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

7.1. 9. . 2. which includes door-to-door selling. 8. habits. Direct selling is one form of direct marketing. 4. Abstract Meaning of Direct Marketing and Direct Selling Introduction to Direct Marketing and Direct Selling Overview of cosmetics industry Future trends in Cosmetics Industry Research methodology Research Objective Research Design Data Collection Method Sampling technology Analysis & interpretation Limitations Conclusions Recommendation Bibliography Annexure ABSTRACT The dissertation aims to identity and investigate the factors involved in direct selling in relation to cosmetics industry. 11. catalogue selling and home party selling. 10. internet selling. For a company to be able to do business with people with different preferences. 6. 5. 3. 12.

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

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

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

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

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

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

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

This process may be outsourced to specialist call centres. since the marketer incurs the cost of supporting a third-party medium (the newspaper or magazine). In many developed countries. 2. Telemarketing Marketers call telephone numbers. 5. This both allows marketers to reasonably conclude that the calls are due to a particular campaign. and Interwood Marketing Group then cross-sell. Couponing Couponing is used in print media to elicit a response from the reader. direct mail represents such a significant amount of the total volume of mail that special rate classes have been established. direct marketing aims to circumvent that balance.financial services. 4. and travel and tourism industries. if the caller buys anything. An example is a coupon which the reader cuts out and presents to a super-store check-out counter to avail of a discount. and allows the marketers to obtain customers' phone numbers as targets for telemarketing. and up-sell to these respondents. Major players are firms like avc. since responses are in the form of calls to telephone numbers given on-air. Under the Federal Do-Not-Call List rules in the US. Direct response television marketing TV-response marketing-Le infomercials-can be considered a form of direct marketing. Coupons in newspapers and magazines cannot be considered direct marketing. paring the costs down to solely delivering their unsolicited sales message to the consumer.Direct selling . home computer. without supporting the newspaper that the consumer seeks and welcomes. Thane Direct. 3. The agents sit at computerised work-stations and try to sell the products of the clients. 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 can be considered as the oldest distribution channel in history. In the Middle Age. Rural areas and small towns were supplied with basic goods only through the travelling salesmen. direct sellers were called "peddlers" who contributed to the development of trade by bringing novelties from large cities to little villages. Introduction to Direct Selling. 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. Today at the beginning of the 21st century. direct selling is a dynamic.Direct selling is the sale of products by face-to-face contact with the customer. In the first part of the 20th century. . 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. through indirect means such as Tupperware parties.

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

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

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

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

China banned Direct Selling for a 7 year period in 1998. In terms of number of people joining the direct selling industry annually. Sales per person are the lowest in the world in Indonesia at US$109. Indonesia has the highest number of sales people in the world after US. 7. but productivity is low. Switzerland has the highest sales per person at US$51561. you can be assured the company has pledged to abide by and uphold the DSA Code of Ethics. India with about 1.Need help evaluating a company? Check to see if the company in which you're interested is a member of the Direct Selling Association. If it is. The drop out rate however is quite high. 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.3mn in 2003. the growth rate has been a higher 15% over the last 10 years and 9% over the last 5 years. as opposed to the person trying to recruit you.24mn direct sellers ranks 11th globally in terms of number of • • • • • .Do not assume that "official looking" documents are accurate or complete or even produced by the company. with only 50-60% of recruits converting into active consultants USA has the highest number of direct sales people at 13.

