Extracted from John P article

Today we will be looking on the subject Making Money through Network Marketing...Lets Go
What is Network Marketing and how exactly does it work?

Many of you reading this may have come across the term ‘network marketing’ before. It’s one of several interesting and exciting business concepts that are helping thousands of people across the world to earn a decent income.

Before we continue with the rest of this very detailed and eye-opening article, it is important that we fully understand exactly what network marketing is and how it works in real life.

To keep it simple, let’s use one of the world’s most popular product brands that you know and probably consume a lot – Coca Cola!

How did that chilled bottle of Coca Cola in your refrigerator get to you? It is very likely that you bought it at a shop in your neighbourhood or at a supermarket in town.

Well, that bottle of Coca Cola had to travel through several hands (or middlemen) before it ended up in that shop where you bought it. From the factory where it was produced and bottled, it was sold to a major distributor who sold some of it to a wholesaler who sold smaller chunks to the retailer (a shop or supermarket) who sold it to you.

This is a clear example of a traditional way of marketing and distributing a product.

Because of the number of middlemen involved (distributors, wholesalers and retailers), the traditional distribution chain is usually long. However, the sad thing about this type of distribution is that everybody in the chain makes money from the product except you (the final consumer).

In fact, consumers in a traditional marketing system cannot buy products directly from the factory or producer; people like you and I must wait until Coca Cola reaches the retailers before we can buy the quantities we want.

Network marketing and distribution (popularly known as ‘direct selling’) is very different from the traditional version.

Under network marketing, factories and producers prefer to sell products directly to ordinary people (that’s why it’s called ‘direct selling’). This concept, which cuts away all the middlemen, allows ordinary people like you and I to sign up directly with the factory or product manufacturer to buy and/or distribute a product.

As a distributor, you can buy products directly from manufacturers at very low prices and make a profit by selling to other people. You also earn commissions for referring other people (friends, family or total strangers) to sign up as distributors.
Because network marketing companies sell their products directly to consumers, they usually spend very little on advertising and sales of their products. As a result, many of them pay out huge bonuses to their distributors who sell large volumes of products during the year.

Apart from the profits, commissions and bonuses that can be made as a distributor for a network marketing company, the thing that makes this business opportunity very attractive is the passive or residual income that it can make for you.

Passive or residual income is money that you make without any active effort. Unlike a 9-to-5 job which you must work at in order to earn a wage or salary, passive income doesn’t require your efforts or presence; it just keeps rolling in.

Other popular passive income streams include: investment in stocks, real estate, and interest on your bank savings account.

Many people often refer to ‘network marketing’ as ‘multi-level marketing’; both terms are very closely related and we’ll explain:
Author John P.