The Leading Marketing Tool You Aren’t Using – And Why You Can’t Afford NOT To

Dashing out the office door for a quick caffeine pick me up, I saw it. Effortlessly cruising down the street, its red velvet cupcakes and sprinkles taunted me. I salivated. I drooled. My coffee quest became a distant memory, and five minutes later, I was happily noshing on a cupcake — and carrying a dozen more back to the office. The cause of my sudden sweet tooth? A colorful, vinyl-wrapped PT Cruiser, prominently featuring tasty-looking cupcake graphics and the address for a local bakery. Chalk up another win for vehicle advertising!

Vehicle advertising, also known as vehicle wrapping and mobile advertising, reaches more consumers at a lower cost per thousand impressions (CPM) than any other form of outdoor advertising. One vinyl vehicle wrap on a fleet car, truck, trailer or van can generate between 30,000 and 70,000 impressions daily — and even more in urban media markets, like Seattle. And vehicle wraps boost name recognition 15 times more than any other form of advertising. It’s inexpensive, practical and an effective way to spread the word about new products and services. And yet thousands of small businesses fail to take advantage of this cost-effective marketing tool, while wasting thousands on over-priced advertisements. “But it’s not Twitter!” you protest. “And how do I know vehicle wraps actually work?” Sort through the hype here and get the real facts on vehicle wraps — the leading marketing tool for your small business needs.

Marketing in the digital age: Making sense of all the hype.

In today’s media saturated world, cost-effective advertising is the difference between success and failure. The shift from traditional print campaigns to online marketing has left many small business owners wondering, “What should my company do to stay competitive and get noticed?” Advertising through traditional means, such as the Yellow Pages, is costly and no longer effective. Radio and television advertisements are simply too expensive for most small businesses to afford. And for all the hype, the online world is not any easier or affordable for small businesses. Marketing emails end up unread in the spam bin. Search engine pay-per-click advertising can quickly add up. And the sobering reality remains that a small business’s advertising budget simply cannot compete with a Fortune 500 company’s vast financial resources.

At the same time, Americans’ spending patterns are changing. In these tough economic times, the majority of Americans are living a simpler life, scaling back on big purchases, spending less, and saving more. Adjusting your company to this new economic reality is not as east as simply lowering price points. The average American customer is now an expert at online comparison shopping — whether it’s finding the biggest sale on a product, locating coupons or comparing service costs. And it’s not just product comparisons that customers are researching. With limited resources, your customers want to ensure they get the biggest bang for their buck and purchase from companies they know they can trust. Marketing today is as much about being a trusted, respected corporate citizen as it is about understanding the latest social media buzz. So how does a small business owner sort through all the hype and develop a cost-effective advertising strategy?

Step 1: Define your brand.

Local businesses must build and maintain a strong brand for their companies, and for good reason. Without a strong brand, no one will know what a local business offers and where it is located. In a world of sprawling big box stores and over-sized corporations, a small business must work twice as hard to define its brand. A strong brand translates into a strong relationship with your target audience, and allows you to cultivate a strong culture around your product, service, or organization. Before you make any advertising decisions, you need to define your brand. Ask yourself these questions: What is my company’s mission? Why is my product or service unique? Who is going to buy my product or service? What do I want my target audience to think about my product or service? Write down the answers to these questions on a sticky note. Refer back to this note before you make any advertising decisions to be sure your marketing strategy is true to your brand.

Step 2: Do your research, know your product, know your audience.

Avoid falling head-over-heels for the latest marketing trend by doing your research. Firstly, what is your product? Too many small businesses rush into advertising decisions without taking the time to understand their brand and product. If you don’t know what you are selling, how can you sell it? Your product can’t be both high-end and budget-friendly. Why is your product unique and what makes it worth the money (whatever the price point)? Secondly, know your target audience. What are the needs, habits and desires of your current customers? What about your prospective customers? Finally, take the time to study your local industry. If your business has a storefront, how can you increase walk-in traffic in your neighborhood? If you offer a common service, what is it about your company that makes your service stand out from the rest? Don’t rely on what you think you know — invest in the marketing research to get it right. Conducting marketing research will help grow your business by both identifying potential customers and avoiding marketing pitfalls.

