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

catalogue selling and home party selling. 11. . 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. 4. 2.1. Direct selling is one form of direct marketing. 10. 9. habits. 12. internet selling. 5. 6. For a company to be able to do business with people with different preferences. which includes door-to-door selling. 7.

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

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

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

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

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

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

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

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

vibrant and growing sector of activity providing earning opportunities to millions of salespeople all over the world. . direct selling is a dynamic.Direct selling is the sale of products by face-to-face contact with the customer. Introduction to Direct Selling. 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. In the first part of the 20th century. Rural areas and small towns were supplied with basic goods only through the travelling salesmen. In the Middle Age. through indirect means such as Tupperware parties. Today at the beginning of the 21st century. It is part of the man's basic need to exchange goods and to communicate. Direct selling can be considered as the oldest distribution channel in history. 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.

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

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

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

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

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

DIRECT SELLING -A GROWING INDUSTRY Direct selling companies to slug it out in Rs 5. accounting for almost 40% of product sales through direct selling. Bhopal. and Jabalpur. Ravindra Deshmukh. Image Lifestyle Private Ltd in April 2009 through whom we will launch new consumer promotions by partnering with various . Bhubaneshwar. "We plan to set up about 50 malls in the next three years at an initial investment of Rs 100 crore in Mumbai. We will be forming a new subsidiary. among others. more and more men are today directly or indirectly venturing into 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. Traditionally considered as a profession for women. Marketing of Services is likely to emerge as the next growth area. Image Multitrade Private Ltd told FE. Pune. chairman and managing director. Kolhapur.000 crore segment. Mumbai. Feb 1 The year 2009 is likely to witness intense competition among direct selling Companies in India. Nagpur.• • • • people employed in the direct selling industry Sales in India through direct selling is estimated at Rs23bn (US$511mn) in 2003.000 crore market. Further. Health & Nutrition products has emerged as the fastest growing category in India. The men to women ratio in India is gradually changing. 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. which are vying for a pie in the Rs 5.

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

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

growth in the segments for mascara and eye shadow will be remarkable. color cosmetics have the highest average annual growth rate. Sindoor.0 mil) in 2008.586.0 bil) in 2007 to 112. According to Global Cosmetic Industry Business Magazine.9 billion yen ($782. and oral hygiene have steady growth rates of 4.3 million US dollar in 196364 and 25.351.8 mil) in 2007 to 88.7 billion in 2007. Kajol.6 bil) in 2008.9 million in 2008 to $3. and will maintain the highest market value through the forecast period. and is expected to increase to 509. the global market for natural beauty products will be worth more than $10 billion. with growth of the ingredients expected to be around 5% per year through 2012. In particular. The market for body-care products will remain roughly flat: from 112. Bindi and Herbal Cosmetics and Toiletries. in particular for raw materials originating in developing countries. particularly in developing countries. by 2009.9 billion yen ($801. price and range. The Indian Cosmetics Industry can match International Standards when comes to quality. perfume. They will grow from $2. Factors contributing to this steady growth include improvements in the global economy. The report also mentions that the segments for eye make-up products are expected to show steady growth.0 bil) in 2008. growing at 5. from 86. the market for makeup products reached 497.are generally low.7 million in 2012.6 % per year through 2012. According to the report.2 billion yen ($4. Exports of Cosmetics & Toiletries from India was 1. • • • • • • • . Kum-Kum. and the introduction of new consumer-friendly products. There are traditional Toiletries items like Perfumes and Ethers. Hair care products were worth more than $4 billion in 2008.7 million US dollar in 1979-80 and touched 336 million US dollar during 2006-2007.0 billion yen ($1. In end-user segments. Talcum Powder.2 % per year.6 billion yen ($4. Fuji Keizai Releases Report on Japanese Cosmetics Market.5 bil) in 2007. The global market for cosmetics and toiletries ingredients is estimated to be around $14.1 billion yen ($1. • The Indian Cosmetic Industry continues a beautiful blend of traditional and the modern. Bath/ shaving products. Perfumed Hair Oil.

