Is “network marketing” same as “sales promotion” or “marketing”.
Marketing is the act of conceptualization, planning, implementing, production and selling of products or services of value, to a target market for profit.
One of my best marketing authors, Philip Kotler, defined marketing as the science and art of exploring, creating and delivering value to satisfy the needs of a target market at a profit. It means, science is the method and the design for the search for the need gap and value delivery system, to the target market while art is the requisite skills-set to do marketing. Agreed?
How come ‘network marketing’ is not sending the right signal in some quarters, despite the fact that marketing by nature has networking as an essential component?
“Multilevel marketing” (also called network marketing), describes systems in which companies contract with individuals to sell a set of products, door to door or office to office.(According to Kotler by Paul Kotler)
Let’s look at the practice of “network marketing” as it is practice in Nigeria today. Though it is well known as “multilevel marketing”, in practice, I see sales promotion mostly than multilevel or network marketing. What I see in practice is that a member of a particular “network business” (as the promoters are often referred to) tries to “market” to a prospect, the compensation plan of his or her network business. In some cases, that network member invites some prospects to their weekly meeting where some senior members of the network do a customized presentation of the network business, mostly about their compensation plan and the sales strategy for converting prospects to join their network business. Those invitees are expected to register with the network business by paying for the “package” they are subscribing to. This “package” determines the earning bonuses and privileges of that individual on their software platform. New members who eventually pay and get registered, are placed under the name of the “networker” who invited them. The software platform pairs “networkers” in a binary system.
As soon as you are registered, you automatically become the CEO of your business. As a member of a network business, you are actually expected to carry on as business owner of some sort ie a “franchisee”, in my view. The network business (franchisor) owns the software platform (system) where the business is conducted, the product or service that is being promoted and supports you with branding materials which you buy for your promotional activities. Invariably, it is actually a full scale “franchise” business, however, the owners of the network businesses do not communicate this much. Little wonder then, why the people who become very successful in multilevel marketing businesses are mostly those who carry on the business as a franchise business, though with very low initial capital outlay and entry barrier. They take several steps further to put materials and resources around their promotional activities to convert more prospects to join their networking team. They mimic their principal network business by setting up their own seminar venues and replicate same presentations to their own captive audience and win new members into their team.
What you then discover in practice is that majority of the multilevel (network) marketer only understand the product selling aspect of the business but do practically nothing about the requisite marketing skills required to grow their own team. They become salesy in their approach and conduct, giving the entire business a salesy aura that puts most prospect off.
The compensation plan for some of them I have reviewed are quite simple and generous. Some have very few products while the others have several products. In some network businesses, the members compulsorily have to buy products up to certain amounts, monthly, before their earned bonuses are paid at the end of the month. Others pay on daily bases. It’s advisable to understand a network’s compensation plan and consider how it will fit with one’s financial needs and inflow before investing money and time in the business, just same way business plans are prepared and appraised before starting a business.
In my experience as a professional “networker”, I observed that certain factors are critical to be successful in network marketing profession. These are same skills that are required in sales and marketing profession generally, however, in network marketing, it is more emphasized and taken to a more interpersonal retail level. As a networker, you are your own CEO, marketing and sales manager, sales executive and marketing agency. It is a continuous personal improvement business so to be successful, you need to update your learning skills at an increasing rate, regularly.
There are some critical marketing skills that must be acquired or updated on a regular basis, to be successful in any network marketing business. I will discuss those skills in my next blog.