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What is Network Marketing

Network Marketing

Concept of Network Marketing

Network marketing is a business model that relies on a network of distributors to grow a business. It involves selling one-to-one basis with home delivery. It is selling directly to friends, family members, and neighbors. It does not require any fixed retail outlet. It eliminates wholesalers and retailers. It provides rewards for results.

Network marketing is also as referral marketing or multilevel marketing. It is pyramid marketing. It is a method of marketing that utilizes independent representatives to reach potential customers. The representatives (salesperson) in the down-line build a team of people to make up a payment.

Network marketing is one of the methods to direct selling which is defined as “the sale of a consumer product or service in a face to face manner away from a fixed retail location.” It is the way or direct-selling technique that many companies used to reach final consumers.

Network Marketing

In network marketing, salesperson not only sells a product but also recruits other salespeople who become a leveraged sales force that gives the original salesperson a commission on sales. It can be used for high-sizzle, high margin, fast-growth opportunities in branded differentiated products. Some of the best-known company that uses network marketing worldwide includes Amway (household cleaning products, personal care products, appliances, etc.), Herbalife (Nutritional supplement and vitamins), etc.

Importance of Network marketing

Network marketing is very important to do the best business due to following reasons:

Network Marketing

  1. Increase in Social Relationship: Network marketing helps to promote good relations with both customers and down line members. The salespersons build their social network strong through network marketing. This helps to retain long term loyalty of customers. Relationship marketing is promoted in network marketing.

  2. High Income: Network marketing is a specific kind of business model rewarding compensations to individuals involved. It provides a high potential to make income and succeed. Earning is not limited by hours of work. The whole team generates income in terms of commission and bonus based on the volume of business. All the individuals in network marketing earn an income of self-efforts as well as they can earn income from the efforts of others down line members.

  3. Independence: The owners of network marketing enjoy independence and freedom. They can work from home. They can work full time or part-time. Owners have flexibility in their work. This marketing is suitable for people of all ages and all professions.

  4. Low Cost: Overhead expenses are low in network marketing because there are no costs for rent, staffing, inventory, decorations furnishings, and promotion. The wide distribution of products is possible through network marketing at low cost. Capital investment is low in network marketing. Hence, the price of products remains low in network marketing.

  5. Qualitative Products at Reasonable Price: The customers of the network can get highly qualitative products at a reasonable price. It eliminates wholesalers and retailers. Customers get a quality product at a low price directly from products.

  6. Time-Saving: Customers save their time in shopping through network marketing. They need to go to stores for shopping. Salespersons come to their home or offices. They receive service when and where they want it. In this way, network marketing saves customer time in shopping.

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What about Industrial Marketing

Simply, industrial marketing is the marketing of industrial products to industrial and business customers who purchase the goods for processing or as a part of processing. These include manufacturers, government, service organizations, institutions, industrial distributors and other middleman or resellers.

Industrial products, also known as business goods, are those products which are designed to be used by buyers (customers) as inputs in producing other products and for further commercial processing. These are goods that are produced for other business to use. They are bought to produce other products or for use in a firm’s operations. For example, machine, tools, minerals, trucks, etc. are the names of industrial products. Thus, industrial marketing is concerned with the marketing of industrial goods and services.

industrial marketing

Industrial marketing is an ongoing process of discovering and converting industrial customer’s wants, needs, expectations and requirements into products and services specifications and then, in turn, the process of convincing more and more of these customers to use and continue to use these goods and services.

So, industrial marketing is known as business to business marketing. It involves business transactions between businesses. It performs the functions of buying, selling, assembling, processing and physical distribution of industrial goods. Effective industrial marketing is the foundation of the development of the country.

Let’s have a look features of Industrial Marketing

  1. Derived Demand: The demand for industrial products is derived demand from the demand for consumer products. For instance, the demand for aluminum depends upon the demand for automobiles, home appliances, containers, etc. Thus, the change in demand for automobiles or home appliance for aluminum would lead to the change in demand.

  2. Few Buyers: Industrial customers are few in numbers. Consumer goods and services reach millions of individuals. In contrast, a specialized industrial product such as jet planes may have a potential market of only a few organizations.

  3. Rational Buying: Industrial buying is a rational process because the purchasing behaviors of institutional customers are guided by objective factors having to do with productions and distribution.

  4. Large Quantities: Industrial buying is done in large quantities. There are several reasons why an organization must buy the goods they need in bulk. In the first place, they use large quantities of each item and must maintain inventories at a level high enough that they will not run out of stock. Secondly, it is cheaper and more efficient to make a large-volume purchase.

  5. Advance Agreement: Industrial customers buy goods for commercial purpose. So, there must be regularity in the supply of goods. That is why they do advance agreement with supplies ensuring regular supply of goods that they need. They maintain extensive contact.

  6. Short Channel: Industrial goods are marketed through a short channel. Most industrial customers purchase goods directly from the manufacturer of industrial goods.

  7. Technical Knowledge: Industrial customers have technical knowledge. They know everything about the market. They have known about price, quality, substitute products, comparative advantages, and disadvantages. Before purchasing the goods, they assess and compare the relative merits and demerits of goods from different angles and finally purchase the goods.

  8. Company Image: The image of the supplying company is important in industrial marketing. The buyers trust the company for product quality, timely delivery, and terms & conditions.

  9. After Sales Service: After sales services are very important in industrial marketing. Industrial suppliers must have to provide many after sales services such as repair and maintenance, installation, delivery, financing, guarantees, warranty, staff training, etc. The suppliers can provide such services through its own service department or through authorized services centers.

Also Read: 

What Is Network Marketing
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