ankur nrhra | Direct Marketing | Survey Methodology

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.

Ankur nehra

ACKNOWLEDGEMENT

Above all I want to express my gratitude to the God Almighty, who gave me life. , Amity School of Business, the place where I have spent most memorable days of my life, the place that has always inspired to deliver my best, I owe all my motivation and success. I am not the most popular names of this institution, but I want to be the most motivated and most inspired person from this place.

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. The staffs in Amity Business School, especially in the academic section, which were always around me, always there to help me in need, my friends, who taught me a lot of things, they all deserve a word of honor.

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

11. 2. 4. 6. 12. 3. . internet selling. catalogue selling and home party selling. 5. 9. which includes door-to-door selling. 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 Annexure ABSTRACT The dissertation aims to identity and investigate the factors involved in direct selling in relation to cosmetics industry. 10. 8.1. Direct selling is one form of direct marketing. habits. 7. For a company to be able to do business with people with different preferences.

DIRECT MARKETING Direct marketing is a sub-discipline and type of marketing. There are two main . The results were analyzed and interpreted.tastes and expectations it must continuously monitor their expectation level and increase it's efficiency and effectiveness. In order to test the research work. The population consisted of people living in Faridabad. a survey was conducted and questionnaire was prepared. MEANING 1.

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

. oils and other ingredients. COSMETICS INDUSTRY Cosmetics are mixtures of surfactants. New brands of cosmetics to appeal to various population sectors are constantly being developed. long lasting. This is needed where the products value needs more explanation and cannot be purchased off the shelf. At its best. 3. stable and last not least safe to human use. The cosmetics industry is a multi-billion dollar industry. direct selling can be an opportunity for individuals to find fulfillment. express their entrepreneurial talents and gain financial independence.brokers. print which is handled by the business. They are required to be effective. Direct selling involves people and is a part of direct marketing which additionally involves the use of media.

The industry produces a vast array of products. lipsticks. perfumes. Scott Cook Launched intuit in 1984. deodorants. including shaving preparations. colognes. which today offers software and online products to help individuals and small companies manage their finances including the extremely popular Quicken and QuickBooks packages. “SOME SELLING QOUTES” Scott Cook Starting his career at Procter & Grable. dentifrices. . nail products. Scott thought there might be a market for basic software hat would help people pay their bills. mouthwashes. hair preparations. 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. creams. and lotions.

courage. There are two main definitional characteristics which distinguish it from other types of marketing or advertising. junk mail. the music will play. then they’re copying your old stuff. 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. he smiles will return. without the use of intervening media. "Count your blessings. and you will finally be able to move forward the life that God intended for you with grace.) with consumers or businesses. Introduction to direct marketing Direct marketing is a sub-discipline and type of marketing. The first is that it attempts to send its messages directly to consumers.” I find too many companies in our industry have focused on the competition. you kind of know what the company makes. to their deaths. particularly when it was Microsoft. etc. and confidence. This involves unsolicited commercial communication (spam." This aspect of direct marketing involves an emphasis on trackable.A whole generation of Americans will retire in poverty instead of prosperity. The second characteristic is that it is focused on driving purchases that can be attributed to a specific "call-to-action. Once you realize how valuable you are and how much you have going for you. The great man or woman is the one who never steps outside his or her specialty or foolishly dissipates his or her individuality. because they simply are not preparing for retirement now”. the sun will break out. And if you’re ahead of the other guy understanding the customer. strength.” At least if you buy a company’s stock.” 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." "Failure will never overtake me if my determination to succeed is strong enough. . like Coca Cola." It is those who concentrate on but one thing at a time who advance in this world.

who pioneered direct marketing techniques with brands such as American Express and Columbia Records. Benefits and drawbacks Direct marketing is attractive to many marketers. meaning "unsolicited commercial email". For example. and ten thousand customers can be tracked as having responded to the promotion. internet banner ads. transit ads. The term junk mail. Although in its first few months it merely referred to inadvertently posting a message so many times on UseNet that the repetitions effectively drowned out the normal flow of conversation. television. billboards. email. the marketer can say with some confidence that the campaign led directly to the responses. The term spam. measurement of other media must often be indirect. because in many cases its positive effect (but not negative results) can be measured directly. since there is no direct response from a consumers Measurement of results. 1993. pay-per-click ads. newspapers. can be traced back to 1954. referring to unsolicited commercial ads delivered via post office or directly deposited in consumers' mail boxes. Direct marketers also use media such as door hangers. can be traced back to March 31. is not easily measured. radio. however. The number of recipients who are offended by the junk mail/spam. magazines. is explored . By contrast. if a marketer sends out one million solicitations by mail.measurable positive (but not negative) responses from consumers (known simply as "response" in the industry) regardless of medium. a fundamental element in successful direct marketing. package inserts. The term direct marketing is believed to have been first used in 1961 in a speech by Lester Wunderman.

