Wednesday, November 13, 2013

Retail vs. Direct Sales

In yesterday's blog, I reviewed the book "How to Become Filthy, Stinking Rich in Network Marketing," and promised to address the reasons why the authors believe network marketing to be a better distribution channel than retail marketing. The question is, how can network marketing deliver superior products at less cost to the consumer? and still pay out attractive commissions to its marketers?

According to the authors Yarnell, Bates and Hall, it is estimated that upwards of 50 cents of every retail dollar is spent on developing beautiful and effective package and product labels, creating an accompanying and now-requisite advertising campaign, purchasing airtime or print space, and finally paying for shelf space in the store.

Face-to-face selling has dramatically lower costs, which allows for a lower product price to the consumer. Most modern network marketing compensation plans offer their distributors a commission equal to or greater than the amount spent on bringing a retail product to market.

Use of the internet has also dramatically shifted consumers buying patterns, with more use of online shopping services and less of the traditional retail distribution. Retailers are beginning to recognize the competitive edge they can mobilize with an entire volunteer army of distributors to sell what they offer - if their compensation package is lucrative enough, and if the product fills a need.

Network marketing companies use the power of human interaction and personal touch to communicate their product message; they invest in the development of a simple selling strategy, one that their independent business owners can understand and duplicate over and over again.

Recognized investors like Warren Buffett, Donald Trump and Robert Kiyosaki tout and own network marketing businesses to diversity their income streams. Companies like Facebook and Costco rely heavily on word of mouth for advertising their products. Network marketing may just be the wave of retail for the future.

In the next blog, I will share these authors "Belief Assessment" that allows entrepreneurs to create a leap of success in network marketing with the right tools and mindset.

Happy investing!

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