network marketing essay

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What Is Network Marketing?

Understanding network marketing, the bottom line.

• Marketing Essentials

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

Investopedia / Ellen Lindner

Network marketing is a business model that generates sales through independent representatives who build a network of business partners or salespeople to assist with lead generation and closing. Network marketing is also known as multilevel marketing (MLM) , cellular marketing, affiliate marketing , consumer-direct marketing, referral marketing, or home-based business franchising.

Key Takeaways

• Network marketing representatives typically require strong sales skills.
• A single-tier program involves one individual salesperson selling products independently.
• A multi-tier program requires sales representatives to recruit a network of other salespeople.
• Network marketing is also known as multilevel marketing (MLM), cellular marketing, affiliate marketing, consumer-direct marketing, referral marketing, or home-based business franchising.

Network marketing firms seek to leverage the relationships of their salespeople to identify customers and market their products, rather than more traditional advertising and marketing strategies. Salespeople are pressured to aggressively target their friends and family, not only as to buy their products, but also to recruit them as new salespeople.

In a typical network marketing arrangement, each sales representative is encouraged to recruit a networks of salespeople, resulting in multiple tiers of recruits. The creators of a new tier or "upline" earn commission on their sales and on sales made by the people in the tier they created, the "downline".

Each new tier can sprout another tier adding more commission to those in the top and middle tiers. The earnings of salespeople depend on recruitment as well as product sales. Those in the top tier make the most.

Network marketing has been compared to pyramid schemes, particularly with respect to the focus on recruiting new distributors. The Federal Trade Commission has warned that many multi-level marketing firms may be pyramid schemes, but stopped short of saying that the model is inherently fraudulent.

Some MLM schemes may be run as pyramid schemes . A pyramid scheme funnels earnings from all recruited participants on lower levels of an organization to those on higher levels. The Federal Trade Commission (FTC) monitors businesses that operate as multi-level marketing companies.

Examples of Network Marketing

An individual with a lot of energy and good sales skills can create a profitable business with a modest investment in the network marketing space. According to the Federal Trade Commission (FTC) , an operation that ensures compensation based on actual sales to real customers tends to be more reputable than multi-tier schemes, in which people make money based on the number of distributors they recruit.

In 2016, the FTC settled a suit with Herbalife, alleging the company deceived consumers into believing they could earn money selling diet, nutritional supplements, and personal care products. Herbalife paid $200 million to compensate consumers and restructured its business.

Skin care provider, Rodan and Fields operated as a billion-dollar business in the MLM space prior to 2024. Due to increased online marketing and shops like Amazon or TikTok Shop, the company moved away from the multilevel direct business model and established a new affiliate program.  

How Should an Individual Research a Network Marketing Company?

Anyone considering joining a network marketing operation should independently use or be enthusiastic about the products and familiarize themselves with the company structure. They should also be assured that the position is to earn commissions based on selling products and not recruiting others.

What Are Some of the Oldest Network Marketing Programs?

Some of the oldest network marketing companies still exist in 2024. Avon was founded in 1886, Tupperware was established in 1946, Amway began in 1959.

What Are "Buyback Provisions" In Network Marketing?

“Buyback provisions” allow participants to return unsold products to an MLM for a refund. This Federal Trade Commission mandate benefits sales representatives with too much inventory who cannot earn commissions.

The Federal Trade Commission helps to regulate the operations of network marketing organizations. Network marketing may involve multilevel marketing (MLM), cellular marketing, affiliate marketing, consumer-direct marketing, referral marketing, or home-based business franchising.

Federal Trade Commission. " Multi-level Marketing Businesses and Pyramid Schemes ."

Federal Trade Commission. " Business Guidance Concerning Multi-Level Marketing ."

Federal Trade Commission. " Herbalife Refunds ."

PR Newswire. " Rodan + Fields Announces New Path to Growth ."

Amway. " About Amway ." Select "How long has Amway been in business?"

Tupperware. " About Tupperware ."

Avon. " The Best Beauty Story Ever Told ."

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What Is Network Marketing? Meaning, Types, and History

August 7, 2023

Types of network marketing

History of network marketing companies, things to consider when entering network marketing.

Do you remember those Tupperware and Pampered Chef parties your mom would host when you were younger?

You’d have to clean the house all day just to get confined to your room while your mom dealt with some high-quality kitchen gear and entertained the other moms in town. You weren’t entirely sure what was going on outside your bedroom door those nights.

Turns out, your mom was an entrepreneur – running her own home marketing business and participating in network marketing.  

What is network marketing?

Network marketing is a business model that relies on individuals harnessing their personal networks to grow a business or sell a product. These networks are used to generate leads and recruit customers or partners, usually implementing a training and mentorship process for new recruits.

Some network marketing companies use multi-level marketing (MLM) software to assist with lead generation and deploy their strategy.

In this article, you will learn about the types of network marketing, its history, and things to consider before approaching network marketing.

Network marketing, although similar, is not to be confused with influencer marketing . Instead, it can be broken down into three essential categories.

These categories are similar in that they call upon individuals to use their personal networks to run their businesses. Through these networks, individuals make sales or recruit others to sell products.

1. Multi-level marketing

Multi-level marketing (MLM) is a distribution-based marketing network that includes direct sales and a downline of distributors. These home businesses tend to get a lot of bad press for their similarity to pyramid schemes.

In reality, they have one key difference. Where pyramid schemes require people to invest in a false promise of wealth, MLM organizations sell real products or services that distributors believe in. 

Source: LastWeekTonight 

Many MLM companies provide a healthy infrastructure and great training, plus extra rewards for high performers. Scentsy, Herbalife, and Advocare are some well-known players in the MLM field.  

2. Direct marketing

This single-tier marketing system requires an individual to sign up for a program to sell a product or service. Individuals who sign up for these programs do not need to recruit other distributors and are paid only for the direct sales they make.

Direct marketing is the most immediate form of sales. Find a product you like and get your friends and family to buy it. A few top companies involved in this type of network marketing are Mary Kay cosmetics, Avon cosmetics, and Pampered Chef kitchen supplies.