Consumers are demanding an end to direct marketing. and other unsolicited merchandising invitations delivered by mail or to homes and businesses. and unwanted email messages are considered spam. including spam may have passed telemarketing in frequency at this point. direct mail that is irrelevant to the recipient is considered junk mail. Direct mail Any medium that can be used to deliver a communication to a customer can be employed in direct marketing. Channels The most common form of direct marketing is direct mail. 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. pre-approved credit card applications. 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. Yet since the start of the Internet age the challenges of Chief Marketing Executives (CMOs) are tracking direct marketing responses and measuring results. A related form of marketing is infomercials. A fourth type of direct marketing.in greater detail elsewhere in this article. which may also be referred to as admail and may involve bulk mail. is now less common than the other forms. Junk mail includes advertising circulars. Bulk mailings are a particularly popular method of promotion for businesses operating in the . but viewers respond directly via telephone or internet. For example. 1. some direct marketing efforts using particular media have been criticized for generating unwanted solicitations. Email Marketing. This is partly due to laws in the United States and elsewhere which make it illegal. commonly called junk mail. send paper mail to all postal customers in an area or all customers on a list. free trial CDs. While many marketers like this form of marketing. broadcast faxing.{[fact}} in which marketers contact consumers by phone.. which some advertising agencies are able to provide by using variable data printing and targeted mailing lists. in which marketing communications are sent to customers using the postal service. or delivered to consumers' mailboxes by delivery services other than the Post Office. and is a third type of direct marketing. common form of direct marketing is telemarketing. The second most. The term direct mail is used in the direct marketing industry to refer to junk mail.

5. Couponing Couponing is used in print media to elicit a response from the reader. direct marketing aims to circumvent that balance. direct mail represents such a significant amount of the total volume of mail that special rate classes have been established. 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. 3. paring the costs down to solely delivering their unsolicited sales message to the consumer. 4. Direct response television marketing TV-response marketing-Le infomercials-can be considered a form of direct marketing. and up-sell to these respondents. if the caller buys anything. This both allows marketers to reasonably conclude that the calls are due to a particular campaign. and Interwood Marketing Group then cross-sell. and travel and tourism industries. Telemarketing Marketers call telephone numbers. since the marketer incurs the cost of supporting a third-party medium (the newspaper or magazine). This process may be outsourced to specialist call centres. since responses are in the form of calls to telephone numbers given on-air.financial services. 2. The agents sit at computerised work-stations and try to sell the products of the clients. 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. Thane Direct. In many developed countries.Direct selling . and allows the marketers to obtain customers' phone numbers as targets for telemarketing. without supporting the newspaper that the consumer seeks and welcomes. Under the Federal Do-Not-Call List rules in the US. Coupons in newspapers and magazines cannot be considered direct marketing. Major players are firms like avc.

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. Today at the beginning of the 21st century. direct sellers were called "peddlers" who contributed to the development of trade by bringing novelties from large cities to little villages.Direct selling is the sale of products by face-to-face contact with the customer. In the Middle Age. Direct selling can be considered as the oldest distribution channel in history. . vibrant and growing sector of activity providing earning opportunities to millions of salespeople all over the world. through indirect means such as Tupperware parties. It is part of the man's basic need to exchange goods and to communicate. either by having salespeople approach potential customers in person. In the first part of the 20th century. Rural areas and small towns were supplied with basic goods only through the travelling salesmen. Introduction to Direct Selling. direct selling is a dynamic.

