There are basically two methods of distributing physical consumer products.  When the buyers go to the shop to make a purchase, this is Retailing. However, when the products are presented to the customer without the customers going to the shop, this is Direct Sales Marketing.

Direct sales distribution to the customer is differentiated by how the customer is being acquired. When a person acquires the customer, this is known as Direct Selling. Direct Marketing is when the customer is acquired through a media such as TV, Internet or mail order. A customer acquired by Direct Selling may then be sold to directly from the main company where the customer purchases online or through telephone ordering.

Direct Selling is divided into two sections; Single Level Marketing [SLM] and Multi-Level Marketing [MLM]. In both forms of marketing, the customer is ‘sold to’ by a person who is a ‘direct sellers’. Depending on the company rules and regulations, these direct sellers will sometimes be known with terms such as consultant, representative, associate, executive, partner, agent. A general term in MLM is Retailer – the person will basically employ the skill of retailing to sell to the customers where the income opportunity shall be purely based on commission earned through customer sales.

The difference between the two methods is based on how the sales force or prospect is recruited, trained and supported. In MLM, it is often referred to the ‘Leadership Programme’. This programme determines the growth of an organisation.

SLM is the traditional form of Direct Sales where the Leadership Programme is managed and controlled by the Direct Sales company. The direct sellers are known as “Directors” or “Managers” who are given some form of basic salary and are tasked to manage or handle certain regions, areas or sections.

In MLM, the responsibility to promote the products or expanding the sales development of the sales network is being offered to Network Marketers in the form of a Business Opportunity. The Network Marketer promoting the products earn a commission on the purchases made by other Networkers “hired” by them and everyone under the organization. The fact that the expansion opportunity is larger, Network Marketers are able to significantly earn larger incomes than in SLM. This is the reason as to why MLM is now the dominant form of Direct Sales in the world.

As such, a Network Marketing company generally offers two opportunities to a would-be business owner or the direct seller; a Retail income opportunity [Retailer] and a Network business opportunity [Networker].

Nowadays, you heard of many other marketing terms use such as referral marketing, group marketing, etc. These terms are used to the fact that the company actually want to distance themselves from the bad publicity of Network Marketing. However, whatever terms they used, if a company uses a commission based programme to earn from multiple levels of business owners, then the programme is still a Network Marketing business.

As far as many network marketing leaders are concerned, Network Marketing is the best term.

Talk soon,

Jailani

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Network Marketing has evolved in many ways. Companies that began as direct selling companies are now utilizing network marketing compensation plans. Today, you can see that many companies of different industries has in fact turned to Network Marketing to increase their sales. Traditional sales method companies have also created network marketing subsidiaries in order to utilize the network marketing method of products’ distribution. There are many reasons for the decline of direct selling.

One of the reasons is to allow for more informal methods of sales and greater compensation. In early 1970′s, the direct selling distributors making calls on their prospects found that no one was home. As time goes by, the women, who has been known as the customer or prospect backbone of direct sales, had entered the work force, thus leaving only few at home during the day. The entire industries have actually been pioneered by the Network Marketing companies.

What do you think is the main reason as to why so many companies turned to network marketing as their chosen method of marketing? You probably knows the reason if you have been in the industries for quite sometimes. So, do you know why? Its simply none other than efficient. It’s more efficient! Companies do not pay for the marketing, distribution or sales until after the sale is made and the product is delivered. In traditional marketing, companies have to spent millions of dollars on advertising, staffing, etc.

In todays trend, many people like to own their own business, manage their own time and the desire to work at home or from home. This is exactly what network marketing provides. This is how network marketing companies hire the so called “sales team” to market their products, These “sales team” are mostly an individuals who have dreams. These people are searching for ways to build a future that develops leadership and provides a balance in their lives for their families and each other, without sacrificing their sanity in the process.

One of the many reasons for the success of Network Marketing is that it is based on cooperation, not competition. Another is that a recommendation from a friend is the most powerful form of advertising; that is what Network Marketing is all about.

Talk to you soon,

Jailani

PS. Sam Walton (founder of Wal-Mart ) is quoted as saying that he’d rather run a profitable business in an unconventional industry than an unprofitable business in a conventional industry.

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Network Marketing is a growing industries throughout the world. However, when it first started, the trade industry was being misunderstood and it was finally revived in early 1980′s.

Abuses of exponential growth haunted network marketing for years and it is still misunderstood till today. One of the first abuses of the concept of exponential growth to generate income may have been the chain letter craze that swept the United States after World War 1. The letters promised great profit if you would send a dime or a dollar to the person at the bottom. The chain letters spread like wild fires as far as Europe. At one time, the US Postal Service estimated that 10 million letters were being mailed each day. Working together with the law enforcement agencies, the USPS battled the fraudulent schemes and the chain letter phenomenon began to subside in the early 1940s.

Unfortunately, this scam spawned schemes which came to be known as pyramids, where money was given for the right to involve others, as no valid product which was being purchased from the company. Again the law enforcement agencies acted quickly to clean up the abuses as it became the United States number one consumer fraud.

In mid 1970′s, with no clear understanding of what constituted a legitimate use of network marketing, the US Federal Trade Commission and state agencies across the nation turned their eyes to almost all network marketing companies. In 1975, the FTC filed suit against Amway, alleging that the company was an illegal pyramid and that its refusal to sell its products in retail stores constituted a restraint of trade. However, after spending 4 years and millions of dollars in legal fees to clear its name, in 1979, Amway was ruled out by FTC that the company was not a pyramid, and that its revenue was generated from the sale of its products.  After the incident, hence, the US Federal Trade Commission acknowledged network marketing as a legal and efficient distribution system. Network Marketing exploded in the next decade!

Today there are thousands of Network Marketing companies operating throughout the United States, Canada, Mexico, South America, the United Kingdom, Europe, Australia, New Zealand, Israel, Japan, Taiwan, Malaysia, etc. In Singapore alone, there are more than 100 companies dealing in direct selling and only a handful of them is an active members of the Direct Selling Association of Singapore.

Network Marketing is reported to be a billion dollars industry, internationally, made up of Fortune 500 and New York Stock Exchange (NYSE) listed companies.

Talk to you soon,

Jailani