Party Plan vs Network Marketing

There are two primary business models in direct sales. They represent the largest share of companies in the industry. Over the years these two have evolved but even today they share some similarities and distinct differences.

The two models are Party Plan and Network Marketing.

In the following pages we will present an overview of the differences and shared features.

First let’s discuss what is similar between the two models:

Here are some of the differences:

In the next two short paragraphs we summarize very generally the Party Plan and Network Marketing models. This is a simple black & white comparison. We understand that there are many variables within each business model.

Party Plan companies have consultants who sell products to retail customers who then recruit other people to sell products to retail customers and get paid on those orders.

Network Marketing companies have distributors that buy product at wholesale for personal consumption, who recruit others to buy at wholesale for personal consumption and then get paid on those orders.

Now let’s dive a little deeper into each model.

Party Plan companies sell products that have an “experience” associated with it. The product when displayed or demonstrated with a group of women creates enthusiasm, fun, taste, memories, or some other emotional personal connection. For example, a scented soy candle, food or jewelry creates an experience much better than a bottle of vitamins or juice.

The party becomes the gathering place for women to socialize and experience different products. There is no obligation to buy but because of the social environment that they are in most do purchase something. The party becomes as much about the social gathering as it does about the product purchase.

The party has three different types of attendees. The consultant, hostess and the guests.

The parties last anywhere between 60-90 minutes. Presentations normally are short and then sampling or viewing the products commences. Light refreshments are provided normally by the hostess and then the party is wrapped up with ladies placing
orders and booking additional parties.

Products can be purchased at the party if the consultant has extra inventory on hand. Or orders can be placed to be shipped later. Guest can order by credit card, checks or cash.

An experienced consultant will always weave the business opportunity into her presentation or discussion. She will encourage guests to book their own parties so they can earn either free or half-price items.

When a consultant gets home she will enter the party order into her online company workstation. She creates a party, enters guests and the hostess and then enters each customer’s order. Based on the party sales volume the hostess will earn free or half-priced items. Customers can have their orders shipped directly to them or the combined party order can be shipped to the consultant or hostess.

Once the party order arrives either the consultant or the hostess prepares each individual order for delivery.

As you can see there is a lot of retail focus on the product. So the product needs to have retail appeal, and must be priced so actual retail customers will purchase the items.

Even though the party is the center of sales activity more recently some party plan consultants have used the internet to market to new and repeat customers.

Other methods for selling are catalog parties, 1 to 1 sales and fairs & shows.

The majority of consultants who join party plan companies tend to join because they like the products and feel they may be able to make some extra income doing parties or just selling the products. Some consultants do join to build a downline organization. Most evolve in their direct sales career to recruit and build. Still many feel attached to the products and culture of the company and view the social aspect of the parties as a fun and profitable way to sell and recruit.

Network Marketing companies sell products and services that range from life insurance to high antioxidant juice. There thousands of products offered through Network Marketing companies. The products do generally have is a cause or a crusade behind them. They are normally unique products either because of the ingredients or the service they provided.

Most of the products can be consumed personally by the distributor. We call this concept “internal consumption”. This is when the primary user of the product is the distributor.

(Important note: All network marketing companies have policies in place to encourage retail sales)

Auto-ship is a standard in Network Marketing. This is used as a standing order for distributors and preferred customers. Not only does it create a consistent reoccurring order but it also allows the distributor to make their personal volume each month. Each
distributor is encouraged to be a user of the product, enroll for auto-ship and recruit others to do the same.

Many great products have been introduced through Network Marketing companies. Most of the products have science or unique services behind them that help the distributors promote them and the business opportunity.

Unlike Party Plan’s, Network Marketing companies put additional emphasis in the compensation. The compensation plan in many cases is the lead concept in presentations when promoting the business. The product as valuable as it is for the benefits becomes a tool to create volume to drive the compensation plan. You don’t see as many distributors in a Network Marketing company selling to retail customers. They are more focused on first recruiting and then getting that person using the product. The method of marketing has created millions and millions of distributors around the world.

With the advent of the internet distributors have been able to build large downline organizations globally as their parent companies have expanded.

The ordering process is much more simplified in Network Marketing. Almost without exception each distributor or customer can order products from a distributor’s replicated website. They can have the product order setup as an auto-ship with it being shipped directly to themselves. It is a very efficient method for the distributor. The ordering process is much more one to one than the party plan model.

There are Network Marketing companies that have a little more focus on the retail customers. For the sake of this article we have directed our explanation to the most prominent method used by Network Marketing companies, internal consumption.

How do you determine if you are going to use the party plan or network marketing model? It really is determined by your product and the culture you are trying to create in your company. You need to ask yourself which model does your product fit best? You might simply ask, does your product fit the fun, social experience and environment of the party plan or does it fit better in the internal consumption model of the network marketing model?

To download the article click on the link below:
» Party Plan vs Network Marketing