Sunday, January 15, 2006

A Brief History Of Network Marketing

By Kamal Mustajab

Network marketing today is a multi-billion dollar business. It is now a major method of doing business with more and more companies adopting this business model. Today, it has grown into one of the driving forces of the 21st century economy. Network marketing is now regarded by many business leaders as the business of the future. However, it was not so long ago this marketing method was misunderstood as a get-rich-quick scheme, or pyramid scams. It is all too common for network marketers worldwide for having to answer the legality and soundness of their business. Who actually pioneered this business? When did network marketing or multilevel marketing as it is popularly known actually start? After pouring through some books and the Internet regarding this subject I hereby present to you a brief history of this fantastic and wonderful business which requires a lot less financial capital than a traditional brick and mortar business but many eventually yield enormous, long lasting income.

Nutrilite Products Inc.

In 1945, Carl Rehnborg was known to be the first person to introduce a compensation plan to market his nutritional products. His company was originally called the California Vitamin Company but later renamed as Nutrilite Products Inc. Using a multilevel it allowed any Nutrilite distributor to get a 3% commission from his own sales. With this system, Nutrilite achieved stunning success.

Amway Corporation

In 1959. two good friends- Rich DeVos and Jay Vay Andel started a new company called Amway Corporation selling a biodegradable all-purpose cleaner. Using an improved compensation plan, the tiny enterprise achieved remarkable success with a sales force of independent distributors from all over the United States. DeVos and Van Andel had earlier made a fortune from working as distributors for Nutrilite. After breaking away from Nutrilite they were convinced they could do better on their own.

Phases of Network Marketing

Over the following years, network marketing has evolved and diversified into a wide range of products and services as more companies adopted the marketing method. Richard Poe in his book, Wave4 (Network Marketing in the 21st Century) summarizes network marketing into the following phases:

1945 - 1979 -- The Underground Phase
1979 - 1989 -- The Proliferation Phase
1990 - 1999 -- The Mass Market Phase
2000 and beyond -- The Universal Phase


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