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.1. 5. 2. 10. 3. 4. 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. For a company to be able to do business with people with different preferences. . 11. 7. 6. 9. catalogue selling and home party selling. 12. habits. Direct selling is one form of direct marketing. which includes door-to-door selling.

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

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

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

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

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

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

{[fact}} in which marketers contact consumers by phone. Junk mail includes advertising circulars. send paper mail to all postal customers in an area or all customers on a list. 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. Bulk mailings are a particularly popular method of promotion for businesses operating in the . broadcast faxing.. Channels The most common form of direct marketing is direct mail. The unpopularity of cold call telemarketing (in which the consumer does not expect or invite the sales call) has led some US states and the US federal government to create "no-call lists" and legislation including heavy fines. For example. some direct marketing efforts using particular media have been criticized for generating unwanted solicitations. but viewers respond directly via telephone or internet. 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. direct mail that is irrelevant to the recipient is considered junk mail. and unwanted email messages are considered spam. including spam may have passed telemarketing in frequency at this point. or delivered to consumers' mailboxes by delivery services other than the Post Office. commonly called junk mail. pre-approved credit card applications. This is partly due to laws in the United States and elsewhere which make it illegal. While many marketers like this form of marketing. which may also be referred to as admail and may involve bulk mail. Yet since the start of the Internet age the challenges of Chief Marketing Executives (CMOs) are tracking direct marketing responses and measuring results. 1. The second most. which some advertising agencies are able to provide by using variable data printing and targeted mailing lists. A fourth type of direct marketing. common form of direct marketing is telemarketing. Email Marketing. and is a third type of direct marketing. A related form of marketing is infomercials. Consumers are demanding an end to direct marketing. The term direct mail is used in the direct marketing industry to refer to junk mail. free trial CDs. Probably the most commonly used medium for direct marketing is junk mail.in greater detail elsewhere in this article. and other unsolicited merchandising invitations delivered by mail or to homes and businesses. in which marketing communications are sent to customers using the postal service.

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

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

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

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

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

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

the growth rate has been a higher 15% over the last 10 years and 9% over the last 5 years.3mn in 2003. 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. Switzerland has the highest sales per person at US$51561.24mn direct sellers ranks 11th globally in terms of number of • • • • • . Overview of the direct selling industry • • • The direct selling industry does an estimated sales of over US$88 billion worldwide Almost 49 million people all over the world are engaged in direct selling. The drop out rate however is quite high. with only 50-60% of recruits converting into active consultants USA has the highest number of direct sales people at 13. you can be assured the company has pledged to abide by and uphold the DSA Code of Ethics. 7. as opposed to the person trying to recruit you. If it is. Sales per person are the lowest in the world in Indonesia at US$109. In terms of number of people joining the direct selling industry annually.Do not assume that "official looking" documents are accurate or complete or even produced by the company. India with about 1. China banned Direct Selling for a 7 year period in 1998. but productivity is low.

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

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

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

According to the report. and is expected to increase to 509. Hair care products were worth more than $4 billion in 2008. Exports of Cosmetics & Toiletries from India was 1.2 % per year.0 mil) in 2008. Fuji Keizai Releases Report on Japanese Cosmetics Market.7 million US dollar in 1979-80 and touched 336 million US dollar during 2006-2007. the market for makeup products reached 497. and oral hygiene have steady growth rates of 4. Kum-Kum. price and range.9 billion yen ($782. in particular for raw materials originating in developing countries. Sindoor. growth in the segments for mascara and eye shadow will be remarkable.351. The global market for cosmetics and toiletries ingredients is estimated to be around $14. • • • • • • • . The report also mentions that the segments for eye make-up products are expected to show steady growth.6 % per year through 2012.5 bil) in 2007. Kajol. The Indian Cosmetics Industry can match International Standards when comes to quality.6 bil) in 2008.6 billion yen ($4. perfume. and will maintain the highest market value through the forecast period. There are traditional Toiletries items like Perfumes and Ethers. In particular. They will grow from $2. growing at 5.7 million in 2012.9 million in 2008 to $3.0 bil) in 2007 to 112. and the introduction of new consumer-friendly products. from 86. Perfumed Hair Oil. with growth of the ingredients expected to be around 5% per year through 2012. by 2009. the global market for natural beauty products will be worth more than $10 billion.9 billion yen ($801.586.0 bil) in 2008. The market for body-care products will remain roughly flat: from 112. • The Indian Cosmetic Industry continues a beautiful blend of traditional and the modern. Bath/ shaving products. According to Global Cosmetic Industry Business Magazine.3 million US dollar in 196364 and 25. color cosmetics have the highest average annual growth rate.0 billion yen ($1. In end-user segments.7 billion in 2007. Talcum Powder. Bindi and Herbal Cosmetics and Toiletries.8 mil) in 2007 to 88.are generally low.1 billion yen ($1. particularly in developing countries. Factors contributing to this steady growth include improvements in the global economy.2 billion yen ($4.