Step 3: Choose the right media tool.

Small businesses often make the mistake of not choosing the right media tool for the job. Instead, they choose the latest ‘trendy’ tool. For example, with the explosion of social media, small businesses rushed to pump out Facebook newsfeed and Twitter updates. But in a sea of Twitter updates, your product becomes one more tweet lost in the noise — akin to another email dumped directly into the spam bin. Amid the hype about building buzz over social networks comes a sobering realty for many small businesses. Generating and updating content for networks such as Facebook and Twitter can be both a mental energy and time drain that gets your company nowhere. Investing hours each day in updating a Twitter feed is simply not worth the loss in productivity. Social media campaigns rely on carefully segmenting and identifying a select target audience. But with all this segmentation, small businesses often miss their core audience and fail to translate online buzz into real-world profit. Don’t get me wrong: social media can — and often should — play a role in your marketing strategy. But falling too hard for the latest marketing trend can leave your company without a well-rounded strategy and the right media tools to compete. Always remember your brand, your product and your audience. The number of people (in your target audience) who actually use Twitter on a daily basis and pay attention to tweets from your company is a lost less than you think. Look at your sticky note, and stay on track!

Step 4: Get the biggest bang for your advertising buck.

From Super Bowl commercials to glossy advertisements, big businesses spend the big bucks when it comes to marketing. In all likelihood, your advertising budget will never rival a large company’s budget. But even if your biggest competition is the corner shop down the street, when it comes to advertising, your small business still needs to get the biggest bang for its buck. Vehicle wrapping is a cost-effective, proven marketing technique — allowing you to compete with the big boys for a fraction of the price.

Most small business owners cannot afford TV and radio advertising, and mistakenly think that they cannot afford a billboard advertisement. But if you own a car, you already own the advertising space. So why not use it? Promote your business on your daily commute. Simply by driving to and from work, you can advertise your product or service and directly connect with thousands of potential consumers. If you have a fleet of company cars, invest in fleet vehicle wraps. When your employees meet with a client, they will arrive in style, connoting professionalism and authority. And as an added benefit, studies show that employees are safer, better drivers when driving a clearly labeled fleet vehicle.

Statistics prove that one vehicle wrap can generate over 10 million impressions per year. The cost of advertising over the life of the vehicle is minimal, especially when compared to other forms of advertising. And vehicle wraps work for all types and sizes of businesses. Major corporations already know this secret. Big companies wrap their vehicles. But many small businesses have failed to capitalize on this cost-effective marketing tool. You have a great logo and marketing message — now share them with the world!

Step 5: Generate publicity.

Nothing improves sales or builds company reputation like great publicity. Especially when the publicity is free! But how do you generate the ever-elusive word-of-mouth buzz? Nothing stands out from the crowd quite the same way that a vinyl wrapped vehicle does. Whether you have a fleet of PT Cruisers covered with your logo, a car with your logo on the roof, or a company van, a vinyl wrapped vehicle proudly announces your brand. Vinyl wrapped cars are an unexpected sight — a break from otherwise ordinary, mundane vehicles — that make people stop and take notice — and keep talking about it at the water cooler later that day. A big part of getting the biggest bang for your buck in advertising (See Step 4), is ensuring the advertising technique you use also generates free publicity. One wrapped vehicle that gets everyone talking is better than a stack of paper mailers that end up in the waste bin. So make your own headlines and create free buzz with vehicle wraps.

Step 6: Boost sales!

Whether you are selling cupcakes or marketing a service, boosting sales is the end goal of all advertising. If you’ve done your research (See Step 3), you may be surprised that there is a big gap between what you are selling and what your customers want to buy. Customers do not simply purchase a product or service; they buy into a lifestyle and a persona. Whether you are a new or established company, the fastest way to boost sales is to close the gap between your product and your customers’ expectations. Effective advertising — that captures the essence of your new, core message and your customers’ expectations — is the key to the success of your small business. Powerful graphics and images are the best way to visually connect with customers and deliver your message. And the best, most cost-effective way to get your message out to your customers is on vehicles. Your customers already spend hours in a car commuting or walking around a downtown area. A vehicle wrap is a quick, cost-effective way to redefine a brand or launch a new product. More than 95% of Americans are reached by media targeting vehicle drivers and passengers. Mobile advertising is an ideal way to outshine the competition and differentiate your brand — two key components to boosting sales. Send your employees driving around town in colorful cars covered in tasty cupcakes, and people will start lining up outside your cupcake bakery, too!

