THE ROLE OF DIRECT SELLING

IN RELATION TO COSMETIC PRODUCTS

Under the Supervision of

Mr. Anil Kumar

SUBMITTED BY: ANKUR NEHRA ROLL NO. A-68 M&S ENRL No.: A3914708072

DECLARATION
I here by declare that this dissertation report entitled “THE ROLE OF DIRECT SELLING IN RELATION OF COSMETIC PRODUCTS” has been carried out by me, Ankur nehra, a student of BBA (Mktg & Sales) in Amity School of business, Amity University, holding Enrollment Number A3914708072. The research confirms to course regulations regarding cheating and plagiarism. I declare that no material contained within this assignment has been used in any other submission, by the author, for an academic award. I further declare that the information presented in this project is true and original to the best of my knowledge.

Date:

Name: Ankur nehra Enroll:A3914708072

ACKNOWLEDGEMENT

It has been a great learning experience working on this project entitled “THE ROLL OF DIRECT SELLING IN RELATION TO THE COSMETICS INDUSTRY”. I would like to express my heartiest gratitude to Mr. Anil Kumar who is my faculty guide, for giving me an opportunity to work under guidance. I would like to thank her for support and guidance which was a source of encouragement for me throughout this project

CERTIFICATE

This dissertation on “Role of direct selling in relation to cosmetics industry”-is submitted in partial fulfillment of the requirement Bachelor of business Administration (BBA), of Amity School of Business, Amity University Uttar Pradesh. This is a bonafide work conducted by Ankur Nehra ENRL No.: A3914708072 of BBA batch of 2008- 2011; Guidance of Mr. Anil Kumar (faculty guide).

(Signature of the Student)

(Signature of the Faculty Guide)

TABLE OF CONTENETS

1. 2. 3. 4. 5. 6.

Abstract Meaning of Direct Marketing and Direct Selling Introduction to Direct Marketing and Direct Selling Overview of cosmetics industry Future trends in Cosmetics Industry Research methodology Research Objective Research Design Data Collection Method Sampling technology Analysis & interpretation Limitations Conclusions Recommendation Bibliography

7. 8. 9. 10. 11.

ABSTRACT The dissertation aims to identity and investigate the factors involved in direct selling in relation to cosmetics industry. Direct selling is one form of direct marketing, which includes door-todoor selling, internet selling, catalogue selling and home party

habits. a survey was conducted and questionnaire was prepared. DIRECT MARKETING Direct marketing is a sub-discipline and type of marketing. tastes and expectations it must continuously monitor their expectation level and increase it's efficiency and effectiveness. The results were analyzed and interpreted. There are two main definitional characteristics which distinguish it from .selling. The population consisted of people living in Faridabad. MEANING 1. In order to test the research work. For a company to be able to do business with people with different preferences.

S. This aspect of direct marketing involves an emphasis on traceable. junk mail. billboards. This involves unsolicited commercial communication (spam. magazines. Direct marketers also use media such as door hangers. radio. internet banner ads. (Citation needed) 2. package inserts.) with consumers or businesses. The second characteristic is that it is focused on driving purchases that can be attributed to a specific call-to-action. newspapers. etc. transit ads. and . U. "In 2008. email. pay-per-click ads.DIRECT SELLING Direct selling is the marketing of products or services to consumers through sales tactics including presentations. measurable positive (but not negative) responses from consumers (known simply as "response" in the industry) regardless of medium. television. agencies generated more revenue from marketing services than from traditional advertising and media. And according to Ad Age.other types of marketing or advertising. demonstrations. The first is that it attempts to send its messages directly to consumers. without the use of intervening media.

express their entrepreneurial talents and gain financial independence. direct selling can be an opportunity for individuals to find fulfillment.phone calls. stable and last not . distributors or brokers. oils and other ingredients. They are required to be effective. 3. At its best. print which is handled by the business. This is needed where the products value needs more explanation and cannot be purchased off the shelf. long lasting. It is sometimes also considered to be a sale that does not utilize a "middle man" such as a retail outlets. Direct selling involves people and is a part of direct marketing which additionally involves the use of media. COSMETICS INDUSTRY Cosmetics are mixtures of surfactants.