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. toys and game. express their entrepreneurial talents and gain financial independence. and phone calls. Virgin Companies. for example the Bundesverband Direktvertrieb Deutschland. This is needed where the products value like in Insurance. Bertelsmann. DIRECT SELLING Direct selling is the marketing of products or services to consumers through sales tactics including presentations. household items and wellness are the strongest sectors in direct selling. Several well known multinational corporations have adopted direct selling as channel of distribution for some of their brands (Loreal. demonstrations. A majority of direct selling companies manufacture and control the production of their goods. it can become a kind of pyramid scheme. It is also very convenient for the sales of services such as telecoms. the direct selling association of Germany. books. At its worst. distributors or brokers. training and marketing but are also socially responsible companies involved in community programs at local and international levels. jewellery and clothes. needs more explanation and cannot be purchased off the shelf. Some direct selling associations. Reader's Digest. Other products categories include food and beverages. have given themselves codes of conduct which lead to a fair partnership both with customers and salesmen. Time Life. Cosmetic and personal care products. home improvement products. etc. direct selling can be an opportunity for individuals to find fulfillment. Direct selling companies range from those with smaller than 1 million € annual turnover to medium size and large firms with turnovers above 1 billion €. Yves Rocher. some even on a worldwide basis but many more are national or often locally based. etc. nutritional products. gas and electricity supplies. . Citigroup. They invest heavily in research. Some companies operate in just a few countries. At its best.). It is sometimes also considered to be a sale that does not utilize a "middle man" such as a retail outlets. Unilever.

. Receive training and support from an established company. Direct selling offers flexible work schedules.Most of the national direct selling associations are represented in the World Federation of Direct Selling Associations (WFDSA). Direct selling involves people and is a part of direct marketing which additionally involves the use of media. Anyone can do it. Benefits of Direct Selling • • • • • Direct selling is a good way to meet and socialize with people. Earnings are in proportion to efforts. The level of success you can achieve is limited only by your willingness to work hard. Earn in proportion to your own efforts. the second one is the Direct Selling Europe. Direct selling is a good way to earn extra income. In Europe there are two supranational associations: the first one is the Federation of European Direct Selling Associations (FeDSA). There are prominent people in the society who started their careers in direct selling. which is founded in spring 2007. Direct selling is a good way to own a business. print etc. Own a business of your own with very little or no capital investment. • • • • Set your own goals and determine yourself how to reach them.

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. Pyramid schemes make their money through fees paid by new recruits or by loading inventory or training aids on them. The DSA Code of Ethics requires that member companies do this. Start up costs should be minimal. You should be able to return unsold inventory.People like to shop through direct selling According to recent surveys.usually the cost of a sales kit. The start up fees in direct selling companies are generally modest . That's more than the number who have purchased through television shopping and on-line computer services combined." or buying large inventories of . 2. People value the products available through direct selling and 45 percent of Americans want to buy from direct sellers. 74 percent of Americans have purchased goods or services through direct sales. for 90 percent of the price you paid for them. Beware of opportunities that encourage "front end loading. DIRECT SELLING Considering an opportunity? Here's how to identify legitimate direct selling opportunities: 1. Companies want to make it easy and inexpensive for you to start. High entry fees should be a warning sign.

Think longterm 3. About the company. 6. return policies. Take your time deciding.unreturnable products to reach achievement levels or receive a "special" or larger "discounted" price. Check to see if the products or services are actually being sold to consumers. 3. 4. You should also believe in the products or services you'll be selling. depends on selling to customers who use and/or consume the product. And read it! 5.Consult with others who have had experiences with the company and its products. Is the money you'll earn based on the sale of products or services? The answer should be "absolutely.Investigate and verify all information. 2." This is a key element of a legitimate business. its leadership. Check our list of member companies or look in your local phonebook. and anything else you're concerned about. How to Get Started: 1. realistic costs of doing business. like other methods of retailing. Ask questions. Identify a company and product that appeal to you.Get copies of all company literature. average earnings of distributors. Beware of any business that claims you can get rich by solely using their products or by recruiting new people into the business. the products or services. . Direct selling. 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. start-up fees. This requires quality products and services sold at competitive prices.

Switzerland has the highest sales per person at US$51561. Sales per person are the lowest in the world in Indonesia at US$109. The drop out rate however is quite high. the growth rate has been a higher 15% over the last 10 years and 9% over the last 5 years. as opposed to the person trying to recruit you. In terms of number of people joining the direct selling industry annually.3mn in 2003. with only 50-60% of recruits converting into active consultants USA has the highest number of direct sales people at 13. China banned Direct Selling for a 7 year period in 1998. 7. you can be assured the company has pledged to abide by and uphold the DSA Code of Ethics. but productivity is low. 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. If it is.24mn direct sellers ranks 11th globally in terms of number of • • • • • . Indonesia has the highest number of sales people in the world after US.Do not assume that "official looking" documents are accurate or complete or even produced by the company.Need help evaluating a company? Check to see if the company in which you're interested is a member of the Direct Selling Association. India with about 1.