More impressions, more money: The marketing science behind vehicle wraps.

A successful marketing campaign can be difficult to achieve. You want to stand out and be different, but not too different. You want to be trendy, but not alienate longtime customers. You want to spend pennies, but look like you spent millions. After reading through the steps to successful marketing above, the clear solution for small businesses is a vinyl vehicle wrap or vehicle lettering.

A vehicle wrap generates instant attention. Your small business will get noticed, and you can differentiate yourself in a crowd of competition. A vinyl wrap transforms your car, truck, van or fleet into eye-catching advertising machines. It builds your brand recognition, raises your company’s profile and reinforces brand identity. Oh, and it’s a long-term investment that costs next to nothing — and can potentially generate thousands in profit via free, word-of-mouth publicity. “Okay,” you say quizzically. “It sounds almost too good to be true — how do I know this actually works?” The answer: impressions.

One way marketing gurus measure the success of an advertising campaign is with impressions. You may be familiar with terms such as ‘cost per impression’ (CPI). Each time an individual views an advertisement represents an impression. The effectiveness of an advertising campaign then can be determined by dividing the cost of the entire campaign by the number of impressions. For example, according to Nielsen Media data, the CPI for a national magazine ad is $0.033 and a prime time TV ad is $0.019. However, the actual cost of the ad, including production and placement, may run over a million dollars. Clearly not the biggest bang for your buck if you are a small business!

In comparison to pricey television and print ads, a vinyl vehicle wrap costs very little, and last far longer. In fact, mobile advertising (vehicle wraps and lettering) is the most effective and efficient form of outdoor advertising. A partial wrap may cost as little as $500, and a full wrap as little as $2,000. When professionally printed and applied, a vinyl vehicle wrap or vehicle lettering can last up to seven years. With upwards of ten million impressions per year, both your CPI and initial cost is very low. Driving to and from work, or simply parked on the street, your vehicle is an eye-catching, can’t-be-missed advertisement. In the past seven days alone, eight out of ten Americans report they have walked in a town, city or downtown area. This pedestrian traffic represents a huge, untapped market, allowing you to bring your marketing directly to your consumers. At the same time, millions of Americans drive their car in the daily work commute. Even if they haven’t had their morning coffee, it will be hard for them to miss your brightly colored, vinyl wrapped vehicle in the lane next to theirs. That’s why vehicle wraps and lettering give your small business the biggest bang for your buck.

Bad graphics, bad design: Avoiding a branding catastrophe. We all remember that one really bad sign or poorly designed logo that made us think “Really? Are these people professionals or a bunch of amateurs? What on earth were they thinking?” Instead of engaging with the brand, we walked away puzzled, disgusted, shocked — or worst of all — told our friends about how bad the design was. Definitely not the public relations move that company intended with the design!

The goal of every marketing initiative is to clearly communicate your message. Design is at the root of this communication. Good design visually implements your marketing strategy; poor design does not. The old adage, “It’s not what you say, but how you say it,” is still the fundamental truth of effective marketing. In fact, nothing screams unprofessional and damages your brand like bad graphics. On the other hand, good design establishes your brand’s legitimacy. Fundamentally, good graphic design should: (1) improve your image and strengthen your brand, (2) make your business stand out from your competitors’ and (3) convincingly sell your messages to customers with a strong emotional appeal. These all add up to one thing: a better small business. Think of graphic design not as an expense, but as an investment in your company’s future. If you aren’t a graphic designer, don’t create your own logo. Leave the logo, and marketing collateral such as brochures and case studies, to a professional design team.

