What is network marketing in Russia?

What is network marketing and is it worth it to deal with? These issues are worried by many people who are looking for an additional source of income, or those who are urgently faced with the issue of employment.

The concept

Network marketing is considered the most promising business of our time. Although many still associate it with the financial pyramid. Its main advantage for distributors is the lack of special knowledge and experience. That is, you can do it at any age. There is no need to go through countless interviews, hoping to be better than other candidates.

The principle of this business model is to simplify communication between producer and consumer. Classical product promotion involves high costs associated with advertising and complex logistics, which involves many intermediaries. In addition, without good advertising support, you cannot expect from the buyer that he will buy this particular product, and not competitors.

The essence of network marketing is that the principle of word of mouth is used, that is, distributors of manufacturer’s products work with customers. They are able to talk about all the products, recommend what is best to choose based on human needs.

For the distributor, the benefit is that he receives a percentage of the sale. But earnings are quite small. In addition, one consultant cannot reach a large number of potential consumers. Therefore, he needs to create his own structure, attracting other distributors. Moreover, he has the opportunity to receive additional income already from the fact that the consultants working under his leadership will sell.

Classification

What is network marketing? It is a direct selling system. But depending on the functional responsibilities of the participants and the possibilities of earning, there are several types of this business, the main ones are:

• Single level. Earnings agent is only a percentage of sales. Since most products are distributed through catalogs with a declared single price, the agent has a discount on the purchase of goods. It is this difference that is his earnings.
• Stepped. The distributor receives a reward for his direct sales. In addition, he connects other distributors, receiving a percentage of their sales. This structure of network marketing is considered the most understandable, so it is chosen by large companies.

And also more complex schemes of building business structures are possible: binary, matrix, puff.

The difference between network marketing and the pyramid

What is network marketing - a pyramid or not? The pyramid is to receive a bonus by attracting other people who simply invest their money. In return, they may receive some shares that do not have any security. In network marketing, it doesn't really matter how many people get involved. It can be 10 and 1 thousand people, if their sales are zero, then the distributor who organized the network will not receive anything. In addition, there is no entry fee for new agents.

At the same time, unfortunately, you can become a member of a fraud company, because due to the popularity of this type of business, companies appear that want to get quick money without investments. There are certain signs that can tell a person that a company should not be dealt with.

1. You need to pay for entry. Usually companies do not require a fee from people who want to become distributors or it can be completely symbolic.If the contribution is calculated in the thousands or tens of thousands of rubles, then this is a sign that this is a financial pyramid.
2. What is network marketing? This is a business built on a percentage of sales. If the company promises payments simply for attracting people, it is better to bypass it.
3. The product is ephemeral - it is never in stock.
4. Network marketing does not promise instant high earnings. The work of one-day companies is based on obtaining the maximum income “today”.
5. The absence of any documents: contracts, invoices, documentary evidence of receipt of funds.

Benefits

You can organize your business at any time and the presence of start-up capital does not matter. And also the advantage of network marketing is the product itself. It is of good quality and it is possible for distributors to purchase it at competitive prices. Therefore, they often shop for themselves. In addition, companies often offer exclusive products that are not available anywhere else. Since sales volumes directly depend on the abilities and knowledge of the agent, manufacturers prefer to invest in their training. There is no need for a potential distributor to make classic beginner mistakes in order to gain experience. Some of the problems can be avoided through mentoring. Another advantage of agents is the ability to develop important qualities such as communication, the ability to manage and plan. That is, to acquire irreplaceable experience and develop yourself as a person. In addition, you can meet a large number of people that will come in handy in the future.

disadvantages

Network Marketing (MLM) has its drawbacks. The main is a difficult start. Becoming an agent, many rely on quick success and instant earnings. But in practice, this is not always the case. Sales growth may be quite slow, and the difficulty in finding buyers causes a strong desire to quit this business. Another difficulty is not the best reputation of such a business structure. Therefore, it can be difficult to find not only buyers, but also distributors, which seriously complicates the process of building your own distribution network.

Of course, network marketing is not suitable for everyone. An irregular working day, the need to constantly work with people and often leave the zone of personal comfort frighten away those who are more comfortable working in an office with a certain schedule and salary.

Appearance story

Despite the fact that the popularity of direct sales is considered a growing business with good prospects, they came up with it not yesterday. The pioneer was the American Carl Renborg, who in 1939 began to offer his friends to try vitamins and health products invented by him. The goods did not appeal to friends too much, and he offered them a percentage of sales if they would promote his products by offering his acquaintances. Since many wanted to earn money, the idea quickly went to the people.

