The History Of Network Marketing

The History of Network Marketing

One of the most important fundamental principles of our lives is change. As

general rule, most of us resist change and decided to stay in

our comfort zone, which is known and accepted by the majority. This is an aspect of human nature. But it is also true that we usually resist persists, especially when we refuse to engage with those who have better ideas, methods or systems to which their time has come to them. In almost any area such as art, science, medicine and business, new ideas have always met with resistance and rejection at first. The more revolutionary and only an idea, find strength and opposition. People have always been afraid of the ideas that promote change. Due to fear of change Christopher Columbus was ridiculed, and Louis Pasteur, Thomas Edison and Albert Einstein to name a few. There are other examples of how fear of change has had negative effects on the progress of humanity.

In the 1800's, people bought what it takes to survive in small shops and family businesses. Later W.T. Grant had an idea that would generate a major change. What if we combined all these small shops isolate and create individual departments under one roof, all in a large department store? A new and efficient way of doing things. Customers are enamored with the concept. However, small business owners to see their sales decline, fought on the field against this policy change. There were thousands of small traders, with thousands of votes against, defending their right to do things the old way.

Finally managed to get local and state governments ban of Grant department stores. Eventually, the department store won the battle. If there is a better way of doing things, this will prevail.

In the early sixties of the franchise model was the new and revolutionary way of doing business in the United States. It is noteworthy that also met with resistance. Newspapers and magazines wrote about how this new business model was an elaborate fraud to investors. Stories abound of people who lost their life savings to establish a relationship with a franchisor. It created a strong movement against the franchises as a business intended to declare them illegal. In fact, when the case was brought to the United States Congress, franchises were declared as a legitimate business by just 11 votes majority. Today franchises are responsible for more than 34% of all retail sales in North America. Franchises sell nearly 800 billion dollars in products and services currently. What we have learned over the years is that every industry is going through a period of evolution similar to this. Chiropractors were considered quacks in the seventies, the stock market was considered a dark business and a way of betting. Currently we can not imagine life without these industries.

The Pioneers

Like all highlighted items, the Network Marketing or Network Marketing has also met resistance due to a lack of understanding. There is no mystery about Network Marketing. It's just another form of sale and distribution. The Network Marketing has been in place for the past 50 years. In the early forties of the company known as "The California Vitamins Company" to realize that new sellers who join the company were friends or relatives of the other vendors, primarily because they wanted to purchase the product at a price wholesale, they found it much easier to create a sales force made up of hundreds of people where each product sold a little extraordinary to find vendors that might sell a large quantity of products.

Thus combining these two ideas and designed a fee structure that motivated salespeople to invite new representatives based on satisfied customers, most of whom were family and friends, where each had the same right to offer the product and its distribution to third parties, which allowed the sales force to grow exponentially. The company paid sales commissions generated as a group to each vendor. This process would allow the birth of Network Marketing. A few years later, the company changed its name to "Nutrilite Food Supplement Corporation". In 1956, Nutralite joined forces with Dr. Forrest Shaklee's to achieve a higher level of distribution of food supplements he had developed.

In 1959, former Nutrilite distributors Rich DeVoss and Jay Van Andel founded the company "The American Way". Like many innovative advances in different areas, the development of true network marketing was an accident.

The abuse of exponential growth at Network Marketing has pursued for years and today is still misunderstood by many people. One of the first cases of abuse of the concept of exponential growth to generate income was the string of letters that toured the United States after the First World War. The letters promised great profit by sending 10 cents or a dollar to the person whose name appeared at the end of the letter.

The chain letters spread to Europe, and for the year 1930 the postal service

American estimated that 10 million letters were sent daily. The postal authorities and law enforcement agencies battled the fraudulent schemes and the phenomenon of chain letters began to decline in the early 40's. Unfortunately, this system of fraud led to others who became known by the name of Pyramid, which gave money on condition of enlisting others in the Pyramid, with no need to purchase or distribute any products.

In 1974, Senator Walter Mondale declared such companies were the main scheme to defraud consumers in the United States. Police moved quickly to dismantle the fraudulent companies. In the mid seventies, without a clear understanding of what the legitimate MLM companies, the Federal Trade Commission United States and state agencies across the country put under observation almost all network marketing companies . In 1975, the FTC (Federal Trade Commission) sued the company claiming the American Way that it was a pyramid and that the refusal to sell its products in retail stores constituted a formal trade embargo.

The American Way invested millions of dollars in litigation and four years for cleaning

his reputation. In 1979, the FTC determined that The American Way was not a pyramid and that its revenues were generated from the sale of their products. At the same time, the FTC acknowledged that Network Marketing was a legal framework and efficient sales and distribution. The MLM industry would generate an explosion in the next decade.

Who is part of Network Marketing?