There is a fine line between getting the biggest bang for you buck and looking cheap. When you choose to advertise with vehicle wraps, your goal is to cut costs, not quality. From color disasters to font fiascoes, don’t gamble your business’s brand away on sub-par design. Leave the design of your vehicle wrap to the professionals. An experienced, professional team understands how to use design elements for maximum visual impact. For example, a simple graphic communicates more information in less time than text. A high color contrast, strengthened with a drop shadow, will improve legibility. Emphasize the name of your company, phone number or address with large letters and bold type. The best designs stimulate an emotional, subconscious reaction in the viewer, like when I spontaneously bought a dozen cupcakes. A poorly designed wrap would have failed to stimulate this emotion, or worse yet, go completely unnoticed. Whatever your graphic needs, avoid a branding catastrophe and go with the professionals.

The technical stuff: How vinyl vehicle wraps, vehicle graphics and vehicle lettering work.

Vehicle wraps help local businesses better engage customers and boost revenue — for a fraction of the cost of traditional advertising. When choosing what type of vehicle wrap, graphics, or lettering, consider your needs. If you just want to include your company’s name and contact information on the door, consider vehicle lettering. If you want to include a logo or graphic, consider vehicle graphics or a partial vehicle wrap. If you truly want to transform you vehicle or fleet into a mobile billboard, choose a vinyl vehicle wrap.

The most important decision you will make is the team you choose to apply the wrap, graphics or lettering. Always, always, always go with the knowledgeable professionals. While vehicle wraps are a cost-effective form of advertising, outfitting an entire fleet still represents a significant financial investment, and you want to have it done right the first time. When properly applied, your vehicle wrap will last for up to seven years. Improper application and poorly designed graphics, however, can spell disaster for your marketing plans. Take the time to find a professional and engaging team that will work with you to meet your needs.

How do vehicle wraps get applied and how long will it take?

Depending on the size, a vehicle wrap is typically applied over a few days. Once the final design is approved, the production team will pre-flight check the graphics and manage any necessary resizing. If you choose a vinyl body wrap, technicians will trim the wrap down for application, and then bond and smooth the wrap over the contours of your vehicle. This application process, while straight forward, must be handled by a team of experts. If a vinyl wrap is improperly applied, it may peel or crack, and will need to either be removed or completely replaced.

Will the vinyl covering damage my car?

Not at all! In fact, the vinyl will protect your car body from UV rays. A few years under the wrap is like giving your vehicle a professional beauty treatment. The wrap peels off like a label on glass, requiring little more than rubbing alcohol for touch ups. When removed, your vehicle’s exterior will look brand new, often resulting in higher resale value for clients. Talk about a great investment!

What parts of my car will the vehicle wrap cover?

Vehicle wraps typically cover the majority of the vehicle, including the side the windows. The only windows that are always excluded (for legal compliance) are the front windshield and front driver and passenger side windows. The rear window and rear side windows are typically covered. The window covering material is called a “window perf”. It has tiny holes that let you see out, but the outside viewer looking at the vehicle only sees the graphic. A 100% vehicle wrap covers the whole vehicle as described above, and with the noted front window exceptions. Doing the top of the roof is optional, although adds an extra bang for you buck, especially in urban communities with tall buildings.

What if I don’t want to cover the entire vehicle?

No problem! You do not have to cover the entire vehicle. Some small businesses prefer to get a partial vinyl wrap or simply apply vinyl lettering on the doors or roof. You can choose between covering 20%, 40%, 60% or 80% of your vehicle. You can also do simple vehicle lettering.

Why should I cover the roof of my car?

If you work or live in a big city, consider wrapping the roof of your car. Covering the roof with your company name, phone number and web site is great when you are driving by or working at job sites that have tall buildings. People will look down and see your company advertisement driving by — that definitely makes a lasting impression!

What are specialty vinyls?

There are specialty vinyls that are reflective or luminescent (glow in the dark). In darkness, these vinyl wraps can get a customer’s attention (so you are always able to market your company 24 hours a day– even at night!) or they may be applied for safety purposes.

What if my car gets dirty — can I wash my vehicle wrap?

If you have a full vinyl vehicle wrap, you will want to hand wash your vehicle. This extra care — rather than using a power washer — will protect the integrity of the wrap, and ensure it remains beautiful for years to come.

The bottom line: your business simply can’t afford for you NOT to use vehicle wraps!

