Marketing Models Comparison

Direct vs. Network Marketing

Even seasoned marketers often confuse the differences between various marketing models. You might consider the perspective that there are pros and cons to just about every system, company, industry, and product. The same is true for both direct marketing (DM) and network marketing (NWM).
The internet is the foundation for both these and other marketing models as the bridge that carries that information to your computer screen. The bottom line for you is to choose business directions based on your own preferences, and learn to block out the noise lest you quickly become overwhelmed by the avalanche of internet information and advertizing competition. This is true for anyone who markets on the internet, regardless of marketing model.

The internet is the communication method for all of the above. Your business needs to be included on that superhighway and the better you market on the internet, the higher your success rate. However, just because your business utilizes online systems for marketing and relaying information, still the term internet business is a false term, since the internet is a TOOL and not a business in and of itself.

Those in direct marketing (DM) often tend to criticize network marketing (NWM) and vice versa, while there are pros and cons to both. They are simply different business marketing models which may have different personal appeal depending on many variables. In fact, many wise marketers have begun to use strategies that employ both models within the same marketing campaign, thereby enjoying the postive aspects of each one of them.

A Comparison of Direct Marketing (DM)
and Network Marketing (NWM)

Commissions and Payout Timing: Growth-based residual based on levels vs. immediate and direct income. While some NWM companies do pay out half or more of their monies in commission, these monies are then split among levels over time as residual income. In contrast, DM companies use a system where most or even all of the commission is paid directly to you immediately upon completion of the sale.

Geography: Limited to certain countries vs. open worldwide

Network companies will get established in one country and then slowly expand, which will limit your audience to those countries which have been established. While this is true, the general population in NWM doesn't care whether they have customers or partners on the other side of the planet. On the other hand, direct marketing model is usually geared toward an international audience.

Monthly Costs: advertizing and autoships

Both NWM and DM require advertizing costs, both usually require some other monthly fee.

In NWM it is expected that you will use the product you sell, therefore a minimum purchase per month is required to stay qualified for income from the business. This is the only required monthly fee. If a person chooses their company well based on personal needs and desires, this ends up not being an extra expense at all. For example, an athlete or other health-minded person who already purchases products like protein shakes, supplements, etc. on a regular basis might certainly see the value in quality products bought wholesale rather than retail, and switch the source of those purchases. It would be a mistake to get involved with any company to sell any product not valued and used by the rep in the first place, so assuming one joined due to desire for the product, then that buying would have happened anyway, maybe at the local market or health food store.

Often websites and other tools are free or offered for a nominal fee. DM will require an initial fee for set-up and sometimes additional monthly fees as well, even for replicated websites*.

*About replicated websites:

Both models will offer a website that is exactly the same as everyone else who is a rep for that company, with a place for you to enter your own ID information. Some of them also offer an 'ABOUT ME' page one can personalize. Two very important points about replicated websites: One, while they do have a purpose, they alone are not even close to a marketing plan, and are often used as such to no avail. Two, once created - these sites cost the company absolutely nothing - zilch! Yet in many cases their own reps are charged a monthly fee for having this website. This is true in both NWM and in DM, however there are exceptions in both models and these are the more trustworthy companies. I would steer away from any company who requires monthly fees for replicated websites for this reason. I know of a few companies over ten years old who still charge this fee, while their own cost of building that system was certainly met many years ago. Therefore, they are making money off the very reps who are bringing them customers for a 'service' that costs them nothing. Avoid.

Leverage: Traditionally, the NWM model was based on leveraging people, whereas the DM model was more based on leveraging internet systems. This leveraging of automated internet systems is now being used more and more by those in network marketing. The advantages within their use applied to network marketing has developed high success rates for this business model. These systems also provide a venue beyond the old-fashioned stone age NWM strategies of prospecting their warm market (ie. friends and family). The use of automated internet systems provides a way for those looking for such a business to do their own research and be in personal contact only at ecision time. No one wants to be sold, yet most people DO want to buy, and an ever-growing number of people are in search of a home-based business. I believe the more companies and people who make this online marketing strategy their goal, the more the NWM model will revert away from old paradigms and grow dramatically in credability and professionalism.

Stigma: Both models have suffered from negative stigma in being referred to as 'pyramid schemes' over the years. When the compensation plans are described, those same terms cross both models 'you get two and they get two and...' This language will set off internal alarms for those not ready to cross from traditional 'jobs' toward a business position of leveraging income through networks and systems. Those in DM love to advertize that it is 'NOT mlm' yet this same income structure that scares those away from mlm exists in DM as well. Both models involve networks that create leverage, and that in itself is usually the draw for those attracted to both of these very lucrative business models.

Product Markets: While NWM has two distinct product markets, being the product line and the business opportunity, these do often get combined into one in such a way that can cause much confusion. Both in the company replicated websites as well as just about any business presentation out there, these two very different product markets get combined into one package. This issue has received much discussion over the years, as pros and cons get thrown around...'do you lead with the business or do you lead with the opportunity?' I feel you are best to LISTEN to what X customer/prospect wants, and lead with only that or else don't lead at all!

Consider those folks who might well have been interested in the product itself, but were turned off by the business proposition, and felt they couldn't get one without the other. That is completely false, yet it confuses people. Even some of those who realize it is possible to pursue product use only, don't feel it might be very comfortable, since they just want the product, and do NOT want the prospecting. Wise reps will be alert and respect that desire.

In contrast, the DM model is simpler and less confusing in terms of marketing one product and one only. However, this IS something each individual NWM rep IS in control of, and can certainly choose to market one product at a time if desired. We recommend marketing to targeted audiences only, and by doing so need a separate strategy for each product market.

A Few Conclusions about DM and NWM

Do you prefer making upfront income or building a long-term residual?
I say BOTH!

Do you prefer working with internet systems or working with interested people?
BOTH!

Market worldwide or market in only specific countries?
Why NOT both?

Get the idea?

When the best of both models is integrated, the door is wide open for the best of both worlds in marketing models.