The cosmetics industry is a multi-billion dollar industry. nail products. mouthwashes. creams. deodorants. dentifrices. colognes. Scott thought . lipsticks.least safe to human use. including shaving preparations. New brands of cosmetics to appeal to various population sectors are constantly being developed. “SOME SELLING QOUTES” Scott Cook Starting his career at Procter & Grable. Scott Cook soon began using the insights he was learning to develop an idea for his own company with computers just coming out at the time. The industry produces a vast array of products. perfumes. and lotions. hair preparations.

then they’re copying your old stuff. to their deaths. and if you’re bringing to market the stuff that the other companies just haven’t figured out because you’re ahead in understanding and delivering for the customer. you kind of know what the company makes.” At least if you buy a company’s stock. Scott Cook Launched intuit in 1984.” Og Mandino Og Mandino has been called the sales mans sales men and is considered one of the classic reads in the sales persons arsenal of learning. because they simply are not preparing for retirement now”. A whole generation of Americans will retire in poverty instead of prosperity. like Coca Cola. . which today offers software and online products to help individuals and small companies manage their finances including the extremely popular Quicken and QuickBooks packages.there might be a market for basic software hat would help people pay their bills.” I find too many companies in our industry have focused on the competition. And if you’re ahead of the other guy understanding the customer. particularly when it was Microsoft.

The first is that it attempts ."Count your blessings. the sun will break out. the music will play. strength. There are two main definitional characteristics which distinguish it from other types of marketing or advertising. and you will finally be able to move forward the life that God intended for you with grace." "Failure will never overtake me if my determination to succeed is strong enough. he smiles will return. Once you realize how valuable you are and how much you have going for you. courage. The great man or woman is the one who never steps outside his or her specialty or foolishly dissipates his or her individuality. Introduction to direct marketing Direct marketing is a sub-discipline and type of marketing." It is those who concentrate on but one thing at a time who advance in this world. and confidence.

billboards. meaning "unsolicited commercial email". television.) with consumers or businesses. junk mail. 1993. etc." This aspect of direct marketing involves an emphasis on trackable. Direct marketers also use media such as door hangers. transit ads. pay-per-click ads. The term spam. magazines. The second characteristic is that it is focused on driving purchases that can be attributed to a specific "call-toaction.to send its messages directly to consumers. measurable positive (but not negative) responses from consumers (known simply as "response" in the industry) regardless of medium. referring to unsolicited commercial ads delivered via post office or directly deposited in consumers' mail boxes. newspapers. package inserts. email. can be traced back to March 31. radio. without the use of intervening media. internet banner ads. Although in its first few months it merely referred to inadvertently posting a message so many times on UseNet that . can be traced back to 1954. The term junk mail. who pioneered direct marketing techniques with brands such as American Express and Columbia Records. The term direct marketing is believed to have been first used in 1961 in a speech by Lester Wunderman. This involves unsolicited commercial communication (spam.

the repetitions effectively drowned out the normal flow of conversation. For example. and ten thousand customers can be tracked as . because in many cases its positive effect (but not negative results) can be measured directly. if a marketer sends out one million solicitations by mail. Benefits and drawbacks Direct marketing is attractive to many marketers.

a fundamental element in successful direct marketing. is explored in greater detail elsewhere in this article. is not easily measured. common form of direct marketing is telemarketing. Channels The most common form of direct marketing is direct mail. some direct marketing efforts using particular media have been criticized for generating unwanted solicitations.{[fact}} in . since there is no direct response from a consumers Measurement of results. The second most. send paper mail to all postal customers in an area or all customers on a list. the marketer can say with some confidence that the campaign led directly to the responses. Consumers are demanding an end to direct marketing. For example. measurement of other media must often be indirect. The number of recipients who are offended by the junk mail/spam. which some advertising agencies are able to provide by using variable data printing and targeted mailing lists. While many marketers like this form of marketing. By contrast. Yet since the start of the Internet age the challenges of Chief Marketing Executives (CMOs) are tracking direct marketing responses and measuring results. commonly called junk mail. and unwanted email messages are considered spam. direct mail that is irrelevant to the recipient is considered junk mail. however.having responded to the promotion.

A fourth type of direct marketing.which marketers contact consumers by phone.. but viewers respond directly via telephone or internet. The unpopularity of cold call telemarketing (in which the consumer does not expect or invite the sales call) has led some US states and the US federal government to create "no-call lists" and legislation including heavy fines. broadcast faxing. They are typically called direct response marketing rather than direct marketing because they try to achieve a direct response via broadcast on a third party's medium. Probably the most commonly used medium for direct marketing is junk mail. Email Marketing. This is partly due to laws in the United States and elsewhere which make it illegal. and is a third type of direct marketing. in which marketing communications are sent to customers using the postal . Direct mail Any medium that can be used to deliver a communication to a customer can be employed in direct marketing. 1. including spam may have passed telemarketing in frequency at this point. is now less common than the other forms. A related form of marketing is infomercials.

