Unit 2 Topic: Network Marketing, B.Com Hons., Ist Sem, DU | EduRev Notes

B Com : Unit 2 Topic: Network Marketing, B.Com Hons., Ist Sem, DU | EduRev Notes

 Page 1


Network Marketing 
1 
Institute of Lifelong Learning, University of Delhi 
 
 
 
 
 
 
 
Subject: Commerce 
Lesson: Network Marketing 
Course Developer: Romila Aggarwal, Roopa Johri 
University / Department: Bharati College Commerce, Delhi 
University 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Page 2


Network Marketing 
1 
Institute of Lifelong Learning, University of Delhi 
 
 
 
 
 
 
 
Subject: Commerce 
Lesson: Network Marketing 
Course Developer: Romila Aggarwal, Roopa Johri 
University / Department: Bharati College Commerce, Delhi 
University 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Network Marketing 
2 
Institute of Lifelong Learning, University of Delhi 
Table of Contents 
 
Chapter 1: Network Marketing 
? 5.0: Introduction 
? 5.1: Concept of Network Marketing  
? 5.1.1 Meaning 
? 5.1.2 Emergence 
? 5.1.3 Characteristics  
? 5.1.4 How does it work? 
? 5.1.5 Who participates in Network Marketing? 
? 5.2 Forms of Network Marketing 
? 5.2.1 Network Marketing vs. Direct Selling 
? 5.2.2 Products and services of Network Marketing 
? 5.3 Selection criteria for Network Marketing          
? 5.4 Evaluation of Network Marketing                 
? Summary  
? Exercises 
? Glossary 
? References  
 
Page 3


Network Marketing 
1 
Institute of Lifelong Learning, University of Delhi 
 
 
 
 
 
 
 
Subject: Commerce 
Lesson: Network Marketing 
Course Developer: Romila Aggarwal, Roopa Johri 
University / Department: Bharati College Commerce, Delhi 
University 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Network Marketing 
2 
Institute of Lifelong Learning, University of Delhi 
Table of Contents 
 
Chapter 1: Network Marketing 
? 5.0: Introduction 
? 5.1: Concept of Network Marketing  
? 5.1.1 Meaning 
? 5.1.2 Emergence 
? 5.1.3 Characteristics  
? 5.1.4 How does it work? 
? 5.1.5 Who participates in Network Marketing? 
? 5.2 Forms of Network Marketing 
? 5.2.1 Network Marketing vs. Direct Selling 
? 5.2.2 Products and services of Network Marketing 
? 5.3 Selection criteria for Network Marketing          
? 5.4 Evaluation of Network Marketing                 
? Summary  
? Exercises 
? Glossary 
? References  
 
Network Marketing 
3 
Institute of Lifelong Learning, University of Delhi 
 
 
                                          
Learning Outcomes 
 
After you have read this chapter, you should be able to 
? Understand the concept of network marketing; 
? Identify the products that can be sold through network marketing; 
? Explain how network marketing works; 
? Identify the industry leaders and the different forms of network marketing; 
? Distinguish between network marketing and direct marketing/selling; 
? Appreciate the reasons of its growth; 
? Explain the strategies for successful network marketing; 
? Develop the skill to build a network marketing business; 
? Value the network marketing as a business opportunity. 
 
 
 
 
 
Page 4


Network Marketing 
1 
Institute of Lifelong Learning, University of Delhi 
 
 
 
 
 
 
 
Subject: Commerce 
Lesson: Network Marketing 
Course Developer: Romila Aggarwal, Roopa Johri 
University / Department: Bharati College Commerce, Delhi 
University 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Network Marketing 
2 
Institute of Lifelong Learning, University of Delhi 
Table of Contents 
 
Chapter 1: Network Marketing 
? 5.0: Introduction 
? 5.1: Concept of Network Marketing  
? 5.1.1 Meaning 
? 5.1.2 Emergence 
? 5.1.3 Characteristics  
? 5.1.4 How does it work? 
? 5.1.5 Who participates in Network Marketing? 
? 5.2 Forms of Network Marketing 
? 5.2.1 Network Marketing vs. Direct Selling 
? 5.2.2 Products and services of Network Marketing 
? 5.3 Selection criteria for Network Marketing          
? 5.4 Evaluation of Network Marketing                 
? Summary  
? Exercises 
? Glossary 
? References  
 
Network Marketing 
3 
Institute of Lifelong Learning, University of Delhi 
 
 
                                          
Learning Outcomes 
 
After you have read this chapter, you should be able to 
? Understand the concept of network marketing; 
? Identify the products that can be sold through network marketing; 
? Explain how network marketing works; 
? Identify the industry leaders and the different forms of network marketing; 
? Distinguish between network marketing and direct marketing/selling; 
? Appreciate the reasons of its growth; 
? Explain the strategies for successful network marketing; 
? Develop the skill to build a network marketing business; 
? Value the network marketing as a business opportunity. 
 
