Any society is a consumer cooperation, i.e. association of consumers for joint production and sale of certain goods and services.
The totality and variety of social and consumer technologies and methods determine the level of development of society, as well as the level and lifestyle of huge groups of people united in it by historically established forms of common life and activity. Thus, it becomes quite natural that progress has also come to fruition.
Advanced technologies in trade are the means that allow the consumer not to worry about the future. Today, sellers are concerned about finding new ways to attract spoiled customers. Previously, it was enough to offer them a special assortment of goods, convenience store location, serving better than the competitor. Now it is obviously not enough: almost the same thing is being sold everywhere, because manufacturers strive for maximum sales volumes, and I throw my products to all possible retail outlets at approximately the same prices. Differences smooth the appearance of miracles of technology. Since the stores, as we have already found out, are uncomfortable for the customers of the new millennium, we had to come up with new distribution channels.
Distribution channels are a chain of interconnected organizations that make a product or service available to consumers. Everybody is likely to find them: telemarkets, catalogues, online auctions, phone sales, home delivery services. Another way of distributing products quickly gained popularity among consumers around the world network marketing.
It is a system for promoting products from manufacturer to consumer. One of the advantages is the ability for enterprising and energetic people to have an income without spending a full day. This requires an effort to develop communication skills. This entrepreneurship requires investment like any other business, and here as well the risk is comparable to possible income.
The economic essence of such a business is simple. It is a way of selling products or services using the oral recommendations of network project participants, usually called distributors. As you know, producing a product (or service) is half the battle, and sometimes much less. Manufacturers are full: look, how many firms let out similar production. And how can an enterprise make its products to be purchased by the consumer? This is where two different approaches to the organization of product sales appear.
The first approach is usually called a traditional or linear method of building a sales system. The company sells products to large wholesale companies, those - medium, medium - small. And at the last stage the goods from wholesale firms get to the shop - a place of meeting of the goods and its potential buyer. But this is not all. In order to make the buyer from the potential became real, it is necessary to spend money on advertising in its most different forms, from colorful product packaging to television advertising. Without advertising, manufacturers today have little chance of success.
Thus, we usually have a chain of wholesale and retail companies between the product manufacturer and the end customer. And, naturally, at every part of this chain the goods become more expensive. Plus advertising, the cost of which is huge and sometimes exceeds half of the cost of goods. Naturally, when analyzing the traditional method of building a sales system, it is possible to avoid the cost of multistage sales and advertising.
This is the so-called direct selling method. It represents an alternative to the linear method of sales of products. The enterprise-manufacturer instead of a long chain of firms-intermediaries and powerful advertising invites distributors people who directly, bypassing wholesale firms and shops, are engaged in sale of production. Distributors go directly to the end users, to the house, apartment, office, and tell them live about the advantages of the product. That's all. Pay distributors a certain percentage of sales, and they will sell the product. There are no intermediary firms, and there are no advertising costs. Why does the direct selling method work? People believe people. People listen to other people. Advertising always has a generalized effect, you feel like a gray mass that is being squeezed by advertising; a mass that is being used to squeeze out money. And when a person stands before you and tells you about his personal feelings it's quite another matter.