3. Affiliate marketing

A newer aspect of network marketing is using online affiliate marketing platforms . Website owners and bloggers integrate links to specific products on their platforms. When people click on those links and purchase products, the website owner is rewarded a referral fee. This provides customers with access to a trusted site where they can immediately purchase the products being advertised.

It’s important for those using affiliate links to be transparent about that. A simple disclaimer at the bottom of a blog post fits this purpose and lets your audience know that you’re making money from these links. Amazon’s affiliate program is one of the most well-known, but Partnerize and Google’s Affiliate Network are also options.

Those are thousands of affiliate programs out there for both brands and individual individuals can leverage. Researching the most lucrative opportunities before joining any program is crucial. A great example is the growing market for  clock in clock out apps , which often offer affiliate partnerships. Be sure to research the most high-paying affiliate programs out there before you join a program.

To understand how these network marketing systems have evolved and become prominent, let’s take a look at where these marketing strategies originated.

During the Industrial Revolution of the 1800s, a large number of new products were being invented that needed to be sold to consumers. These products were often complex and required explanation to potential buyers. Network marketing began to hit its stride following World War II in the 1940s with the California Vitamin Company (renamed Nutrilite in 1939) and the California Perfume Company (now Avon).  

The products produced by the California Vitamin Company were in such high demand that founder Carl Rehnborg began recruiting independent distributors to increase the number of salespeople. These independent distributors were instructed to find new distributors in their circles of friends, acquaintances, and customers. The representatives were paid on the sales of the distributors they personally recruited.

In 1959, two employees of Nutrilite, Rick de Vos, and Jan van Andel, founded their own company: Amway. Amway was created using the MLM organizational structure and paved the way for MLM companies to be established in other countries like Canada, the United Kingdom, Australia, Germany, and France. Amway allowed companies like Panasonic, Palmolive, and MasterCard to include network marketing in their omnichannel marketing strategies. Amway's success has even led them to sponsor an NBA arena, the Orlando Magic's Amway Center (and the older Amway Arena), since 1989.

Source: Amway Center

By the 1980s, the landscape of U.S. economics was transformed. A financial boom coincided with women entering commercial life. These women were a huge target for network marketing companies, as they sought jobs that allowed them to earn money without neglecting their children and families. Women were able to acquire high positions within these companies, creating opportunities for women to achieve financial independence without giving up their families.

At the end of the 1990s, network marketers were learning to harness the power of the internet. The implementation of online shops and electronic orders made employing social networks much easier for individual distributors and businesses. Since the rise of social media platforms, it’s become common to see advertisements by people in your network for companies like Rodan + Fields or ItWorks.

The categories network marketing is conducted in will continue to grow and evolve as society does. At its core, though, building relationships will always be the key to successful network marketing.

However, there are some other things you should take into consideration if you think network marketing is for you.

If you’re ready to start your own home business as a network marketer, there are some things you should consider and research first. These organizations want access to your network of friends and family.

You value the people in your life, so protect them and only market what you personally find valuable.

Questions to ask before joining a network marketing company

• How old is the company?
• What product or service do they offer (and is it something you find valuable)?
• How fair and generous is the pay distribution?
• What is the integrity of the company?
• Does the company have good momentum and timing?
• What support or training is offered by the company?

Like in any career, you need to make sure you are securing yourself and your customers. A large number of scams exist, claiming to be network marketing opportunities. Use the simple checklist above to begin research into network marketing organizations.

Remember that this is a business. You are your own boss and your own employee. If you want to call the shots, you need to be okay with facing failure and trying again. Keep in mind that not everyone in your network may be supportive.

Additionally, have a clear understanding of how this affects your taxes and finances. If you’re not versed in accounting, consider hiring an accountant. There are many people who specialize in dealing with home-based businesses.

Mentorships are key to successful network marketing

If you joined a network marketing organization, chances are you were recruited by someone you know. This person has likely been around longer than you and should function as your mentor until you get off your feet.

It’s in the best interest of your mentor to help you succeed, so be willing to listen to them and learn the system.

Equally as important, it’s vital for you to be a good mentor when the time comes. When you recruit someone into your organization, support them and teach them how to be a successful network marketer.

Long-term relationship building is how you’ll find success in network marketing.

Make connections that count

We’ve covered almost everything there is to know about network marketing, including what it is, the different types, its history, how to choose an organization, and the importance of mentorships.

As you go forward and employ your network to sell a product or service, keep in mind that before they are your customers, they are your friends and family. Building a great relationship first and selling a product second is the way to be an effective and successful network marketer.

Another way to generate leads is by maintaining a good brand reputation. Promote a positive brand experience by tracking customer reviews through online reputation management software .

Derek is a former G2 content associate. He can usually be found discussing pop music, politics, or digital marketing on the internet. (he/him/his)

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• Network Marketing

Emerging trends in marketing have completely changed the way business is conducted. These new modes of marketing help companies attract a large number of customers. They even reduce expenses that companies incur in traditional modes of marketing. One such revolutionary trend is network marketing.

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Network marketing is basically a medium of marketing that manufacturers use to expand their sales. Manufacturers use them when they have to deal with several distributors to push out their products. Sometimes, these distributors might have sub-distributors. As a result, this leads to a “network” of distributors that operate at various levels of the distribution chain.

Manufacturers use this vast network of distributors to market their products to customers at various levels. This enables them to reach out to even more customers indirectly.

These distributors and dealers, therefore, act as independent representatives of the company. As a result, this way the company can market their goods widely without spending more money on traditional methods of marketing, like advertising .

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Structure of Network Marketing

Firstly, manufacturers require several distributors, sub-distributors and dealers in order to create a network marketing structure. Secondly, These distributors procure goods from manufacturers themselves at wholesale prices.

They may either use them personally or they may sell them to other distributors for a profit. This chain continues further. The distributors, thus, will end up marketing goods until they reach customers or else they may become final customers themselves.

Furthermore, these distributors get an opportunity to make some profits from this marketing network. They can receive some  commission from manufacturers on the basis of the total volume of goods they buy and sell. Hence, the functioning of these distributors is similar to that of insurance agents.

Use of Network Marketing

Manufacturers generally use network marketing in business structures that require multi-level marketing. This is because such business models involve a large network of distributors and sub-distributors.

