Multi Level Marketing (Network Marketing) – Meaning and Important Concepts

Some consider being Salesmanship to be an inborn trait as is Leadership. Some consider Salesmanship to be an Art. Then there are those who believe that anyone and everyone can be a Salesman with some training. Traditional concept of channel sales and retain sales as concepts are studied by every marketing and sales student.

From the humble beginnings of mom and pop shops to super markets, selling has come a long way. Apart from these sales channels we have also seen the concept of direct selling and referral selling having developed over the last forty to fifty years.

In the last thirty years or so we have seen another new trend in sales known as Multi-Level Marketing and this has spread across the globe stealthily but silently and engaged millions of people in selling products and earning decent income for themselves.

It is not rear to find your friends inviting you home for a tea party over the weekend and you find yourself buying the irresistible Tupperware products for your home. Similarly thousands of people are buying Home products, Personal Care products as well as Food supplements and other lifestyle products through their friends who happen to be a part of Amway Network. If you have been exposed to these type of transactions you have been introduced to what is known as Multi-Level Marketing or Network marketing.

Network marketing is a fairly new concept that has developed since early 1980s and has spread all across the globe. Today it involves housewives, corporate executives, retired persons, students as well as people from all walks of life engaged in selling through network and early decent incomes while they continue to pursue their vocations.

Network Marketing is a new phenomenon that has gained ground in the last three decades and hence there isn’t much of research, study and literature that is available as in the other traditional theories and practice of Marketing. The WFDSA - World Federation of Direct Selling Agents have defined Network selling as “Marketing and Selling of Products and Services directly to the Consumers in a face to face and in places like home, workplace and other offices other than retail sales locations.” On the face of it this definition describes the Network Marketing in the right way. However you will see that this definition can hold good even for Direct Selling which is not the same as Multi Level or Network selling. There are several characteristic differences in the modalities that these two sales methods follow though there are similarities too.

In both cases of Direct Selling as well as Network marketing, the selling happens on ‘One to One basis’ where the sales person comes in face to face contact with the user or customer. Therefore both the methods involved the End User or End customer on one end and the Sales person on the other. In both cases the Salesman involved plays the role of influencing the decision maker. The main different between the two methods is to do with the organizational setup of the sales teams as well as the method of compensation and income generation. However theoretically Network marketing is considered to be a part of Direct Selling methods.

Multi Level Marketing is an activity that anyone can take up at any point of time in life and generate income. There are thousands who take up MLM along with their main careers and then there are so many who have become millionaires by taking up MLM on full time basis and making it their prime vocation. This form of marketing does not require any qualification or any investments. Besides generating income, the individual gets to build social contacts and relationships as well which is seen as an added benefit.