In return, you recruit others and can make money off them.

The only way you make money is if you get in at the top because the people at the bottom don't make any money.

Are they correct?

If so, maybe network marketing really isn't something you should get involved in.

But if they are not correct, wouldn't it make sense to find out exactly what network marketing is and how network marketing really works?

This way you can make an informed decision for yourself as to whether it's something you should consider investing your time, energy and money in pursuing.

Contents at a Glance

1. What Is Network Marketing?
2. The Benefits of Network Marketing
3. What Is Network Marketing? A More Objective Perspective:
4. What is Network Marketing
   Compared to Franchise Businesses and Retailing
5. What is the Overall Strategy of the Network Marketing Business Model?
6. What Is It About Network Marketing and Pyramid Schemes?
7. What Is an Example Of an Actual Network Marketed Pyramid Scheme?
8. What Is An Example of A Legitimate Network Marketing Business Opportunity?
9. What Is The Distinct Difference Between A Legitimate Network Marketing Opportunity and An Illegal Pyramid Scheme?
10. What Network Marketing and Traditional Business Recruiting Have In Common
11. Why Is Network Marketing A Win-Win-Win Business Model?

Find Related Topics

Low Start Up Cost and Compensation

The first benefit of a network marketing business and the number one reason why most distributors decide to get started is the income potential.

Unlike most other businesses that require a tremendous amount of time and investment in order to make money, you can get started in network marketing minimum start up costs and produce a serious part-time or even full-time income.

The power behind the income potential in network marketing lies in the compensation plan. Most network marketing compensation plans offer three ways that a distributor can be paid.

There's earned income where you get paid for making a sale personally.

There's passive income where you get paid when someone in your organization makes a sale.

Then there's residual income where you get paid for continuing sales from customers made by you and your organization in the past.

Personal Development

The second benefit of a network marketing business is the personal development opportunities that the business offers.

Most network marketing companies stress the importance of its distributors contributing to the process of their self development.

Most people stop developing themselves after they get out of school. Network marketing teaches distributors to continuously improve themselves.

Small Business Backed by Big Business

The third benefit of a network marketing business is the ability to own a business without having to worry about all the other aspects of running a business.

With every other business you, as the business owner, are responsible for every aspect of the business. This includes sales & marketing, finance, product development, operations, human resources and more.

In the network marketing business model you are only responsible for one area and that is the sales and marketing. The parent network marketing company takes care of all of the other areas for you.

However, despite this fact you are still able to earn an income comparable to most businesses in which the business owner is responsible for all aspects of the business.

Positive Social Relationships

The fourth benefit of a network marketing business is the relationships that are developed as a result of the business.

There are many distributors who participate in network marketing who readily admit that some of their best friends to this day are people that they met and work with in their network marketing business.

The nature of a network marketing business makes it very easy to develop quality lasting relationships.

You are communicating with people in your network marketing business on a regular and consistent basis. The people you meet in network marketing tend to be more positive than people you meet elsewhere. This makes it a great way to build quality long term relationships.

In fact, although I certainly don't recommend you get involved in network marketing for this purpose; there are a number of network marketing distributors who have met their spouses as a result of participating in the business. The spouse was either their up line or down line or perhaps another distributor in the business they met at an event.

Those who choose to participate in the network marketing business model benefit in a number of ways. The key is to decide whether it is a business model that you feel you can get benefits from.

Pyramid schemes are illegal and if you are caught participating in one you can face severe fines and possible serve jail time.

Network marketing is a business model and a marketing strategy.

Have you ever heard of the company, McDonalds? Of course you have! They are the #1 fast food restaurant chain in the world.

McDonalds is operating using a business model called franchising.

What about Walmart? They are one of the most profitable companies in the world today.

Walmart uses a business model called retailing.

Network marketing is also a business model that many successful companies use.

Some examples include Avon, Mary Kay, Amway, Herbalife and Pre-Paid Legal Services.

Each company has a different marketing strategy.

For instance, Microsoft's marketing strategy is to establish relationships with computer manufacturers to include its software with the computer itself.

Since the operating system is already installed, the purchaser of the computer tends to stick with that operating system.

This simple marketing strategy has allowed Bill Gates the founder of the company to become the richest man in the world.

The network marketing strategy of marketing involves the company turning over its marketing to a group of independent distributors.

The company provides marketing tools, resources and guidelines so that the company and its distributors stay out of trouble.

The distributors are then responsible for marketing the company and are paid according to how successful they are at helping the company get new customers.

The network marketing distributors get paid when they successfully make a sale of the company's products.

The network marketing distributors can also get paid based on the activities of other distributors who were either introduced by the original distributor or introduced by someone within that distributor's line of sponsorship to the parent network marketing company.

I'm glad you asked!

The biggest reason why is because people confuse the method of compensation that network marketing offers with the way a pyramid scheme or some type of make money scam operates.

The network marketing compensation model is dramatically different from a pyramid scheme.

However, most people that label it a scam fail to take the time out to really understand the differences and as such they simply refer to all network marketing opportunities as scams and schemes.

Consider the following scenario:

I approach you to share with you a powerful business opportunity that is going to allow you to change your life financially.

To get started you have to invest $5,000 as a one time investment.

You also have to pay $100 a month as a business license fee.

What you get is a training kit that teaches you how to market the business opportunity to other people.

When you sign people up for the opportunity you get paid up to $2500 when they sign up and up to $50 a month for each person that continues to pay for their business license fee.

