Network Marketing and Party Plan are different models of the direct selling industry. Both of them use a Multilevel Plan; however, these models have different operation structure and their compensation plans have plenty of differences.
65% of the direct selling companies in the USA use the typical Network Marketing model. On the other hand, 35% of the companies are using a Party Plan strategy.
- This model, generally, sells products or services that are used on a recurring basis. Like Vitamins, Electricity and Nutrition.
- These products or services lend themselves to a recurring usage model called Auto-Ship.
- Network Marketing focuses on one person selling to another or in groups highlighting the benefits of the products.
- A significant focus is placed on the business opportunity of joining the network.
- More men are enrolled in this type of businesses.
- Compensation Plans in Network Marketing companies tend to be focused on structure.
- Party Plan companies generally sell products that lend themselves to demonstration, education or explanation to highlight the value proposition. For example, Jewelry Kitchen products and Skin Care.
- This type of business is almost exclusively performed by women.
- The Party Plan model involves a hostess; whose job is to gather a group of friends to see the demonstration of the products.
- The hostess receives benefits like free products, discounts and free shipping, depending of the company.
- Its focus is on the products, association, and experiences with a smaller emphasis on compensation.
- Effective compensation plans have a greater focus on volume than in the structure.