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

10. 6. habits.1. . catalogue selling and home party selling. 5. 12. For a company to be able to do business with people with different preferences. Direct selling is one form of direct marketing. 4. 3. 8. 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. internet selling. 2. 9. 11. 7. which includes door-to-door selling.

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

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

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

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

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

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

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

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

. 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 is the sale of products by face-to-face contact with the customer. Rural areas and small towns were supplied with basic goods only through the travelling salesmen. In the Middle Age. Direct selling can be considered as the oldest distribution channel in history. through indirect means such as Tupperware parties. either by having salespeople approach potential customers in person. 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. direct selling is a dynamic. Introduction to Direct Selling. Today at the beginning of the 21st century. direct sellers were called "peddlers" who contributed to the development of trade by bringing novelties from large cities to little villages.

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

Direct selling offers flexible work schedules. Earnings are in proportion to efforts. which is founded in spring 2007. print etc. The level of success you can achieve is limited only by your willingness to work hard. Anyone can do it.Most of the national direct selling associations are represented in the World Federation of Direct Selling Associations (WFDSA). In Europe there are two supranational associations: the first one is the Federation of European Direct Selling Associations (FeDSA). Earn in proportion to your own efforts. the second one is the Direct Selling Europe. Direct selling involves people and is a part of direct marketing which additionally involves the use of media. Direct selling is a good way to own a business. 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. Benefits of Direct Selling • • • • • Direct selling is a good way to meet and socialize with people. Receive training and support from an established company. • • • • Set your own goals and determine yourself how to reach them. Direct selling is a good way to earn extra income.

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

. the products or services. Check to see if the products or services are actually being sold to consumers. 3. and anything else you're concerned about. This requires quality products and services sold at competitive prices. Beware of any business that claims you can get rich by solely using their products or by recruiting new people into the business. 4.Consult with others who have had experiences with the company and its products. About the company. depends on selling to customers who use and/or consume the product. Think longterm 3. Is the money you'll earn based on the sale of products or services? The answer should be "absolutely. You should also believe in the products or services you'll be selling. Direct selling. like other methods of retailing. Ask questions. realistic costs of doing business.Investigate and verify all information. return policies. 2. Does" getting in on the ground floor" mean that everyone joining after you will be less satisfied or happy? A legitimate opportunity won't disappear overnight. its leadership. start-up fees. 6." This is a key element of a legitimate business.unreturnable products to reach achievement levels or receive a "special" or larger "discounted" price. Take your time deciding. Identify a company and product that appeal to you. average earnings of distributors. Check our list of member companies or look in your local phonebook. And read it! 5.Get copies of all company literature. How to Get Started: 1.

China banned Direct Selling for a 7 year period in 1998. the growth rate has been a higher 15% over the last 10 years and 9% over the last 5 years. but productivity is low. Overview of the direct selling industry • • • The direct selling industry does an estimated sales of over US$88 billion worldwide Almost 49 million people all over the world are engaged in direct selling. 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. with only 50-60% of recruits converting into active consultants USA has the highest number of direct sales people at 13. Switzerland has the highest sales per person at US$51561. 7.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. In terms of number of people joining the direct selling industry annually.24mn direct sellers ranks 11th globally in terms of number of • • • • • . you can be assured the company has pledged to abide by and uphold the DSA Code of Ethics.3mn in 2003. The drop out rate however is quite high. If it is. India with about 1. as opposed to the person trying to recruit you.

Bhopal. Kolhapur. "We plan to set up about 50 malls in the next three years at an initial investment of Rs 100 crore in Mumbai. The men to women ratio in India is gradually changing.• • • • people employed in the direct selling industry Sales in India through direct selling is estimated at Rs23bn (US$511mn) in 2003. Mumbai. Image Lifestyle Private Ltd in April 2009 through whom we will launch new consumer promotions by partnering with various . Feb 1 The year 2009 is likely to witness intense competition among direct selling Companies in India. Traditionally considered as a profession for women.000 crore segment. Health & Nutrition products has emerged as the fastest growing category in India.000 crore market. Ravindra Deshmukh. more and more men are today directly or indirectly venturing into direct selling. We will be forming a new subsidiary. which are vying for a pie in the Rs 5. Nagpur. Pune. DIRECT SELLING -A GROWING INDUSTRY Direct selling companies to slug it out in Rs 5. among others. and Jabalpur. Image Multitrade Private Ltd told FE. Further. plans are also on the anvil to tie up with retail majors such as LG Electronics and Subhiksha to provide 10% discounts on cash coupons to its distributors. Mumbai-based Image Multitrade Private Ltd is planning to launch new corporate initiatives through a subsidiary called Image Lifestyle to foray into the retail mall segment. Marketing of Services is likely to emerge as the next growth area. accounting for almost 40% of product sales through direct selling. chairman and managing director. Bhubaneshwar.

