Network marketing is a growing field in India and due to the internet it is emerging as the leading form of direct selling in the country. According to Statista, India generated about 3.3 billion U.S. dollars of the direct selling industry’s retail sales in 2021. By 2025, the industry is expected to grow to a whopping USD 8.9 billion in India.
The data is quite promising and if you are into business, right now you are probably thinking what is network marketing?
Network marketing is a marketing model whereby a chain or network of individuals work towards the common goal of selling the products or services of a company. It involves two main processes : person-to-person sales and network expansion.
It is the latter that separates network marketing from regular personal selling and elevates the marketing model to credit a specific term to itself. The next logical question should be what is network marketing in terms of functionality, and how exactly does it work?
Though elaborate, a network marketing model works in a pretty simple and straightforward manner. A business enterprise hires an individual whose job is to reach out to prospects and sell the company’s products and services to them. The individual works as an unsalaried salesperson who earns a commission on the sales he/she makes.
So far, it is basically a marketing model where a company outsources the function of sales. It is the most basic form of network marketing and it is actually closer to affiliate marketing.
Now, this rather simplistic marketing method becomes network marketing in the true sense when these salespeople are encouraged or required to recruit more salespersons like themselves to build a network.Each one of them creates their own network of salespersons and earns a commission on their sales as well as his/her own sales.
Pretty alluring,cool, huh? And it doesn’t stop there either, it gets even more sophisticated and scalable when MLM (multiple level marketing) is introduced into it. Here is how. The new recruits are similarly encouraged to make recruitments in their turn, which makes the chain of salespeople into a cobweb like network.
In this way, the network just keeps on branching out and growing. And the really amazing thing is that the original salespersons earn commission on the sales of each salesperson linked to the network they created.
Want a still simpler answer to the question: what is network marketing? Here it is.
A company hires an unsalaried salesperson A working on commission whose job is to make sales and recruit more similar salespersons. If A recruits B, and B recruits C, then A gets a commission on the sales of B and C in addition to the commission on A’s own sales.
So, in addition to earning a commission on the sales you make, you also earn a commission on the sales made by the individuals you recruit into the network and the individuals they recruit in turn as well. This is what encourages the network marketers to constantly grow the network and hence the term Network Marketing.
As opposed to you going to a store and being catered to by a sales executive, here, the sales executive comes to you. And sometimes the executive not only sells the product to you but also convinces you to sell the product to others.
Hence, this business model is a great opportunity for those who have exceptional sales and motivational skills.
Like all marketing models, network marketing comes with its own set of jargon. If you find yourself caught up in the technicalities of network marketing and wondering what is network marketing tier, distributor, downline, MLM, and so on, don’t worry, here is a simple explanation.
A marketing network may have a single level, double level, or multi level. These levels are generally called tiers in the network. A marketing network with multiple levels is called an MLM (Multi Level Marketing) network.
The salespeople at the center of the network are generally referred to as ‘’distributors’’ and every salesperson that a distributor recruits onto the network is called the distributor’s downline. The wider the network, the more the number of downlines.
If you are looking to join a network marketing program, you are very likely to run into a pyramid scheme disguised as a network marketing operation because of the similarity in the structures of the two.
And so, a very important question that needs to be addressed here before we go any further is what is network marketing and how is it different from a pyramid scheme?
There are several differences, but the key distinction that can help you tell one from the other is that in a network marketing program, your recruits are never supposed to pay any amount by way of a purchase.
If you are looking to join a network marketing program and you come across one that REQUIRES you to make a purchase to come onboard and recruit others in the same way, get out of it right away.
Types of Network Marketing
There are many different variations that you may introduce in your network marketing model and several types of direct selling are often loosely pooled under network marketing.
But strictly speaking, there are three types of network marketing which are classified on the basis of the number of levels of the network involved:
1. Single – Tier Network Marketing : This is a very basic type of network marketing where the salespeople you recruit are not supposed to recruit salespeople of their own.
It is more or less like a simple person-to-person selling, except that the salespeople are unsalaried and work on commission.
When carried out on the internet, it takes the shape of PPC (pay per click) and PPL (pay per lead) models. Affiliate marketing is a great example of online single-tier network marketing where the affiliate is an unsalaried individual who earns a commission on the sales made through him/her.
2. Two – Tier Network Marketing : This type of network marketing has an intermediate level of complexity. Each salesperson recruits other salespeople and earns commission on his/her recruits’ sales as well as on their own sales.
3. Multiple Level Network Marketing : This is the most sophisticated type of network marketing. As the name suggests, it involves more than two levels of salespeople. Each participant is supposed to create a network of their own by recruiting other salespeople.
The salesperson, generally known as a distributor, earns a commission on the sales made by each of his/her recruits who are referred to as the downlines. Amway, a very well known network marketing company operates on this model.
Network Marketing Examples
Avon and Amway are the most well renowned network marketing examples in the world. Both companies have been really very successful and Amway operates in over a hundred countries across the globe.