. pre-approved credit card applications. 2. Junk mail includes advertising circulars. Bulk mailings are a particularly popular method of promotion for businesses operating in the financial services. The agents sit at computerised workstations and try to sell the products of the clients. Telemarketing Marketers call telephone numbers. free trial CDs. In many developed countries. or delivered to consumers' mailboxes by delivery services other than the Post Office. and travel and tourism industries. Couponing Couponing is used in print media to elicit a response from the reader.service. and other unsolicited merchandising invitations delivered by mail or to homes and businesses. home computer. An example is a coupon which the reader cuts out and presents to a super-store check-out counter to avail of a discount. which may also be referred to as admail and may involve bulk mail. direct mail represents such a significant amount of the total volume of mail that special rate classes have been established. The term direct mail is used in the direct marketing industry to refer to junk mail. This process may be outsourced to specialist call centres. 3.

Major players are firms like avc. since the marketer incurs the cost of supporting a thirdparty medium (the newspaper or magazine). Under the Federal Do-Not-Call List rules in the US.Direct selling . Direct response television marketing TV-response marketing-Le infomercials-can be considered a form of direct marketing. the marketer would be exempt from Do-Not-Call List restrictions for a period of time due to having a prior business relationship with the caller. Thane Direct. if the caller buys anything. and up-sell to these respondents. 4. since responses are in the form of calls to telephone numbers given on-air. and Interwood Marketing Group then cross-sell. without supporting the newspaper that the consumer seeks and welcomes. paring the costs down to solely delivering their unsolicited sales message to the consumer. 5. direct marketing aims to circumvent that balance.Coupons in newspapers and magazines cannot be considered direct marketing. and allows the marketers to obtain customers' phone numbers as targets for telemarketing. This both allows marketers to reasonably conclude that the calls are due to a particular campaign.

Direct selling can be considered as the oldest distribution channel in history.Direct selling is the sale of products by face-to-face contact with the customer. through indirect means such as Tupperware parties. either by having salespeople approach potential customers in person. It is part of the man's basic need to exchange goods and . Introduction to Direct Selling.

Rural areas and small towns were supplied with basic goods only through the travelling salesmen. In the Middle Age. vibrant and growing sector of activity providing earning opportunities to millions of salespeople all over the world. In the first part of the 20th century. direct selling is a dynamic. It is also very convenient for the sales of services such as telecoms. Today at the beginning of the 21st century. THE STRONGEST GROWING SECTOR Direct selling suits the sale of almost every category of goods that can be found in traditional retail locations and in department stores. . innovative products such as vacuum cleaners or washing machines were first marketed through direct selling because these revolutionary products required a demonstration that only a direct seller could offer.to communicate. direct sellers were called "peddlers" who contributed to the development of trade by bringing novelties from large cities to little villages.

Virgin Companies. household items and wellness are the strongest sectors in direct selling. Bertelsmann. Several well known multinational corporations have adopted direct selling as channel of distribution for some of their brands (Loreal. Time Life. books. demonstrations. etc. Citigroup. Direct selling companies range from those with smaller than 1 million € annual turnover to medium size and large firms with turnovers above 1 billion €. training and marketing but are also socially responsible companies involved in community programs at local and international levels. Cosmetic and personal care products. They invest heavily in research. etc. and phone calls. Unilever. toys and game. It is sometimes also considered . Yves Rocher.). some even on a worldwide basis but many more are national or often locally based. A majority of direct selling companies manufacture and control the production of their goods. DIRECT SELLING Direct selling is the marketing of products or services to consumers through sales tactics including presentations. Some companies operate in just a few countries. jewellery and clothes. nutritional products. home improvement products. Reader's Digest. Other products categories include food and beverages.gas and electricity supplies.

At its worst. In Europe there are two supranational associations: the first one is the Federation of European Direct Selling Associations (FeDSA). the second one is the Direct Selling Europe. direct selling can be an opportunity for individuals to find fulfillment. This is needed where the products value like in Insurance. Direct selling involves people and is a part of direct marketing . the direct selling association of Germany. Most of the national direct selling associations are represented in the World Federation of Direct Selling Associations (WFDSA). distributors or brokers. needs more explanation and cannot be purchased off the shelf. express their entrepreneurial talents and gain financial independence. it can become a kind of pyramid scheme. have given themselves codes of conduct which lead to a fair partnership both with customers and salesmen. for example the Bundesverband Direktvertrieb Deutschland. which is founded in spring 2007. At its best. Some direct selling associations.to be a sale that does not utilize a "middle man" such as a retail outlets.

print etc. There are prominent people in the society who started their careers in direct selling.which additionally involves the use of media. . Benefits of Direct Selling • Direct selling is a good way to meet and socialize with people.