Today there are thousands of Network Marketing companies operating in the United States, Canada, Mexico, South America, United Kingdom, Europe, Australia, New Zealand, Israel, Japan and the Pacific Rim. In Malaysia there are more than 800 active Network Marketing companies. It has been reported that Network Marketing is an industry that generates $ 100 billion a year. The most successful companies of this type are already part of the FORTUNE 500 and New York Stock Exchange (NYSE).

In 1993, The American Way was the fastest growing company outside the United States in Japan, generating sales exceeding one billion dollars. Discovery Toys only sells its products under the scheme of Network Marketing, with sales exceeding 100 million dollars a year. Companies like Sprint, MCI and AT & T use the Network Marketing schemes to sell their services long distance telephone. The company A.L. Williams has had a major impact on the insurance industry to significantly exceed Prudential, one of the giants of that area, in just four years. Companies with traditional sales methods such as Colgate-Palmolive and Gillette Company have Network Marketing subsidiaries. Rexall Drug using network marketing system in its subsidiary, Rexall Showcase. Network Marketing companies have surpassed companies such as Liz Claiborne, Maybelline, Johnson & Johnson, Revlon and Estee Lauder. Sam Walton, founder of Wal-Mart said: "I'd rather have a profitable business in an unconventional industry to have a profitable business is not in a conventional industry."

The Network Marketing has evolved in other ways. Companies that began operations under the scheme now use direct sales compensation plan in Network Marketing. Examples include companies such as Avon, Watkins Products, which for over 100 years was in the direct selling industry before joining the Network Marketing and the Encyclopedia Britannica.

One of the reasons that direct sales have declined is that in the early

seventies distributors usually made cold calls to homes

particular, they gradually found that most of the time there was nobody home. Women, who had long been the backbone of direct sales, they were increasingly integrated into the workforce of the country leaving their homes during the day. Companies who observed these social changes quickly adopted MLM schemes, which allowed a greater number of informal methods of sales and better compensation plans.

Network Marketing Companies have actually pioneered in different industries such as: vitamin supplements, nutritional and dietary beverages, cleaning supplies for home, and so on. A company almost alone created a multimillion dollar business in the area of ​​water filters.

The Company also earns.

Why so many companies today are choosing Network Marketing for the sale, promotion and distribution of their products? The answer is very simple, is more efficient! No expenses incurred in marketing, distribution or sale until the dealer has made the sale and the product has been delivered. Comparing this with the traditional method in which a company comes to invest millions of dollars in advertising and costs associated with human resources, benefits, communication, travel and office before a sale occurs, the Network Marketing clearly has many advantages. Charles Givens, financial expert and author of the bestseller "Wealth Without Risk" (Wealth Without Risk), emphasizes that 80% of the costs of bringing a product to consumers today are for marketing costs. Companies are currently looking as closely as possible the costs to the point where a sale is made. Network Marketing companies have replaced the costs of marketing commissions to its independent distributors. These costs are paid after the product has been sold.

In his bestselling book, "The Popcorn Report", Faith Popcorn explains additional fashions or social movements that have contributed to the success of Network Marketing. In his book describes how consumers tend to stay more time at home. She believes that most want to avoid crowded malls and traffic jams and therefore want the convenience of direct delivery offered by the Network Marketing. The magazine "Advertising Edge" states that the recommendation of a friend is the most powerful form of advertising that exists. This is the essence of Network Marketing.

The changing labor market has shown that there is currently no security

employment under the traditional corporate structure. In the United States over 3,100 jobs lost every day due to downsizing. The automation of processes and technological advances are driving rapid changes in entire industries. Millions of people will lose their jobs and seek the same kind of job is being eliminated due to obsolescence. This is postponing the inevitable, in fact 47% of the companies that were included in the Fortune 500 in 1980 now operate no more. This represents a loss of more than 5 million jobs.

Technological advances affect the work forces of many industries. An example is the vinyl record industry. In 1985, vinyl records were an industry that generated $ 24 billion a year. In the early eighties this technology started to be replaced by the digital compact disc. The steel and copper industries have suffered with advances in new alloys that have resulted in new and different types of plastic materials for manufacturing. Computerized systems have replaced millions of workers because they are capable of performing complex operations and processes without human supervision. Robotics has also contributed to massive layoffs of workers. A robot can replace human workers 20 and eliminates the costs of benefits and employment benefits for workers.

The Company Man Power Inc., a company that offers the services of temporary workers, is today one of the most successful placement companies in the world because many companies have realized it is cheaper to hire temporary employees to avoid incurring the payment of benefits and allowances to permanent employees.

By joining the Network Marketing or partially "part time" many people find a solution for generating additional revenue and to create a financial cushion to protect themselves or residual income of the modern labor market disadvantages. A recent survey by the Wall Street Journal found that about 80% of the workforce would like to have your own business and 40% would like to work from home. This is precisely the solution that offers Network Marketing. Many people are looking for ways to build a future where they can develop their leadership and financially while balancing their lives and their families without sacrificing their health and mental well-being during the process.

