Introduction:-

Network marketing, also known as Multi level

marketing, Pyramid marketing & direct selling,
is the marketing style & technique, adopted by
many companies in India as well as worldwide. In
this concept, companies emphasise not only on
sales generation, but also on workforce
maximization. Companies adopt a workforce
pyramid of different levels. 
In multi level marketing, companies sell their
products directly through the distributers. They
take the distributers from the society. Here, each
member of the pyramid is supposed to generate
sales & also attach more members or distributers
with the company. All these members further
generate sales & join more people as distributers.
Thus, the sales as well as the workforce increase.
These distributers are paid the commission on the
base of sales they generate & also by the sale
generated by the next level of the distributers, they
attach to the company. 
Thus, we see that it acts like a chain reaction.
Here each member brings sales & work force.
Each member uses the product and makes other
using it. Thus he earns & also earns for the
company.
Need of Network Marketing:-
   In the traditional marketing model, a product
goes through many processes before in reach to
the customer like Importer (in case of imported
products), Whole
Selling, Retailing, Distributing, Advertisement
etc. All this made a delay in delivery of the
product, as well as these all increase the cost to
the customer. Also all this made a product less
profitable to the company. 
            In Network Marketing, the companies just
eliminate all these middle processes & hand out
the product directly to the customers. It cost less to
the company. Same way, it cost less to the
customer also. Secondly, it creates lot of
Employment Opportunities. Third, if customer
finds the products good & the company also, he
may be the part of this. He may also earn money
by just using the products only.
Different Models:-
                    Network marketing has five different
models. We can explain it as further:-
Unilevel   Model:- This model is often considered
the simplest of compensation plans. As the name
suggests, the plan allows a person to sponsor one
line of distributors, called a "frontline." Every
distributor the person sponsors is considered to be
on that sponsor's frontline and there are no widths
limitations, meaning there is no limit to the amount
of people one can sponsor in the frontline. The
common goal of this plan is to recruit a large
number of frontline distributors and then
encourage them to do the same. This is due to the
fact that commissions are normally paid out on a
limited depth, which typically means sponsor can
earn commissions on sales between 5 and 7
levels deep.
Stair step Model:- This model is characterized as
having representatives who are responsible for
both personal and group sales volumes. Volume is
created by recruiting and by retailing product.
Various discounts or rebates may be paid to group
leaders and a group leader can be any
representative with one or more down line recruits.
Once predefined personal and/or group volumes
are achieved, a representative moves up a
commission level. This continues until the
representative's sales volume reaches the top
commission level and "breaks away" from their up
line. From that point on, the new group is no
longer considered part of his up line’s group and
the multi-level compensation aspect ceases. The
original up line usually continues to be
compensated through override commissions and
other incentives.
Matrix Model:-This model is similar to a Uni-Level
plan, except there are also a limited number of
representatives who can be placed on the first
level. Recruits beyond the maximum number of
first level positions allowed are automatically
placed in other down line (lower level) positions.
Matrix plans often have a maximum width and
depth. When all positions in a representative's
down line matrix are filled (maximum width and
depth is reached for all participants in a matrix), a
new matrix may be started. Like Uni-Level plans,
representatives in a matrix earn unlimited
commissions on limited levels of volume with
minimal sales quotas.
Binary Model:-A binary plan is a multilevel
marketing compensation plan which allows
distributors to have only two front-line distributors.
If a distributor sponsors more than two distributors,
the excess are placed at levels below the
sponsoring distributors front-line. This "spill over"
is one of the most attractive features to new
distributors since they need only sponsor two
distributors to participate in the compensation
plan. The primary limitation is that distributors must
"balance" their two down line legs to receive
commissions. Balancing legs typically requires that
the number of sales from one down line leg
constitute no more than a specified percentage of
the distributor's total sales.
Advantages of Network Marketing Model:-
  Network marketing model comes with a large
workforce. Also, the workforce grows very fast.
Thus, it helps company to establish soon.
 In Network Marketing system, a company
need to pay a nominal advertisement cost.
Most of the promotion is done by the
workforce only.
 Company always stay connected with its
customers as well as distributers. It provides a
3D picture of the market as well as the
distribution system of the company. Thus, any
internal problem in the sale or the
organizational structure can be solved very
quickly.
 Network Marketing develops its market by the
social network of the Distributers. Thus it
penetrates very quickly in the market.
 Network marketing gives employment to many
people. It helps people to earn money. One
can join it as a part time job also.
 
