There’s a point of confusion that arises among home-business
entrepreneurs when it comes to using common terms like ”network marketing.”
Sometimes new terms are coined because the old ones are tarnished in some way
or because an organization simply wants to appear different. Most of the time,
however, these terms are simply misused and misunderstood.
The dangerous side effect of not understanding these terms
is often manifested in that marketers apply the wrong strategy for their
objectives or end up trying to build on weaknesses rather than the
strengths of these various marketing methods.
Starting a successful business begins with a clear
understanding of what you are getting involved with. Because we could not find
ANYONE involved in network marketing to clearly define the difference between
Network Marketing, Direct Marketing, Multilevel Marketing and Affiliate
Marketing we decided to do it ourselves.
So let’s define these terms for the sake of the
home-business entrepreneur.
The Role of Marketing
Before we subdivide this subject, it’s important to
understand the core nature of all marketing. Marketing at its most basic
level is about being able to match a company’s product or service with the
needs and wants of a target audience and do so in a way that ensures
profitability.
Marketing involves all the commercial functions that are
required to transfer a product or service from the producer to the consumer.
This includes advertising, packaging, public relations, and even the human
element of customer interaction. Marketing is everything a company does to
acquire customers and maintain a relationship with them.
No matter what we call it, we can never forget that
our job as a marketer is to get the attention of a target market so
that we can sell something to that target audience that they want and need in a
way that allows us to earn a profit on our efforts.
Network Marketing
As the term suggests, network marketing is simply marketing
through a network of personal connections or relationships.
The term Network Marketing was first made popular through
the 1982 book Megatrends by John Nesbit. In it the author predicts that
as our world becomes more high-tech, more consumers will rely on personal
connections to make decisions. Essentially, the overload of marketing
information requires each individual to filter more information from the world
around them. This increases the importance of high -touch skills such as
communication, listening, problem solving and public speaking.
Mr. Nesbit predicted that businesses would increasingly rely
on passing their marketing messages through their networks of personal
connections and thus the term was born. It was quickly picked up by a number of
key Amway distributors and spread like a wildfire among distributors for
multilevel marketing companies.
It’s important to point out that network marketing is
employed by many different types of businesses - not just multilevel marketing.
From Real Estate and Insurance agents to Health Clubs, many businesses use
Network Marketing to gain new customers and clients. While it most often
involves word of mouth, it’s different from pure word of mouth in that network
marketing involves some form of recognition or incentive for the word of mouth
promotion.
Direct Marketing
Direct Marketing is a method of selling a product or service
directly to the end consumer usually by the producer or a marketing agent. The
key difference between Direct Marketing and other marketing methods is that the
direct marketer selects the individuals who will receive the promotion and is
the direct recipient of the response. This response may be a purchase, and
inquiry or a referral that can be traced back to the original marketing effort.
Direct Marketing relies heavily on measurable and trackable
methods of response frequently associated with mail order, but can include any
direct sales method including door to door, telemarketing, newspaper inserts,
and Internet advertising. Direct Marketing relies heavily on the use of lists
and customer databases.
Multilevel Marketing
Multilevel Marketing is a term that describes a structure
of marketing and compensation that’s designed to create a sales force by
compensating promoters not only their personal sales, but also on the sales of
other promoters they introduced to the company.
The foundational principle for Multilevel Marketing is the
belief that a multilevel compensation structure is more efficient and effective
than traditional sales structures. The basic premise is that a successful sales
person is more apt to recruit and train other successful sales persons when
they have a direct stake in that person’s success. In this way a multilevel
structure provides a framework for top producers to create large sales
organizations by replicating their activities through a network of promoters.
A key component in the success of Multilevel organizations
is in the creation of marketing tactics that are mass duplicatable. This
requires that the marketing methods employed are simple to learn and personal
in nature to minimize competition in high-visibility channels often employed by
Direct Marketers. For this reason most Multilevel Marketing companies employ
some level of Network Marketing to market their product and services.
Affiliate Marketing
Affiliate Marketing is primarily an Internet based marketing
practice in which a business rewards a marketer for sales (or other
actions such as clicks, visitors, etc.) made through their marketing efforts.
The affiliate is usually free to market a product or service any way they wish
- within the confines of the terms of their agreement with their affiliate
network or company - which often includes restrictions on the use of trademarks
and competitive advertising.
The main reason companies look for affiliates is to connect
with a source of traffic within their target market that they would not
otherwise have access to. An ideal affiliate already has an audience or a
unique ability to reach a certain audience. They are seeking to monetize that
audience by offering relevant products and services to them. This can make for
an ideal business relationship.
The Line of Demarcation
Most marketers employ multiple strategies to reach their overall marketing goals. It’s important,
however, to understand the overall role of marketing and how each of of these
subcategories fit in.
For example, creating a landing page and a PPC ad campaign
would be considered Direct Marketing while calling a prospect on the phone and
building a personal relationship would fall under Network Marketing.
This is important to realize because there are many
so-called experts that confuse the two and cause a lot of people to apply the
right effort in the wrong place or vice versa. In some cases entire programs
are even deliberately mislabeled. The reality is that some good strategies when
applied to the wrong business model become ticking bombs ready to destroy the
very business they build. Here’s prime example...
Multilevel Marketing companies tend to employ Network
Marketing strategies to create sales organizations and move their products and
services to consumers. Marketing through these personal connections is very
duplicatable once an effective way of connecting with the target audience has
been discovered. Many times as businesses grow marketers will venture outside
of their warm market and start to advertise. There’s nothing wrong with this
Direct Marketing strategy. However, it can quickly get out of hand when the
same or very similar offers are advertised in the same places. It doesn’t take
long to this system to collapse - because Direct Marketing strategies are less delectable
than Network Marketing strategies.
There are literally millions of Network Marketers that are wondering why they are not getting responses to
their ads, social media efforts or other promotion. 9 times out of 10 it boils
down to competition. In the face of competition the Direct Marketer must
continually differentiate themselves from everyone else. In a Multilevel
Marketing company, this is easier said than done, since everyone in that same
company is marketing the same product or services.
The solution is to know when Direct Marketing makes sense
and when Network Marketing strategies are more productive. Network Marketing by
its very nature bypasses much of the competition because it focuses on personal
connection rather than getting the attention of the prospect against a backdrop
of advertising noise.
For original post source see : http://leadersclub.com/html/defining_network_marketing.asp
Thanks Tomspry, I really appreciate you.....
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