Further. Nagpur. The men to women ratio in India is gradually changing. "We plan to set up about 50 malls in the next three years at an initial investment of Rs 100 crore in Mumbai. Bhubaneshwar. Feb 1 The year 2009 is likely to witness intense competition among direct selling Companies in India. Mumbai. We will be forming a new subsidiary. Image Multitrade Private Ltd told FE. 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. Bhopal.000 crore market. Ravindra Deshmukh. accounting for almost 40% of product sales through direct selling. DIRECT SELLING -A GROWING INDUSTRY Direct selling companies to slug it out in Rs 5. Traditionally considered as a profession for women. Marketing of Services is likely to emerge as the next growth area. and Jabalpur.• • • • people employed in the direct selling industry Sales in India through direct selling is estimated at Rs23bn (US$511mn) in 2003. more and more men are today directly or indirectly venturing into direct selling. Image Lifestyle Private Ltd in April 2009 through whom we will launch new consumer promotions by partnering with various . Kolhapur. Pune. 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. chairman and managing director. among others. which are vying for a pie in the Rs 5. Health & Nutrition products has emerged as the fastest growing category in India.000 crore segment.

we are in the process of in talking LG Electronics India and Subhiksha." The company also plans to expand its distributors from 1. 7) Then consumer buys the product from retailer. among others.5 lakh to about 50 lakh for its existing B2B business in the next few years. This way a product manufactured @ Rupees 5-6 in the factory is reached to the consumer purchasing it @ Rupees 10. he added. 4) Product goes to District Distributor. 5) Then it comes to whole seller. apart from planning to start its training centre either in Mumbai or in Lonavala.. are taking money from consumer for just providing the product to the consumer. 1) Factory manufactures a product. 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. For the purpose. 2) Advertisement of the product.retailers to generate repayment of incomes for our distributors. In DIRECT SELLING SYSTEM company provide the product straight to the . (So that people know about the product) 3) Product goes to C & F agents.. are not improving the quality of the product in anyway. 6) Then it comes to retail seller. Though people from 2 to 6 in above procedure.

mouthwashes. AN OVERVIEW OF THE COSMETICS INDUSTRY • Cosmetics are mixtures of surfactants. 1) Factory 2) Consumer This way company returns the money back to the consumer. New brands of cosmetics to appeal to various population sectors are constantly being developed. perfumes. nail products. dentifrices. so there are only two people in the whole transaction. Standards for the materials used in these products have been upgraded and many are now equal to the material specifications for the pharmaceutical industry. including shaving preparations. • • • Metal dyes are used in finger nail polish and also the use and concentration of heavy metals play an important role in cosmetics production. stable and last not least safe to human use. oils and other ingredients. The cosmetics industry is a multi-billion dollar industry. and lotions. colognes. The industry produces a vast array of products. Tariffs on raw materials . creams. They are required to be effective.consumer. long lasting. lipsticks. which it saved by not paying money the people from step 2 to 6 in traditional system. hair preparations. deodorants.

According to the report.1 billion yen ($1.2 billion yen ($4.7 million in 2012. There are traditional Toiletries items like Perfumes and Ethers. Bindi and Herbal Cosmetics and Toiletries.6 billion yen ($4.0 mil) in 2008. Kum-Kum.0 billion yen ($1. Exports of Cosmetics & Toiletries from India was 1.3 million US dollar in 196364 and 25. growing at 5. The market for body-care products will remain roughly flat: from 112. the global market for natural beauty products will be worth more than $10 billion.8 mil) in 2007 to 88. • The Indian Cosmetic Industry continues a beautiful blend of traditional and the modern.6 % per year through 2012. According to Global Cosmetic Industry Business Magazine.2 % per year. color cosmetics have the highest average annual growth rate. Perfumed Hair Oil. In end-user segments. and the introduction of new consumer-friendly products.351. Kajol. and oral hygiene have steady growth rates of 4.0 bil) in 2008.7 billion in 2007. The global market for cosmetics and toiletries ingredients is estimated to be around $14.0 bil) in 2007 to 112.9 million in 2008 to $3.586. Bath/ shaving products. and is expected to increase to 509. price and range.9 billion yen ($782. with growth of the ingredients expected to be around 5% per year through 2012. Factors contributing to this steady growth include improvements in the global economy. Hair care products were worth more than $4 billion in 2008.are generally low. growth in the segments for mascara and eye shadow will be remarkable. Sindoor. They will grow from $2. The Indian Cosmetics Industry can match International Standards when comes to quality. particularly in developing countries.6 bil) in 2008. The report also mentions that the segments for eye make-up products are expected to show steady growth. Talcum Powder. Fuji Keizai Releases Report on Japanese Cosmetics Market. perfume. the market for makeup products reached 497. and will maintain the highest market value through the forecast period. in particular for raw materials originating in developing countries.7 million US dollar in 1979-80 and touched 336 million US dollar during 2006-2007.5 bil) in 2007. by 2009. from 86. • • • • • • • .9 billion yen ($801. In particular.