It is also of great use for distributors themselves because they can make an earning from it. Most companies like Amway and Tupperware tie-up with people who put in part-time work for this. Many women in India also become distributors and actively work with manufacturers directly.

Advantages of Network Marketing

• There are absolutely no limits on the size of the network marketing structure. This happens because companies can tie-up with innumerable people to become distributors. Further, distributors can further c0-ordinate with other sub-distributors to expand the company’s sales.
• Due to a reliable and robust distribution network that engages customers directly, companies do not need to rely on advertising to market their goods.
• The structure of distributors also reduces the profit margins of retailers that companies consider as an expense. These margins get passed on to distributors and the companies do not have to bear their burden.
• Another advantage is that companies do not need to spend a lot of money on storage and distribution. This is because distributors end up bearing these expenses themselves.
• Finally, this structure allows distributors to earn an unlimited income from their dealings with the company. They can earn an income from their own profits as well as commissions.

Disadvantages of Network Marketing

• Since manufacturers depend on distributors to determine consumer demand, it can be difficult to predict production targets. They may end up under or over-stocking their products.
• In this form of business, it is basically the distributors who facilitate delivery of goods to final customers. Manufacturers have a limited role in this regard. As a result, they may find it difficult to control distribution and sales.

Solve Question on Network Marketing

Mention the missing words from the following sentences.

1. __________ and __________ are big companies that use network marketing actively in India.

2. Distributors make an income through __________ and __________.

3. Network marketing helps in reducing expenses on other modes of marketing like __________.

1. Amway and Tupperware

2. Commission and profits

3. Advertising

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What is Network Marketing? Types, Working & Examples

• Utsav Mishra
• Jun 19, 2021

Marketing, the word itself has several images floating with it. When we hear this word, we think about shops, big businesses, everything. We start thinking from the smallest grocery shop in our area and end up at the IT firms providing services and manufacturing new software to internet marketing . All the things that come in between these thousands of thoughts come under marketing.

Like all the other things, marketing too with time has evolved a lot. It's not just limited to buyers, sellers, salesmen, and businessmen. It has transformed rapidly with time. New types of marketing have evolved, new ways have come up, expanding the territory of marketing. 

One such type of marketing is Network Marketing. In this blog, we are going to focus on the same.

Network Marketing

Network marketing is a business concept that grows a company by relying on a network of distributors. To create money usually entails the use of three fundamental types of systematic strategies: lead generation, hiring, and building and management. Network marketing is divided into three categories: single-tier, two-tier, and multi-level.

Simply speaking, Network marketing is a business concept that relies on independent agents selling to other people, generally from their homes. You may need to develop a network of business partners or salespeople to help you generate leads and close sales if you start a network marketing firm. 

Read more about effective marketing techniques through the link.

Terms related to Network Marketing

Direct Sales: Network marketing companies promote and sell their products directly to customers, rather than through a well-defined distribution channel. The participants are given the job of selling the items, and they are paid a commission for each sale they make.

Entrepreneurs that are self-employed (IBO): The participants are referred to as IBOs since they act as if they are running their own company.

Distributor: Most multi-level marketing companies refer to their members as distributors rather than salespeople.

Downline: Members recruited by the distributor or fresh recruits registered by these members make up the distributor's downline. All distributors profit from their downline sales.

Upline: All distributors in the hierarchy above a member's personal sponsor. All the way up to the Head of Sales is the upline. On sales made by downline partners, all distributors in the upline get a commission.

Plan: It Makes a list of all the many methods salespeople may earn money. The plan also demonstrates how pay varies based on sales volume and the number of partners recruited. For their staff, reputable organizations make the strategy as open as feasible.

Sponsorship: A person who brings in a new employee to the company.

Recruit or collaborate: An individual who is brought into the company by a sponsor. The sponsor is compensated for the sales of the partner .

(Similar blog: What is Service Marketing? )

What are the Types of Network Marketing?

Network marketing functions on different tiers. This makes three types of it-

Single-tier Network Marketing

Two-tier network marketing, multi-level network marketing.

You join a company's affiliate program to sell its products or services through single-tier network marketing. You don't need to recruit other distributors, and direct sales are your only source of income. Avon, a well-known cosmetics firm, employs single-tier networking marketing.

Some internet affiliate schemes pay you for driving traffic to the affiliate's website. Single-tier networking also includes pay-per-click (PPC) and pay-per-lead (PPL) affiliate schemes.

Two-tier network marketing, unlike single-tier network marketing, requires some recruitment, but your compensation isn't entirely dependent on it. You get compensated for direct sales (or traffic driven to a website) as well as direct sales or recommended traffic generated by affiliates or distributors you choose to work for you.

Some direct sales organizations employ multi-level marketing (MLM) to encourage existing distributors to recruit new distributors in exchange for a portion of their recruits' sales. The recruits are the "downline" of the distributor. Distributors also profit from direct product sales to clients. 

Amway, a well-known multilevel marketing organization that offers health, beauty, and home care items, is an example of a well-known direct sales organization.

How does Network Marketing work?

Multi-Level Marketing (MLM), cellular marketing, affiliate marketing , consumer-direct marketing, referral marketing, and home-based business franchising are all terms used to describe network marketing.

Network marketing companies frequently construct layers of salespeople, in which salespeople are incentivized to recruit their own networks of salespeople. 

The persons who start a new tier (or "upline") get paid commission on their own sales as well as the sales of the individuals in the tier they started (the "downline"). 

With time, a new tier may emerge, providing additional commission to the top tier as well as the intermediate tier.

The earning of a member of network marketing depends on the sale of the product as well as on the recruiting.

Any person joining the network marketing team goes through two processes: the first one is training and the other one is sales.

Training  

The first step after joining is to become the distributor of the company i.e. you will be the one selling the products from now. 

Because the business entails selling and recruiting distributors, the firm you are joining or your sponsor will offer you comprehensive product and sales training.

To assist you in getting started with the company, the Company supplies you with thorough product information as well as promotional items such as advertising materials and Marcom tools. 

You'll learn about the intricacies of your company's product line, the quality and safety requirements that they satisfy, how they compare to the competition, what inquiries to expect from customers, and solutions to commonly asked inquiries, among other things.

