There's a difference between network marketing and multi-level advertising. Today, however, a growing number of people are grouping both business models together so they're almost thought of as synonymous.
It's important that you fully understand the idea of network marketing and the power behind it until you're introduced to the multi-level advertising business program, which takes it a step farther.
sometimes also known as direct sales, is a business model which does away with the middleman. The maker markets goods directly to the customer without needing to pay the expenses of advertising or needing to develop and train a large sales force.
To do so, the producer uses independent distributors to advertise its products in the distributor's own cost.
Since the manufacturer has saved huge amounts of money by not having to market and build a sales force, it passes the savings on to the distributor in the kind of commissions and bonuses.
The individual distributor promotes the goods by networking with friends, relatives, and acquaintances.
In a sense, all that the seller does is recommend the product to others, and should they opt to get it, he/she has paid.
What a concept! Would not you have loved being compensated by the movie studio or theatre whenever you recommended a picture to someone that they went to watch?
Think of all of the people to whom you've referred a service or product! You'd be in a different financial situation today if you had obtained a commission for each referral you made.
Network marketing is a win-win-win circumstance. The manufacturer saves money and lowers his overhead and risk. The distributor promotes the products and earns some additional income. The customer purchases a product that's been recommended to him as having worth, as opposed to buying something because of slick marketing.
Now onto multi-level marketing (MLM). In a nutshell, it's network marketing on steroids!
As an independent distributor in the MLM business, you're allowed -- no, you're invited -- to build your own sales force of individuals that will also promote the products.
This is the important difference between network marketing and multi-level advertising. You do not just build your own team (sales force), but you teach your staff members to duplicate your efforts and become leaders of their own groups.
When members of your staff recruit independent vendors and become leaders of their own sales force, they still stay under your umbrella and you make money from their efforts.
All vendors, even those brought in by somebody else in your team, are thought of as part of your company and are put beneath you on your company chart. In MLM language, they are regarded as your "downline." This downline consists of many levels or layers -- hence the title multi-level marketing.
Like network marketing, multi-level promotion is also a win-win-win scenario -- just the wins are higher! The manufacturer sells several times more goods, the income potential of these vendors is infinite, and the customer saves money on a superior product.