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 rdsults 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 (ruch 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.