Network Marketing – Is It A Scam or Reality ???

Network marketing is a cheaper way to get the products which would otherwise be rotting in stores due to their high costs into the end customers. The concept is very old and it depends on what the product is, the commitment of the company behind it, what is the effort to get it right etc.

In almost every field of endeavour, most new ideas have always met with resistance and rejection at first.

In the early 1940's a company by the name of California Vitamins recognized that all their new sales representatives coming aboard were friends and family of their existing sales force, primarily because they wanted the product at wholesale cost. They also discovered that it was easier to create a sales force of a lot of people who each sold a small amount of product than it was to find a few superstars who could sell a lot of products.

So they combined those two ideas and designed a sales compensation structure that encouraged their salespeople to invite new representatives from satisfied customers, most of whom were family and friends, who each had the same right to offer the product and representative status to others, which allowed the sales force to grow exponentially. The company rewarded them for the sales produced by their entire group or network of sales representatives. Network Marketing was born! A few years later, the company changed its name to NutraLite Food Supplement Corporations.
In 1959, former NutraLite distributors Rich DeVoss and Jay Van Andel started the Amway company as the American Way of marketing products.

Chain letters, 40$ a day to 1000$ a day dreams are being sold but it is important to recognize that whosoever wants to reach the big money has to work very hard for it. They have to build networks and believe me that is very difficult.

Network Marketing has evolved in other ways, as well. Companies that began as direct selling companies are now utilizing networking marketing compensation plans. Some examples include Avon, the $3 billion cosmetic giant, Watkins Products, which had been direct selling for nearly 100 years before it converted to network marketing, and Encyclopedia Britannica.

A properly and legally structured network marketing company is not a scam or an illegal pyramid. It is a legitimate way of distributing a product. For example, some of Warren Buffet's companies use network marketing to distribute their product or service.

However, there is "old-fashioned" network marketing and "futuristic" network marketing.

"Old-fashioned" network marketing is the Amway and other foot-plodding ways of physically distributing product. It is also based on pitching ("pushing") the product and the business opportunity at friends, family, and almost anyone with whom you come into contact. Those days are over.

Recognizing that reality about 10 years ago, for its North American operation, Amway changed its name to Quixtar and went online in 1999. On the face of it, that was futuristic "pull" marketing, and the company had an excellent online ordering and drop ship delivery model.

However the company never really changed its "old-fashioned" culture. It is dominated by the old Amway mindset. As a result sales stopped growing, and have not grown since 2005. In fact they have declined slightly, even though online shopping has been growing at around 20% a year.

The "old-fashioned" culture of pushing product is simply not acceptable to the modern, Web-savvy consumer. And the way the business usually is presented is obnoxious to them. Moreover, the advocated method of building the business is simply too difficult and time-consuming for today's tech savvy generation(s).

As well, even though a legit network marketing organization is not a scam, many of them have become distorted and warped by greed. Some businesses also have become very much diverted away from their main purpose (the sale of products). They are corrupted by the over-sell of hype and basically useless training materials (CDs, books), on which the senior distributors earn most of their income. As a result, the new distributor has little chance of earning any money, because the overall emphasis is not on sales volume. In fact, most distributors lose money. Hence, "old-fashioned" network marketing is a failure.

However, the "futuristic" pure e-commerce businesses are more suited to today, where the prospective consumer and/or affiliate is "pulled" towards the product and the opportunity. These business, are easier to grow. Particularly from a time spent view (as compared to the old fashioned time consuming home visits, hotel meetings, etc.). They are easier to grow because they are built entirely online, by attracting people to them who are interested of their own volition.

My basic point is that the Webolution is transforming all of commerce, reversing all processes. Instead of product "push", the Web demands product "pull". It is far more effective. Today for any business to truely succeed long term, it must be nearly a pure e-commerce business.

The businesses which I prefer are 100% focused on product sales, all done online (although my 2 mainstays also have viable offline marketing approachs). There are no training materials to buy, no cold calls, no hotel meetings, no rah-rah cult-like conventions. Pure e-commerce from your laptop.

Affiliate marketing is also suited to pure info-based products. I also participate in a couple such businesses (SBI and AWeber), affiliate based, that are pure online ventures, and where the website shares its advertising revenue with members. They are free to join, there is nothing to buy. Very simple, Web 2.0-type models.

In conclusion, I only recommend a network marketing business if it is pure or nearly pure e-commerce. You must draw prospects to you (because they are already looking), they must be able to do everything themselves online (or most of it), and they must be webpreneurs who do not need any hand-holding.

This is just my opinion. You may disagree and that's OK. At least give it some thought .... too many don't.

http://best-mlm-resources.blogspot.com/2008/10/network-marketing-is-it-s...