According to statistics released by the Ministry of Economy.• China's cosmetic products market ranked the second largest in Asia. the size of the Japanese cosmetics market reached a total of U5$12. and restore hydration have created an $83 billion worldwide market. which accounts for 55. as compared to $36.S. Germany and Japan) make up 93% of sales.9 billion / Euro 10. Trade and Industry. As this statistic shows.8% of the total number of salons nationwide. Firms based in Japan and South Korea also have substantial market share at 14%.65 in other Asian countries. 2500 crores in consumer price terms. Current per capita expenditure on cosmetics is approximately $0. This low market penetration for cosmetics and personal care products in India can be viewed as an . • • • Even with double-digit growth rates. UK. in terms of number. • Further.057 of these being in Western Japan (the part of the country west of Nagoya). in 2007 the number of esthetic salons in Japan reached 18. and firms based in North America and in West Europe account for approximately 86% of sales: 43% for each region. Japan is the second-largest cosmetics market in the world only after the U. the market penetration of cosmetics and toiletries products in India is very low. France. Two West European cosmetics companies have the largest portion. 960 million US dollars.7 billion (ex-factory) in 2006. minimize pores. • The herbal cosmetics industry is set for a significant growth depending on the capability of the manufacturers to market their products. Western Japan is a large beauty market.A. The growth of health care products is about 20%. The personal care products industry in India is value at Rs. but their average sales are the smallest. Products that claim to renew cells. The cosmetics industry is regionally based. 50%.003 with 10. Firms in the largest five countries (USA.68 cents.

The two biggest . Euro monitor estimates that the Industry for products alone minus services to be $ 3. a Division of TAM Media research shows there has been 49% increase in commercial time for Beauty product on TV in 2008.claims to have done similarly. 200 crores -. The figure is about Rs.000 crores in 2004. The Salon industry is estimated at USD. 620 crores now.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. Amway estimates its turnover at Rs. pumped in over Rs. 1. targeting lower prices. This change in strategy helped it reap rewards and stage a turnaround. 312 crores in 1997-98 and Rs. Television soaps & Magazines and largely Mumbai based. The Beauty Business has another parallel with the growth of Indian economy . In its second year of operations (1999-2000). It is a market of great interest to international companies. 375 Million and is growing at rate of 30 to 40 %.4 billion by 2012. This seems to have been the trend with all the major direct sellers.Amway. 115 crores as foreign direct investment. 520 crores in 1998-99. 2. The market for beauty in India has been booming and it's a prime playing field for beauty majors across the globe. For the beauty industry the reference points are largely Bollywood (the Indian Film Industry). Amway expects its business to touch Rs. It has since re-positioned itself to a broader market.6 billion and that should reach $4. Its flashy prices did not convince the consumers about the quality of the products. 1 .a 100 per cent increase. ADEX India.a Swedish direct selling company involved in cosmetics -. Oriflame-.opportunity for more significant growth down the road in this country of 1 billion people. a direct selling pioneer. with total recorded sales of Rs.

