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

9. which includes door-to-door selling. Direct selling is one form of direct marketing. 11. . 2. 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. 8. 3. internet selling. 7. catalogue selling and home party selling. 10. 12. 6. 5.1. habits. 4. 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. a survey was conducted and questionnaire was prepared. The results were analyzed and interpreted.tastes and expectations it must continuously monitor their expectation level and increase it's efficiency and effectiveness. MEANING 1. The population consisted of people living in Faridabad. In order to test the research work. There are two main .

Direct marketers also use media such as door hangers. transit ads.S. billboards.definitional characteristics which distinguish it from other types of marketing or advertising. etc.DIRECT SELLING Direct selling is the marketing of products or services to consumers through sales tactics including presentations. email. This involves unsolicited commercial communication (spam. television. The second characteristic is that it is focused on driving purchases that can be attributed to a specific call-to-action. (Citation needed) 2. junk mail. magazines. radio. 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. pay-per-click ads. package inserts.) with consumers or businesses. "In 2008. distributors or . And according to Ad Age. The first is that it attempts to send its messages directly to consumers. newspapers. agencies generated more revenue from marketing services than from traditional advertising and media. internet banner ads. This aspect of direct marketing involves an emphasis on traceable. and phone calls. without the use of intervening media. demonstrations.

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

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

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

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

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

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

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

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

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

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

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

24mn direct sellers ranks 11th globally in terms of number of • • • • • . Indonesia has the highest number of sales people in the world after US.Need help evaluating a company? Check to see if the company in which you're interested is a member of the Direct Selling Association. the growth rate has been a higher 15% over the last 10 years and 9% over the last 5 years. India with about 1.Do not assume that "official looking" documents are accurate or complete or even produced by the company. but productivity is low. Switzerland has the highest sales per person at US$51561. If it is. China banned Direct Selling for a 7 year period in 1998. In terms of number of people joining the direct selling industry annually. Sales per person are the lowest in the world in Indonesia at US$109.3mn in 2003. as opposed to the person trying to recruit you. The drop out rate however is quite high. you can be assured the company has pledged to abide by and uphold the DSA Code of Ethics. with only 50-60% of recruits converting into active consultants USA has the highest number of direct sales people at 13. 7. 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.

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

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

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

6 % per year through 2012. They will grow from $2. According to the report. and the introduction of new consumer-friendly products.9 million in 2008 to $3.0 bil) in 2008. price and range.7 million US dollar in 1979-80 and touched 336 million US dollar during 2006-2007.0 billion yen ($1. and is expected to increase to 509. Perfumed Hair Oil. Kajol. in particular for raw materials originating in developing countries.6 bil) in 2008.are generally low. and oral hygiene have steady growth rates of 4.5 bil) in 2007. Fuji Keizai Releases Report on Japanese Cosmetics Market.9 billion yen ($801.0 bil) in 2007 to 112. The report also mentions that the segments for eye make-up products are expected to show steady growth. the global market for natural beauty products will be worth more than $10 billion. the market for makeup products reached 497.2 billion yen ($4.0 mil) in 2008. In end-user segments. with growth of the ingredients expected to be around 5% per year through 2012. The global market for cosmetics and toiletries ingredients is estimated to be around $14. The market for body-care products will remain roughly flat: from 112. • • • • • • • . Bath/ shaving products. Sindoor.7 billion in 2007.586.1 billion yen ($1. In particular.7 million in 2012. Factors contributing to this steady growth include improvements in the global economy.2 % per year. perfume.6 billion yen ($4. growing at 5.351. According to Global Cosmetic Industry Business Magazine. particularly in developing countries. Talcum Powder. Exports of Cosmetics & Toiletries from India was 1. • The Indian Cosmetic Industry continues a beautiful blend of traditional and the modern.8 mil) in 2007 to 88. growth in the segments for mascara and eye shadow will be remarkable. The Indian Cosmetics Industry can match International Standards when comes to quality.9 billion yen ($782. Kum-Kum. Hair care products were worth more than $4 billion in 2008. and will maintain the highest market value through the forecast period. There are traditional Toiletries items like Perfumes and Ethers. from 86. color cosmetics have the highest average annual growth rate. Bindi and Herbal Cosmetics and Toiletries. by 2009.3 million US dollar in 196364 and 25.

