What is Network Marketing, Home Based Business Opportunity

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Migdalia & Arsteo

What is Network Marketing, Home Based Business Opportunity?
Network marketing is a business model that is based on a company distributing products and services through a network of independent contractors. Network marketing is also popularly known as multi-level marketing (MLM), affiliate marketing, and tiered marketing.

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To understand how network marketing works, it may be helpful to think of a business model that most consumers are familiar with, franchising. In a franchise, an owner pays a company for the right to do business using that company's products, services, and name. The parent company agrees to provide the owner with training, development, advertising and marketing support. While the name on the outside of the building is that of the parent company, the actual location is privately owned by an independent business owner.

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While networking marketing is not actually a franchising model of business, it does work in a similar fashion. In fact some large MLM companies refer to its business plan informally as "private franchising". In network marketing, a company distributes its products and services through independent business owners (IBO) who in turn market these products and services to customers of their own.

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The key factor that has made network marketing so attractive is that independent business owners not only have the ability to sell products and services to retail customers they are also able to expand their business by setting up others in their own businesses as well. This is commonly known as "sponsoring" in the MLM industry. Sponsoring others allow a business owner to not only profit from what he directly sells, but also allows him to profit from the sales production of those he has sponsored.

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Because of the structure of a network marketing business, many people mistakenly believe that all MLM companies are illegal pyramid schemes. In actuality legitimate network marketing companies are not pyramids. The belief that MLM companies are illegal pyramid schemes may have popularly taken root in 1975, when the United States Federal Trade Commission (FTC) accused Amway Corporation of being an illegal pyramid. However in 1979 a US Federal Judge determined that the networking marketing plan used by Amway was indeed a legitimate business model. This decision in turn helped to legitimize other MLM companies.

This does not mean however that all companies who purport to be legitimate businesses, are. The entrepreneur who is considering network marketing should consider these factors: * The length of time the company has been in business. * The up-front investment to start the business. Many reputable companies do not require a large start-up fee. * The product return policy of the company. Legitimate companies generally allow for the return of products. * The amount of training and development available to IBOs.

Migdalia & Aristeo
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[lacromar]

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