• Direct selling offers flexible work schedules. • Earnings are in proportion to efforts. • Direct selling is a good way to earn extra income. • Set your own goals and determine yourself how to reach them. • Own a business of your own with very little or no capital investment. • Earn in proportion to your own efforts. People like to shop through direct selling According to recent surveys. • Receive training and support from an established company. • Direct selling is a good way to own a business. That's more than . 74 percent of Americans have purchased goods or services through direct sales. The level of success you can achieve is limited only by your willingness to work hard. Anyone can do it.

People value the products available through direct selling and 45 percent of Americans want to buy from direct sellers. DIRECT SELLING Considering an opportunity? Here's how to identify legitimate direct selling opportunities: .the number who have purchased through television shopping and on-line computer services combined.

High entry fees should be a warning sign. Companies want to make it easy and inexpensive for you to start. You should be able to return unsold inventory. Companies belonging to the Direct Selling Association "buy back" unsold marketable products purchased within the prior 12 months if you decide to quit the business." This is a key element of a legitimate business. The start up fees in direct selling companies are generally modest . 2.usually the cost of a sales kit.1. Start up costs should be minimal. Beware of opportunities that encourage "front end loading. 3. for 90 percent of the price you paid for them. Direct selling. This requires quality products and services sold at . Pyramid schemes make their money through fees paid by new recruits or by loading inventory or training aids on them. depends on selling to customers who use and/or consume the product. like other methods of retailing." or buying large inventories of unreturnable products to reach achievement levels or receive a "special" or larger "discounted" price. Is the money you'll earn based on the sale of products or services? The answer should be "absolutely. The DSA Code of Ethics requires that member companies do this.

You should also believe in the products or services you'll be selling. 2. Take your time deciding.competitive prices. Identify a company and product that appeal to you. Check our list of member companies or look in your local phonebook. How to Get Started: 1. Beware of any business that claims you can get rich by solely using their products or by recruiting new people into the business. .

About the company.Consult with others who have had experiences with the company and its products. Check to see if the products or services are actually being sold to consumers. start-up fees. If it is. the products or services. as opposed to the person trying to recruit you. And read it! 5.Does" getting in on the ground floor" mean that everyone joining after you will be less satisfied or happy? A legitimate opportunity won't disappear overnight. realistic costs of doing business. Think long-term 3. average earnings of distributors. 7. and anything else you're concerned about. return policies. Ask questions.Get copies of all company literature. you can be assured the company has pledged to abide by and uphold the DSA Code of Ethics. . Do not assume that "official looking" documents are accurate or complete or even produced by the company. 4.Investigate and verify all information. its leadership. 6.Need help evaluating a company? Check to see if the company in which you're interested is a member of the Direct Selling Association.

Overview of the direct selling industry • The direct selling industry does an estimated sales of over US$88 billion worldwide Almost 49 million people all over the world are engaged in direct selling. • .

• The drop out rate however is quite high.• In terms of number of people joining the direct selling industry annually. with only 50-60% of recruits converting into active consultants USA has the highest number of direct sales people at 13.24mn direct sellers ranks 11th globally in terms of number of people employed in the direct selling industry • Sales in India through direct selling is estimated at Rs23bn (US$511mn) in 2003. Switzerland has the highest sales per person at US$51561.3mn in 2003. Sales per person are the lowest in the world in Indonesia at US$109. • Health & Nutrition products has emerged as the fastest growing category in India. the growth rate has been a higher 15% over the last 10 years and 9% over the last 5 years. Indonesia has the highest number of sales people in the world after US. • India with about 1. . but productivity is low. • • • China banned Direct Selling for a 7 year period in 1998. accounting for almost 40% of product sales through direct selling. • Marketing of Services is likely to emerge as the next growth area.

which are vying for a pie in the Rs 5.• The men to women ratio in India is gradually changing. Feb 1 The year 2009 is likely to witness intense competition among direct selling Companies in India.000 crore market.000 crore segment. DIRECT SELLING -A GROWING INDUSTRY Direct selling companies to slug it out in Rs 5. . Mumbai. more and more men are today directly or indirectly venturing into direct selling. Traditionally considered as a profession for women.

