What is Network Marketing

Posted by Roxanne on September 8, 2008

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What exactly is MLM / Network Marketing?

Some people have a bad view of MLM / Network Marketing / Multi-level marketing. Network Marketing is not bad. Some companies are bad and some “opportunities” are bad, but network marketing is not bad.

Network marketing is a form of distribution.

In traditional distribution, a company has lots of costs associated with getting their products to the end consumer. They pay to manufacture the product. They then have to pay agents, advertisers, wholesalers, national distributors, regional distributors and retailers to get that product to the end consumer.

In MLM / Network Marketing, the company must still manufacture the product, however, the distributors act as the agent, advertiser, wholesaler, national distributor and regional distributor. Advertising is done by the distributors.

If a product sells for $1.10 to the end consumer and costs $0.10 to manufacture, in traditional distribution, the other $1.00 gets split between all of the others involved in getting that product to the end consumer. In MLM / Network Marketing, that $1.00 gets split only between the distributor and the company.

Now, let’s take a look at some MLM companies and see why the company seems to be making money, but not the distributors. Some company owners opt to have huge office buildings, lots of employees, private jets, gold faucets in the lavatories, and a lot of other “status symbols”. With these things come overhead. There is a cost to purchasing and maintaining all of these things. In this type of company, the company takes more of that $1 and gives less to the distributors so they can cover their overhead. Most of the time, distributors in this type of company need up to 3,000 customers and distributors in their group to make $10,000/mo.

Now let’s look at a streamlined MLM company. In this type of company, there is no huge building, only a few employees and the company owners fly commercial airlines just like the rest of us. These company owners know that by streamlining and renting a small office space, they can make more AND pay us (the distributors) more. In this type of company, distributors need less than 1,000 (many times less than 500) customers and distributors in their group to make $10,000/mo.

Can an established MLM company that already has all of the overhead ever be streamlined? Most likely not. The only companies that can be streamlined and pay distributors more are companies that were specifically set up to be streamlined companies.

If you’re looking for a streamlined company, feel free to contact me.

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Roxanne Green
270-975-4846 anytime
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