The reasons for the growing demand for cosmetic products in India also include: greater access to television. up 46. Tupperware salespersons are trained on how to explain why a Tupperware plastic bowl costs Rs.6% from 1997-2004.obstacles they face in this country were explaining the concept and. Such concepts are alien to the conservative middleclass Indian households. From concept to completion. increased advertising in general. sun care (13. The Indian Client is a demanding one and expects nothing less than a Versace. thereafter. Nevertheless. Increased disposable income has led to growth in demand for premium products. For instance.1 %). According to Euro monitor. and deodorants (10. 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.5%). Also. manufacturer I distributor expansions. which has created a growing awareness of the western world. where raw material sources. justifying the premium prices of their goods. a boom in the Indian fashion world has contributed to the rise in demand for professional beauty care products. and greater product choice and availability. THE GROWING COSMETICS INDUSTRY IN INDIA The sun and sales are rising on the Indian cosmetics market. The greatest growth was recorded in color cosmetics. 120 more than what is available in the market. followed far behind by increased sales in fragrance (18%). or a .to India. 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. the Indian cosmetics and personal care market has grown 62. the cosmetics industry is heading East .3% from 2003-2004. retail store grand openings are the buzz words. They try to promote the concept that the bowl is worth the investment and offers value for money.

they concentrate more on recruiting people than on selling. consequently. 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.25-30 per cent. The margins here are generally quite high . of everyone who they recruit. Therefore. a significant proportion of their income is sourced from others' personal sales value commission. But to reach such levels.called your personal sales value. This is called' pyramid selling. As people go higher up the network pyramid. awarded when you reach a sales target . At this point you will receive a percentage commission on the total of their sales value and. . This is awarded on a slab-basis over and above the basic commission. you can start recruiting people yourself. This is where the real money is once you go higher up the ladder. Rewards An inherent feature of direct selling is performance based rewards. The second is bonus commission. Future trends in direct selling of cosmetics 1.Channel or a Lancome product. you have to dedicate yourself to creating a vast network of distributors and consumers and initially attain high levels of personal value. It comes as no surprise therefore that they expect nothing less than a luxurious experience at an equally prestigious Salon or Spa. Once you reach a particular target. There can be up to nine types of income when you direct-sell.

3. There is . 100-300 and the initial deposit (in some companies.250. Companies such as Tupperware expect an initial deposit which makes you eligible for credit for the value of products you buy. Merits Low start-up costs: The costs incurred in this business are minimal. distributors are rarely left with unsold Products. This requires building a relationship based on trust. Rewards are directly proportionate to your efforts: So you can earn as much or as little as you want .the more time you invest the greater the rewards. if you decide to use the credit facility). Product buy-back policy and low inventory: Another merit is that if you have a good relationship with your customers. Most products involved in direct selling are easy to relate to and hence easy to sell. One way of getting around this is to have a personal understanding with your customers.What is the initial investment? Nothing at all. most companies have product buy-back policies. Even if you do. that is. You can collect the money from your customers and place an order thereby making instant profits as you only pay the cost price. Nothing is fixed except the selling price. In the US and the UK. However. they will buy-back products you cannot sell. house parties. It also differs from company to company.Rs. The only real costs are the initial joining fee . give you credit once you reach a particular target level and are a priority distributor. Flexibility The flexible nature of direct selling is one of the main reasons for its growth. if you wish. This credit would be settled once you sell the products. insists that you pay for the goods when you collect them and not when you sell. on the other hand. Most people know how to value and judge cosmetics and household cleaning items. Amway. Costs incurred in travelling when meeting people can be avoided if you go to community meetings or gatherings or. companies Business Line spoke to said that due to the high levels of training given. such as Oriflame. 2. where direct sellers such as Tupperware and Ann Summers hold parties to woo customers. even. you need not hold stocks. Oriflame has a registration fee of Rs. This system initially puts people off as they are scared of getting stuck with products they cannot sell. Other companies. But it is generally divided into two types.

You do not want to be stuck with expensive cosmetics and plastic bottles you cannot sell. Pradeep Mathur: "Direct selling works by introducing new people into the business. They might ask you to order a product and later change their mind. Worth the while? It is not a bad way of making money and meeting people at the same time. they saw but will they conquer? There are about seven-eight companies involved in direct selling in India. the bigger your business. Once you have convinced the customer to at least try it. with total recorded sales of Rs. Be assertive but not pushy. According to Tupperware India managing director. 520 crores in 1998-99. It takes a while to develop good relationships and a network." Your success ultimately depends on the relationship you develop with your customer. the product will speak for itself. Mr. finally.comfort in familiarity. . Your customer will appreciate such honesty. The more people selling or buying your products. she does not recommend the nail polish her firm sells as she believes it is too expensive. be patient. But it is not secure as the main source of income. Critical success factors The critical success factor is your ability to sell and interact with people. 312 crores in 1997-98 and Rs. Be sure of your customers. Indian experience HOW have the companies that have touted the benefits of direct selling to the individual fared? They came. 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. Your business thrives on repeat-customers and the focus should be on inducing trial. Be honest. 620 crores now. One distributor Business Line spoke to says she does not recommend products that she believes do not offer value for money. Direct selling might be a good option if you want to earn some extra money in your own time. For instance. It is a new concept and needs explaining. The figure is about Rs. 4. And.