Further. Bhubaneshwar. "We plan to set up about 50 malls in the next three years at an initial investment of Rs 100 crore in Mumbai. Nagpur." The company also plans to expand its distributors from 1. Ravindra Deshmukh. Image Lifestyle Private Ltd in April 2009 through whom we will launch new consumer promotions by partnering with various retailers to generate repayment of incomes for our distributors. plans are also on the anvil to tie up with retail majors such as LG Electronics and Subhiksha to provide 10% discounts on cash coupons to its distributors. Pune.5 lakh to about 50 lakh for its existing B2B business in the next few years. Bhopal.Mumbai-based Image Multitrade Private Ltd is planning to launch new corporate initiatives through a subsidiary called Image Lifestyle to foray into the retail mall segment. among others. apart from planning to start its training centre either in Mumbai or in Lonavala. We will be forming a new subsidiary. Image Multitrade Private Ltd told FE. and Jabalpur. among others. we are in the process of in talking LG Electronics India and Subhiksha. he added. Kolhapur. chairman and managing director. . For the purpose.

.Traditional System v/s Direct Selling system? As we all know that in TRADITIONAL SYSTEM of business a product reaches to the consumer through following procedure.. (So that people know about the product) . 1) Factory manufactures a product. 2) Advertisement of the product.

In DIRECT SELLING SYSTEM company provide the product straight to the consumer. 7) Then consumer buys the product from retailer. so there are only two people in the whole transaction. 1) Factory 2) Consumer This way company returns the money back to the consumer. . This way a product manufactured @ Rupees 5-6 in the factory is reached to the consumer purchasing it @ Rupees 10. 5) Then it comes to whole seller. 6) Then it comes to retail seller. are not improving the quality of the product in anyway. 4) Product goes to District Distributor. which it saved by not paying money the people from step 2 to 6 in traditional system. Though people from 2 to 6 in above procedure. are taking money from consumer for just providing the product to the consumer.3) Product goes to C & F agents.

stable and last not least safe to human use. long lasting. oils and other ingredients. The cosmetics industry is a multi-billion dollar industry.AN OVERVIEW OF THE COSMETICS INDUSTRY • Cosmetics are mixtures of surfactants. New brands of cosmetics to appeal to various population sectors are . They are required to be effective.

Kajol. perfumes. deodorants.constantly being developed. Bindi and Herbal Cosmetics and Toiletries. including shaving preparations. • The industry produces a vast array of products. creams. dentifrices. and lotions. • Exports of Cosmetics & Toiletries from India was 1. Tariffs on raw materials are generally low.3 million . Talcum Powder. lipsticks. Kum-Kum. Perfumed Hair Oil. • Metal dyes are used in finger nail polish and also the use and concentration of heavy metals play an important role in cosmetics production. • Standards for the materials used in these products have been upgraded and many are now equal to the material specifications for the pharmaceutical industry. There are traditional Toiletries items like Perfumes and Ethers. colognes. hair preparations. mouthwashes. • The Indian Cosmetic Industry continues a beautiful blend of traditional and the modern. Sindoor. in particular for raw materials originating in developing countries. nail products.

particularly in developing countries. • Hair care products were worth more than $4 billion in 2008.351. • In end-user segments. and will maintain the highest market value through the . price and range. color cosmetics have the highest average annual growth rate. by 2009.9 million in 2008 to $3. The Indian Cosmetics Industry can match International Standards when comes to quality.7 million in 2012. They will grow from $2. and the introduction of new consumerfriendly products. • According to Global Cosmetic Industry Business Magazine.7 billion in 2007.US dollar in 1963-64 and 25.586. • The global market for cosmetics and toiletries ingredients is estimated to be around $14. the global market for natural beauty products will be worth more than $10 billion. Factors contributing to this steady growth include improvements in the global economy.7 million US dollar in 1979-80 and touched 336 million US dollar during 2006-2007. with growth of the ingredients expected to be around 5% per year through 2012.

0 billion yen ($1.6 % per year through 2012. According to statistics released by the Ministry of Economy.0 mil) in 2008. the size of the Japanese cosmetics market reached a total of U5$12. growing at 5.S.2 billion yen ($4. growth in the segments for mascara and eye shadow will be remarkable. • China's cosmetic products market ranked the second largest in Asia. from 86.8 mil) in 2007 to 88.A.0 bil) in 2008.5 bil) in 2007. and oral hygiene have steady growth rates of 4. and is expected to increase to 509. the market for makeup products reached 497. perfume. The market for body-care products will remain roughly flat: from 112. Japan is the second-largest cosmetics market in the world only after the U.9 billion yen ($782. Bath/ shaving products.1 billion yen ($1. Trade and Industry.6 billion yen ($4. • The report also mentions that the segments for eye make-up products are expected to show steady growth.9 billion yen ($801.forecast period.0 bil) in 2007 to 112. According to the report.6 bil) in 2008.2 % per year. In particular. • Fuji Keizai Releases Report on Japanese Cosmetics Market.9 .