You now know the importance of building an effective brand — and how good graphic design and cost-effective marketing is essential to connecting your brand with your target audience. At times, marketing in the digital age may seem overwhelming. You know not to let your advertising decisions be guided by chasing the latest media trend. At the same time, it’s clear that maintaining the status quo is no longer good enough, especially as consumers change their spending habits to reflect the tough economy. And yet, small business owners often ask, “Why isn’t my marketing plan working? It’s they way I’ve always done it — and it worked in the past!” And here is your answer: traditional advertising that worked in the past is simply not going to work today. The hard truth many small businesses avoid is that they talk about change a lot more than they actually engage in change. This is understandable. Changing a marketing strategy can seem at times like a scary jump into the unknown — or a misguided chase of the latest (and not so greatest) online advertising trend. There is nothing scary, however, about adapting your marketing strategy to include vehicle wraps. In fact, the only scary thing about vehicle wraps is how few small businesses currently take advantage of this inexpensive and highly effective marketing technique.

Vehicle advertisements are an easy and proven way to put a little spice in your image and fire up your bottom line. Whether you are a new business out to make a name for yourself or an established business wanting to stay ahead of the competition, you simply can’t afford NOT to use vehicle wraps. And any vehicles you wrap will retain the quality of their exterior finish, avoiding UV light damage — a huge plus for resale. Fortune 500 companies already know how successful mobile advertising is — and now you do too! So let go of your past assumptions about marketing, think long and hard about your brand, audience, and product, and starting raking in the profit with vehicle wraps!

Top Network Marketing Company – Why Are the Products So Expensive?

I’m sure you’ve heard this question before, Why are top network marketing company’s products so expensive?

This is one of those ever-present questions that networkers and direct sales people will continue to encounter (probably) forever–and there’s always more to it than meets a simple answer.

One key is not to side-step it. There are good and genuine reasons for legitimate, premium-priced products–and of course there are over-priced ones as well. Honesty is best, as always, and I’ll endeavor to give you the general truth with my answer to the question.

Special Products at Special Prices
First, the products available through top network marketing companies sales and distribution model are mostly what are called “specialty” items. They are higher priced products to begin with, having more costly ingredients and more complex designs or formulas; they are simply more expensive to make and package. Some well-known non-network marketed examples are Clinique makeup and fragrance products, Apple computers, iPods and iPhones, Armani clothing, Mercedes and Lexus automobiles.

Unless you’re dealing with a scheme or a scam, these premium products outperform their cheaper, off-the-shelf counterparts, giving consumers more and better benefits. Since they have greater value, they cost more.

If these products are being outsourced by the networking company (produced by a “third-party” vendor/supplier), they tend to be manufactured in smaller production runs that do not allow for all the optimal low-cost advantages of buying and making in the high volumes mass-marketers enjoy. The manufacturing processes are more complex and exclusive. The profit margins are higher. This results in a higher quality product with more attention to detail and quality control.

The reason manufacturers and marketing companies select network marketing and direct sales is because these higher-priced products are of higher quality, and they therefore require special methods of distribution and sales.

Simply put, they cannot compete with the lower-priced, lower quality “commodity” products, which are sold based mainly on discounted mass-market pricing and brand awareness alone. Think Wal-Mart and Costco.

Specialty products are “education-intensive.” They need greater explanation; for example, what formula, ingredients and/or processes makes the product more expensive than those mass-market goods available through direct response marketing (such as the Internet and mail-order) or retail chain store sales. Many require demonstration.

Mass-market products depend on advertising, promotion and merchandising at “point-of-purchase,” all of which are required to get consumers’ attention, let them know the product exists (to create “trial” especially if it’s “brand” new), and to give them enough compelling reasons to purchase and keep on purchasing.

Going head-to-head with nationally advertised products, many to most of which are heavily discounted and sold at the lowest price possible, is a tough game for just about all smaller businesses to win. Imagine trying to sell vitamins or nutritional beverages or “prestige” cosmetics against a major manufacturer selling through Wal-Mart, or a natural toothpaste against a tube of Crest® through Kroger or Publix supermarkets.

Specialty products are perfect for the person-to-person, information-rich education, demonstration and service oriented methods of network marketing.

And that’s where the important second aspect of network marketing’s “higher price” comes in: the added value which you as a “distributor” add to the specialty products you sell.