In the following years, more and more companies appeared that sold their products through “recommendation” marketing. The industry began to develop especially actively in the 80-90s of the last century. Manufacturers offered consumers almost the entire range of goods.

Current market situation

Today, network marketing has received a second life thanks to the development of Internet technologies. This allows not only to cover more people in less time, but also to save on the manufacture of printed products. Distributors can not waste time personally attending trainings and seminars, all this can be done online without leaving home.

In Russia, this type of business received official recognition in 1996, when the Direct Selling Association appeared. Its goal is to develop the industry and work to create a positive image of this business model.The figures owned by the associations say that about 6% of Russia's population are agents of companies promoting their products through direct sales. Moreover, the number of end consumers is almost impossible to calculate.

Attract people

Building a successful business consists in expanding the sales network and finding end customers. How to attract people? Network marketing can be developed over the Internet. There are many ways to do this.

• Using social networks. Most people are users of an online community. That is why the use of this communication channel is one of the most used. Where to begin? You can create a group that will be directly or indirectly associated with the distribution of products. It is necessary that more people join the group who will also invite people from their circle of friends to join the group. Participants are potential buyers.
• Creating your own website and setting up contextual advertising. You can promote your site so that customers can find it when searching for any information on the Internet. But such methods will require financial investments, sometimes considerable. Its website enables customers to subscribe to receive newsletters about new products and current promotions. What will allow to transfer them from single customers to the category of regular customers.
• Specialized forums. There you can exchange experiences, learn from more successful colleagues, and also find those who are ready to become a member of the distribution network. Or become a distributor yourself by joining an existing group. After gaining basic experience, you can proceed to create your own network.

Simple marketing of products (single-level marketing) is not very interesting. You need to know how to attract people to network marketing in order to receive income from the established structure of distributors. The main tool is persuasion. To prove to a person the expediency of work, it is necessary to motivate him by telling him about the advantages of this type of earnings. But if a person himself does not fully understand why he needs it and what benefits he can get, convincing others will be quite difficult.

Most popular network companies

To start your own business you need to choose the right company. To do this, there is a rating of network marketing companies in Russia. According to 2016, the leaders are:

• Avon is a mid-range cosmetics manufacturer. Its share in the Russian market is estimated at about 30%.
• Oriflame is a Swedish company manufacturing cosmetics, accessories and diet food. By popularity, the company is comparable to Avon.
• Amway is an American company that has been around for decades. The range of products is quite wide. But among Russians it is primarily famous for its cleaning and detergents.
• Mary Kay is another cosmetics company. Its specificity is that they work exclusively with female agents.
• Faberlik is a Russian company that promotes oxygen cosmetics made from natural ingredients. When the brand first appeared, traditional promotion methods were chosen - advertising with mass coverage, including on television. What allowed to quickly make the brand recognizable.

Thus, the most popular products of Russian network marketing are cosmetics.

Recently it has become fashionable to lead a healthy lifestyle, take care of your diet and regular physical activity. In order to get in shape, to reduce the feeling of hunger, to provide the body with the necessary vitamins and minerals, a whole direction has appeared - sports nutrition. Network marketing in this area is only developing in Russia. The existing segment of consumers of such products cannot be called very wide.Among the most famous companies include NL International, Energy Diet HD.

How to choose a company

Before proceeding with the search for customers, building your own distribution network, you must choose a company whose products will need to be distributed.

For the right choice, some criteria are important:

1. How many years the company exists in the market. The longer her story and her fame, the better. Less effort will be required to promote a particular brand, the minimum risk of financial loss. But there is another side: a new company with not very widespread products makes it possible to work with a larger audience. You can study the full list of network marketing in Russia and choose the one that does not have a large market share.
2. Training. Constant trainings and seminars are important for the manufacturer, since the profits of the organization depend on the skills and knowledge of the distributors.
3. Demand for products. You can sell the vacuum cleaner once to one buyer, or he can constantly sell cosmetics that are quickly consumed. In addition, affordable products are purchased with greater desire than expensive.
4. Company website and opinions on the Internet. A good manufacturer has a quality website with easy navigation. How comfortable working with her can be learned from others. Better network marketing attracts more people.

Creating your own business always has a sufficient number of pros and cons. Direct sales require certain qualities of a person, for example, to calmly accept rejection, communication skills, a desire to learn and develop. If you want to test yourself and gain a certain experience or build your own business, then you can try yourself in network marketing. Sports nutrition, cosmetics, appliances, household goods - you can choose absolutely any field.