Western Japan is a large beauty market.A.057 of these being in Western Japan (the part of the country west of Nagoya). • Further. Two West European cosmetics companies have the largest portion. and restore hydration have created an $83 billion worldwide market.S. Trade and Industry. 50%. the market penetration of cosmetics and toiletries products in India is very low.65 in other Asian countries.7 billion (ex-factory) in 2006. Firms based in Japan and South Korea also have substantial market share at 14%. This low market penetration for cosmetics and personal care products in India can be viewed as an . 960 million US dollars.003 with 10. The cosmetics industry is regionally based. According to statistics released by the Ministry of Economy. UK. Current per capita expenditure on cosmetics is approximately $0.8% of the total number of salons nationwide. France. but their average sales are the smallest. 2500 crores in consumer price terms. • The herbal cosmetics industry is set for a significant growth depending on the capability of the manufacturers to market their products. in terms of number. and firms based in North America and in West Europe account for approximately 86% of sales: 43% for each region. Products that claim to renew cells. The growth of health care products is about 20%.9 billion / Euro 10. Germany and Japan) make up 93% of sales. The personal care products industry in India is value at Rs. as compared to $36. Japan is the second-largest cosmetics market in the world only after the U.68 cents. As this statistic shows. • • • Even with double-digit growth rates. which accounts for 55. Firms in the largest five countries (USA. in 2007 the number of esthetic salons in Japan reached 18. minimize pores. the size of the Japanese cosmetics market reached a total of U5$12.• China's cosmetic products market ranked the second largest in Asia.

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

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

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

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

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

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

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

describes data and characteristics about the population or phenomenon being studied. In other words.e. Often the best approach. also known as statistical research. accurate and systematic. RESEARCH DESIGN: In this research work descriptive studies are undertaken to conduct the survey. 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:- . • What is descriptive research? Descriptive research. where. prior to writing descriptive research. descriptive research cannot be used to create a causal relationship. when and how. the research cannot describe what caused a situation. The description is used for frequencies. Although the data description is factual. questionnaires. is to conduct a survey investigation. what. descriptive research can be said to have a low requirement for internal validity. 2. Descriptive research answers the questions who. averages and other statistical calculations. where one variable affects another.This Report provides insight into the effectiveness of direct selling techniques on the cosmetics industry and also measures the satisfaction level of consumers through the use of quantitative method of data collection i. Thus.

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

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

when the sales person is already in one's home. this increases their shopping effort whereas in direct selling one often finds sellers easily and conveniently located. On the other hand. Also the relationship they get with the seller through traditional shopping is also perceived to be shallower as compared to direct selling. At the same time the price can be perceived as lower in direct selling because the buyer is willing to pay more. bad rapport of the salesperson. 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. lack of trust on the salesperson and inadequacy of information about the company or the products. This can be due to a bad shopping experience. Through direct selling the customer will probably get in contact with the same sales person more than once and therefore a deeper relationship is created between the buyer and the seller. Shopping at home is much more convenient and is less expensive.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. providing door-to-door service which reduces the whole shopping effort. not all the customers are 100% satisfied customers. 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. .

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 will help them to capture the untapped market. Increase the awareness level among the non-users through extensive promotional methods. They should add new distribution channels or should increase the intensity of distribution in each channel. • • • .

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

ANNEXURE1: • SAMPLE QUESTIONNAIRE .

000 More then 1. Income(Per Annual) Below 50. then from where did you purchase your cosmetics? Internet Tele-Shopping Catalogue Door to Door . Occupation…………………………………… 5. If yes.. 2. Gender………………………………………. Name………………………………………….000 50.. Have you ever purchased cosmetics through direct selling? Yes No 7. Age…………………………………………… 3. 00. 00.000 6. 4.QUESTIONNAIRE 1.000-1.

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

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

please specify .Any others.

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