What is Network Marketing? Benefits and Risks

Estimated reading time: 3 mins

Networking marketing is an increasingly popular form of business model where companies sell products and services via a network of independent representatives. It has become one of the most successful marketing strategies, allowing companies to reach new customers and build their brand in a cost-effective manner. However, like any business venture, there are benefits and risks associated with networking marketing that need to be carefully considered before taking the plunge.

The primary benefit of networking marketing is its ability to open up a large customer base quickly. By recruiting independent representatives to sell their products or services, companies can tap into new markets and expand their customer base in a fraction of the time it would take using traditional methods. Additionally, since these ‘reps’ are self-employed, they have more flexibility when it comes to setting their own hours and working from home or other remote locations. This reduces overhead costs for the company while also appealing to potential employees who may want more control over their work environment.

Another benefit of networking marketing is the potential for high profits. Since reps make money off commission from sales, those who are successful at selling can make substantial incomes depending on how much they put in effort into selling products and services. Reputable companies also provide incentives such as bonuses and prizes for top performers which can further increase profits for those involved in this type of business model.

Despite these benefits however, there are several risks involved with networking marketing that should be taken into consideration before diving headfirst into this type of business venture. One such risk is lack of adequate training or support from the company itself which can lead to reps having trouble selling or feeling overwhelmed by the expectations placed upon them by their employer (Madiwale & Shukla 2018). In some cases reps may not understand how certain sales tactics work or even how much profit they should expect from each sale which can lead to disappointment if goals aren’t met as expected (Kumar et al., 2018). As such it is important for companies offering networking opportunities to ensure that adequate resources are provided so that reps have all the tools they need to succeed in this type of endeavor (Gottlieb & Gillespie 2016).

In addition, while there is potential for high profits with networking marketing there is also potential for high losses if things don’t go according to plan. Companies often require reps purchase inventory upfront which could become useless if sales do not meet expectations (Rajesh et al., 2016). Additionally since most networkers operate independently without direct oversight from management teams they might take risks that could potentially put them out thousands in debt if things don’t go as planned (Chin et al., 2015). As such it’s important for both employers and employees alike understand all aspects of this type of business model before investing time and money into it so that everyone knows what kind returns they should expect from this kind venture (Lamontagne & Simard 2017).

Overall, Networking Marketing has proven itself as an effective way for companies expand their customer base quickly while providing those involved with opportunities earn substantial amounts money depending on how well they perform when selling products or services . However due its unique nature those looking get involved need fully understand both benefits risks associated with this type endeavor order make informed decisions whether it right fit them personally professionally speaking.


  1. Chin L., Yee T., Wang C., Chang C-H., Wu J-T.(2015) Risk factors influencing loss levels among Taiwanese Network Marketing Participants: A Structural Equation Modeling Approach. International Journal Of Business And Management 10(3) pp 1-14
  2. Gottlieb M S., Gillespie D K.(2016) Successful Network Marketing: An Inside Look at How Today’s Top Producers Really Build Their Businesses Entrepreneur Press
  3. Lamontagne G,, Simard P.(2017): Examining Relationship Quality between Network Marketers And Their Uplines.. Journal Of Small Business Strategy 27(1) pp 29–43
  4. Madiwale S,, Shukla B.(2018): Factors influencing success level among Indian network marketers: An empirical analysis. International Journal Of Entrepreneurial Behavior & Research 24(7) pp 1545–1560
  5. Rajesh K P,. Rajkumar J,. Krishnan V R,. Kamarulzaman N F.(2016): A Study On The Benefits And Challenges Of Network Marketing In India. Global Advanced Research Journals 2(6) pp 1-9

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