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Marketing Definitions: What is Network Marketing?

3 Different Types of Network Marketing Programs

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Network Marketing
Definition: Network marketing is a business model that relies on a network of distributors to grow a business. Network marketing typically involves using three basic types of systematic strategies to make money:
  • Lead Generation: To locate new prospects;
  • Recruiting: Adding customers and/or business partners to your network; and
  • Building and Management: Methods you use to train, motivate, and manage your recruits.

There are many types of network marketing including two-tier programs and multi-level marketing, but many of the more solid marketing companies, like Avon, are single-tier.

  • Single-Tier Network Marketing: You sign up with an affiliate program to sell their product or service. You do not need to recruit other distributors and are only paid if you make a direct sale. Avon, is a company that uses single-tier networking marketing.

    In some online affiliate programs you are only paid for traffic you have referred to the affiliate's website. Pay-per-click (PPC) and pay-per-lead (PPL) affiliate programs are other examples of single-tier networking.

  • Two-Tier Network Marketing: This terms applies to network marketing that pays you for direct sales (or traffic you refer to a website) and for direct sales or referred traffic made by affiliates or distributors you recruit to work under you. An example of a two-tier program is Ken Envoy's Site Sell.

  • Multi-Level Marketing (MLM): Is a distribution-based marketing network that is two or more tiers "deep." Some MLM programs allow you to make money five or more tiers deep. Examples of MLM businesses include The Trump Network, Magnetic Sponsoring, and Amway.

Two other types of network marketing strategies are marketing-driven networks and name-driven network marketing.

Also Known As: Often incorrectly referred to as multi-level marketing which is only one form of networking marketing.

Alternate Spellings: None.

Example: Martha made $200 in sales commissions at her first Pampered Chef party. She joined the single-tier marketing program to make commissions on her own sales and bonuses from recruiting other networkers.

Related Terms:

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