billion / Euro 10. and restore hydration have created an $83 billion worldwide market. • The cosmetics industry is regionally based. • Firms based in Japan and South Korea also have substantial market share at 14%. Western Japan is a large beauty market.003 with 10. The personal care products industry in India is value at Rs.7 billion (ex-factory) in 2006. and firms based in North America and in West Europe account for approximately 86% of sales: 43% for each region. • The herbal cosmetics industry is set for a significant growth depending on the capability of the manufacturers to market their products. which accounts for 55. Products that claim to renew cells. in 2007 the number of esthetic salons in Japan reached 18. .8% of the total number of salons nationwide. • Further. As this statistic shows. 2500 crores in consumer price terms. The growth of health care products is about 20%. minimize pores.057 of these being in Western Japan (the part of the country west of Nagoya).

50%. Euro monitor estimates that the Industry . Germany and Japan) make up 93% of sales. as compared to $36. UK.68 cents. This low market penetration for cosmetics and personal care products in India can be viewed as an opportunity for more significant growth down the road in this country of 1 billion people. the market penetration of cosmetics and toiletries products in India is very low. but their average sales are the smallest.65 in other Asian countries. The market for beauty in India has been booming and it's a prime playing field for beauty majors across the globe. Even with double-digit growth rates. France. Firms in the largest five countries (USA. in terms of number. Current per capita expenditure on cosmetics is approximately $0.• Two West European cosmetics companies have the largest portion. 960 million US dollars.

The Beauty Business has another parallel with the growth of Indian economy . 375 Million and is growing at rate of 30 to 40 %. Television soaps & Magazines and largely Mumbai based.6 billion and that should reach $4. pumped in over Rs.4 billion by 2012. 115 crores as foreign direct investment. The Salon industry is estimated at USD. ADEX India. 1 . For the beauty industry the reference points are largely Bollywood (the Indian Film Industry).it has it's own service sector that is growing as fast as the market for products. they saw but will they conquer? There are about seven-eight companies involved in direct selling in India. TRENDS IN INDIA HOW have the companies that have touted the benefits of direct selling to the individual fared? They came. a Division of TAM Media research shows there has been 49% increase in commercial time for Beauty product on TV in 2008. In its second year of operations (1999- .for products alone minus services to be $ 3. The figure is about Rs.Amway. 520 crores in 1998-99. It is a market of great interest to international companies. with total recorded sales of Rs. a direct selling pioneer. 620 crores now. 312 crores in 199798 and Rs.

Oriflame-. This change in strategy helped it reap rewards and stage a turnaround.claims to have done similarly. The two biggest obstacles they face in this country were explaining the concept and. 200 crores -.2000). Tupperware salespersons are trained on how to explain why a Tupperware plastic bowl costs Rs. For instance.000 crores in 2004. Its flashy prices did not convince the consumers about the quality of the products. thereafter. 120 more than what is available in the market. This seems to have been the trend with all the major direct sellers. It has since re-positioned itself to a broader market. Amway estimates its turnover at Rs. They try to promote the concept that the bowl is worth the investment and offers value for money. Amway expects its business to touch Rs. 1.a Swedish direct selling company involved in cosmetics -. justifying the premium prices of their goods. Such concepts are alien to the conservative middleclass Indian . targeting lower prices.a 100 per cent increase. 2.

the cosmetics industry is heading East . THE GROWING COSMETICS INDUSTRY IN INDIA The sun and sales are rising on the Indian cosmetics market. followed .to India.3% from 2003-2004. The greatest growth was recorded in color cosmetics. where raw material sources. Nevertheless. From concept to completion. there is much to be said for the tremendous potential for direct selling in India if the companies play their cards right and adapt to the Indian conditions. According to Euro monitor. manufacturer I distributor expansions. up 46. the Indian cosmetics and personal care market has grown 62.6% from 1997-2004.households. retail store grand openings are the buzz words.

sun care (13. which has created a growing awareness of the western world. Increased disposable income has led to growth in demand for premium products. . and greater product choice and availability. increased advertising in general. It comes as no surprise therefore that they expect nothing less than a luxurious experience at an equally prestigious Salon or Spa. or a Channel or a Lancome product. and deodorants (10. Also.far behind by increased sales in fragrance (18%). The reasons for the growing demand for cosmetic products in India also include: greater access to television.1 %). The success of contestants from India at various well known international beauty pageants in the last few years has also contributed to making Indian women more conscious of their appearance and more aware of western cosmetic products and brands. The Indian Client is a demanding one and expects nothing less than a Versace.5%). a boom in the Indian fashion world has contributed to the rise in demand for professional beauty care products.

