Network marketing is a way for spreading information on a product to consumers via social communication channels. Trading between the seller and the consumer in the market only occurs when the consumer possesses a certain level of information on the product.
It is usually associated with product-based pyramid schemes as they both work on the same techniques and processes except that products are purchased by distributors, primarily for resale (supposedly). Such product purchases, often combined with other incentives, qualifies the distributors for commissions in ascending levels in the distributor hierarchy.
As a legal network marketing strategy is based on revenue generation, the distributors should be focusing on sales. To make distributors active and sales profitable we believe it is a good option to set target threshold to be achieved per level of distributors per month or quarter.
The concept of network marketing of the healthy, legal type is used in some cases as equivalent to “direct marketing.” In this method, the producer sells its goods through the people and customers themselves rather than through distribution agents with a high percentage of commission. Thus, a network of customers who are willing to help the producer with the sale task while benefitting themselves take charge of the goods marketing and sale tasks via a contract.
Technically, network marketing is not a type of marketing but rather is a form of compensation in a direct sales company where the salesperson can earn money on his or her own personal retail sales and also on the sales of people he or she personally recruited into the business and on the sales of people recruited by their recruits.
It is a business model based on hierarchical setup of compensating distributors primarily for recruiting downline.
Concept of network marketing
