What Is Network Marketing?

by Ann Hudson

Overview

In network marketing, an independent sales person will sign on with a direct sales organization. He will then market products through home parties and catalog or Internet sales. Tupperware, Amway and Mary Kay cosmetics are some of the most well-known examples of network marketing.
Function

Network marketing is also known as multi-level marketing. As the name indicates, this business model works on a tiered structure.

Considerations

An associate's biggest earnings will come when he recruits new sales personnel and earns money from the sales of these recruits.
Benefits

There are some benefits to network marketing, including flexible schedules, being your own boss, owning a business with minimal investment, and discounts on products.
Misconceptions

In spite of these benefits, a marketer should understand that some organizations are known for using very aggressive recruiting methods and encouraging new associates to follow suit. In some programs, a representative's primary profits come from his recruitment of others.
Warning

A marketer is often not told up front that the only way to rake in the promised large salary is to build several tiers of new sales recruits beneath him.
Insight

For many marketers, the aggressive tactics and lack of transparency that some organizations employ can be troubling. Seek opportunities elsewhere if recruiting methods seem dishonest or too aggressive.
Potential

In spite of the hype, the potential for making large sums of money can actually be quite limited without excessive recruiting efforts.