There can be up to nine types of income when you direct-sell.25-30 per cent. This is awarded on a slab- .called your personal sales value. The second is bonus commission. Rewards An inherent feature of direct selling is performance based rewards.Future trends in direct selling of cosmetics 1. awarded when you reach a sales target . The most basic form of income is the margin at which you buy the product and the retail price (MRP) at which you sell it. The margins here are generally quite high .

Once you reach a particular target. a significant proportion of their income is sourced from others' personal sales value commission. What is the initial investment? Nothing at all. Companies such as Tupperware expect an initial deposit which makes you eligible for credit for the value of products you buy. such as Oriflame. But it is generally divided into two types. Amway. At this point you will receive a percentage commission on the total of their sales value and. But to reach such levels. Therefore. if you wish. they concentrate more on recruiting people than on selling. you can start recruiting people yourself.basis over and above the basic commission. give you credit once you reach a particular target level and are a priority distributor. This is called' pyramid selling. insists that you pay for the goods when . This credit would be settled once you sell the products. consequently. Other companies. you have to dedicate yourself to creating a vast network of distributors and consumers and initially attain high levels of personal value. It also differs from company to company. of everyone who they recruit. This is where the real money is once you go higher up the ladder. As people go higher up the network pyramid. on the other hand.

Oriflame has a registration fee of Rs. most companies have product buyback policies. even. they will buy-back products you cannot sell. if you decide to use the credit facility). Costs incurred in travelling when meeting people can be avoided if you go to community meetings or gatherings or.Rs. house parties.you collect them and not when you sell. This system initially puts people off as they are scared of getting stuck with products they cannot sell. The only real costs are the initial joining fee . Even if you do. Merits Low start-up costs: The costs incurred in this business are minimal. One way of getting around this is to have a personal understanding with your customers. Product buy-back policy and low inventory: Another merit is that if you have a good relationship with your customers. In the US and the UK.250. You can collect the money from your customers and place an order thereby making instant profits as you only pay the cost price. This requires building a relationship based on trust. 2. companies Business Line spoke to said that due to the . 100-300 and the initial deposit (in some companies. where direct sellers such as Tupperware and Ann Summers hold parties to woo customers. that is. However. you need not hold stocks.

the more time you invest the greater the rewards. According to Tupperware India managing director.high levels of training given. distributors are rarely left with unsold Products. Rewards are directly proportionate to your efforts: So you can earn as much or as little as you want . Most people know how to value and judge cosmetics and household cleaning items. Nothing is fixed except the selling price. Most products involved in direct selling are easy to relate to and hence easy to sell. 3. Flexibility The flexible nature of direct selling is one of the main reasons for its growth. Once you have convinced the customer to at least try it. Critical success factors The critical success factor is your ability to sell and interact with people. the product will speak for itself. Mr. Your business thrives on repeat-customers and the focus should be on inducing trial. 4. Pradeep Mathur: "Direct selling works by introducing new people into the . There is comfort in familiarity.

the bigger your business. The more people selling or buying your products. For instance. It is a new concept and needs explaining. be patient.business. It takes a while to develop good relationships and a network. And. Be honest. Your customer will appreciate such honesty." Your success ultimately depends on the relationship you develop with your customer. finally. Worth the while? It is not a bad way of making money and meeting people at the same time. They might ask you to order a product and later change their mind. But there are some points to be wary of: Make sure you understand the policies of the company on payment of commission and product buy-back. Be assertive but not pushy. Be sure of your customers. she does not recommend the nail polish her firm sells as she believes it is too expensive. Direct selling might be a good option if you want to earn some . One distributor Business Line spoke to says she does not recommend products that she believes do not offer value for money. You do not want to be stuck with expensive cosmetics and plastic bottles you cannot sell.

