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

internet selling. For a company to be able to do business with people with different preferences. . 2. which includes door-to-door selling. 6. 8. 12. habits. 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. 9. 4.1. 3. catalogue selling and home party selling. 5. 11. 7. 10. Direct selling is one form of direct marketing.

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

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

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

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

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

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

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

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

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

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

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

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

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

Sales per person are the lowest in the world in Indonesia at US$109. the growth rate has been a higher 15% over the last 10 years and 9% over the last 5 years. The drop out rate however is quite high.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 1.24mn direct sellers ranks 11th globally in terms of number of • • • • • . If it is. 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. but productivity is low.3mn in 2003. 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. Indonesia has the highest number of sales people in the world after US. China banned Direct Selling for a 7 year period in 1998. 7. with only 50-60% of recruits converting into active consultants USA has the highest number of direct sales people at 13. In terms of number of people joining the direct selling industry annually. as opposed to the person trying to recruit you. Switzerland has the highest sales per person at US$51561.

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

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

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

There are traditional Toiletries items like Perfumes and Ethers.586. and the introduction of new consumer-friendly products. the global market for natural beauty products will be worth more than $10 billion.8 mil) in 2007 to 88. and oral hygiene have steady growth rates of 4. According to Global Cosmetic Industry Business Magazine.351. and will maintain the highest market value through the forecast period. Bindi and Herbal Cosmetics and Toiletries. • The Indian Cosmetic Industry continues a beautiful blend of traditional and the modern. The global market for cosmetics and toiletries ingredients is estimated to be around $14.2 % per year.7 billion in 2007.0 bil) in 2007 to 112. Talcum Powder. growing at 5. particularly in developing countries. Exports of Cosmetics & Toiletries from India was 1.3 million US dollar in 196364 and 25. The report also mentions that the segments for eye make-up products are expected to show steady growth. and is expected to increase to 509. Kum-Kum. growth in the segments for mascara and eye shadow will be remarkable. Hair care products were worth more than $4 billion in 2008. the market for makeup products reached 497. color cosmetics have the highest average annual growth rate. with growth of the ingredients expected to be around 5% per year through 2012. perfume. price and range. Sindoor. The market for body-care products will remain roughly flat: from 112. The Indian Cosmetics Industry can match International Standards when comes to quality. According to the report.6 % per year through 2012.0 mil) in 2008.0 bil) in 2008.are generally low. • • • • • • • . Fuji Keizai Releases Report on Japanese Cosmetics Market.2 billion yen ($4. Factors contributing to this steady growth include improvements in the global economy.5 bil) in 2007. In particular. from 86. in particular for raw materials originating in developing countries.9 billion yen ($782.7 million US dollar in 1979-80 and touched 336 million US dollar during 2006-2007. Perfumed Hair Oil. by 2009.6 bil) in 2008. Bath/ shaving products.9 billion yen ($801. Kajol.0 billion yen ($1.1 billion yen ($1. In end-user segments.9 million in 2008 to $3.6 billion yen ($4. They will grow from $2.7 million in 2012.

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

Its flashy prices did not convince the consumers about the quality of the products. In its second year of operations (1999-2000). 1 . This change in strategy helped it reap rewards and stage a turnaround. pumped in over Rs. they saw but will they conquer? There are about seven-eight companies involved in direct selling in India. 312 crores in 1997-98 and Rs. The Salon industry is estimated at USD. TRENDS IN INDIA HOW have the companies that have touted the benefits of direct selling to the individual fared? They came.claims to have done similarly.6 billion and that should reach $4. Television soaps & Magazines and largely Mumbai based. Amway expects its business to touch Rs.Amway. Amway estimates its turnover at Rs. 1. 520 crores in 1998-99. 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.a Swedish direct selling company involved in cosmetics -. It has since re-positioned itself to a broader market. 375 Million and is growing at rate of 30 to 40 %. Oriflame-. with total recorded sales of Rs. This seems to have been the trend with all the major direct sellers. targeting lower prices. The Beauty Business has another parallel with the growth of Indian economy .000 crores in 2004. The two biggest . a Division of TAM Media research shows there has been 49% increase in commercial time for Beauty product on TV in 2008. The figure is about Rs. 620 crores now. The market for beauty in India has been booming and it's a prime playing field for beauty majors across the globe. Euro monitor estimates that the Industry for products alone minus services to be $ 3. It is a market of great interest to international companies. 200 crores -. a direct selling pioneer.a 100 per cent increase. 115 crores as foreign direct investment.opportunity for more significant growth down the road in this country of 1 billion people. ADEX India. 2.4 billion by 2012.

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

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

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

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

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

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

when and how. accurate and systematic. averages and other statistical calculations. the research cannot describe what caused a situation. where. 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. where one variable affects another. The description is used for frequencies. questionnaires. Descriptive research answers the questions who. what.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. Often the best approach. descriptive research cannot be used to create a causal relationship. descriptive research can be said to have a low requirement for internal validity. is to conduct a survey investigation. 2. describes data and characteristics about the population or phenomenon being studied. Although the data description is factual. also known as statistical research.e. RESEARCH DESIGN: In this research work descriptive studies are undertaken to conduct the survey. prior to writing descriptive research. Thus. • What is descriptive research? Descriptive research. 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:- . In other words.

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

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

providing door-to-door service which reduces the whole shopping effort.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. 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. Shopping at home is much more convenient and is less expensive. This can be due to a bad shopping experience. when the sales person is already in one's home. So some respondents believe that direct selling does not provide them with adequate information and is more stressful compared to traditional selling. since the consumers are provided with various schemes and discounts. . On the other hand. bad rapport of the salesperson. not all the customers are 100% satisfied customers. lack of trust on the salesperson and inadequacy of information about the company or the products. At the same time the price can be perceived as lower in direct selling because the buyer is willing to pay more. 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. Also the relationship they get with the seller through traditional shopping is also perceived to be shallower as compared to direct selling. 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. this increases their shopping effort whereas in direct selling one often finds sellers easily and conveniently located.

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. 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. They will help them to capture the untapped market. • • • .

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

ANNEXURE1: • SAMPLE QUESTIONNAIRE .

. Age…………………………………………… 3. Income(Per Annual) Below 50. 2.QUESTIONNAIRE 1. 00. then from where did you purchase your cosmetics? Internet Tele-Shopping Catalogue Door to Door .000-1.. Name…………………………………………. 00.000 6. Gender………………………………………. 4.000 More then 1. Occupation…………………………………… 5. Have you ever purchased cosmetics through direct selling? Yes No 7. If yes.000 50.

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

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

please specify .Any others.

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