Most of the companies provide sales training along with the training to recruit new people, generally they organize a short workshop for that.

You are ready to begin working when the Company has instructed you on selling, product knowledge, and equipped you with the necessary tools and supplies, as well as a startup package. Your sponsor will be available during your training and will also assist you in getting started with the business. 

Prospecting or making a list of prospects, qualifying the prospects, making an appointment with the prospects, meeting them and making a presentation of the MLM business proposal, answering questions and assisting them in making a decision to join the network, and following up with them on a regular basis for a positive decision will now be part of your sales process. 

The process continues with them signing up as distributors, receiving product training, selling, and supplying them with tools, marketing materials, and a beginning kit, as well as inspiring and working with them to help them grow their network.

You'll strive to increase retail sales in addition to hiring and developing your distributor network. Making a list of prospects for retail sales includes your family, friends, neighbors, and the local community, as well as your coworkers, your firm, and other firms with which you have known contacts. This is how a simple Network Marketing business model functions.

(Also read: Basics of Product Positioning )

Examples (Case studies) of Network Marketing

It is one of the most well-known multi-level marketing organizations in the world. The brand, which was founded in the United States in 1938, has become associated with its whole product category – plastic food storage containers – to a degree only equaled by firms with traditional distribution methods like Scotch tape or Hoover vacuum cleaners. Every minute, approximately 40 Tupperware parties are held throughout the world.

It is a cosmetics company with millions of sale agents and a $3.63 billion yearly revenue in 2020. It is one of the world's largest multi-level marketing firms. Avon Products, Inc. was purchased by Natura & Co, a cosmetics company that also owns The Body Shop, in early 2020.

It is a multi-level marketing company that sells dietary supplements. It was founded in 1980 in California and today has about millions independent distributors globally.

Amway is the world's largest network marketing corporation, with about $8.5 billion revenue in the year 2020. Since its founding in Michigan in 1959, the company has grown to over 3 million representatives selling health, beauty, and home care products in over 100 countries.

(Related blog: Factors Influencing Consumer Behavior )

Advantages of Network marketing

There are no restrictions on the size of a network marketing organization. This occurs because businesses may form partnerships with a large number of people to become distributors. Distributors can also work together with other sub-distributors to increase the company's sales.

Companies do not need to rely on advertising to advertise their products since they have a solid and powerful distribution network that engages customers directly.

(Must read: B2C Marketing Strategies )

Distributor structure also affects retailer profit margins, which are considered an expenditure by firms. These profit margins are passed on to distributors, and the corporations are relieved of their financial load.

Another benefit is that corporations do not have to spend as much money on storage and delivery as they once did. This is due to the fact that distributors are responsible for these costs.

Distributors can make an endless amount of money from their business transactions with the organization because of this framework. They can make money from both their own earnings and commissions.

(Also read: B2B Marketing Strategies )

To sum up, Network Marketing is one of its kind marketing techniques. People involved in it find it unique and believe that the market is expanding at an amazing pace. In the near future, we might be able to witness some drastic expansions of the network marketing world. Till then, we can witness a happy growth of it.

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Network Marketing and its Career Scope

Do you want to earn that extra income with flexible working hours? Want to leverage your networking skills and entrepreneurial abilities? Then, network marketing is your professional calling!

Network Marketing is also known as multi-level marketing. It is a very fast-growing industry that has gained a lot of popularity over the recent years. With the digital world taking over, there are several marketing ways that have acquired significance and brought great results for businesses. Network marketing is also one such model that has emerged.  So, let’s deep dive into what network marketing is, what’s the career scope, and how you can pursue it. 

What is Network Marketing?

Network Marketing is a business model that involves person-to-person sales of the products or services in one’s network. This form of marketing is used by manufacturers and sellers with the prime motive to sell products. Individuals are required to promote and sell the products of the company in the network that they develop or create over time. These individuals can also be called sales representatives of the company. However, they are not actually the employees of a company. 

Today there are a number of network marketing companies that deal with businesses that want to sell their products. The marketing companies buy inventory from businesses, set up a pay cycle, and manage the various individuals who wish to work as network marketers. These companies train people who sign up, give them tips and advice, help them understand the product inside out, and then they are set to start selling. 

The network marketers talk to people in their network about the products and services that they are selling. By now you must be wondering how is this different from personal selling.

Recommended Read: Marketing vs Sales: Identifying the Best Career Path

Don’t worry! We will clear this very common myth of yours!

Network marketing is actually very different from outright face-to-face sales. Here you need to build the trust of people you are talking to through excellent communication skills. Only after you have built confidence and rapport will you be able to sell the product and get others interested in it. However, this is just half the work and not the real source of revenue.

After this, you need to get more people to sign up and join your network because this is where the real earning power of network marketing comes. When you get people to sign up, you earn commission from the sales they make and people they get to sign up. This entire process assists you in building your network, earning revenue, and the company to sell its products. 

How To Pursue Network Marketing?

Network Marketing is a great way in which a number of companies are earning huge revenues. The investment that this marketing requires is low but the results that it gives are commendable. Not only does the company earn huge profits through the sale of their products but the network marketers also earn high amounts of money. 

It creates a structure that has no limitation while growth and prosperity to the company and all the people involved in distribution. 

You can pursue a career in network marketing and know how it benefits the business by pursuing a business program. Both undergraduate and postgraduate programs offer network marketing as a part of the program. 

Things To Know Before You Get Into Network Marketing

It is nowhere like your 9 to 5 job. You get the freedom to choose when and how you want to work, however, in order to make your career in network marketing successful, you need to decide on the amount of time that you are willing to invest. 

2. Dedication

You cannot inculcate the skills of a network marketer in a night. Here you learn as you go on which is why along with time, you also need to invest sincere efforts. Many professionals and experts in this domain follow the 1/3/5/7 formula. According to this, you will take 1 year to become a proficient network marketer, 3 years to make this part-time career your full-time career with consistent effort, 5 years to make 6-figure earnings, and 7 years to become an expert in network marketing. 

Recommended Read: Watch Out for These 10 New Age Careers

3. About the Company

The time that you spend on research can never go to waste! So, take your time and research the companies that you can work with. Before you start working for a network marketing company, ensure that you know for long the company has been working, the products they are selling and its quality, and how big the company is. 