pumped in over Rs. In its second year of operations (1999-2000). Amway estimates its turnover at Rs. This seems to have been the trend with all the major direct sellers. The two biggest obstacles they face in this country were explaining the concept and. Tupperware salespersons are trained on how to explain why a Tupperware plastic bowl costs Rs. This change in strategy helped it reap rewards and stage a turnaround.claims to have done similarly.a Swedish direct selling company involved in cosmetics -. It has since re-positioned itself to a broader market. 1. 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. a direct selling pioneer. thereafter.Amway. They try to promote the concept that the bowl is worth the investment and offers value for money. Such concepts are alien to the conservative middleclass Indian households. 115 crores as foreign direct investment. justifying the premium prices of their goods. Amway expects its business to touch Rs. 120 more than what is available in the market. Its flashy prices did not convince the consumers about the quality of the products.000 crores in 2002 Oriflame -. 200 crores -. . Nevertheless. For instance.a 100 percent increase. targeting lower prices.

Successful marketers need to be aware of the different characteristics that affect consumer behavior. RESEARCH OBJECTIVE Marketing is a shared interest among us. One thing that is the prime concern for companies today in direct selling is to constantly monitor and measure customer satisfaction level. Messages can be developed and adapted quickly to facilitate one to one relationship with customers. It is an effective for company to build up customer relationship in new markets. therefore this research focuses on use of direct selling techniques in cosmetics industry. home party selling. Direct is defined as any form of marketing in which the seller communicates response & to build long-term relationship directly with the possible customers. rather than shops or agents'. which is the reason why we chose to examine this area. When it comes to direct selling then cosmetics industry is the most lucrative industry to study.REASEARCH METHOLOGY 1. I believe that marketing will be more and more important for companies when trying to build strong relationships with customers. Direct selling is one form of direct marketing. And this focuses on the same. Direct marketing often consists of interactive communication and has the being customized to match the needs of specific target markets. . Companies using direct marketing will not use any intermediary between its organization and its customers. etc. It aims to achieve an immediate quantifiable response and build long-term relationship with customers. it can include door-to-door. office-to-office. So. it is one-twoone relationship.

is to conduct a survey investigation. the research cannot describe what caused a situation. Qualitative research often has the aim of description and researchers may follow-up with examinations of why the observations exist and what the implications of the findings are:- . 2. where. descriptive research can be said to have a low requirement for internal validity. RESEARCH DESIGN: In this research work descriptive studies are undertaken to conduct the survey. accurate and systematic. In other words. The description is used for frequencies. where one variable affects another. I designed a questionnaire consisting of 17 questions related to the main topic and then I interviewed 100 responded be sure of getting a high response rare the survey was conducted on one to one basis. Descriptive research answers the questions who. Often the best approach. questionnaires. when and how. • What is descriptive research? Descriptive research.e. what. also known as statistical research. averages and other statistical calculations. describes data and characteristics about the population or phenomenon being studied. Although the data description is factual. descriptive research cannot be used to create a causal relationship. prior to writing descriptive research. Thus.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 of quantitative method of data collection i.

Thus. Primary data: A survey was conducted by using a questionnaire answered by 100 respondents living in Faridabad. The aim of the survey was to study the role of direct selling in relation to cosmetics industry. As a type of survey. do not require as much effort from the questioner as verbal or telephone surveys. this is not always the case. 2. However. Secondary data: Direct selling is a part of direct marketing and has existed as a marketing. Data collection method 1. 3. Questionnaires have advantages over some other types of surveys in that they are cheap. such standardized answers may frustrate users. The questionnaire was invented by Sir Francis Galton. questionnaires also have many of the same problems relating to question construction and wording that exist in other types of opinion polls. and I often have standardized answers that make it simple to compile data.What is a questionnaire? A questionnaire is a research instrument consisting of a series of questions and other prompts for the purpose of gathering information from respondents. For this reason there exists many . Although they are often designed for statistical analysis of the responses.strategy for more than 100's of years. for some demographic groups conducting a survey by questionnaire may not be practical. Questionnaires are also sharply limited by the fact that respondents must be able to read the questions and respond to them.

