Multi-level marketing or network marketing are terms which refer to product marketing method.
It is engaged in the business activity of selling directly to consumers. Consumers can directly purchase at the company without going through the dealer or retailer. Thus, this method also saves a lot of cost from advertising cost, promotion, warehouses, or cargo freight. Instead, this amount of money was used to pay bonus for distributors and upgrading product as well as improving product quality to serve consumers. In Vietnam, there are some multi-level business networks such as Arm way.
This is the business method which takes advantage of the consumer habits: when using good products, or service they often share with relatives, friends and neighbors. Multi-level marketing cause much argument in society.
The distributor play a role like agents. They use their results and acquaintances’ result from using goods in order to attract customers. By doing that they bring customers to the company and themselves.
Also, they may seek other partners in order to become a distributor to work together. And this is managed by the code. Meanwhile, a number of new distributors are connected to the code number of his sponsor.
The government defined Multi-level marketing is one of the forms of business organizing through many different levels in which participants will be receive commission, bonus or economic benefits from their result and other people’s result in the network of selling goods.
Now we will study more about distributor, sponsor and product in multi-level business network
Distributor are people who involved in multi-level business network. They directly use goods, share information about the product and recommend to others to take part in this work. In true network marketing, the distributor is paid a commission from selling their products or in the entire system.
Sponsor is a person who directly support for a consumer then the consumer becomes a member of the multi-level business network.
Products evaluated the long-term survival of a network marketing company, therefore products in network marketing must be high-quality (as it was spread from one person to another, so if the quality is not well there will not be contagious). The products meet the needs of most consumers. In addition, the product must ensure exclusivity. It means that only selling goods through the distributors of the company, not be widely available in the market. In the market there is no similar products.