You can also find many network marketing examples in India, the most prominent among which are enlisted below:
- Amway India : It is the oldest and largest network marketing company operating in India.Their portfolio includes more than 200 FMCG products. They provide health and personal care at competitive rates and have warehouses in 35 cities in the country.
- Forever Living : It is also a foreign company with a strong presence in India. They have more than 150 products in their portfolio with a special emphasis on Aloe Vera based health products in the Indian market.
They also provide unique offerings on free products and the company is gaining a stronger hold on the Indian market every day.
- Vestige: When it comes to India based countries, Vestige is one of the oldest and most rapidly growing network marketing examples. The company was founded in 2004 and provides world class products and services in lifestyle and healthcare categories.
It is a leading network marketing company with over 200 health care and lifestyle products in its portfolio. These products are provided at generous rates along with unique offerings in free products.
- Mi Lifestyle Global Limited : It is an India based network marketing company that was established in Chennai in 2013. Their portfolio includes more than two hundred lifestyle and healthcare products.
They generally provide different types of offerings like coupons with every sale. The company has a very good reputation for providing great incentives and services to its network marketers.
- Modicare: The company was founded in 1996 and is one of the fastest growing network marketing companies in India. They offer a wide range of personal care, home care, wellness, and skincare products among others.
They don’t follow conventional MLM marketing and have come up with their own unique method of direct selling which they call the Azadi Plan.
Network Marketing Strategy
If you are looking to drive sales at low costs and with flexibility, you should definitely consider including some kind of a network marketing strategy in your marketing mix. It is arguably the most ingenious form of person to person sales out there, and with the rise of the internet, it has become even more powerful.
Coming up with a sound network marketing strategy involves making a thorough evaluation of the rate of commission, number of levels in the network, and the targets set for the distributors to achieve.
If you don’t have these down, it can compromise the effectiveness of your marketing and you won’t be able to reap the full benefits of the wonderful marketing technique.
A very important thing you need to consider while formulating your network marketing strategy is how are you going to monitor and manage the expansive network.
You need to take care that the high scalability of the model does not make you complacent and careless about the assessment of your distributors.
You also need to take care that you are not incentivising all distributors indiscriminately and compensate those who grow the network considerably more than others are paid over and over the fixed commission.
Many network marketing companies also offer unique offers in the form of coupons and complimentary free products and you should consider incorporating it in your network marketing strategy as well.
Network Marketing Advertising
You may use different kinds of traditional and non-traditional media for network marketing advertising if you run a network marketing enterprise, though ideally, you should strike a balance between the two .
Traditionally, the word for mouth has been predominantly used for network marketing advertising, and with great results too. You should explore new avenues of advertising like guerilla marketing to draw the attention of potential network marketers.
The people who do well as network marketers are high energy and driven individuals with a taste for going against the grain. Such individuals should respond well to innovative methods of marketing like flash mobs.
Having an online presence is imperative for any business today, and whichever marketing method you choose, you should make it a point to incorporate digital marketing in one form or another in your marketing mix.
Network Marketing Income
In time you can earn impressive amounts as your network marketing income when your network grows. The standard commission in network marketing programs is 20-25 percent of the sale, which doesn’t seem much at first, but once you consider the accumulative commission from your downlines, it is an alluring earning opportunity.
In fact, the biggest appeal of the business model for participants is its scalability. Technically, a network marketing program is infinitely scalable and you can generate a hefty network marketing income.
The engineering of the incentive structure makes it a self growing machine; and as the network grows, so does the earnings of the participants.
Network Marketing Opportunities
You can find many network marketing opportunities both traditional and digital on the internet. Which ones would be most suitable for you depends upon whether you are better at person-to-person sales or driving traffic to a website.
For the latter, you would be compensated on the PPC (pay per click) or PPL (pay per lead) model. If you have got a considerable number of followers on social media, you should consider affiliate marketing.
If you have great sales skills, there are great network marketing opportunities for you out there. You should consider joining the network marketing programs of companies like Eazyways, Future Maker, Herbalife, Oriflame, Safe Shop, and the like.
Network Marketing Agency
There is no network marketing agency as such and if you want to join a network marketing program, the best way is to seek out network marketing agencies on the internet and reach out to the ones you like.
Though it is not network marketing in the strictest sense, The Media Ant does provide influencer marketing, which is a great way of advertising in today’s era of social media.
We also offer a multitude of advertising options that network marketing companies can use to advertise their business.
Frequently Asked Questions
What is the role of a network marketer?
The job of a network marketer is to reach out to potential customers, sell the company’s products/services and recruit others to do the same. They work as IBO’s (independent business owners) as they are unsalaried, work for their own commission, and are responsible for their own networks.
Which is the best network marketing?
Multiple level marketing (MLM), also known as multiple tier network marketing, is the most advanced type of network marketing. Here, each and every participant grows their own network and it is the most scalable kind of network marketing.
What are the basics of network marketing?
The network marketing model is based on personal selling and networking. All you need to do as a network marketer is to reach out to prospects and sell them, and recruit others to do the same for you.