50%. Current per capita expenditure on cosmetics is approximately $0. • • • Even with double-digit growth rates. but their average sales are the smallest. the size of the Japanese cosmetics market reached a total of U5$12. • The herbal cosmetics industry is set for a significant growth depending on the capability of the manufacturers to market their products. 960 million US dollars. The cosmetics industry is regionally based. and restore hydration have created an $83 billion worldwide market.057 of these being in Western Japan (the part of the country west of Nagoya). Germany and Japan) make up 93% of sales. and firms based in North America and in West Europe account for approximately 86% of sales: 43% for each region. Western Japan is a large beauty market. As this statistic shows. This low market penetration for cosmetics and personal care products in India can be viewed as an . Firms in the largest five countries (USA. which accounts for 55. 2500 crores in consumer price terms.7 billion (ex-factory) in 2006.S. in terms of number. Products that claim to renew cells. The growth of health care products is about 20%.9 billion / Euro 10.8% of the total number of salons nationwide.003 with 10.• China's cosmetic products market ranked the second largest in Asia. • Further. minimize pores. Two West European cosmetics companies have the largest portion. Japan is the second-largest cosmetics market in the world only after the U. France. the market penetration of cosmetics and toiletries products in India is very low. According to statistics released by the Ministry of Economy. Firms based in Japan and South Korea also have substantial market share at 14%. Trade and Industry.A. as compared to $36.65 in other Asian countries. in 2007 the number of esthetic salons in Japan reached 18. The personal care products industry in India is value at Rs.68 cents. UK.

Amway. The Salon industry is estimated at USD. targeting lower prices. 1 .opportunity for more significant growth down the road in this country of 1 billion people. 200 crores -. In its second year of operations (1999-2000). Oriflame-. For the beauty industry the reference points are largely Bollywood (the Indian Film Industry). ADEX India. pumped in over Rs. Television soaps & Magazines and largely Mumbai based.000 crores in 2004. Euro monitor estimates that the Industry for products alone minus services to be $ 3.6 billion and that should reach $4. 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. 2. The figure is about Rs. they saw but will they conquer? There are about seven-eight companies involved in direct selling in India.a 100 per cent increase. This seems to have been the trend with all the major direct sellers. It is a market of great interest to international companies. 312 crores in 1997-98 and Rs. The Beauty Business has another parallel with the growth of Indian economy . This change in strategy helped it reap rewards and stage a turnaround. with total recorded sales of 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. 520 crores in 1998-99. The two biggest .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 -.4 billion by 2012. Amway expects its business to touch Rs. a direct selling pioneer. TRENDS IN INDIA HOW have the companies that have touted the benefits of direct selling to the individual fared? They came. 1. Amway estimates its turnover at Rs. Its flashy prices did not convince the consumers about the quality of the products. 375 Million and is growing at rate of 30 to 40 %. 115 crores as foreign direct investment. It has since re-positioned itself to a broader market.

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

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

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

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

115 crores as foreign direct investment. Amway estimates its turnover at Rs. Amway expects its business to touch Rs. Such concepts are alien to the conservative middleclass Indian households. This change in strategy helped it reap rewards and stage a turnaround. pumped in over Rs. It has since re-positioned itself to a broader market.Amway. 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. justifying the premium prices of their goods. Tupperware salespersons are trained on how to explain why a Tupperware plastic bowl costs Rs. They try to promote the concept that the bowl is worth the investment and offers value for money. thereafter. For instance. . 1.000 crores in 2002 Oriflame -. In its second year of operations (1999-2000). targeting lower prices.a 100 percent increase. Nevertheless. Its flashy prices did not convince the consumers about the quality of the products. 120 more than what is available in the market. This seems to have been the trend with all the major direct sellers. 200 crores -.a Swedish direct selling company involved in cosmetics -.claims to have done similarly. The two biggest obstacles they face in this country were explaining the concept and. a direct selling pioneer.

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

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

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

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

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

Provide better incentives to sales people to increase their motivational level and boost sales.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. They will help them to capture the untapped market.

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

ANNEXURE1: • SAMPLE QUESTIONNAIRE .

then from where did you purchase your cosmetics? Internet Tele-Shopping Catalogue Door to Door . 2.QUESTIONNAIRE 1.000 More then 1..000-1.. 00. 00. If yes. Have you ever purchased cosmetics through direct selling? Yes No 7. Occupation…………………………………… 5.000 6.000 50. Income(Per Annual) Below 50. Age…………………………………………… 3. Name…………………………………………. Gender………………………………………. 4.

. In future would you prefer purchasing cosmetics through direct selling? Yes No 12. Would you recommend this method of purchasing to your friends? .8. 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.

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

Any others. please specify .

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