Disadvantages of Network Marketing:-
 Companies cannot provide a range of the
products. Customer is left with no choice, but a
single product to use. Thus, after some time,
the companies start losing their customers.
 In Network Marketing model, a company need
to pay commission at every level of the
 Pyramid. This process makes it an expensive
one
 The workforce of the Network cannot be relied
upon. All the distributers do not perform well
expect few. Thus, the Pyramid does not
perform properly.
 Scope of Network Marketing is limited in India,
due to the conservative behaviour of the
people. Behaviour about the distributers, about
the quality of the products and the reliability of
the Chain system.
 The performance of the companies, who had
tried the multi level marketing, is also de-
motivating. None of them had performed well.
Most of them has adopted the retail chain
system or left the multi level marketing.
 
Required Steps:-
 Companies should recruit only the able
distributers. A person, who is not smart
enough to convince a person, is not a right
person for the network marketing. Evaluated &
educated people can do a lot in multi level
marketing.
 The companies need to make the customer
aware of the products. The product, which has
never been heard about, will not be accepted
by the customer.
  Workforce needs a lot of motivation from the
company side. Training is also required to
make enough sales & to join more distributers.

Network Marketing
Emerging trends in marketing have completely changed the way
business is conducted. These new modes of marketing help
companies attract a large number of customers. They even reduce
expenses that companies incur in traditional modes of marketing.
One such revolutionary trend is network marketing.

Manufacturers use this vast network of distributors to

market their products to customers at various levels. This
enables them to reach out to even more customers
indirectly.

These distributors and dealers, therefore, act as

independent representatives of the company. As a result,
this way the company can market their goods widely
without spending more money on traditional methods of
marketing, like advertising.

Structure of Network Marketing

Firstly, manufacturers require several distributors, sub-
distributors and dealers in order to create a network
marketing structure. Secondly, These distributors procure
goods from manufacturers themselves at wholesale prices.

They may either use them personally or they may sell

them to other distributors for a profit. This chain continues
further. The distributors, thus, will end up marketing
goods until they reach customers or else they may become
final customers themselves.

Furthermore, these distributors get an opportunity to make

some profits from this marketing network. They can
receive some commission from manufacturers on the basis
of the total volume of goods they buy and sell. Hence, the
functioning of these distributors is similar to that of
insurance agents.
Use of Network Marketing
Manufacturers generally use network marketing in
business structures that require multi-level marketing. This
is because such business models involve a large network
of distributors and sub-distributors.

It is also of great use for distributors themselves because

they can make an earning from it. Most companies like
Amway and Tupperware tie-up with people who put in
part-time work for this. Many women in India also
become distributors and actively work with manufacturers
directly.

Advantages of Network Marketing

 There are absolutely no limits on the size of the

network marketing structure. This happens because
companies can tie-up with innumerable people to
become distributors. Further, distributors can further
c0-ordinate with other sub-distributors to expand the
company’s sales.
 Due to a reliable and robust distribution network that
engages customers directly, companies do not need to
rely on advertising to market their goods.
 The structure of distributors also reduces the profit
margins of retailers that companies consider as an
expense. These margins get passed on to distributors
and the companies do not have to bear their burden.
  Another advantage is that companies do not need to
spend a lot of money on storage and distribution. This is
because distributors end up bearing these expenses
themselves.
 Finally, this structure allows distributors to earn an
unlimited income from their dealings with the company.
They can earn an income from their own profits as well
as commissions.
Disadvantages of Network Marketing

 Since manufacturers depend on distributors to

determine consumer demand, it can be difficult to
predict production targets. They may end up under or
over-stocking their products.
 In this form of business, it is basically the distributors
who facilitate delivery of goods to final customers.
Manufacturers have a limited role in this regard. As a
result, they may find it difficult to control distribution
and sales.
A

NETWORK MARKETING AN EMERGING FACE OF SALE MANAGEMENT

With the changing scenario of business around the globe, organizations have
quickly and effectively synergized with the dynamics of the modern business.
Their orientation, their focus, their processes, and aboveall, their ways of
marketing
& sales management- everything has evolved.

