What is Network marketing? Advantages & disadvantages
The world is connected through networks. Everyone everywhere is at someone’s network. So we are going to discuss the Network Marketing concept. And this a different type of marketing plan. A lot of companies have also adopted this marketing plan for a long time. A lot of persons have also achieved their dream life because of this plan. That’s why you have to know the details about this marketing plan so that you can also join in this and can gain the profits of the network marketing plan. Let’s know in detail about network marketing.
What is Network Marketing?
Network marketing is such a business model in which people add in a pyramid structure network and sell products or services of a company. Each distributor/member of this network is an independent sales representative. Each member of his network gets paid a fixed amount of commissions on selling the products. Every participant in this business model is called an IBO-Independent Business Owners because they promote the products on their own. The products directly delivered to customers through network marketing. This marketing plan has various names such as- Multi-level marketing(MLM), Consumer-Direct marketing, Cellular marketing, Referral marketing, Affiliate marketing. Amway, Avon, Herbalife are some of the famous network marketing companies.
Generally, in a marketing plan, whenever you sell a product, you will get a commission or payment according to the product. But network marketing is different from this and an advanced model. Let us consider, you are a member of a network marketing company and you sell its product to your friend and you will get the commission from the company. But your friend also sells the product to another friend from the same company then he will get a commission. Along with him, you will also get some percentage of that commission.
But think why you will get the commission second time? Because this is network marketing. The number of people in your network sells the products, you will get the commissions. The network will increase by joining of new members in the pyramid. And everyone in the network will get the commission according to their position in the network whenever the product is sold.
Types of Network Marketing
There are 5 types of networking plans.
This plan is very simple and famous among MLM plans. Each member is positioned in the binary structure in this plan. This plan started in late 1980 and became very famous in the 21st century because of its simplicity. Each member has two legs in this plan. Each one has two done lines such as Right leg or left leg in this plan.
The leg which makes more money is profit leg and the other is power leg. One will get a commission in a specific ratio of the two legs. The main benefit of this plan is that you will get a commission simply by joining two members only. This is the reason it is very simple and famous. When both legs reach the same depth, the maximum profit will be available. whenever a new member will join, not only the sponsor but also all the uplines in the network will be benefited.
You can add only 3 persons directly in this plan. If you want to add one more person then you have to give it to one of the three persons below you. In this plan, if you want to get a commission then 60% of sales must be generated from two legs combinely and 40% must be from one leg individually.
According to internet analytics, it is the most favorite compensation plan. It has another name i.e. “Forced matrix plan”. In this plan there is a fixed number of width(row) and depth(column) that restricts the number of distributors you can sponsor on your first level. It has the formula, width*depth. The most commonly used matrix plans are 2×2, 4 x 7, 5 x 7, 3 x 9, and 2×12. Like in other MLM Plans, it doesn’t have a leg system or breakaways.
This plan is regarded as the most effective and significant plan which can be rewarded many levels deep. From the name, you can have the idea that the Generation Plan system depends on the idea of Generation. So, one generation has all the members (say C1, C2, C3…) who are at par with each other in the down line of saying a sponsor C. Users can have ‘n’ number of leads. It develops horizontally bigger than vertically.
A generation is the total amount from up line to down line. For the beginner, this plan can be complicated to learn and describe. Starting from you down to the next person in your down line who is in the same or higher rank is called a Generation. The next generation is also the same from that person to down until it gets one of the same/higher levels.
This is a combination of two or more plans. This plan has overcome the limitations of the two plans.
Future of Network Marketing:
There is no particular history of network marketing. It is said that in 1934 California Vitamin Company came with a concept it could sell products to people and add them so that they could also sell it to their relatives and friends. And in return, they would get a commission of 50$ per month. at that time it was good financial support. In 1943, California Vitamins changed its name to Nutralite Corporation. It actually started a multi-level marketing concept. Then in 1959 Jay and Richard started their own Multi-Level company called Amway. Amway proved itself a legitimate business in 1979 and this gave birth to many more MLM industries.
Scope of network marketing in India:
This is called as the business of the 21st century. It has changed from part-time work to full-time work. And in 2016 also a new chapter added to this business in India. In 9th September 2016, The Government of India advised to State Governments / Union Territories to model guidelines on Direct Selling.
Each year this industry makes miraculous growth in India. It is calculated that network marketing is likely to reach Rs. 64,500 crore billion in India by 2025, a FICCI-KPMG report. Direct selling has already emerged as a successful industry in over 100 countries, with market size of USD 180 billion. It should be considered a serious career and earning opportunity.
As India is a large country and has a lot of population, with the problems it has now , this industry can be a miracle. To the large number of unemployed people in this country, this industry can provide a good source of income and can be a better career option.
Top network marketing companies in India:
- Mi Lifestyle Marketing Global Private Limited
- Forever Living
- DXN India
Advantages of Network Marketing:
- You can start it at a low cost of the amount.
- You are your own boss here.
- There is no time-bound in this system.
- You will get attractive offers by the company from time to time.
- You will be surrounded by like-minded peoples.
- No 9 to 5 job schedule.
- You will get Appreciation and Recognition.
- You will get Foreign trips and National trips by the company upon completing the targets.
- It is easy to understand.
- You can generate your passive source of income. The bigger your network the more stable your income.
- There are no income limits you can earn as much as you want.
- There will be people always to help you.
- Enhanced Women empowerment.
- Contribution towards the Government Sector.
- Social Awareness(Helmet rally, save water etc.)
- One can improve his/her conversation skills and can improve mindset through the training of this system.
- Direct distribution of products.
Disadvantages of Network Marketing:
- Sometimes such companies come into the market, which attracts people by showing their fraud plan and runs away after taking their money. So, be aware of these companies.
- Before joining any company, you should consider the things Plan, Products, People, and portfolios of the company.
- As there is not much investment of money but we do have to invest time. So if you choose the wrong company, you are gone.
- In some companies, there are some lines that do not have their ethics. They play with the money, emotion of the downlines.
- There is a lot of rejection.
- It takes a lot of time to expand/grow.
- Most networking sales are face to face.
- Most people don’t get rich through this system.
- Companies still use outdated methods.
- As there is no such traditional education to this system, people who join, most of them are amateurs and non-professionals. As a result, it becomes harder for them to move ahead in this system.
1. Why network marketing is bad?
Like other business ideas, this is also a business model. No business model is good or bad. It’s the people, products, services, which decide it good or bad. The same applies here also. People consider it as a bad business model because of the following reasons:
- Some of the companies are bad. They start with the motive to cheat people by offering different profits. Which is completely against the rules of this model.
- Another one is the products of the company. Some companies don’t provide good products which creates a bad image in the society. Their products and services don’t match their price tags.
- In some companies where both the above ones are good, the up lines are not good. They play with the money and emotions of the people below them. Which creates a very bad impression about network marketing industry.
2. Is network marketing a good career?
Yes, network marketing can be a good career if you follow some rules and regulations regarding this business model and do it. Some of these are:
- Before choosing the company, you should examine in detail about the products, people and portfolios of the company.
- Always try to choose a company, which products are easy to sell and of your interest.
- You must have a lot of patience. Like other fields, you must acquire proper knowledge regarding this field and learn continuosly.
- And do business with rules and ethics.
I think from the above discussion, you have some ideas about the network marketing concept. This is the industry that has created more millionaires all over the world. For a person having high dreams and no opportunities, this platform acts as a blessing. Like a coin, everything in this world has some advantages and disadvantages. Focus on the positives and choose a good company and work patiently. With due time, you will have all the dreams you ever wanted in your life.