Dr. Andrwe Smith

Why do companies choose Direct Sales and Network Marketing?

Direct Sales and Network Marketing are becoming massive trends in Industry, as we move away from the Industrial Age into an Information Age.  In the Information Age, success is usually achieved by effectively communicating information about products and services with a target market. 

Markets such as the health and wellness industry offer many different products and services, so it is important to help potential customers to understand what differentiates one product or brand from another.

Direct Sales has become more common due to advancements in technology, particularly with the Internet.  Not only is this more convenient for customers, but also goods are often available at a more reasonable price online.  This is due to the nature of the distribution model, as consumers purchase directly from the manufacturer rather than from wholesalers, or retailers, who are often responsible for significant mark-ups on the price of products.  However, this is understandable when you consider the running costs that a retail outlet must cover.

By ordering direct from a manufacturer, consumers will have a closer relationship with the producer of their goods, rather than the retailer.  This often leads to exceptional customer service and the consumer will have easier access to detailed product information.  The consumer is therefore able to gain better insight into the benefits of the products that they purchase.

Network Marketing is a system used by Direct Sales companies to promote their goods and services.  In Network Marketing, Independent Associates (representatives) promote the company’s products on their behalf, via word-of-mouth marketing and are compensated for doing so.  The main advantage of promoting products in this way is that potential customers can learn about the products from a trusted source (usually a friend, family member, work colleague, etc.) and they can learn how the products differ from the competition.  In a market such as the health and wellness sector, new products could be lost on the shelf of a retail outlet, amongst other similar products!  If the product is unique then the customer will have no way of finding out how the product is unique, unless they are prepared to do their own research.

Another reason why Network Marketing might be the preferred marketing strategy 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 summary, it is important to determine what came first for any Network Marketing company: the product or the business model?  The business model can be very lucrative for both the company and the Independent Associates, so some companies may create products just to fit into the business model.  This is entirely different from a company who has an exceptional product and wants to adopt the best method for sharing information about their product.  Try to distinguish what came first for any company who uses the business model.

Article Tags: Direct Sales

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