Gone are the days when people had to depend upon a handful of sources to get
access to branded offerings, products and services. Internet, E Commerce, Direct
Selling, Mail Order System? and there's an inexhaustive list of innovative ways
and media through which organizations sell to their customers.
One cannot ignore the abovementioned modes of marketing and selling,
particularly in an environment, which is today driven by anything but the motto of
"Customer Service, Satisfaction and Ease". To add to this, Internet & Information
Technology
has given marketers tools like never before- the tools of accessibility and wider
reach. In fact marketers around the world have started emphasizing upon the
significance of these new modern age tools that could be the very beginning of a
new evolution in the field of marketing. And yes, to mention in the same context,
I'd like to share the following lines of a famous leader-"Today's illiterate won't be
the persons who aren't educated, but instead they'll be the ones who aren't
adopting themselves to changes".
Getting back to the topic, I must talk of Network Marketing (also known as Direct
Selling/ Multi Level Marketing (MLM)). Being a part of the most modern methods
of making sales, it has already made its presence felt in India backed with
established credentials of itself as an industry spread far and wide across most
parts of the world and having annual global business volumes exceeding US $
100 billion and enormous potentials to grow. A non-conventional way of sales &
distribution, direct selling or network marketing is all about going directly to the
consumer, and most importantly- through a customer.
Definition & Explanation
Network or Multi Level Marketing may be defined as a distribution channel/ sales
method wherein the manufacturer directly sells to the customer at a preferred
rate and also gives the customer rights of selling the same product(s) for certain
compensation/ incentive.
Thus, firms involved in selling through network marketing have a well developed
system of functioning based on the concept of Network Marketing. According to
the concept, the company does not employ full time salaried employees to sell
and market its product offerings. Instead it goes the direct way to consumers by
approaching them first to become customers of the company by purchasing
products of the company at preferred rates, and then offering the same
customers to re-purchase those products at special preferred rates for future
purchases. This way the company ensures that it has a system strong enough to
attract people towards its products and offerings coupled with the advantages of
lifetime re-purchase discounts. Now, besides the discount facility, the company
also offers the customers to help the company market its offerings. The
customers acting as independent agents/ distributors/ network marketers/
independent consultants on behalf of the company do this (very similarly like the
life insurance companies have independent marketing agents to sell their
insurance policies). It is worthwhile to note that the formalities for registration of
the customers as agents of the company incurs no agency or distributorship
charges except a nominal fee being charged by the company towards one time
registration of the customer and his enrolment as a network marketer/ network
customer.
How Does the Model Work?
As per the model, the firm motivates the customers of the company to sell its
products by way of Network Marketing (direct selling). This happens when the
customer introduces other people to the system of MLM and sells to them his
firm's products. Now, after purchasing, theses new customers will automatically
have agency rights for marketing (as explained earlier) the same products to
other people, thereby increasing sales and recruiting more marketers
(consultants). Hence this system of network marketing boosts sales and also
brings in new and more marketers by way of existing customers working on
behalf of the company and marketing its offerings + the great business
opportunity available with the customership.
Advantages of Network Marketing
The 45 per cent or more of the margin or markup, which was charged by the
middlemen, is now given to the consultants.
The consultant gets the product direct from the firm, hence the material is always
genuine.
The products will be of superior quality at affordable pries and in appropriate
packings. These products will not be available at retail outlets, hence there is
exclusivity of selling rights.
A detailed computerized monthly statement of accounts, along with the payment
is sent to the consultant. This statement also gives the names, addresses and
phone nos. of all the consultants in your group.
The consultant gets a chance to do business without any investment or liability.
The Business opportunity aspect of MLM- earnings potential
Multilevel marketing allows sellers to build a business through their own sales
efforts and by inviting others to become sellers. Remuneration is based on a
seller's personal sales AND on the combined sales of those people they have
sponsored, trained and motivated.
Every human being on this earth has limitations, the biggest being time limitation.
Nobody can afford more than twenty four hours of work a day (assuming that a
person works for full of a day), since god has given us only twenty four. Thus it
clearly implies that there are limitations for people to work, and hence for them to
earn. This is called Linear Income or limited income.
Keeping the above factor in mind, it is but obvious that nobody can have
unlimited earning or better and more practically, say exponential earning.
It must be kept in mind that it is through only exponential earning that
industrialists have been able to build wealth and make big industrial empires.
This can be understood from the simple explanation ? An industrialist has a
factory, an office, etc where he employs people in large numbers to work for him
and in turn pays them salaries and he himself earns huge profits and turnovers
from their work. This becomes possible by the multiplication of time and work, i.e.
the time put in by thousands and hundreds of employees is multiplied by virtue of
so many employees working for say eight hours each, thus time worked totaling
to eights of thousands of hours a day, and that too in the industrialist's favour.
The best part of the whole story is that the people working as such are
individually working only for eight hours a day, but collectively for thousands of
hours. This is called time duplication and it forms the basis of what is called
Leverage Income or Exponential Income.

