit or what level are you at, on the economic pyramid? Food for thought!
What is a pyramid scheme and how does it work?
Pyramid schemes have been around for at least a century in many forms. In brief, it’s a scheme or scam disguised as a legitimate network marketing business based on the network marketing plan. However, there is a vast difference. There are two common types of schemes; “product based” and “naked scheme”. A typical scam is designed solely as a get rich quick scheme with the promise of a vast return on investments.
Traits of a pyramid scheme under the guise of network marketing.
First and foremost a scheme is a plan designed in a devious way with intent to do something illegal or wrong. So, let’s take a look at the two most basic types:
1) The so-called naked scheme. This form of network marketing is a get-rich-quick scheme consisting of the following:
- High cost to enter the scheme (termed as an investment)
- No products involved
- No money invested by the company
- A lot of recruiting new members
- Climbing up the pyramid to qualify for payment
- Those at the top levels make all the money ( does that ring a bell?)
Herein lies the fallacy; as the pyramid grows and is reliant on money coming in from new recruits to keep it sustained; recruitment dries up; the pyramid becomes unsustainable; it collapses; those at the top take the money and run, while those at the bottom are left with nothing, scratching their heads wondering what happened.
Read here of a typical pyramid scheme that has just taken place and caused social harm in China.
2) Product-based scheme
A product based scheme is very similar to that of a naked scheme. Again the emphasis is based on recruiting. Here is the scenario:
- A distributor recruits 10 salespeople who each pay £300 for a starter kit of products to sell.
- 10% of each starter kit sold goes to the distributor
- The distributor also gets 10% of each product that any of his recruits sells, including more starter kits.
- The fastest way to make money isn’t by selling products, but by recruiting more people to buy starter kits.
- The people at the top of the pyramid get commissions from everyone in their downline, the many levels of recruits below them on the pyramid.
What is s legal network marketing business?
A network marketing business, on the other hand, is a legal and fair business when:
- legitimate companies provide consumers with bona fide products they need and want.
- Fairly priced products
- No income made from charges to new recruits
- Income is made from products sales
- Bonuses are paid on team turn-over of the volume of products
However, while some people do make a lot of money through the multi-level marketing business, their financial rewards are the result of their commitment and dedication to team building that distributes real products and services.
The network marketing business growth on the World economy
According to the Direct Selling Association, the networking marketing industry regulating body; in 2011 around 16m distributors generated sales of almost $30 billion in America and worldwide, 92m grossed around $154 billion. Today that will be more; (the ongoing case of the network marketing business growth).
“The world’s top 10 countries for network marketing (accounting for 80% of global sales) are the U.S., China, Korea, Germany, Japan, Brazil, Mexico, France, Malaysia, and U. K. Six of these are “Advanced economies” and four are “Developing economies” according to the International Monetary Fund. Network marketing is thriving in both advanced and developing economies”. Source networkingtimes.com
The attractions of a network marketing business
Network marketing is a huge business and forever growing, especially in the health and wellness sector. This type of business is open to everyone, where ordinary people from an ordinary background with no experience or qualifications can achieve their full potential. Over five thousand people a day are joining network marketing companies in the U.S.A. says the DSA. Below are some of the reasons why people are attracted to network marketing, thus making it very popular; especially to those looking for lifestyle and work/life balance.
- Extra Income
- More time and freedom
- Retirement Income
- Meet new people
- Being your own boss
- To help others
- A better work/life balance
- Achieve your potential
- Career satisfaction
- Work from home
The Network Marketing Business growth is certainly exploding globally. It is a recognised business vehicle for solving many financial situations. Despite the stigma, however, its dubbed “The Business of the 21st century” which offers everyone the opportunity to realise their worth. I hope you have found this article useful.
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