Its flashy prices did not convince the consumers about the quality of the products. Indian experience HOW have the companies that have touted the benefits of direct selling to the individual fared? They came.claims to have done similarly. 115 crores as foreign direct investment. 1. Amway estimates its turnover at Rs.000 crores in 2002 Oriflame -.a Swedish direct selling company involved in cosmetics -. 312 crores in 199798 and Rs. . a direct selling pioneer. In its second year of operations (19992000). 520 crores in 1998-99. Amway. pumped in over Rs. 620 crores now. The figure is about Rs. This change in strategy helped it reap rewards and stage a turnaround. But it is not secure as the main source of income.extra money in your own time. It has since re-positioned itself to a broader market. This seems to have been the trend with all the major direct sellers. with total recorded sales of Rs.a 100 percent increase. 200 crores -. they saw but will they conquer? There are about seven-eight companies involved in direct selling in India. targeting lower prices. Amway expects its business to touch Rs.

there is much to be said for the tremendous potential for direct selling in India if the companies play their cards right and adapt to the Indian conditions. it is one-two-one relationship. Companies using direct marketing will not use any intermediary between its organization and its customers. 120 more than what is available in the market. Such concepts are alien to the conservative middleclass Indian households. RESEARCH OBJECTIVE Marketing is a shared interest among us. Tupperware salespersons are trained on how to explain why a Tupperware plastic bowl costs Rs. thereafter. justifying the premium prices of their goods. I believe that marketing will be more and more important for companies when trying to build strong relationships with customers.The two biggest obstacles they face in this country were explaining the concept and. REASEARCH METHOLOGY 1. For instance. They try to promote the concept that the bowl is worth the investment and offers value for money. Direct is defined as any form of marketing in which the seller communicates . which is the reason why we chose to examine this area. Nevertheless.

It aims to achieve an immediate quantifiable response and build long-term relationship with customers. it can include door-to-door. office-to-office. When it comes to direct selling then cosmetics industry is the most lucrative industry to study. home party selling. So. It is an effective for company to build up customer relationship in new markets. Direct marketing often consists of interactive communication and has the being customized to match the needs of specific target markets. Successful marketers need to be aware of the different characteristics that affect consumer behavior. therefore this research focuses on use of direct selling techniques in cosmetics industry. And this focuses on the same.response & to build long-term relationship directly with the possible customers. This Report provides insight into the effectiveness of direct selling techniques on the cosmetics industry and also measures the satisfaction level of consumers through the use secondary data. Messages can be developed and adapted quickly to facilitate one to one relationship with customers. etc. Direct selling is one form of direct marketing. One thing that is the prime concern for companies today in direct selling is to constantly monitor and measure customer satisfaction level. rather than shops or agents'. .

2. For this reason there exists many research materials on this subject and therefore a literature view was conducted to learn more about the subject also a cosmetics industry was studied and particularly those involved in direct selling of cosmetics. Secondary data: Direct selling is a part of direct marketing and has existed as a marketing.strategy for more than 100's of years. Therefore there are two main sources of data -primary and .

The limitations of this study can be: .secondary. LIMITATION OF RESEARCH No study is free from limitations. as the information is collected for other purposes. . Primary research is conducted from a scratch whereas secondary research also known as desk research already exists.Due to the availability of only secondary data.This research only covers the secondary data. authentication of the data is not sure. .

Shopping at home is much more convenient and is less expensive.· Since the authentication of the data is not sure. since the consumers are provided with various . the result of the project may not be precise. CONCLUSION AND RECOMMENDATIONS CONCLUSION Most of the people believe that shopping in shops and malls is much more time consuming and expensive than shopping at home.

Also the relationship they get with the seller through traditional shopping is also perceived to be shallower as compared to direct selling. when the sales person is already in one's home. At the same time the price can be perceived as lower in direct selling because the buyer is willing to pay more. not all the customers are 100% satisfied customers. This can be due to a bad shopping experience. Through direct selling the customer will probably get in contact with the same sales person more than once and therefore a deeper relationship is created between the buyer and the seller. Most consumers find traditional shopping is more time consuming since they usually go to more than one shop in order to be satisfied and therefore.schemes and discounts. providing door-to-door service which reduces the whole shopping effort. On the other hand. bad rapport of the salesperson. lack of trust on the salesperson and inadequacy of information about the company or the products. Some customers might feel that since they . this increases their shopping effort whereas in direct selling one often finds sellers easily and conveniently located. So some respondents believe that direct selling does not provide them with adequate information and is more stressful compared to traditional selling.

• They should add new distribution channels or should increase the intensity of distribution in each channel. They will help .have invited the salesperson at their place so they are required to buy something from him or her. RECOMMENDATIONS • The direct selling cosmetics product quality on a continuous basis and provide better offerings to the consumers.

• Provide better incentives to sales people to increase their motivational level and boost sales. • Increase the awareness level among the non-users through extensive promotional methods. BIBLIOGRAPHY Website • • www.co.avon.oriflamme.in www.co.in .them to capture the untapped market.

Journals and Magazines • House Keeping • Femina • Cosmopolitan .

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