 
 
 
 
Network Marketing 
4 
Institute of Lifelong Learning, University of Delhi 
 
Introduction 
 Figure: Network Marketing 
 
Source: 
http://www.google.co.in/imgres?imgurl=http://www.cartoonstock.com/newscartoons/carto
onists/jsi/lowres/jsin100l.jpg&imgrefurl=http://www.cartoonstock.com/directory/n/network
_marketing.asp&usg=__iWGbK1ISbal2ttC9trltmcPK1v4=&h=302&w=400&sz=30&hl=en&st
art=0&zoom=1&tbnid=CRcHdzFxr4-
RnM:&tbnh=140&tbnw=185&prev=/images%3Fq%3DNetwork%2Bmarketing%2Bcartoons
%26hl%3Den%26biw%3D975%26bih%3D410%26gbv%3D2%26tbs%3Disch:1&itbs=1&iac
t=hc&vpx=391&vpy=78&dur=14726&hovh=195&hovw=258&tx=111&ty=150&ei=IT-9TL-
fNYuyvgOd04l7&oei=IT-9TL-fNYuyvgOd04l7&esq=1&page=1&ndsp=10&ved=1t:429,r:2,s:0 
 
During last few years, Indian economic growth has been tremendous and spurt in 
manufacturing has lead to great economic and social changes. The spirit of 
entrepreneurship is predominantly influencing the nation’s interest. In order to earn more 
profits, people now a day are exploring new avenues and entrepreneurial opportunities. 
Network marketing is one of the emerging contemporary trends that exist in business 
environment. It provides opportunities to start and run home-based business to every 
aspiring person. Even a person without any experience can start this small business.  
Network marketing is a small business which offers everyone who aspires to be successful 
opportunities to start his own business. No formal education is required to start such 
business. So everyone can start this business even with full time job.  
Today, network marketing is an industry having huge turnover all over the world. Millions of 
people are associated with various marketing companies as independent marketers. 
 
Concept of Network Marketing 
 
Value addition:  Focus of the Section 
Concept of Network Marketing 
This section gives you the basic understanding of the business opportunity –network 
marketing. This is the opportunity by which one can become self employed and can 
earn the additional income besides one’s original income. It also apprises you of the 
fundamental reasons for the emergence of network marketing in eighties and 
nineties. The section makes you aware of the different meanings that network 
marketing connotes. This also brings out the salient features of this concept and 
explains how it works. The discussion on its participants follows later. 
Page 5


Network Marketing 
1 
Institute of Lifelong Learning, University of Delhi 
 
 
 
 
 
 
 
Subject: Commerce 
Lesson: Network Marketing 
Course Developer: Romila Aggarwal, Roopa Johri 
University / Department: Bharati College Commerce, Delhi 
University 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Network Marketing 
2 
Institute of Lifelong Learning, University of Delhi 
Table of Contents 
 
Chapter 1: Network Marketing 
? 5.0: Introduction 
? 5.1: Concept of Network Marketing  
? 5.1.1 Meaning 
? 5.1.2 Emergence 
? 5.1.3 Characteristics  
? 5.1.4 How does it work? 
? 5.1.5 Who participates in Network Marketing? 
? 5.2 Forms of Network Marketing 
? 5.2.1 Network Marketing vs. Direct Selling 
? 5.2.2 Products and services of Network Marketing 
? 5.3 Selection criteria for Network Marketing          
? 5.4 Evaluation of Network Marketing                 
? Summary  
? Exercises 
? Glossary 
? References  
 
Network Marketing 
3 
Institute of Lifelong Learning, University of Delhi 
 
 
                                          
Learning Outcomes 
 
After you have read this chapter, you should be able to 
? Understand the concept of network marketing; 
? Identify the products that can be sold through network marketing; 
? Explain how network marketing works; 
? Identify the industry leaders and the different forms of network marketing; 
? Distinguish between network marketing and direct marketing/selling; 
? Appreciate the reasons of its growth; 
? Explain the strategies for successful network marketing; 
? Develop the skill to build a network marketing business; 
? Value the network marketing as a business opportunity. 
 