NETWORK MARKETING: AN EMERGING

WAY OF SALES
Network marketing or Multi-Level Marketing has caught on the fancy of people across the
globe and as on date, there are thousands who have made their millions through being a
part of Network marketing. With the changing scenario of business, the organization has
quickly and effectively synergized with the dynamics of modern business. Their orientation,
their focus, their processes, and above all, their ways of marketing & sales management –
everything has evolved. The success stories of such millionaires from US, Australia and UK
etc are being published as a part of the case study in Universities and other Educational
Institutions as well as Direct selling training institutes.

Network or Multi-Level Marketing may be defined as a distribution channel/sales method

wherein the manufacturer directly sells to the customer at a preferred rate and also gives the
customer rights of selling the same products for certain compensation/ incentive.

According to the concept, the company does not employ a full-time salaried person. A
person, recruited by the company to sell a product, earns commissions; if that person
recruits others, this second layer is called the person’s “downline.” The person earns a cut
on the sales of people in the downline, called an “override.” But those in the second level
may also recruit others and create their own “downlines.” The first person in the chain gets
an “override” from every level, however many there may be, although always less the farther
removed the source is. Often recruits are required to purchase an initial “starting inventory”
of the product. In many cases, the MLM company will not repurchase this inventory or will do
so at a very reduced price. These characteristics have caused MLM to be associated with
pyramid schemes, and some techniques are such schemes. The term “network marketing” is
in part used because “multi-level” marketing has at best an ambiguous reputation.

Advantages of Network Marketing:

1. The 45 percent or more of the margin or markup, which was charged by the middlemen, is
now given to the consultants.
2. The consultant gets the product direct from the firm, hence the material is always genuine.
3. The products will be of a superior quality at affordable prices and inappropriate packings.
These products will not be available at retail outlets, hence there is the exclusivity of selling
rights.
 4.  A detailed computerized monthly statement of accounts, along with the payment is sent to
the consultant. This statement also gives the names, addresses, and phone nos. of all the
consultants in your group.
5. The consultant gets a chance to do business without any investment or liability.
Examples of Network Marketing
Amway – been in business for around 57 years now, this company is one of the biggest
examples of a successful MLM/network marketing company.
Other companies that use network marketing model include – Tupperware, Nu skin, Juice
Plus, Modicare, Sunrider India, Avon Beauty, Oriflame etc

What attracts people to MLM is the dream of earning millions as income without having to
invest anything but one’s efforts and time and without having to sacrifice one’s career or
other priorities of life. MLM sells the concept of an individual aspiring and achieving one’s
goals through additional income generation opportunity of joining and working through the
network. As there are no entry barriers, it attracts thousands to take up this activity and
pursue it diligently. Success stories are widely publicized and are there for all to see, for
seeing is believing and this is what drives people to join the MLM networks.