Firms in the largest five countries (USA.• China's cosmetic products market ranked the second largest in Asia. UK. in terms of number. The growth of health care products is about 20%. This low market penetration for cosmetics and personal care products in India can be viewed as an . Two West European cosmetics companies have the largest portion.9 billion / Euro 10. Firms based in Japan and South Korea also have substantial market share at 14%.S. and restore hydration have created an $83 billion worldwide market. As this statistic shows.7 billion (ex-factory) in 2006. France.003 with 10. which accounts for 55.057 of these being in Western Japan (the part of the country west of Nagoya). 50%. and firms based in North America and in West Europe account for approximately 86% of sales: 43% for each region.65 in other Asian countries.8% of the total number of salons nationwide. Japan is the second-largest cosmetics market in the world only after the U. minimize pores. Trade and Industry. in 2007 the number of esthetic salons in Japan reached 18. the size of the Japanese cosmetics market reached a total of U5$12. Current per capita expenditure on cosmetics is approximately $0. but their average sales are the smallest. • The herbal cosmetics industry is set for a significant growth depending on the capability of the manufacturers to market their products. According to statistics released by the Ministry of Economy.A. 2500 crores in consumer price terms. Western Japan is a large beauty market. the market penetration of cosmetics and toiletries products in India is very low. 960 million US dollars. as compared to $36. Products that claim to renew cells.68 cents. The cosmetics industry is regionally based. Germany and Japan) make up 93% of sales. • Further. The personal care products industry in India is value at Rs. • • • Even with double-digit growth rates.

claims to have done similarly. with total recorded sales of Rs. 620 crores now. 1 .000 crores in 2004. 312 crores in 1997-98 and Rs. For the beauty industry the reference points are largely Bollywood (the Indian Film Industry). Euro monitor estimates that the Industry for products alone minus services to be $ 3. The figure is about Rs. It has since re-positioned itself to a broader market. Amway estimates its turnover at Rs. Oriflame-.6 billion and that should reach $4. 1.it has it's own service sector that is growing as fast as the market for products. 375 Million and is growing at rate of 30 to 40 %. In its second year of operations (1999-2000). pumped in over Rs. This seems to have been the trend with all the major direct sellers.Amway. Its flashy prices did not convince the consumers about the quality of the products. The Salon industry is estimated at USD. The market for beauty in India has been booming and it's a prime playing field for beauty majors across the globe. 2. targeting lower prices. This change in strategy helped it reap rewards and stage a turnaround. Amway expects its business to touch Rs. 115 crores as foreign direct investment. they saw but will they conquer? There are about seven-eight companies involved in direct selling in India.opportunity for more significant growth down the road in this country of 1 billion people. The two biggest . 200 crores -. Television soaps & Magazines and largely Mumbai based. 520 crores in 1998-99. a direct selling pioneer. The Beauty Business has another parallel with the growth of Indian economy .a 100 per cent increase.a Swedish direct selling company involved in cosmetics -. It is a market of great interest to international companies. TRENDS IN INDIA HOW have the companies that have touted the benefits of direct selling to the individual fared? They came. ADEX India. a Division of TAM Media research shows there has been 49% increase in commercial time for Beauty product on TV in 2008.4 billion by 2012.