4. Know About the Products

Know the products that you are going to sell before you start selling because only then will you be able to sell more products and lure customers. Check if the products are consumable, good quality, and have a market. 

5. Compensation Plan

Each network marketing company provides its marketers with a detailed compensation plan. This enlists the promotional levels and how you can reach them, discounts, additional bonuses, the number of products that you need to purchase, etc.  Read this carefully, understand, and analyze if the goals and levels mentioned are realistic. 

A career in network marketing can be really interesting majorly because of the growth opportunities that each one can get and the benefits that are available. 

Want to know more about a career in network marketing and if you should pursue it? 

We have something exciting for you!

Mindler is a 360-degree career guidance platform that gives students the opportunity to find their true calling from the comfort of their homes. Take the Mindler online Career Assessment that assesses the students on 5 parameters and gives a detailed 34-page Career Report. 

The Career Report not only showcases the 5 best career matches but also presents a development plan for the students that can help them improve. 

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Abstract of Network Marketing:

Arising patterns in advertising have totally changed the manner in which business is directed. These new methods of promoting assist organisations by drawing in an enormous number of clients. They even lessen the costs that organisations cause in conventional methods of showcasing or marketing. One such progressive pattern is network marketing.

Network promoting is fundamentally a mechanism of showcasing that makers use to grow their sales. Makers use them when they need to manage a few wholesalers to push out their items. Now and then, these wholesalers may have sub-merchants. Thus, this prompts a “network” of merchants that work at different levels of the conveyance or distribution chain.

Makers utilise this tremendous organisation of merchants or distributors to showcase their items to clients at different levels. This empowers them to connect with many more clients in a roundabout way.

These wholesalers and sellers, hence, go about as autonomous agents of the organisation. Accordingly, this way, the organisation can showcase their merchandise generally without spending more cash on conventional strategies for promoting, such as publicising, and advertising.

Meaning of Network Marketing:

Network marketing is a plan of action that relies upon individual-to-individual sales by autonomous or self-made agents, regularly working from home. A network marketing organisation business might expect you to construct a co-worker or co-partner, or sales representatives to help with leads and bring deals to a close.

A network marketing organisation can be a solitary level or single-tier program, by which you sell the items, or multilevel or multi-tier, where you likewise enroll extra sales representatives.

The Utilisation of Network Marketing:

Producers by and large use network promoting in business structures that require staggered advertising. This is on the grounds that such plans of action include an enormous organisation of wholesalers and sub-merchants.

It is additionally of extraordinary use for merchants or distributors themselves since they can make revenue from it. Most organisations like Herbalife, Amway, and Tupperware tie up with individuals who put part-time work into this. Numerous ladies in India additionally become wholesalers and effectively work with producers straightforwardly.

Design of Network Marketing:

Right off the bat, makers require a few merchants or distributors, sub-wholesalers, and sellers to make an organisation advertising structure. Also, These distributors or wholesalers get products from the producers themselves at discount costs.

They may either utilise the products themselves or they might offer them to different merchants for a benefit. This chain proceeds further. The wholesalers, accordingly, will continue to advertise products until they arrive at the end consumers, or more than likely, they might become end consumers themselves.

Moreover, these merchants or distributors get a chance to create a few gains from this promoting network. They can get some commission from the producers based on the absolute or total volume of products they trade. Subsequently, the working of these wholesalers is like that of insurance representatives.

Benefits of Network Marketing:

• There are definitely no restrictions on the size of the organisation’s advertising structure. This happens in light of the fact that organisations can tie up with countless individuals to become wholesalers. Further, merchants or distributors can encourage coordination with other sub-wholesalers to extend the organisation’s sales.
• Owing to a dependable and strong circulation network that draws in clients straightforwardly, organisations don’t have to depend on publicising to showcase their merchandise.
• The composition of wholesalers additionally lessens the net revenues of retailers that organisations consider as a cost or expense. This leeway or margins are given to wholesalers, and the organisations don’t need to bear their weight.
• Another benefit is that organisations don’t have to spend exorbitant use of cash on distribution and storage. This is on the grounds that wholesalers bear these costs by themselves.
• At last, this design or structure permits merchants to acquire limitless revenue from their sales with the organisation. They can procure a good portion of revenue from their own profits just as commissions.

Limitations of Network Marketing:

• Since makers rely upon wholesalers to decide buyer interest or demand, it tends to be hard to anticipate manufacturing targets. They might tend to understock or overload their items.
• In this type of business, it is essentially the merchants who work with the conveyance of merchandise to end consumers. Producers play a restricted part in such a manner. Subsequently, they might think that it is hard to control sales and distribution.

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Network Marketing

Table of Contents

What is Network Marketing?

Network Marketing- definition and examples: Network marketing is a marketing strategy in which a company builds a sales network of independent representatives who market the company’s products or services directly to consumers.

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Network marketing, also known as multi-level marketing (MLM), is a business model that involves the distribution of goods and services through a network of independent contractors. It is a type of direct sales business, which means that the company’s products are sold directly to the consumer. The main feature of network marketing is that it allows sales representatives to earn commissions on their own sales and the sales of the people they recruit, thus creating a dynamic, self-sustaining system.

Network marketing companies usually produce their own products and services, which are then distributed through their network of independent contractors. This enables them to keep their overhead costs low while providing a wide range of products and services to their customers. In addition, network marketing companies often offer incentives and rewards to their sales representatives, providing an additional incentive for them to remain active and successful.

Structure of Network Marketing

• Network marketing is a type of business in which a company recruits individuals to sell a product or service, and then those salespeople recruit other salespeople, and so on. The salespeople are typically paid a commission for each sale that they make.
• In a typical network marketing company, the owner or founder is the top-level salesperson. The owner recruits salespeople, who in turn recruit other salespeople. As the company grows, it may add other products or services that can be sold through the network marketing model.
• The advantage of network marketing is that it can be very scalable. A company can grow quickly by adding more salespeople. And because salespeople are typically paid a commission, the company doesn’t have to spend a lot of money on advertising or marketing.
• The disadvantage of network marketing is that it can be difficult to make a lot of money. To make a lot of money, you need to be able to recruit a lot of salespeople and they need to be able to make a lot of sales.

