Network/Referral
Marketing
Explained....
The
Apple Story
Let's say you wanted to
buy apples from a local store. How did they get there?
First, the apples were picked at a small farm in California and
sold to the local co-op. Next, the co-op sold them to a large
national distributor.
The national distributor
sells the apple to regional brokers who, in turn, resell them at
a profit to local jobbers. The local jobbers sell the apple to
large warehouses for the local grocery chains who, in turn, then
distribute them to the local grocery stores who mark up the
price another 30%-40% for overhead such as employee salaries,
rent, advertising, insurance, utilities, inventory shrinkage,
etc.
Each person along the way covers their overhead and adds on a
profit. So, while the apples may have cost only $.25 at the
field, the final price at the store is $1.00. This is known
as the retail distribution method of marketing.
Farmer > > > Local Co-op > > >
National Distributor > > > Regional Broker > > > Local Jobbers >
> >
Grocery Chain > > > End User
Here is another method of
distribution
The farmers
sell the apples directly to a national distribution company.
The distribution company sells the apples directly to the end
user or consumer. The end user or consumer benefit by being
able to purchase apples for their personal use at wholesale
prices. By using a more direct way of marketing their products.
-- They can cut out all the middle man and their cost.
Farmer
> > > National Distributor > > > End User > > > Buy Wholesale
Everyone does this
Let's say you bought apples
at your local grocery store and liked them so much that you in
turn told your neighbor, your local store would receive
additional sales because of your word of mouth advertising.
But did you get a check for doing this??? No.... And
that is because the store does not offer a bonus program or it
has already spent its advertising budget in the local newspaper
and, guess what; there is nothing left for you.
This is what you really
should be doing
Again, let's say you liked
the apples you purchased at wholesale from the distribution
company. Next, you told your neighbor how you purchase your
apples, and your neighbor purchased apples also at wholesale
from the distribution company.
Since the distribution
company pays their customer a bonus for referring people to
them, you receive a check. This is known as
Interactive Marketing.
Farmer
> > > National Distributor > > > End User > > > Buy Wholesale >
> >
Referring Others > > > Receive a Check
The distribution company
which is a referral marketing company will give you a bonus
check because of your effort that resulted in their increased
sales from your word of mouth advertising and you do not have
to stock inventory to show or sell to others in order to receive
this check. The entire process from trying the product
yourself, telling your neighbor, to receiving a check is also
known as
Referral Marketing.
And when you start to developed a network of customers using the
product because of you, your neighbor and your friends word of
mouth marketing, this now becomes known as
Network Marketing.
Referral Marketing vs.
Traditional Network Marketing
Referral marketing also
differs in design than traditional network marketing because in
the latter you might have to stock product or inventory to
show or sell to others in order to receive a check. While in
Referral Marketing you do not.
That is why so many people
are excited about referral marketing. For doing what comes
naturally (showing a good deal without having to stock
product) we get paid bonuses. This method is now expanded
to the Internet in the form of website information where people
from across the world can purchase products from the company
because of your effort and you can receive a bonus for it.
Which would you choose
Do you prefer to get paid by
a referral marketing company or NOT get paid by a local store
for your word of mouth marketing? In my opinion, the choice is
clear. Referral / Network Marketing is a better deal for all of
us, and it is a legitimate form of conducting business. |
