Legitimizing Network Marketing

Posted on 21. Feb, 2007 by Ty Tribble in Network Marketing - MLM

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The Street:

Direct sales or network marketing. This sales strategy was made famous by companies like Tupperware (TUP - Cramer's Take - Stockpickr - Rating) and Mary Kay. Since then, many other companies, such as The Pampered Chef, Creative Memories and Southern Living, have found great success with this model.

A direct sales approach involves employing a large-scale, commission-based sales force whose members are invested in the success of your company. Sales agents typically host home parties, during which they demonstrate products to the target market.

Then they start building a network of friends and acquaintances who host their own home parties -- with a new group of consumers -- in return for incentives or free product. These friends and acquaintances may become direct salespeople for the brand as well.

Companies that use this model value a personal approach, which promotes a stronger connection between the brand and the potential customer. It's like combining marketing and sales in one pitch -- when a friend vouches for a product and sings its praises, you're more likely to purchase it.

In addition, a company can build an army of salespeople who are passionate about its brand and who are interested in starting their own businesses and achieving financial independence.