obstacles they face in this country were explaining the concept and. a boom in the Indian fashion world has contributed to the rise in demand for professional beauty care products. justifying the premium prices of their goods. the cosmetics industry is heading East . The Indian Client is a demanding one and expects nothing less than a Versace. From concept to completion. and deodorants (10. thereafter. The reasons for the growing demand for cosmetic products in India also include: greater access to television. For instance. or a . 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. sun care (13. manufacturer I distributor expansions. The greatest growth was recorded in color cosmetics. which has created a growing awareness of the western world.6% from 1997-2004.3% from 2003-2004. up 46. increased advertising in general. followed far behind by increased sales in fragrance (18%). Such concepts are alien to the conservative middleclass Indian households. Nevertheless. According to Euro monitor. and greater product choice and availability.to India. 120 more than what is available in the market. THE GROWING COSMETICS INDUSTRY IN INDIA The sun and sales are rising on the Indian cosmetics market. Also. retail store grand openings are the buzz words. Increased disposable income has led to growth in demand for premium products.1 %).5%). They try to promote the concept that the bowl is worth the investment and offers value for money. Tupperware salespersons are trained on how to explain why a Tupperware plastic bowl costs Rs. where raw material sources. The success of contestants from India at various well known international beauty pageants in the last few years has also contributed to making Indian women more conscious of their appearance and more aware of western cosmetic products and brands. the Indian cosmetics and personal care market has grown 62.

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

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

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

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

etc. RESEARCH OBJECTIVE Marketing is a shared interest among us. I believe that marketing will be more and more important for companies when trying to build strong relationships with customers. it is one-twoone relationship. So.REASEARCH METHOLOGY 1. home party selling. It aims to achieve an immediate quantifiable response and build long-term relationship with customers. Direct selling is one form of direct marketing. office-to-office. When it comes to direct selling then cosmetics industry is the most lucrative industry to study. therefore this research focuses on use of direct selling techniques in cosmetics industry. Direct marketing often consists of interactive communication and has the being customized to match the needs of specific target 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. It is an effective for company to build up customer relationship in new markets. which is the reason why we chose to examine this area. And this focuses on the same. 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. rather than shops or agents'. One thing that is the prime concern for companies today in direct selling is to constantly monitor and measure customer satisfaction level. Successful marketers need to be aware of the different characteristics that affect consumer behavior. it can include door-to-door.

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

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

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

. bad rapport of the salesperson. 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. 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. Shopping at home is much more convenient and is less expensive. This can be due to a bad shopping experience. 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. Also the relationship they get with the seller through traditional shopping is also perceived to be shallower as compared to direct selling. On the other hand. when the sales person is already in one's home. since the consumers are provided with various schemes and discounts. So some respondents believe that direct selling does not provide them with adequate information and is more stressful compared to traditional selling. this increases their shopping effort whereas in direct selling one often finds sellers easily and conveniently located. not all the customers are 100% satisfied customers. Through direct selling the customer will probably get in contact with the same sales person more than once and therefore a deeper relationship is created between the buyer and the seller. Most consumers find traditional shopping is more time consuming since they usually go to more than one shop in order to be satisfied and therefore.

Increase the awareness level among the non-users through extensive promotional methods. They will help them to capture the untapped market.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.

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

ANNEXURE1: • SAMPLE QUESTIONNAIRE .

QUESTIONNAIRE 1. Income(Per Annual) Below 50.000 50.. Occupation…………………………………… 5.000 More then 1..000-1. 4. Age…………………………………………… 3. Gender………………………………………. Name…………………………………………. then from where did you purchase your cosmetics? Internet Tele-Shopping Catalogue Door to Door . 00. Have you ever purchased cosmetics through direct selling? Yes No 7.000 6. 2. If yes. 00.

9. 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. Would you recommend this method of purchasing to your friends? . In future would you prefer purchasing cosmetics through direct selling? Yes No 12.8.

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

Any others. please specify .

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