Network Marketing – Everything About Network Marketing 2024

What is network marketing?

Network marketing is a type of marketing that relies on building a network of distributors or customers who market products or services directly. The basic idea in network marketing is that you start as a distributor or customer, and invite other people to join the network, and the bigger the network, the more chances you have to make more profits through the commissions you get from your sales and the sales of the people you bring to the network. Network marketing provides an excellent opportunity for people looking for additional income or even full-time work without the need for a large capital.

It also helps in developing marketing, communication and relationship building skills, which is very useful in professional and personal life. But like any other type of business, network marketing has its advantages and disadvantages. One of its most important advantages is that it provides freedom and flexibility in work, and reduces financial risks. One of its disadvantages is that it requires a lot of effort in building the network, and you may face some challenges in convincing people to join the network or buy products. In the end, network marketing is an effective marketing strategy if used correctly, and provides great opportunities for success and profit.

History of network marketing:

In 1959, two independent marketers from California Vitamins founded a new company called Amway https://www.amway.com that relied entirely on network marketing. This company was one of the first to use this model successfully, and this helped spread and develop the idea. In the 1970s, laws began to appear to regulate network marketing and prevent pyramid companies that exploited people. Amway spent four years in court to defend its legality, and in 1979, it obtained a ruling from the Federal Trade Commission that its business model was legal. Since then, network marketing has continued to evolve and spread, and has become an effective way for companies to market their products and services through a network of independent marketers.

How does network marketing work?

Network marketing works in a simple but effective way. Let me explain the basic steps:

• Product or service: This product can be anything from cosmetics to health and fitness products.
• Independent Representatives: The company hires independent representatives (or distributors) to sell the product. These representatives buy the product from the company at a discounted price, and then sell it at a higher price to make a profit.
• Expanding the network: Independent representatives not only sell the product, but also recruit other people to join the network. Each new person who joins the network buys the product and starts selling it, and also recruits other people.
• Commissions: Each independent representative gets a commission from his own sales, as well as from the sales of people he recruits. This means that the bigger the network, the more commissions you get.
• Training and Support: Companies provide training and support to independent representatives to help them succeed in selling the product and expanding the network.

The basic idea is that you build a network of distributors who sell the product and recruit new distributors, and the bigger the network, the more chances you have to make more profits.

Types of network marketing:

Network marketing has different types, and each type has its way of working and advantages. Let me explain the basic types to you, my dear:

• Single-Level Marketing: In this type, distributors earn commissions from their personal sales. This means there is no recruiting and no commissions from their sales. This is suitable for people who want to focus on direct selling without building a large network.
• Multi-Level Marketing (MLM): This type is the most common, and in it distributors earn commissions from their personal sales and also from the sales of people they recruit to the network. The larger the network, the higher the commissions. It is the type that depends on building a large network of distributors.
• Pyramid Marketing: This type is similar to multi-level marketing, but there is a greater focus on recruiting new people rather than selling products. This type is illegal in many countries because it is considered a type of fraud.
• Referral Marketing: In this type, distributors earn commissions when they refer new customers to the company. This means that they do not have to sell the product themselves, but they earn a commission when the customer they referred buys the product.

Each type has its advantages and disadvantages and is suitable for certain people and goals. The important thing is that you choose the type that suits you and your goals in network marketing.

Network marketing companies:

Many network marketing companies have achieved great success worldwide. Let me mention some of the most famous companies:

• Amway: One of the oldest and largest network marketing companies in the world. Founded in 1959 in America, it offers a wide range of products such as nutritional supplements, skin care products, and household items.
• Avon: An American company famous for its cosmetics and skin care products. It was founded in 1886 and relies on network marketing to sell its products in more than 100 countries.
• Herbalife: An American company specializing in health and nutrition products. Founded in 1980, it relies on a large network of independent distributors to sell its products all over the world.
• Vorwerk: A German company that offers a variety of products such as home appliances and skin care products. Founded in 1883, it relies on network marketing to distribute its products.
• Mary Kay: An American company is famous for its cosmetics and skin care products. Founded in 1963, it relies on a large network of independent distributors to sell its products in more than 40 countries.
• Forever Living: An American company specializing in aloe vera products and nutritional supplements. Founded in 1978, it relies on network marketing to distribute its products in more than 160 countries.