Characteristics of Network Marketing

Networking marketing is a business model that allows independent distributors to sell products or services through a network of independent distributors. The distributors earn commissions on the products or services that they sell.

The key characteristics of a network marketing company are:

1. The company has a product or service that is sold through a network of distributors.

2. The distributors earn commissions on the products or services that they sell.

3. The company has a low start-up cost.

4. The company offers a low-risk way to start a business.

5. The company has a generous compensation plan that rewards its distributors for selling products or services.

6. The company has a proven track record of success.

7. The company offers training and support to its distributors.

8. The company is committed to helping its distributors achieve success.

What are the benefits of network marketing?

There are many benefits to network marketing, including:

• Financial freedom and independence
• Opportunities to earn residual income
• The ability to work from home
• The ability to build a team and help others achieve success
• The opportunity to make a positive impact on people’s lives
• The opportunity to travel and see the world

What does one need to do to become a network marketer?

There is no one-size-fits-all answer to this question, as the best way to become a network marketer will vary depending on your skills, experience, and personal preferences. However, some tips on how to become a network marketer include studying the industry, attending networking events, and building a strong network of contacts.

What are the risks of network marketing?

The risks of network marketing include the potential to lose money, the time commitment required, and the challenge of building a sales network.

How can I make money with network marketing?

There are a few ways to make money with network marketing. The most common way is to recruit others into the network, and receive a commission on their sales. Another way to make money is to sell products and services to people within the network.

What are the most common mistakes people make with network marketing?

The most common mistake people make with network marketing is not having a clear plan or goal. People also commonly make the mistake of not having a strong enough network to support their business.

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Essay on Network Marketing

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Introduction

Network marketing is a form of business opportunity, which is popular with individuals looking for part-time and flexible enterprises. It is often referred to as Multi-Level Marketing (MLM). Some of the companies that employ network marketing in the U.S. include Avon, Tupperware, and Mary Kay Cosmetics. The program requires a low upfront investment and the chance to sell products directly to close friends, family, as well as other personal contacts. MLM may require recruitment of sales representatives to increase sales volume. Network marketing is attractive to many people since they can earn extra income by building a network without sacrificing their occupations or additional investment.

History of Network Marketing

Network marketing has been in existence for more than 50 years. California Vitamin Company that produces food supplements developed the concept of Multi-Level Marketing in 1934. The firm started a direct sales entity signing up sales persons who were to use the products for their personal use and sell it to their friends and family. After the sales, they would earn additional $50 per month, which was a significant income at the time. Their relatives and friends not only liked the items but they realized that they could benefit financially by buying the product at wholesale price and selling them to others.

California Vitamin Company changed its name to Nutrilite Corporation in 1943, which implemented the first recognized compensation plan for Network Marketing. All those engaged in the company were paid on multiple levels of the sales they made. Richard Marvin DeVoss and Van Andle joined Nutrilite Corporation in 1949 as members. They made the company grow and prosper for the next ten years. They considered conventional sales jobs as unjust since they were paid only for the work while the company continued to make substantial profits. The duo believed that they should be remunerated relative to the benefit their company continued to gain from their input. They decided to take a different direction in 1959 by starting their own Network Marketing known as Amway.

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Network Marketing Strategy and Its Success

Before venturing into Network Marketing, o ne has t o consider some key elements. Firstly, the stability of the organization is crucial because people prefer working for companies whose future is predictable. It is important to check how long the company has been in operation. Secondly, one has to consider products and services to be offered to the clients. The products should be excellent and appealing to the consumers so that they keep coming for m ore. Th irdly, one should consider the pay plan since it determines how payment will be made. Another consideration is the integrity of the organization and management. One should investigate the experience and background of the company in the industry of network marketing. Considering the momentum and timing is significant. The present condition of the company and its growth are indicators of whether network marketing may thrive. Besides, business systems and support should be in place to make sure transferable training system is applied in the organization.

Network marketing can succeed by the willingness to learn and listen to the mentors. MLM veterans are aware of the structure and can be essential in providing information regarding the system. All the steps taken by those who have succeeded can be a foundation for new entrants. Application of similar systems can be crucial since one can duplicate what had been done before to succeed. Furthermore, the management of the company should be supportive of the sales representatives so that they can reach out to many people. Those who have joined Network Marketing industry should be couched until they feel confident enough to go on their own.

The target market should be understood to help in meeting their needs. Sales representatives should know what drives their customers to desire a better life. Understanding the clients who want to live differently and life that is more satisfying can help one to succeed in network marketing. Network marketers have to identify the main reason why they joined the industry. It could be due to financial freedom, family, or time freedom. They should have a personal conviction to join network marketing industry and deliver on their mandates. One must be ready to reach out their friends and relatives with their home-based business opportunities. However, network marketers should not beg, chase, guilt, or even try to convince any person, particularly their warm market to join their opportunity. It is crucial to determine whether relatives or friends are open to the business prospect.

Network marketing requires people not to overwhelm themselves by trying to accomplish several market projects at once. It is important for network marketers to demonstrate tenacity and perseverance. They are to look at the other successful MLM pros and learn from their initiatives. Whenever obstacles are encountered, the management should be ready to offer their support. Those involved in network marketing should be ready to learn to improve in their daily activities. Significant growth can be witnessed if they constantly seek to improve their knowledge. Network marketing often goes hand in hand with social media networking since it aids in reaching out to many people at once. It is essential for network marketers to remain consistent. Therefore, a plan has to be developed to enable actions to be executed in a consistent manner.

An established network marketing company should reward leadership just like all the other structured businesses. MLM requires a structure that is built from the top of the business, and the income depends on how many business builders are recruited. Network marketers have to know many people and sharpen their sales skills to succeed. Besides, different stakeholders should be invited to look into the business proposition so that they can give their opinion and recommendations. It may help in identifying gaps that should be addressed to boost the performance. Therefore, business owners should advance the prospective understanding of the business during follow-up interactions. Strong rapport, as well as relationship, should be built along the way.

