Thinking about venturing into network marketing business?
The business structure of a network marketing organization resembles a pyramid. The hierarchy can be observed in a large or a small company. The owner, also known as the director sits on top. Under the owner is the management team and lastly, below the management are the grassroots workers, your everyday employees.
The big difference is that in network marketing companies, you have a good chance to work your way to the top of the organization. In fact, seniority of the marketers can be disregarded as long as you bring in more prospects to the company.
In a pyramid game, you pay a certain amount to join. Once you bring in new participants, you get a commission. The participants you acquired will then bring in more people, for which they will get their own commission, as well as your share of the commission.
For the commissions to keep coming, you, your participants and the participants they bring in would have to keep bringing in more people to the network. It’s a continuous process. If the process stopped, the pyramid will collapse.
Network marketing is not only a pyramid play.
There are companies that became a household name and have built trust with its customers using networking marketing. For example, companies like Tupperware that has been around since 1946 and Herbalife since 1980. People are readily buying their products without thinking about being compensated.
The products sold by network marketing companies must be competitive with the market. The products should be perceived to be better or cheaper than what’s on the market. Saying that the product is high quality but with a cheaper tag can be a great selling pitch.
Another effective strategy is when products are only sold by the network marketing company and can’t be bought anywhere else. Customer will need to sign up for a membership for a discounted price of the exclusive products. Take Tupperware for example, instead of marketing online, the company releases brochures exclusive only to their members.
There is an increasing number of network marketing opportunities that can be considered as a pyramid game only. These are multi-level marketing opportunities that have no real product, with the sole purpose of recruiting people.
These pyramid games claim that the system they use to recruit people to have real value. In most cases, you get a company’s website, promotional material, an e-marketing system and sometimes a free-to-charge phone number. But does it mean that this system can be considered a genuine product worth paying a monthly subscription fee?
How to identify if it’s a pyramid game or not
The easiest way to identify if a network marketing opportunity is a pyramid game or a real business is to ask yourself if the company’s product can stand on its own in the retail market without relying on commissions.
Without an income opportunity or an existing company, there is no specific product or service to sell. Think of it that way when you want to start getting into network marketing.