 
 
 
 
Network Marketing 
4 
Institute of Lifelong Learning, University of Delhi 
 
Introduction 
 Figure: Network Marketing 
 
Source: 
http://www.google.co.in/imgres?imgurl=http://www.cartoonstock.com/newscartoons/carto
onists/jsi/lowres/jsin100l.jpg&imgrefurl=http://www.cartoonstock.com/directory/n/network
_marketing.asp&usg=__iWGbK1ISbal2ttC9trltmcPK1v4=&h=302&w=400&sz=30&hl=en&st
art=0&zoom=1&tbnid=CRcHdzFxr4-
RnM:&tbnh=140&tbnw=185&prev=/images%3Fq%3DNetwork%2Bmarketing%2Bcartoons
%26hl%3Den%26biw%3D975%26bih%3D410%26gbv%3D2%26tbs%3Disch:1&itbs=1&iac
t=hc&vpx=391&vpy=78&dur=14726&hovh=195&hovw=258&tx=111&ty=150&ei=IT-9TL-
fNYuyvgOd04l7&oei=IT-9TL-fNYuyvgOd04l7&esq=1&page=1&ndsp=10&ved=1t:429,r:2,s:0 
 
During last few years, Indian economic growth has been tremendous and spurt in 
manufacturing has lead to great economic and social changes. The spirit of 
entrepreneurship is predominantly influencing the nation’s interest. In order to earn more 
profits, people now a day are exploring new avenues and entrepreneurial opportunities. 
Network marketing is one of the emerging contemporary trends that exist in business 
environment. It provides opportunities to start and run home-based business to every 
aspiring person. Even a person without any experience can start this small business.  
Network marketing is a small business which offers everyone who aspires to be successful 
opportunities to start his own business. No formal education is required to start such 
business. So everyone can start this business even with full time job.  
Today, network marketing is an industry having huge turnover all over the world. Millions of 
people are associated with various marketing companies as independent marketers. 
 
Concept of Network Marketing 
 
Value addition:  Focus of the Section 
Concept of Network Marketing 
This section gives you the basic understanding of the business opportunity –network 
marketing. This is the opportunity by which one can become self employed and can 
earn the additional income besides one’s original income. It also apprises you of the 
fundamental reasons for the emergence of network marketing in eighties and 
nineties. The section makes you aware of the different meanings that network 
marketing connotes. This also brings out the salient features of this concept and 
explains how it works. The discussion on its participants follows later. 
Network Marketing 
5 
Institute of Lifelong Learning, University of Delhi 
 
Meaning 
 
In the literal sense network marketing is marketing of goods and services through a 
network of distributors.  
However, in marketing terminology it is defined as one kind of distribution via direct channel 
from manufacturers to distributors and from distributors to consumers. 
 
 
 
 
It refers to a process where product, services, information and business opportunities are 
sold to family, friends, co-workers, and others through individuals or a chain of individuals. 
It helps people to prosper by providing them adequate product, services, and information 
through team-motivated efforts for self-empowerment. It mainly focus on individual 
customers need for product and services thereby utilising a business opportunity. This is a 
business opportunity for many because it provides an independent source of income or self 
employment and it has huge potential income, that is, commission with its over-rider.  
Anyone can start this network marketing business with little capital and with the required 
knowledge about the market one can achieve higher levels of profits. 
It is a profession since the professional skills or specific training is required to be successful. 
The majority of network marketers fail to generate the extra income in the absence of 
proper training, commitment to personal development and special skills (like people 
management, negotiations, sales, leadership, money management, and many more) to 
make sales and build a huge contact database. 
The main goal of network marketing is to create a network of distributors and to focus on 
the sale of particular product and services to earn profits by helping others to build their 
empire and encouraging the involvement of purchasing party.  
 
Value addition:  Did You Know? 
Network Marketing companies are not Ponzi Schemes 
Very often, people think network Marketing companies are very similar to Ponzi 
Schemes. These kinds of schemes are basically illegal set-ups members earn 
commission by recruiting other members wherein actually no product or service 
existed. The main reason behind this kind of confusion is ponzi schemes were 
introduced by unsuccessful people to make money by following their own rules.  
Although Ponzi schemes were a little more common in the past but now a day these 
schemes usually do not exist for a long. 
 Source: http://www.articlemonkeys.com/Is-Network-Marketing-or-MLM-a-Ponzi-
Scheme-189987.html 
 
Manufacturer Network of 
Distributors 
Consumer 
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