Third-party social proof can be used to validate the opportunity as well as increase the new recruits’ belief that they can succeed with the company. It is important to build a winning environment for the team members to grow and for them to gain the energy and feed the excitement to others. MLM is a voluntary business and retention of the distributors is an important skill. Nevertheless, the company has to offer goods that create a suitable demand in the market. It makes people to be willing to buy, and this increases customer loyalty. Furthermore, new recruits will prefer being associated with such a business because they have a higher chance of making an extra income.

Network marketing has been on the rise, and many MLM businesses have continued to grow over the years. Some of these include Amway, Herbalife, Avon, Vorwerk, Mary Kay, Oriflame, Natura Cosmeticos SA, Tupperware, Primerica Financial Services, and Nu Skin Enterprises.

Avon: It is a U.S. based firm known for selling cosmetics, jewelry, and women’s apparel. The company makes up to about 11.3 billion sales. It has about 6.5 million sales representatives in Canada, U.S., and Puerto Rico. The company became a publicly traded firm in 2015, and it donates part of its proceeds to breast cancer research as well as assisting domestic violence victims.

Amway: The business sells a range of products like beauty products, household goods, weight loss, and nutrition management. It makes about 10.9 billion sales in over 80 markets globally. Its brand is not only known but respected.

Herbalife: It offers protein-based products that aid in the management of weight loss. Mark Hughes founded the company that gained more market share when fitness products became popular.

Natura Cosmeticos SA: The Company is based in Brazil, and it offers cosmetics as well as personal care. Its premium lines target women, men, and children. It makes sales of up to 3 billion across South America with sales reps in seven markets.

Vorwerk: It was founded in Germany, but it carried some products for children, men, and women to Jafra in the United States. The firm engages in cosmetics and makes up to 3 billion sales. It has more than 1 million sales reps covering about seven global markets.

Mary Kay: U.S. based company that offers cosmetics to its clients. It began in 1963, and the business involves recruiting events as well as demonstration. Sales reps with exceptional sales are always rewarded with vehicles. It makes up to 3 billion sales in its 35 markets globally. The business works with some charities to help women in the society.

Tupperware: The firm provides storage and food serving in addition to office and home storage, kitchen utensils, and cookware. It supports other organizations internationally.

Oriflame: The Company based in Luxembourg specializes in personal care products and cosmetics for women and men. It began in 1967, and it carries jewelry and home accessories. It makes about 2 billion sales with 4 million sales reps in approximately 67 global markets.

Nu Skin Enterprises, Inc.: It offers personal care, cosmetics, and weight loss products. It generates about 2 billion sales with almost 900,000 sales reps. It entered the stock market while covering about 52 markets globally.

Primerica Financial Services: It was founded in 1977 while offering services such as financial analysis, investments, debt management, as well as prepaid legal advice. Its sales are often over 1 billion while it operates majorly in North America.

Network Marketing Tips and Tricks

Some tips may guarantee success to network marketers. Firstly, one should have a positive attitude. Individuals who are not successful often believe that they will develop a good attitude when they become top earners. However, this does not work since the negative attitude hinders the success of the business. Positive attitude enables one to remain hopeful that life will improve and their business will flourish. A component of good attitude is being coachable since people should be open to learning from others. Secondly, network marketing should be able to reach out to many people. By introducing the products to several people, they become aware of their existence and may be interested in buying them. They can convince their families and friends to purchase the goods and services. Thirdly, an individual should not quit after venturing into the industry but should remain focused to attain the set goals. Network marketers should not lose hope easily when things seem not to work in their favor.

Network marketing should make an excellent first impression to gain substantial market share. There is limited time to convince everyone at a personal level. Therefore, the available time should be used constructively to impress people. The easiest way to convince the customers is to appear like a know-it-all. Marketers have to practice what other people teach. Role models in the field are important advisors, and they should be offered an opportunity to give their input. One should try as much as possible to remember the names and faces of people. It makes a difference interacting with clients at personal levels since they can be readily persuaded.

Leadership skills are needed in network marketing, as the role models should guide the new entrants. Besides, the business must be given sufficient time even if it is being done as a part time job. Some may consider direct selling as an alternative for earning extra income since it is not their primary job. It requires one to learn non-verbal cues of their clients and act upon them. Network marketers should develop a structure for following up their potential customers. While one may not be interested in pestering and annoying people, follow up is necessary for making a sale or recruit later. Sales depend on timing and those who may not buy at one time; they may be interested in the product in the future.

Most clients are often scared by network marketing since they confuse it with pyramid schemes. Businesses should have sufficient knowledge regarding MLM and take appropriate measures to ensure legal issues are addressed. Those desiring to be network marketers should identify companies that offer services and products that they like. It is not easy to share or sell products that one is not genuinely proud of using. Therefore, people should research about the products or services that can excite them. Moreover, the compensation plan should be favorable to the network marketers to motivate them to reach out to many customers.

There is a need to remain genuine and ethical. In most cases, sales representatives become deceptive and use hype to lure new recruits. It makes many people believe that MLM companies always condone such behavior even if they do not. Businesses encourage people, to be honest in their dealings with potential recruiters and customers. Those who love their products are enthused by them, which is sufficient to enhance promotion. Hence, one should not be making false or exaggerated claims. Excellent business conduct will make sure that the customers or recruiters do not feel duped and they will stick with the company.

Family members and friends should not be allowed to feel bothered by the business. Nothing can be annoying to the relatives as well as friends more than continually pestering them about the products or services. Friends and relatives frequently join MLM after they see the success of network marketers. During such a time, it becomes easy to convince them to join the business. New sales representatives always make a mistake by looking at everyone as potential recruit or customer. After identifying the target markets, they should focus their efforts on them. It avoids situations where people who are not interested in the products are beleaguered to buy the items.

MLM sponsors can make sales representatives focus on recruiting new people. However, their income is generated primarily from the sale of products or services. Clients who like the product can be made new business builders. Moreover, new customers or recruiters can be reached by word of mouth, and this can be beneficial to the business. Other ideas such as inviting a neighbor to host the product party, sharing product samples, and starting social media account or website can help build the market share rapidly. Nevertheless, sales recruits and the management should never lose focus since it will determine whether the strategies adopted will succeed or not.