Added Value Added

Network marketing and direct sales representatives add significant value to the product they sell and they are well paid when they do so successfully.

We reach consumers with the awareness of new products and services that ads and merchandising–no matter how persuasive or promiscuous–would not be able to reach out and touch. And by virtue of our one-on-one, personal relationship with these buyers, we appeal to them with a level of trust and service no mass-market, retail product advertiser could hope to compete with.

The extraordinary level of service Network Marketers provide is not available when buying through mail order or retail outlets. It is a real and tangible benefit, part of the product’s value–and its price.

For example: Someone tries a network marketing anti-aging health product. It’s personally presented for them–either in person or via mail–with a host of educational material about the product: scientific studies, article reprints, even books or tapes explaining how the product was made, how to use it, its unique features and its benefits.

Within one to two days, the network marketer again contacts the person to follow up, asking how they are doing, checking to see that their customer is following use directions properly, make recommendations, etceteras. These service calls continue daily, bi-weekly or weekly until the customer is satisfied and happy.

The network marketer will also continue to send informative and educational material such as updates from scientific literature. He or she will also let the customer know about other products the company offers that this particular customer with his or her unique needs and wants might also enjoy.

This is an extraordinary level of service that is a real and tangible benefit for the consumer. This kind of personal and knowledgeable attention is not available when buying through the Internet alone, or mail-order or most all retail outlets. It is one of the things network marketers are paid for and it is part of the product’s value–and its price.

Are there cases where the above education and service are not offered? Of course.

Are there products that do not have special ingredients or qualities that support a higher price? Sure.

And are there times when a network marketed product is simply more expensive to pay for the multiple-level commission structure? Yes.

Back in the early 1950s, a dog grooming service was opened in New York City to serve people living in the exclusive Park Avenue, 70th and 80th Streets area. They charged $25 to shampoo and clip a dog. They had no customers. Then they jacked-up their prices to $250 per visit–and were an instant success. The Cadillac Seville, when first introduced in test-market showrooms priced at under $10,000, bombed; at $14,000 the very same automobile became an instant best-seller.

Value is a perception. The relationship between quality, benefit and price, i.e., value, is in the mind of the consumer-beholder. Businesses price goods and services according to what the market will bear. Successful marketers come up with just the right mix of value-benefit-price.

The majority of network marketing direct sales products are of the genuine higher-quality variety, not available in stores, special in ingredients, design and making.

Most offer the convenience of in-home or on-line ordering and to-the-door delivery. They are also special in terms of…

Marketing and Customer Service

The network marketing “sales person” adds value to the product through his or her education, service and sales to the customer.

All of this has its price. And according to consumer trends and the explosive growth of network marketing direct sales companies and their products worldwide, more and more people every day think it’s worth it.

What’s the truth about the price of products offered through network marketing? Are they too high? And if so, why?

The full answer to this one is complicated. If you need a short one, mine is:

High? Usually, yes.

Too high? Sometimes… yes, but generally no.

So, if they are high, why? Let’s start with looking at what kind of products we’re really talking about here.

The Truth is, Specialty Products Cost More

Network marketing is predominantly a “specialty products” business: The products we sell most often tend not to be the type you’d find in supermarkets, drug stores or any other mass merchandiser. They are not the kind that combines the lowest possible price for the least acceptable level of quality. For a conventional retail parallel, look at the products in a natural or health food store, beauty salon, boutique or upscale department store.

Specialty products cost more to make. The ingredients are unique and high quality and production is low quantity–the amounts manufactured usually are not great enough to take advantage of the economies of scale enjoyed by big-time, high-volume, mass-market producers. So these products more expensive–both to make and to buy.

Also, specialty product makers usually cannot depend on major advertising to increase sales: they don’t have that kind of money. So they have to use more expensive forms of distribution, such as small, individual retail outlets whose profit margins are higher than mass-market stores and chains.

Profit Margins and Markups

Here’s an example: a discount chain drug store might be able to markup a bottle of vitamins that normally sells for $3.00 wholesale for less than the normal 33 percent retail profit margin. And, because they buy in large volumes, they’ll get the product for less than $3.00 to begin with.

A natural or health food store might buy that same product at the full $3.00 wholesale price, and use a markup of 50 percent to get their full 33.3 percent retail profit margin.