How It Works In Network Marketing, share information and develop a network of contacts to personal and professional level. You are rewarded for sharing that information when the sale results in a product. The Network Marketing gives you the power to build an organized network for the sale of products derived from your personal contacts. This structure gives the same power to all people who join the organization, generating an exponential growth of your network. You have the opportunity to generate revenue from the efforts of your network of associates. Unlike traditional companies with a Director to head into the Network Marketing operate all its members as directors of their own independent organization.

A network marketing company is responsible for developing and delivering the final product.

Subsequently seeks to create an independent company with its partners. The company conducts research and product development and finance, management, public relations, production, storage, packaging, quality control, shipping, data processing, accounting and payment of sales commissions.

Cooperation vs. Competition.

One of the reasons for the success of Network Marketing companies during the nineties, is operating based on cooperation rather than competition. Unlike traditional businesses, the rise in your career comes directly to help them be successful you have invited people to join your network. The Network Marketing is summarized in sharing information that results in the sale of a product. The people who come to join a network marketing structure makes it seeks to be compensated fairly for their efforts. People get involved in network marketing because someone else wanted to help them find a different path through which they could take advantage of the wonderful opportunity offered by the Network Marketing. Those who engage in network marketing do so because they are ready to make a major change in their lives. At this point you may wonder: If this system is so good, then why has not told the truth about Network Marketing?

There are several reasons. People resist change and are afraid of what they do not understand

fully. People feel comfortable with what is known and accepted by the majority.

The truth is that many people in positions of power today are afraid of

losing that power. The Network Marketing gives you the power to each individual. The power to decide about their lives and their future, the power to take action and create unlimited wealth with the help of thousands of individuals who never even come to know each other. Do you think the incumbents are responsible for seeing to thank the interests of its employees? Remember what happened to W.T. Grant, the franchise model and to many others. Most new concepts have always met with resistance and rejection at first. Newspapers, magazines, radio and television earn their income primarily from what they pay their customers to be advertised through these media. Why support an industry that does not need your services?

Some years ago a network marketing company selling beauty products caught the attention of the media and several state attorneys in America. Their sales are approaching 500 million. These were sales that were lost companies like Revlon, Max Factor, Estee Lauder and others in the field of health and beauty. Can we assume that these companies were paid by the success of this network marketing company that also did not invest the stratospheric amounts of money on advertising as they did? To go a little further, Network Marketing companies have exceeded many department stores and shopping centers while providing excellent customer service, convenience and time savings by delivering their products directly. What if you were one of those brokers, wholesalers, media, or any other person whose interests were threatened by the industry of Network Marketing is a new and efficient way of doing business? What would you do? If you had a friend in the Attorney General, you call it? If you or your company had contributed to any lobbyist, political committee or you had friends in the media ...

Do you call for help? What if your job as president of a prestigious company was in jeopardy due to shareholders' profits have fallen by the fact that their sales have fallen to a network marketing company? What explanation would you give the board of directors of your company? What if your position to stagger and your high salary is threatened? Do you think there may be unfair strategies that use political power and the media to attack a competitor?

How many votes do you think an Attorney General would be willing to risk by focusing on a network marketing company that joins thousands of people and pays a large

amount of money in state and local taxes ... but in another state? As in any business or industry, there are fraudulent schemes that hurt the image of Network Marketing. The real estate industry has also suffered from these problems. Similarly there were irregularities in the banking, savings and loans. Of rulers and governments better not speak. The stock market has also experienced its own scandals. Why would network marketing be any different? If you decide to explore the Network Marketing, discusses the company, the product, its administration and its history. He understands the commitment needed to succeed and achieve build wealth through residual income. This advice applies to any industry where you want to enter.

There are many myths about the industry of Network Marketing. It is true that many companies have established subsidiaries traditional network marketing, such as Gillette, Colgate-Palmolive, Rexall and thousands of other companies that are using the scheme of Network Marketing as their primary distribution system to generate sales of approximately $ 100 billion. It has often been said that Coca-Cola, Goodyear, IBM, Firestone and General Motors have been involved in network marketing with their own divisions. In fact, these companies provide products to companies like Amway Network Marketing. MCI, U.S. Sprint and AT & T offers long distance network marketing companies that re-invoicing for these services. Due to the high cost of the showrooms, Toyota in Japan uses direct sales scheme to reach the consumer by the shortest route possible.

Network Marketing is the new path to financial freedom. You'll never be able to create residual income and operate freely with traditional employment. Even the professionals are trading their time for money, if not physically attending your clients or patients are not generating revenue. Most of their income is temporary and is easy to determine if your income is temporary ... just stop working for 90 days. If your income is paralyzed or decreases, your income is temporary.

With Network Marketing you stop changing your time for money. Once you develop a strong network of representatives, you've created a permanent residual income. This can give you the freedom to do whatever you want, anytime.

It is interesting to see how we resist change. We stay in our comfort zone even though we are miserable in it. It has been said that the Network Marketing is the next step in the evolution of free enterprise.

But for now we can only ensure that change is inevitable. It is the fundamental principle of our own existence.