What is Network Marketing?
Network Marketing is a business model in which a distributor network is needed to build the business. Usually such businesses are also Multi-Leveled in nature. This means that payouts occur at several levels of the process.
This is a very popular type of business concept among people looking for an independent, part-time, home-based, flexible business opportunity. Over the year, companies and individuals have grown to become success business giants in America and the world at large. Some of these companies includes, 5Links, Amway, Essante, Partylite, Avon, Mary Kay Cosmetics and Tupperware, just to name a few that fall under the network marketing umbrella.
Network marketing has a few identifying features the main one being a low startup investment.
This is usually required for the purchase purchase of a product sample kit. Buyers are encouraged and given the opportunity to sell products directly to friend, family and other personal contacts. These programs also require their agents independent contractors to recruit other sales representatives. The recruits constitute a rep's "downline," and their sales generate income for those above them in the program.
Things can get sticky when a network marketing company compensates participants primarily for recruiting others rather than for selling the company's products or services. A network marketing system in which most of the revenue comes from recruitment may be considered an illegal pyramid scheme.
Since network marketing programs are usually exempt from business opportunity regulation and aren't defined as franchises under state and federal franchise laws, you'll need to do your own investigation before investing any money.
First Published in Entrepreneur Encyclopedia
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