In Egypt, there are also companies that work in the field of network marketing and achieve great success, such as:

• Waves of Egypt: An Egyptian company that offers various products and relies on network marketing to distribute them.
• Herbalife Egypt: A branch of the international Herbalife company, providing health and nutrition products in the Egyptian market.

Network Marketing Success Story

Let me tell you about the success story of DXN in the field of network marketing. This company started in Malaysia in 1993 and specializes in health and nutrition products, especially products containing Ganoderma mushrooms. DXN has built a global network of independent distributors who market its products in more than 180 countries. The secret to their success is the quality of the products they offer, which are natural and healthy, making them in demand in the market.

The company relied on the strategy of multi-level marketing (MLM), which helped it create a large network of distributors who earn commissions from their personal sales and also from the sales of people they recruit to the network. Over the years, DXN has been able to achieve tremendous growth and global expansion, which has made it one of the leading companies in the network marketing industry. The DXN success story shows how focusing on product quality and building a strong network of distributors can achieve great success in the field of network marketing.

How do I start in network marketing?

Starting out in network marketing can be a big step, but with good planning and the right guidance, you can achieve great success. Let me explain the basic steps:

• Choosing the right company: Look for a reliable and reputable network marketing company. Make sure the quality of the products or services the company offers, and check the reputation of the executives.
• Product recognition: Before you start marketing, you must be fully aware of the products or services you will be marketing. Try the products yourself so that you can talk about them confidently and recommend them to others.
• Training and Learning: Many network marketing companies offer training programs for new distributors. Take advantage of the training to develop your marketing, communication and relationship building skills.
• Building a strong network: Start inviting your friends and relatives to join your network. The bigger your network, the more chances you have to make more profits. Use social media and online marketing to expand your network.
• Goal setting and planning: Set clear goals for yourself and plan to achieve them. Whether your goals are financial or skill development, having a clear plan will help you focus and achieve success.
• Continuity and endurance: Success in network marketing will not come overnight. You must be persistent, patient, and endure the challenges that you may face in the beginning.

Advantages and disadvantages of network marketing

Advantages of network marketing:

• Low risk: Network marketing is considered low risk compared to other types of businesses, because you can start with a very small capital.
• High income: There is an opportunity to make a huge income based on performance and experience in the field. The better you are at marketing and networking, the more your income will increase.
• Lower costs: Most of the work is done from home, which eliminates additional costs such as travel and offices.
• Freedom and flexibility at work: You can work from anywhere and at any time as long as you have an internet connection. This gives you a lot of freedom in setting your work hours.
• Personal skills development: Network marketing helps develop skills such as leadership, marketing, communication, and relationship building.
• No educational requirements: You can start network marketing regardless of your educational background. The important thing is that you have marketing and communication skills.

Disadvantages of network marketing:

• High cost of entry: Some companies require a large financial investment at the beginning, and this can be a deterrent for some people.
• Social pressure: You may face pressure from friends and family to join the network or buy products, and this can cause tension in personal relationships.
• Financial instability: Income in network marketing is not fixed and depends on personal performance and the network, and this may be difficult for some people who are looking for a fixed income.
• Bad reputation: Some people have a negative view of network marketing because of the pyramid companies that exploit people, and this can affect your ability to recruit new people.
• Legal challenges: You should be careful and choose a reliable company to avoid getting into legal trouble with illegal pyramid schemes.

Is network marketing haram?

There is a difference of opinion among scholars and jurists regarding the ruling on network marketing, as follows:

First opinion: Prohibition; some scholars believe that network marketing is forbidden because it relies on uncertainty and gambling. In other words, a person may pay a large sum of money at the beginning in the hope of making big profits from recruiting new people, but in the end he may lose everything if he is able to milk enough people to meet the required number. This makes the process a kind of risk and uncertainty, and this is forbidden in Islam.

The second opinion: Permissibility with conditions; there are other scholars who say that network marketing may be permissible on the condition that there is transparency and fairness in distributing commissions, and that the products sold are of real value and not overpriced. That is, if the company sells truly useful products at reasonable prices, and there is no exploitation of people, network marketing may be permissible.