To the consumer, buying at retail, here’s the difference: $3.99 at the drug store and $4.50 at the health food store.

And then there’s “what the traffic will bear.”

There are sexy boxes of imported chocolate that go for $38.00 each, and poly-bags of 50 mini Reeses Peanut Butter Cups you can get for less than $3.80. If your taste tends towards expensive, you’ll generally pay more–in “margin” percentages to middle-people and in total dollars.

Let’s look at a comparison of one single product offered through the conventional manufacturer-to-retailer distribution system and the exact same product sold through network marketing.

$$$ From Conventional Manufacturer to Consumer

We know specialty products cost more to make; again, the ingredients are unique and high quality, and the production is low quantity, so they are simply more expensive.

Manufacturers speak of “Cost of Goods” (CoG): that’s the figure that a product costs the company to make, including overhead, ingredients, packaging and labeling, sales commissions (such as broker’s fees), etc.

The very minimum a manufacturer needs to sell that product for is double, or a 50 percent margin. Considering that most competitive businesses operate on a six percent pre-tax profit, that leaves them 44 percent to pay for everything else. So, the $2.00 CoG product they make, they sell for $4.00.

Now, some manufacturers sell direct to retailers–not many, but a few do, and when they do, they’ll take a higher profit margin to pay for the Cost of Sales (CoS).

However, most manufacturing companies deal through distributors, who charge for warehousing, shipping and selling the products to retail stores. Normal wholesale is a 25 percent markup, which you get by multiplying the purchase price–plus freight if not included–by 1.33. So, our $4.00 item would be sold by a wholesale-distributor to the retailer for $5.32. (Again, plus or not freight costs which can run 10 to 15 percent additional.)

To achieve a 33.3 percent profit margin, the retailer has a 50 percent mark-up–or higher. Our $5.32 product ends up on the shelf at $7.98.

Now, this is the minimum scenario–not what normally happens except in the more strongly competitive markets. It’s not the least bit unusual to find the manufacturer selling that $2.00 CoG product for $5.00 or $6.00… the distributor working on 35 percent instead of 25 percent… and a retailer – especially from a specialty market segment–look for a 50 percent profit (i.e., a 100 percent markup), instead of “only” one third.

And if all of that were true, the retail price of the product through that sales and distribution system would be more like $14.95.

$$$ In Network Marketing Direct Sales

Let’s work this one backwards (because that’s how most of the numbers are figured for your commissions).

If the networking company’s product sells to consumers for $15.00 it will have an average retail commission to the networker of from 20 percent to 40 percent. So, using a 30 percent retail commission, the company’s “wholesale” price to the mlm distributor will be about $10.50.

Let’s say that your company pays out a full 50 percent in “downline” or organizational commissions. That means that the company’s lowest from-the-warehouse price for the product would be half of wholesale, or $5.25.

That’s right in the ballpark for specialty manufacturing, distribution and sales.

It’s a Question of Value

There is also a greater value, beyond the “specialty products” issues of ingredient quality, cost of manufacture and so forth and that’s the education, information and service delivered by the person-to-person distribution network.

Learning the product’s proper use, additional uses, history, all about the ingredients, etceteras, is all part of its value. And products offered through word-of-mouth network marketing have more of this “added value” than any others.

This last point begs the question:

“Are products purchased through network marketing higher priced to make up for the compensation or commission payments to distributors and their networks?”

Can they be? Yes.
Are they… usually? No and Yes.

In an authentic, intelligent, sincere and sensible network marketing direct sales company, one that’s well-managed and directed… a company that understands that the financial health and well-being of the men and women in the field MUST lead their mission, decisions, strategy, policies and procedures… no.

But that new ostentatious corporate headquarters in the prestige location… corporate jet… an army of “distributor service” personnel… rock concert “conventions”… $50,000 “big name” keynote speakers… resort vacations and incentive cruses to exotic locations paid for by the company… luxury car allowances… are all expenses that need to be paid for. Where does that money come from?

Directly (in terms of potential commissions that will not be paid out to people) or indirectly (in over-priced products and/or inflated charges for marketing materials, self-replicating websites, business building tools and trainings), the money comes from only one place… the men and women in the field.