All stakeholders should adhere to work ethics since it can build or harm the reputation of the organization. All members of the company should be aware of the tenets that guide the operation of the business. When everybody aligns their activities with the goals of the entity, it becomes simple to work as a team and achieve the overall objectives faster. However, this may not be possible if part of the team intends to follow their personal interests. Leaders have the responsibility of explicitly explaining to the members their roles in the business so that they deliver on their mandates.

Another consideration is to sponsor but not recruit. Network marketing can bring new business builders as well as profit from the sale of the products and services. Even though some people may consider it unfair, it is a way of helping others to succeed. Their success requires the business owners to train and lead them well. They should be offered support and training so that they understand how to go about marketing challenges. MLM requires personal contact with the potential customers. Nonetheless, many people in this digital age do not like this aspect. The reality is that personal touch enables people to sell products and boost the business by retaining clients.

Businesses can prosper by providing their customers with products that meet their desires. Marketing is about providing a solution to the needs of the customer. Sales representatives should be aware of these needs and listen to the clients before offering a solution to their problems. Network marketers should employ different strategies to reach their target market and identifying the ways to meet the needs. The products should stand out from those distributed by others. The challenge of MLM is persuading the prospect buyers to purchase the products and not those offered by the competitors. In the contemporary world, there is high competition because many similar products can be found on the market and this gives the consumers a choice. Marketers should provide a reason to the clients to choose particular products over the others.

Network marketing is a useful career for individuals who enjoy engaging with other people. Working hours are always flexible, and availability of the Internet makes it possible to earn commissions along with residual income. While some people often start as part-time workers, they can move to top management after excelling where they earn commissions, full-time salary, together with other incentives. One of the ways to guarantee career success is to research about the company and ascertain that their compensation plan is realistic. It should not be confused with pyramid schemes that often paint an implausible picture of the income to be earned through referrals only. Therefore, sales representatives should investigate the stability of the business before entering into agreements.

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• Network Marketing

What is Network Marketing?

The advanced technology and introduction of network marketing have completely changed the way of conducting business. The new modes of marketing business help multiple companies to attract potential customers towards their services. In addition to it, network marketing helps in reducing expenses that business industries suffer in traditional modes of marketing. Here we will go through what is network marketing's meaning, and some of its merits and demerits. 

Network marketing refers to a medium of marketing that numerous business owners use to expand their businesses. Manufacturers often use such a tremendous medium to deal with numerous distributors to enhance their business productivity. Other sub-distributors under them lead to a great network of distributors. They operate at different levels of the distribution chain and ensure good sales. 

One of the major benefits of network marketing is that manufacturers can use this medium for marketing their services to consumers at multiple levels. It enables them to reach out to potential customers indirectly. 

Structure of Network Marketing- How It Works?

To create a robust network marketing structure, manufacturers need numerous distributors, sub-distributors, and also dealers. All these distributors obtain goods and products from manufacturers at wholesale costs. They may use them personally or can sell to other distributors and gain profit. It forms a chain that continues until distributors reach customers. When the distributor or sub-distributor reaches customers or becomes final consumers themselves, network marketing ends.

Apart from it, these distributors get a tremendous opportunity to gain some returns from this network marketing. They can receive some commission from the manufacturers according to the number of products they buy and sell. 

[Image will be Uploaded Soon]

The above picture shows how a manufacturing company plans and decides the number of distributors for selling their goods and products. 

Examples of Network Marketing

Generally, manufacturers use a network marketing model in certain business structures that involve multi-level marketing. It is because such business models comprise a large network of distributors as well as sub-distributors. Some common network marketing examples include affiliation between companies like Amway and Tupperware with people who work part-time for them. Additionally, there are a number of women in India becoming distributors to work enthusiastically with manufacturers on network marketing. 

Characteristics of Network Marketing

Direct sales: Various companies market and sell their products directly without making any use of the distribution channel. The responsibility is given to non-employed individuals to sell the manufactured products and get a commission every time they make a sale.

Selling philosophy: The network marketing model includes participants to work on the selling philosophy of marketing. The main focus of distributors is to sell as much as they can to gain high commission. 

Hierarchy system: Distributors often have sub-distributors under them to earn more profit. It allows them to earn a commission from the manufacturers and profit whenever the sub-distributor makes a sale. Further, sub-distributors can have sub-distributors under them to earn in the same way and hence make a hierarchy system. 

The above picture shows that there can be multiple distributors connected together in network marketing. Further, there can be numerous sub-distributors under one distributor for earning high profit. 

Advantages and Disadvantages of Network Marketing

Advantages of Network Marketing

There is no restriction on the network marketing structure’s size which enables several companies to tie-up with numerous people to become distributors. Additionally, distributors can coordinate with other sub-distributors to gain profit.

Companies do not need to depend on advertising their goods to market due to a consistent and robust distribution network that attracts customers directly.

One of the greatest advantages includes reducing the profit margins of retailers that companies consider as an expense. The companies don’t have to take the burden of such costs as these margins get directly passed on to distributors.

There is no need for the company to spend a lot of money on distribution or storage. It’s because distributors handle all such expenses by themselves.

The structure of network marketing enables distributors to earn well from their dealings with manufacturers. They have a great chance to earn commissions as well as their own profits. 

Disadvantages of Network Marketing

It becomes difficult for manufacturers to predict production targets. It is because they depend completely on distributors to govern customer demand. It may lead to over-stocking or under-stocking of products.

There is a major role of distributors to facilitate the delivery of goods and services to final consumers. As manufacturers are less concerned regarding this, they may find it tough to control sales or distribution.

FAQs on Network Marketing

Q1. Is it Good to go with Network Marketing?

Ans. For a few people, network marketing has proved to be very successful. With a new business, you need to understand a multi-level marketing venture. Thus to be successful in network marketing, you need to spend sufficient time studying and practising its features. However, you may even need good money to start with it. Also, the success received is not overnight. It needs your much hard work to put in.

Q2. What is the Secret Behind Successful Network Marketing?

Ans. You must begin with network marketing only if you feel interested in doing so. However, you also need to understand that to be successful, you need to work on it. There is no other alternative to gain a good and secure career until you work on it. The one primary way to succeed is to make your work a fun and enjoyable activity for you.