Why do companies select Direct Sales and Multilevel Marketing?
Direct Selling and Network Marketing are getting to be huge trends in Industry, as we move away from the Business Age into an Information Age. In the Information Age, success is generally achieved by effectively communicating information about products and services with a target audience.
Markets like the health and wellness industry offer a number of products and services, so it's crucial to help potential customers to know what differentiates one product or brand from another.
Direct Sales has become more prevalent because of advancements in technology, particularly with the Net. Not only is this easier for consumers, but also products are often available at an even more affordable price on the web. This is because of the nature of the distribution model, as consumers purchase directly from the producer instead of from wholesalers, or retailers, who are often responsible for significant mark-ups on the price of items. But, this is understandable when you consider the running costs that a retail outlet must cover.
By ordering straight from a producer, buyers will have a better relationship with the manufacturer of their products, instead of the retailer. This often leads to excellent customer support and the consumer will have simpler access to comprehensive product information. The consumer is thus able to obtain better insight into the benefits of the products that they buy.
Multilevel Marketing is a system used by Direct Sales organizations to market their products or services. In MLM, Independent Associates (reps) promote the company's products on their behalf, via word-of-mouth marketing and are compensated for doing so. The primary advantage of promoting products in this way is that potential prospects may learn about the products from a reliable source (generally a friend, family member, work colleague, etc.) and they may learn how the products differ from the competition. In a market like the health and wellness sector, new products might be lost on the shelf of a retail store, amongst other similar products! If the product is unique then the customer will have no way of learning how the product is special, unless they're prepared to do their own research.
Another reason why Network Marketing could be preferred marketing technique is when the story behind the products is important. It may be difficult to share the story in a short television advert and if the products are superior then the story behind them may be important.
In conclusion, it's vital to find out what came first for any Multi-level Marketing organization: the product or the business design? The business model can be quite lucrative for both the company and the Independent Associates, therefore some companies may create products just to fit into the business model. This is completely different from a company who has an exceptional product and desires to adopt the best method for sharing information about their product. Try to differentiate what came first for any company who uses the business model.
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