You can also make up to $1200 when someone in your organization recruits a new person and up to $25 a month when that person continues to pay for their business license fee.

Doesn't this sound like a great opportunity?

Unfortunately, this is a perfect example of a pyramid scheme.

The only way you make money is if you recruit someone else into the business opportunity. The training kit has absolutely no value to anyone unless they are participating in the business opportunity.

This is a perfect example of a pyramid scheme and if you are caught marketing something like this you are in serious trouble!

Contents at a Glance

1. What Is Network Marketing?
2. The Benefits of Network Marketing
3. What Is Network Marketing? A More Objective Perspective:
4. What is Network Marketing
   Compared to Franchise Businesses and Retailing
5. What is the Overall Strategy of the Network Marketing Business Model?
6. What Is It About Network Marketing and Pyramid Schemes?
7. What Is an Example Of an Actual Network Marketed Pyramid Scheme?
8. What Is An Example of A Legitimate Network Marketing Business Opportunity?
9. What Is The Distinct Difference Between A Legitimate Network Marketing Opportunity and An Illegal Pyramid Scheme?
10. What Network Marketing and Traditional Business Recruiting Have In Common
11. Why Is Network Marketing A Win-Win-Win Business Model?

Find Related Topics

To get involved in the business opportunity you have to invest $299. This authorizes you to be a distributor in the business opportunity.

In the opportunity you offer an in person training seminar that teaches investors how to fire their mutual fund manager, manage their own stock market portfolio and build wealth using the stock market.

The cost to attend the seminar is $5000. For an additional $100 a month you get access to a web site that provides sample trades, how to videos, monthly conference calls, plus a Q&A help line that you can call to get assistance on implementing the strategies you learned in the seminar.

When you sign up a customer for the seminar, you get paid up to $2500 when they sign up and up to $50 a month when they continue to pay for the web site.

You can also make up to $1200 when someone in your organization signs up a customer for the seminar and up to $25 a month when that person's customer continues to pay for their web site.

Isn't this scenario almost exactly the same as the first scenario?

However, this second scenario is actually a legitimate network marketing business plan and concept.

What is the difference between the two concepts?

The difference is that in the first scenario, you were getting paid for recruiting people.

The business kit had no value to anyone other than someone who planned on participating in the opportunity, or in this case the scam.

The second scenario you are getting paid for marketing a service to a customer. The service is the training seminar and the web site service.

Do you think it's feasible that someone might be interested in attending a seminar about investing in the stock market and subscribing to a web site offering video training on how to invest in the stock market? Absolutely!

Do you think that this same person might have an interest in these services even if they have absolutely no interest in getting involved in the business opportunity? Absolutely!

The key difference that separates network marketing from an illegal pyramid scheme is that in network marketing the company offers a legitimate product that has benefits and value outside the business opportunity.

An illegal pyramid scheme has no product, a product that only has value within the business opportunity or offers a product with exaggerated value.

It is important that you understand that it is NOT the fact that you get paid off the efforts of others that makes something a pyramid scheme.

The act of recruiting and being able to financially benefit from that recruit also doesn't in and of itself make something a pyramid scheme.

Have you ever heard of a "headhunter?"

This is a person who gets paid to help employers find suitable employees for their company and to help job seekers find jobs.

A headhunter gets paid when he or she successfully recruits a new employee for an employer.

Have you ever heard of a "real estate broker?"

A real estate broker recruits real estate agents to work for his or her brokerage. When that agent sells a home, the agent earns a commission for the sale of that home.

However, the agent must share a percentage of that commission with the real estate broker.

If getting compensated off the efforts of others or getting paid for recruiting was illegal then every company that uses headhunters and every real estate brokerage that uses a broker/agent relationship would be immediately shut down by the governing authorities.

Notice they aren't because there is nothing illegal or immoral about the concept.

It is a win for the network marketing company because the company only has to pay for results.

With traditional advertising the company has to pay for that advertising even if it fails to produce a profitable result for the company.

With network marketing the company only pays when a distributor is successful at signing up a new customer.

It is a win for the customer because the customer is able to purchase a valuable product or service at a competitive price point.

Since the company is no longer wasting money on advertising that doesn't work, the network marketing company can reinvest those savings by offering the product or service at a lower price point or re-investing those profits back into the product or service to make it a better one.

It is a win for the network marketing distributor because the distributor now has the opportunity to be able to build his or her business marketing established products & services.

The network marketing distributor can do this spare time, part time or even full time.

The network marketing distributor is also able to earn an income through leveraging the efforts of others.

Network marketing is truly a win-win-win for everyone involved.

Contents at a Glance

1. What Is Network Marketing?
2. The Benefits of Network Marketing
3. What Is Network Marketing? A More Objective Perspective:
4. What is Network Marketing
   Compared to Franchise Businesses and Retailing
5. What is the Overall Strategy of the Network Marketing Business Model?
6. What Is It About Network Marketing and Pyramid Schemes?
7. What Is an Example Of an Actual Network Marketed Pyramid Scheme?
8. What Is An Example of A Legitimate Network Marketing Business Opportunity?
9. What Is The Distinct Difference Between A Legitimate Network Marketing Opportunity and An Illegal Pyramid Scheme?
10. What Network Marketing and Traditional Business Recruiting Have In Common
11. Why Is Network Marketing A Win-Win-Win Business Model?

Find Related Topics