The Network Marketing Business Model: Is it

Right For You?
3 Different Types of Network Marketing Programs

Network marketing is a business model

that relies on a network of distributors to grow a
business. Network marketing typically involves
using three basic types of systematic strategies
to make money:
 Lead Generation: To locate new prospects;
 Recruiting: Adding customers and/or
business partners to your network; and
 Building and Management: Methods you
use to train, motivate, and manage your
recruits.
There are many types of network marketing
including two-tier programs and multi-level
marketing, but many of the more solid marketing
companies, like Avon, are single-tier.
Single-Tier Network Marketing

You sign up for an affiliate program to sell their

product or service. You do not need to recruit
other distributors and are only paid if you make
a direct sale. Avon, is a company that uses
single-tier networking marketing.
In some online affiliate programs, you are only
paid for traffic you have referred to the affiliate's
website. Pay-per-click (PPC) and pay-per-lead
(PPL) affiliate programs are other examples of
single-tier networking.
Two-Tier Network Marketing

This term applies to network marketing that

pays you for direct sales (or traffic you refer to a
website) and for direct sales or referred traffic
made by affiliates or distributors you recruit to
work under you. An example of a two-tier
program is Ken Envoy's Site Sell.
Multi-Level Marketing

Multi-Level Marketing (MLM) is a distribution-

based marketing network that is two or more
tiers "deep." Some MLM programs allow you to
make money five or more tiers deep. Examples
of MLM businesses include LuLaRoe, Magnetic
Sponsoring, and Amway.
Two other types of network marketing strategies
are marketing-driven networks and name-driven
network marketing.
Example 

Martha made $200 in sales commissions at her

first Pampered Chef party. She joined the
single-tier marketing program to make
commissions on her own sales and bonuses
from recruiting other networkers. Martha earns
money from her own sales as well as when she
gets others to join the network and who make
their own sales.
Are You Thinking of Network Marketing as a Business Model?

If you are thinking of starting a business that will

rely on multi-level marketing of any kind, be sure
you have a solid marketing team at the very
core of your organization. The stronger your
base of marketers, the more successful you will
be in the long run.
It is also important to point out that not everyone
who wants to sell something will be good at it.
But if you have someone excited about your
business who might not be a perfect fit for your
sales team, find another spot for them. 
Marketing is critical to the success of any
business, but don't forget that sincerity (genuine
enthusiasm about a company or product) in and
of itself is a form of marketing. If your only
incentive to your sales team is money and make
more money, they may cut corners or mislead
others in an attempt to earn more for
themselves.
You should also take the time to research your
own state's laws regarding network marketing to
make sure that your business is fully compliant.
Deceptive marketing practices and pyramid
schemes can land you in hot legal water trouble
if you are not careful.
Hire people who are even more excited about your company than you are!

Marketing is part industry-driven and part

creative thinking. In the case of network
marketing, it is also about finding salespeople
with charisma. When you hire people who are
excited about your business and product, they
will share that enthusiasm with others. An
enthusiastic sales force leads to more sales, but
also to more recruits into your marketing
network. 
Conclusion:-
          Network marketing is one of the best
innovative techniques. It has done well worldwide.
Many big names like Amway, IQ International,
ANC Inc. Telecom + have grown from multi level
marketing. However it is not a successful one in
India, it has also not a flop one. It may do well with
some more innovative & technical steps. We just
need to improve the model a little in the Indian
contact. It may be a successful marketing model in
the future.

https://blog.finlaw.in/network-marketing-an-emerging-way-of-sales/

http://www.123seminarsonly.com/MBA/Network-Marketing-an-Emerging-Face-of-Sales-
Management.html

https://www.toppr.com/guides/business-environment/emerging-trends-in-business/network-
marketing/

https://www.thebalancesmb.com/the-network-marketing-business-model-is-it-right-for-you-
3515493