“So… do network marketed products cost more?” Sometimes yes and other times no.

Can they be more expensive than similar items of equal value offered in a conventional market such as a retail store? Yes, they can.

In fact, you can find numerous examples of both conventionally retailed products and networking products of similar sizes, shapes and qualities at prices that vary by as much as 30 to 40 percent or more.

The only sure rule in product pricing the world over is, “What the traffic will bear…” No matter what distribution and sales route the product travels. It’s not so much a game of “Let the Buyer Beware,” as it is and always will be…

“Let the Buyer Be Aware.”

Factor in the at-home shopping convenience… the customer service… the satisfaction guarantee… personal attention… education and information–and in today’s increasingly competitive global marketplace, the “aggressive pricing” posture being taken by more and more networking companies around the world–along with the generally superior quality of the products available through network marketing and direct sales…

… and I believe a growing number quality-conscious consumers will agree with me, top network marketing company’s products represent outstanding value.

Network Marketing Concept – Final Part

On my earlier postings, I’ve mentioned the important aspects that one have to look for in order to have a good run of Network Marketing business – What is NM?, Teamwork, The Criteria of Products, Choosing the Right Company. The most important aspect in doing the Network Marketing business is to have THE RIGHT SYSTEM to guide us in doing the business. How do we choose the system when the markets are flocked with too many systems that claims they are the best, the right one, the ultimate, the huha, the huha..

A SYSTEM consists of methods or ways in guiding a would be Network Marketers on how to do the business not only to themselves, but also to their down lines. Teamwork is the most important factors in a system as no one can succeed if they were to work solo or alone. Through SYSTEM, the end results of multiplication concepts will definitely be great!

A SYSTEM not only good in recruiting products lovers/users, down lines, but also it should teach us how to re-recruit those Network Marketers who has been doing top sales in Direct Selling. A good system shall guide us on how to re-recruit down lines based on professionalism and services. We should not to rely on relationship or friendship to recruit or recruitment. The service rendered shall be from the heart. System are meant to be learned, followed. Gain all the knowledge in order to be professional. When you are professional, you will be able to consolidate other people expenses thus using the power of leveraging. We have to look for good people to become our business partners in building our organization! Those not willing to learn, do not bring them inside your team!

System and Tools

Use the system tools provided to teach your down lines and products’ users. Bring them to the Training Centre to learn. Guide and teach them to listen to CDs and tapes to build their confidence and professionalism.

One of the important aspects of SYSTEM is Duplication – Don’t reinvent the wheels! Successful people always follow the paths taken by other successful people. But do not follows blindly! Open up our eyes, mind, listen through our heart!

Is is good that we start the duplication through the attires. Dress professionally and neatly as we are in fact doing our own business and not merely trying to sell products! Sell the whole business packages! Remember that in order to succeed, you have the responsibility to help others to succeed too. So, share your business with others.

System is meant to standardize methods and not to cause confusion. If the system is not standardize, then leave it and find a new one!

What’s the MAIN point in Network Marketing?

The key point of Network Marketing or MLM is CONSOLIDATION and OUTPUT VALUE! i.e. Toothpaste can change our lifestyle if we know how to leverage.

Network Marketing is about consolidation of expenses. As a business owner, we must used all the products first, get the results, and attached to them! Do Not Cheat People! We have to duplicate what we are doing to your downlines and users!

Consolidating of expenses is not new in the Selling and Marketing Industries. Let’s take the credit card as an example. Apart from using credit cards to purchase on credits, we can also earn points where we can exchange for products and services. What we don’t realize is that we are consolidating the use of credit card. But we don’t earn points, in returns we earn cash. Direct Selling company pay you cash for what you used and not points or services!

Conclusion

Whether you do this business or not, time will pass by us everyday and Network Marketing will never die! In fact, a new breed of marketers has emerged to do it online where the markets are really global across all continents, all over the world!

Consolidating out contacts means enlarging our output value! By consolidating our friends, it actually creates a MUTUAL BENEFIT and not only benefiting you!

If you want to be rich and successful, this is one of the triangle of success, a human network in a business concept that coach and teach people to achieve a successful lifestyle that consist of having a freedom of time, health and wealth!