Modern multilevel marketing is a marketing concept and projects for the distribution of goods or services, which is based on creating a network of independent sellers (distributors).
Direct sales are a type of distribution, a type of retail trade outside a fixed retail network. The sale of goods to the final consumer, in this case, occurs as the result of an individual or group presentation of the goods.
In contrast to the traditional form of marketing, which implies the existence of a chain of intermediaries between the producer and the end-user (wholesale and retail trade enterprises, advertising agencies, mass media, advertising) the number of intermediaries (represented by a consultant). This reduces production costs and potentially leads to a reduction in the cost of production for the consumer since the price of products does not include production costs and intermediary profits. This method of marketing also allows the manufacturer to not spend money on advertising, giving this work to consultants and distributors.
You can not equate direct sales and multi-level marketing
Multi-level marketing is a method of compensation (remuneration to consultants) that companies use in their marketing plans, representing various sectors of the economy.
In addition, not all direct sales companies and not all member companies of the Direct Sales Association use multi-level marketing elements in their plans. Therefore, the statistical data that APP collects annually on the performance of member companies of APP following the results of the past period cannot be used to characterize the multi-level marketing industry.
Regarding multi-level marketing technology, it should be noted that it provides an opportunity to increase your income to any person, despite the fact that no initial capital is required to start this business. Donald Trump in one of his speeches said that if he went bankrupt again, he would start a new business in the MLM business.
When choosing a direct sales company, its marketing plan should be evaluated in terms of transparency of business, accuracy, and method of payment, method of taking into account the depth of the distribution structure, as well as the width of the sales market for this company, the age of the company (indicating its reliability), the company’s presence in the markets of other countries, and other factors.
There are also differences in the concepts of “multi-level marketing” and “network marketing”. Network marketing can be considered not only in relation to the direct sales industry but also in relation to other forms of retail trade (retail chains, etc.).
They have the right to attract sales partners who receive similar rights and receive income, depending on the volume of products purchased both by the distributors themselves and by the network they have built.
Multi-level marketing, or in other words network marketing, is a special scheme for promoting goods in the consumer market, which gives the manufacturer the opportunity to distribute the products produced to direct consumers by direct sales. Our agency https://adrenaline-studios.com/ is working in the sphere of project management, and multi-level marketing, ready to offer solutions to all its clients.
The most important feature of MLM marketing is the ability to receive a second type of income – for organizing a consumer network. The companies monitor the involvement of new distributors in the network and pay to individuals who attract new partners a certain percentage of the personal purchases of newcomers and the volume of purchases of their consumption networks.
Shortly speaking, multi-level marketing can be considered as a form of retail store. Sales agents of the company establish direct contacts with a potential buyer independently on the basis of personal connections.
After selling the product to the buyer, the distributor invites him to find another company’s customers on the same terms, for a certain percentage of sales. As a result, an extensive multi-level network consisting of buyers-sellers (sales consultants) is created.
The advantages of MLM marketing can be considered in Digital Agency London:
- direct sales of goods can save on retail space and advertising;
- sales of goods, based on its exclusivity and demonstration of the best qualities, are often more efficient sales through a network of stores with a wide range of products;
- companies bring up a whole cohort of loyal customers who prefer to buy exclusively from familiar people;
- the increase in sales is driven by commission payments to distributors.
Network companies, like the entire MLM industry, are much more resilient to economic crises than a linear business.
The main principle of multi-level marketing is that in this business the number of referrals involved in the network (distributors) is much more important than the number of personal contacts.
The other principles of this strategy are:
- principle of distribution of cash flow to a network company;
- the technique of thorough analysis of the business structure of the marketing plan;
- identification of “weak” places in the presentation of marketing plans;
- analysis, project development, and implementation of incentives.
Multi-level network marketing is a form of private enterprise. Its convenience for beginners lies in the fact that the organization of business does not require large material investments. However, in reality, only a small percentage of people trying to make money in this business receives really significant profits.