The third opinion: Permissibility; some jurists believe that network marketing is permissible as long as it is done in a lawful manner and without deception or exploitation. That is, if a person buys a product that he really needs and markets it to others without pressure or deception, this may be permissible.

The best conclusion is that you consult a reliable religious scholar or the Fatwa House in your country to get an accurate fatwa that suits your personal situation.

Is network marketing legal?

Network marketing or pyramid marketing is a controversial topic. In some countries, network marketing is legal as long as it is done correctly and involves selling real products or services. However, in other countries, network marketing is illegal if it relies primarily on recruiting new members rather than selling real products.

Is network marketing a scam?

Frankly, network marketing can be a scam in some cases, and this depends on the company you are dealing with. There are companies that use network marketing legally and sell real products, but there are other companies that rely on recruiting new members more than selling real products, which makes them closer to scamming.

Some signs can help you distinguish between a serious company and one that is starting illegally:

1. Products: If the company is focusing more on recruiting new members than selling real products, this is a red flag.
2. Big promises: If the company promises you huge, quick profits without much effort, this could be a trap.
3. Initial fees: If the company is asking you to pay a large amount to join, this could be a sign that they are not serious.

Ultimately, you should be careful and do good research before joining any network marketing company.

How do I succeed in network marketing?

To succeed in network marketing, some steps and tips can help you:

• Continuous training: Always try to develop yourself and learn new things in the field of network marketing.
• Define your goals clearly: You must know exactly what you want to achieve. Clear goals will help you focus your efforts and achieve success.
• Expand your network: Try to connect with more people and build new relationships. The bigger your network, the more likely you are to succeed.
• Provide real value: The products or services you offer must be really useful and valuable to customers. This will make them trust you and come back to you again.
• Leverage online marketing: Use social media and online advertising to reach more people.
• Develop your leadership skills: Being a good leader will help you build a strong and committed team.
• Use technology: Many tools can help you organize your work and track your team’s performance.

Out-of-the-box network marketing ideas:

There are many ideas that can help you stay outside the box and succeed in network marketing. Here are some ideas that you can try:

• Participate in events and conferences: Try to participate in events and conferences related to your field. This will help you connect with new people and build a strong network of relationships.
• Use interactive videos: Make short, engaging videos explaining the products or services you offer. Videos are more effective and get the message across quickly.
• Collaborate with influencers: Try to collaborate with social media influencers who have a large audience. This will help you reach more people and build trust in your products.
• Offer free trials: Offer free trials of your products or services. People like to try a product before they buy it, and this will be a strong incentive to buy.
• Use technology: Use apps and tools that help you organize your work and track your team’s performance. Many tools can help you manage time and communicate with your team.
• Focus on personal stories: Share real success stories of your team members or clients. Personal stories will be impactful and will help build a strong relationship with your audience.
• Email Marketing: Use email to communicate with your customers and offer special offers and helpful tips. Email remains a very effective form of marketing.

Why is network marketing forbidden according to some scholars?

Network marketing is considered haram for various religious and economic reasons. Here are some of the main reasons:

• Eating people’s money unjustly: Network marketing is considered a type of commercial fraud and deception, because it tempts people with large commissions and quick profits, and this leads to most subscribers losing their money.
• Usury: In network marketing, the subscriber pays a small amount to get a large amount, and this is considered selling money for money with a difference and delay, and this is a type of usury that is forbidden by Sharia.
• Deception: The subscriber does not know whether he will be able to achieve the required number of new subscribers or not, and this creates a state of ambiguity and risk, and this is considered deception that is forbidden by Sharia.
• Unintended Goods: The products these companies sell are often just a front for the operation, meaning the primary goal is to get commissions and not to sell the products themselves.
• Gambling: Network marketing is similar to gambling because the participant pays money and is not sure whether he will win or not, and this leads to a state of risk that is similar to gambling.

Conclusion about network marketing:

Ultimately, network marketing is an effective way to expand your business and increase sales by building a network of independent distributors. Despite its controversy, it can be a powerful tool if used correctly and ethically. It is always important to ensure that the company you are working with is legal and transparent in its dealings. Network marketing is not just a way to make a profit, but it is also an opportunity to build strong and lasting relationships with customers and distributors.

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Network Marketing Article Questions – Everything About Network Marketing 2024