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

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

According to the report. perfume. by 2009.6 bil) in 2008.0 billion yen ($1. and is expected to increase to 509. The global market for cosmetics and toiletries ingredients is estimated to be around $14.351.586. the market for makeup products reached 497. and will maintain the highest market value through the forecast period. Talcum Powder. Perfumed Hair Oil. particularly in developing countries. from 86. The Indian Cosmetics Industry can match International Standards when comes to quality.7 billion in 2007. The report also mentions that the segments for eye make-up products are expected to show steady growth.9 billion yen ($782.3 million US dollar in 196364 and 25. In particular. in particular for raw materials originating in developing countries. Factors contributing to this steady growth include improvements in the global economy.7 million US dollar in 1979-80 and touched 336 million US dollar during 2006-2007. There are traditional Toiletries items like Perfumes and Ethers. In end-user segments.2 billion yen ($4. growing at 5. with growth of the ingredients expected to be around 5% per year through 2012. • The Indian Cosmetic Industry continues a beautiful blend of traditional and the modern.2 % per year. Fuji Keizai Releases Report on Japanese Cosmetics Market.6 billion yen ($4. and the introduction of new consumer-friendly products. Bath/ shaving products. price and range.6 % per year through 2012.8 mil) in 2007 to 88. Hair care products were worth more than $4 billion in 2008. According to Global Cosmetic Industry Business Magazine.0 mil) in 2008. Kajol. the global market for natural beauty products will be worth more than $10 billion. The market for body-care products will remain roughly flat: from 112. Sindoor.0 bil) in 2008. Kum-Kum. and oral hygiene have steady growth rates of 4.7 million in 2012.are generally low. growth in the segments for mascara and eye shadow will be remarkable.1 billion yen ($1. They will grow from $2.9 billion yen ($801. color cosmetics have the highest average annual growth rate. Bindi and Herbal Cosmetics and Toiletries. • • • • • • • .0 bil) in 2007 to 112.5 bil) in 2007. Exports of Cosmetics & Toiletries from India was 1.9 million in 2008 to $3.

A. Western Japan is a large beauty market. and restore hydration have created an $83 billion worldwide market.7 billion (ex-factory) in 2006.• China's cosmetic products market ranked the second largest in Asia. The growth of health care products is about 20%.9 billion / Euro 10. and firms based in North America and in West Europe account for approximately 86% of sales: 43% for each region.8% of the total number of salons nationwide. Products that claim to renew cells. France. • • • Even with double-digit growth rates. the market penetration of cosmetics and toiletries products in India is very low. Trade and Industry. Current per capita expenditure on cosmetics is approximately $0. As this statistic shows. 50%. in 2007 the number of esthetic salons in Japan reached 18. Two West European cosmetics companies have the largest portion. which accounts for 55. UK. Germany and Japan) make up 93% of sales. The cosmetics industry is regionally based. The personal care products industry in India is value at Rs. Japan is the second-largest cosmetics market in the world only after the U. • The herbal cosmetics industry is set for a significant growth depending on the capability of the manufacturers to market their products. as compared to $36.003 with 10. 960 million US dollars.68 cents.S. According to statistics released by the Ministry of Economy.65 in other Asian countries. Firms based in Japan and South Korea also have substantial market share at 14%. minimize pores. in terms of number. • Further. 2500 crores in consumer price terms. but their average sales are the smallest. the size of the Japanese cosmetics market reached a total of U5$12. This low market penetration for cosmetics and personal care products in India can be viewed as an . Firms in the largest five countries (USA.057 of these being in Western Japan (the part of the country west of Nagoya).

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

increased advertising in general. Nevertheless. which has created a growing awareness of the western world. They try to promote the concept that the bowl is worth the investment and offers value for money. the Indian cosmetics and personal care market has grown 62. and greater product choice and availability. and deodorants (10.1 %). retail store grand openings are the buzz words. The reasons for the growing demand for cosmetic products in India also include: greater access to television. where raw material sources. a boom in the Indian fashion world has contributed to the rise in demand for professional beauty care products. For instance. 120 more than what is available in the market. From concept to completion.6% from 1997-2004. 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. The greatest growth was recorded in color cosmetics.5%). The Indian Client is a demanding one and expects nothing less than a Versace. followed far behind by increased sales in fragrance (18%). Such concepts are alien to the conservative middleclass Indian households. THE GROWING COSMETICS INDUSTRY IN INDIA The sun and sales are rising on the Indian cosmetics market.obstacles they face in this country were explaining the concept and. According to Euro monitor.to India. up 46. Tupperware salespersons are trained on how to explain why a Tupperware plastic bowl costs Rs. justifying the premium prices of their goods.3% from 2003-2004. Increased disposable income has led to growth in demand for premium products. manufacturer I distributor expansions. sun care (13. the cosmetics industry is heading East . thereafter. 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. Also.

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

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

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

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

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

what. descriptive research cannot be used to create a causal relationship. 2. The description is used for frequencies. questionnaires. 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. averages and other statistical calculations. • What is descriptive research? Descriptive research. accurate and systematic. where one variable affects another. Thus. describes data and characteristics about the population or phenomenon being studied. Descriptive research answers the questions who.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. also known as statistical research. 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. Often the best approach. In other words. Although the data description is factual. where. prior to writing descriptive research. Qualitative research often has the aim of description and researchers may follow-up with examinations of why the observations exist and what the implications of the findings are:- .e. is to conduct a survey investigation. when and how. the research cannot describe what caused a situation.

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

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

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

• • • . They should add new distribution channels or should increase the intensity of distribution in each channel. Provide better incentives to sales people to increase their motivational level and boost sales. 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.

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

ANNEXURE1: • SAMPLE QUESTIONNAIRE .

Occupation…………………………………… 5.000 50. Have you ever purchased cosmetics through direct selling? Yes No 7.000-1..QUESTIONNAIRE 1. 00. then from where did you purchase your cosmetics? Internet Tele-Shopping Catalogue Door to Door . Gender………………………………………. 00. 4. Income(Per Annual) Below 50. Age…………………………………………… 3. If yes. 2..000 6.000 More then 1. Name………………………………………….

. Would you recommend this method of purchasing to your friends? . 9. Are you satisfied with your purchase? Yes No 10. How often you purchase your cosmetics through direct selling? Weekly Monthly Yearly 11.8. In future would you prefer purchasing cosmetics through direct selling? Yes No 12. Which brand of cosmetics you prefer? Avon Amway Oriflamme Boutique Wellness Any others please specify…………….

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

please specify .Any others.

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