but these probabilities are not necessarily equal. The respondents had limited knowledge. 5. has a known probability of occurring. Some respondents were not motivated to respond. 7. once the sample has been taken the sampling error associated with the measured results can be computed.There is no point asking respondents questions about a particular product they do not use. also known as probability sampling. Since the research was conducted on one to one basis so the cost of conduction the research was high. Furthermore. especially for the purposes of statistical inference. 3. Primary research is conducted from a scratch whereas secondary research also known as desk research already exists. SAMPLE SIZE: A sample size of 100 people is drawn randomly from the sample population. 4. SAMPLE POPULATION: Consists of the total population living in Faridabad. With any form of sampling there is a risk that the sample may not adequately represent the population but with random sampling there is a large body of statistical theory which quantifies the risk and thus enables an appropriate sample size to be chosen. Some respondents were ignoring some questions.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. SAMPLING TECHINQUES 1. 2. Some questions were incorrectly completed. or stratum. 6. 3. every combination of items from the frame. LIMITATION OF RESEARCH 1. • In random sampling. . Eg. Since respondents were ignorant and were not ready to answer. • Sampling is that part of statistical practice concerned with the selection of individual observations intended to yield some knowledge about a population of concern. as the information is collected for other purposes. all alternatives seemed equally attractive or logically. To some respondents. 3. Random sampling is the method of sampling which has been used in this research work. 2.:. Therefore there are two main sources of data -primary and secondary.

. 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. lack of trust on the salesperson and inadequacy of information about the company or the products. This can be due to a bad shopping experience. providing door-to-door service which reduces the whole shopping effort. Shopping at home is much more convenient and is less expensive. Also the relationship they get with the seller through traditional shopping is also perceived to be shallower as compared to direct selling. At the same time the price can be perceived as lower in direct selling because the buyer is willing to pay more. since the consumers are provided with various schemes and discounts. when the sales person is already in one's home. 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. So some respondents believe that direct selling does not provide them with adequate information and is more stressful compared to traditional selling. bad rapport of the salesperson. not all the customers are 100% satisfied customers.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. this increases their shopping effort whereas in direct selling one often finds sellers easily and conveniently located. On the other hand. Some customers might feel that since they 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. They should add new distribution channels or should increase the intensity of distribution in each channel. Increase the awareness level among the non-users through extensive promotional methods. Provide better incentives to sales people to increase their motivational level and boost sales. They will help them to capture the untapped market. • • • .

avon.org/wiki/Direct_marketing www.net/ www.marketingteacher.rdmipl./lesson-direct-marketing..direct-marketing-association-india.in • • • • • • • en.html www.com/lesson.htm www.oriflamme.wisegeek.BIBLIOGRAPHY Website • www.wikipedia.co.direct-marketing.com/what-is-direct-marketing.org/dm_report_outline.com/ Journals and Magazines • House Keeping • Femina • Cosmopolitan .directmarketingmag.in • www.asp www.co..com/ www.

ANNEXURE1: • SAMPLE QUESTIONNAIRE .

000 6.000-1. then from where did you purchase your cosmetics? Internet Tele-Shopping Catalogue Door to Door .QUESTIONNAIRE 1. 2.000 50. Gender………………………………………. Occupation…………………………………… 5.. 00.000 More then 1. Income(Per Annual) Below 50. Name…………………………………………. Age…………………………………………… 3.. 4. Have you ever purchased cosmetics through direct selling? Yes No 7. If yes. 00.

Which brand of cosmetics you prefer? Avon Amway Oriflamme Boutique Wellness Any others please specify……………. Are you satisfied with your purchase? Yes No 10. How often you purchase your cosmetics through direct selling? Weekly Monthly Yearly 11. 9.. In future would you prefer purchasing cosmetics through direct selling? Yes No 12. Would you recommend this method of purchasing to your friends? .8.

Did you find your purchase. please mention? Cash Discount Free Gifts Coupons . Whether you like to go for schemes? Yes No 16. If yes. cost and time effective? Yes No 15.Yes No 13. What was the range of personal care products you purchased? Very Expensive Expensive Marginally Expensive Not Very Expensive 14.

please specify .Any others.

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