For business owners who are curious to learn about the distribution method of network marketing, here is a SWOT analysis of the industry.
Strengths:
For decades business owners have detected that word-of-mouth advertising is one of the most powerful methods of advertising. Companies who distribute their products in network marketing can experience exponential growth because of the microorganism effect. Everyday people can become distributors for your company and bring the products to their local market. This is supported the doctrine that people are willing to purchase products or services more promptly from people they know and trust, rather than from a gross revenue rep.
Compensation is performance-based as there is often a pay grid in place for satisfying certain quotas. Having this kinda pay structure in place reduces the risk for the business owner for if a new distributor does not perform, the business enterprise burden of obtaining the new distributor/ associate is minimized. Customers are loyal to both the Independent Distributor representing the company and the products. Products are ordinarily expendable which creates repeat orders therefore increasing gross revenue from one quarter to the next is common.
Weaknesses:
As business owners we will want to cover the weaknesses as part of our SWOT analysis of the Network Marketing industry. The first and taken for granted weakness is that the growth of the company becomes conditional the strength of your distributors. This is not altogether out of a business owners' control but can be difficult to influence. The compensation is the main motivating factor for distributors. Retention of distributors is a problem right across the industry. As it is easy for a distributor to join a company, it is even as easy to leave. This model of distribution works best for products or services that are expendable. This creates repeat orders which ideally can be set informed a monthly cycle. Works best for products between $30 and $180 which makes it cheap for customers, and still profitable for the company.
Threats:
Having a look at the Threats portion of our SWOT analysis of the industry, down line marauding can occur at any time. Down lines are referred to en bloc of distributors who work and benefit from one other. If a key distributor decides to join other company and bring their team, a portion of gross revenue can be loss. Having incentives and agreements in place is the best way to avoid this situation.
Another threat to the business owner and company is that distributors are free to promote in the field following certain guidelines. These guidelines may not always be followed ensuant in possible lawsuits or defamation of the company's brand.
Opportunities:
Expanding into new markets is on top of the list of opportunities as part of our SWOT analysis of network marketing. As people are happy with the products in one market, distributors will be ready to move to expand into a new market. This will also be possible attributable the low marketing budget necessary for the main stream of communication is through the distributors who only get paid when a product is sold.
Since the marketing budget is not as burdensome as traditional advertising methods, business owners have been able to apportion more resources to the product allowing it to be more competitive in the market. And as gross revenue grow other chance that business owners take advantage of is being able to expand the line of merchandise to the existing customers who are often open to adopting the new products.
This SWOT analysis of network marketing for business owners is not by a blame sight comprehensive, but gives you a starting point on what to expect. The industry is apace evolving and more people than ever are looking to build with respectable companies who they can trust. There are different strategies to build a network marketing business for the owner and for the distributor. A recommendation would be to integrate technologies which will optimize your leverage in reaching the highest number of qualified prospects.
