Distribution is simply a method of moving products from the
manufacturer to the consumers. In a traditional
distribution system, a
manufacturer can spend tons of money on all sorts of professional
agencies and marketing channels to promote and move there
products. These products can go
through a number of hands before they reach the store where the retail
sales of the good are usually made.
manufacturer of the product usually receives around 20% of the retail
price with the remaining 80% being shared by the
middle man and the retailers involved in the distribution process.
Many retailers place a 400% mark up on products.
Network Marketing companies are able to tap into this 80% (that would normally be lost to the middleman in a conventional retail business) by allowing there members to buy directly from the factory at a wholesale price and in return the members get paid the profits that would traditionally have gone to the middleman.As every marketing professional, Hollywood producer, and corporate giant knows, the single most powerful form of promotion in the world is word of mouth. That's why television commercials spend millions to hire actors to talk just like your mum, your spouse, your best friend, and your kids: They are imitating personal word of mouth.
Marketing companies use word of mouth because they also know that it is
the most effective
form of advertising at the lowest possible cost! Instead of
spending millions of dollars on advertising, products are distributed
through relationships where there is
trust, integrity, and credibility.
You are able to introduce
something that you are passionate about into the market and distribute
through that fashion. Once again , a large percentage of the
money that is saved by not
following the traditional marketing and distribution models is now
passed back to the members.
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