Archives for March 2010

What is Network Marketing vs. Traditional Marketing

Network Marketing, also known as Multi-Level Marketing (MLM) is a relatively new therefore most misunderstood method of moving products or services from the manufacturer to the consumer.

Accordingly it allows independent distributors not only sell the product/service, but also recruit other independent distributors and draw a commission from the sells of those recruiters.

The other business methods of moving a product are:

Retailing or Traditional Marketing where the consumer is purchasing from the retail stores: department stores, drug stores etc. Retail marketing is using traditional channel of paid advertising such as TV, newspapers, and radio.

Direct Marketing is a sales method by which advertisers approach consumer direct with the product or services.  Direct marketing is use by smaller companies with yet unrecognized brand names and limited budget.

Direct Marketing  Advertising reaches the potential customers using the simple advertising techniques such as fliers, catalogs, and letters.

Most common forms of Direct Marketing are: Direct Selling, Direct Mailing, Telemarketing, Email Marketing, Broadcast Faxing, Couponing, and Direct Response Television Marketing (DRTV).

Elements of Direct Marketing are also found in a Network Marketing.

The only difference is that Network marketing is a Direct Selling with multi-level structure.

Product distribution ways: Traditional Marketing vs. Network Marketing and Direct Selling

 

In Traditional marketing, when a consumer buys a product or service from a retailer the money are divided among 4 sectors of the supply chain:

Manufacturer ->Distributor ->Wholesaler ->Retailer ->Consumer

In Network Marketing and Direct Selling Independent Distributors market the product directly to the consumer and earn the profit that used to go to the middlemen.

Consequentially the profit chain is shorter:
manufacturer -> distributor -> consumer

Advertising in Network Marketing vs. Traditional Marketing

Today’s consumers are very skeptical and experience an information overload.

The result: they ignore the expensive television advertising and print ads that marketing team creates.

Instead, they ask for recommendation from people around: family, friends, relatives, co-workers, neighbors or others who had any experience with the product they need.

It creates “invisible marketing”.

Companies have always recognized the power of the word-of-mouth recommendation that in fact more effective than an advertisement created by the product’s seller.

This type of recommendation is also called word-of-mouth advertising or viral marketing and recently is gets a new more indicative term – BUZZ.

Where exactly the BUZZ starts and what it does?

When you need to buy a product or service you ether perform independent research on the product or just ask for the recommendations.

It’s very easy to acquire the information because people like to talk about themselves and their experiences in life. They like to share and recommend.

People recommend everything – product and services they use and satisfy with. It can be car they drive, car services they use, phone and phone services.

They recommend which movie to see and where to take vacation. This list can go on and on. And it is actually the most powerful marketing strategy.

Although it is broadly used in Traditional marketing in Network Marketing companies the product moved by only word-of-mouth marketing.

Attraction Marketing System