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

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

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

5 bil) in 2007. There are traditional Toiletries items like Perfumes and Ethers. Perfumed Hair Oil.6 bil) in 2008.1 billion yen ($1.351. In particular. Exports of Cosmetics & Toiletries from India was 1. and the introduction of new consumer-friendly products. • The Indian Cosmetic Industry continues a beautiful blend of traditional and the modern.0 bil) in 2008. price and range.9 billion yen ($801. and oral hygiene have steady growth rates of 4. Hair care products were worth more than $4 billion in 2008. The report also mentions that the segments for eye make-up products are expected to show steady growth. In end-user segments. Factors contributing to this steady growth include improvements in the global economy. color cosmetics have the highest average annual growth rate.6 % per year through 2012. Fuji Keizai Releases Report on Japanese Cosmetics Market. The market for body-care products will remain roughly flat: from 112. and will maintain the highest market value through the forecast period.are generally low. According to the report. the market for makeup products reached 497.0 bil) in 2007 to 112. particularly in developing countries.7 billion in 2007.8 mil) in 2007 to 88. • • • • • • • . Sindoor.586. Talcum Powder.2 billion yen ($4. from 86. with growth of the ingredients expected to be around 5% per year through 2012. Kajol.9 billion yen ($782. Bindi and Herbal Cosmetics and Toiletries.3 million US dollar in 196364 and 25. Bath/ shaving products. by 2009.2 % per year.9 million in 2008 to $3.7 million US dollar in 1979-80 and touched 336 million US dollar during 2006-2007. The global market for cosmetics and toiletries ingredients is estimated to be around $14.0 mil) in 2008.0 billion yen ($1. and is expected to increase to 509. the global market for natural beauty products will be worth more than $10 billion.6 billion yen ($4. perfume. growing at 5. growth in the segments for mascara and eye shadow will be remarkable. Kum-Kum. According to Global Cosmetic Industry Business Magazine. in particular for raw materials originating in developing countries. They will grow from $2. The Indian Cosmetics Industry can match International Standards when comes to quality.7 million in 2012.

This low market penetration for cosmetics and personal care products in India can be viewed as an . 960 million US dollars. as compared to $36. in terms of number. but their average sales are the smallest. • The herbal cosmetics industry is set for a significant growth depending on the capability of the manufacturers to market their products.7 billion (ex-factory) in 2006. The personal care products industry in India is value at Rs. According to statistics released by the Ministry of Economy. Western Japan is a large beauty market.S. Current per capita expenditure on cosmetics is approximately $0. The growth of health care products is about 20%. the size of the Japanese cosmetics market reached a total of U5$12.65 in other Asian countries. Products that claim to renew cells. France.003 with 10. Germany and Japan) make up 93% of sales. Two West European cosmetics companies have the largest portion. the market penetration of cosmetics and toiletries products in India is very low. The cosmetics industry is regionally based. As this statistic shows. UK. minimize pores. Firms based in Japan and South Korea also have substantial market share at 14%. Japan is the second-largest cosmetics market in the world only after the U. 2500 crores in consumer price terms. and firms based in North America and in West Europe account for approximately 86% of sales: 43% for each region.68 cents. Trade and Industry. in 2007 the number of esthetic salons in Japan reached 18. which accounts for 55. 50%. and restore hydration have created an $83 billion worldwide market.9 billion / Euro 10. • • • Even with double-digit growth rates. Firms in the largest five countries (USA. • Further.• China's cosmetic products market ranked the second largest in Asia.A.8% of the total number of salons nationwide.057 of these being in Western Japan (the part of the country west of Nagoya).

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

followed far behind by increased sales in fragrance (18%). 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. They try to promote the concept that the bowl is worth the investment and offers value for money.to India. Nevertheless. manufacturer I distributor expansions.6% from 1997-2004. a boom in the Indian fashion world has contributed to the rise in demand for professional beauty care products. justifying the premium prices of their goods. retail store grand openings are the buzz words. up 46. The Indian Client is a demanding one and expects nothing less than a Versace. Such concepts are alien to the conservative middleclass Indian households. Increased disposable income has led to growth in demand for premium products. 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. which has created a growing awareness of the western world. the Indian cosmetics and personal care market has grown 62.1 %). 120 more than what is available in the market.obstacles they face in this country were explaining the concept and. Also. where raw material sources. and deodorants (10. The reasons for the growing demand for cosmetic products in India also include: greater access to television. thereafter. According to Euro monitor.3% from 2003-2004. sun care (13. From concept to completion.5%). increased advertising in general. THE GROWING COSMETICS INDUSTRY IN INDIA The sun and sales are rising on the Indian cosmetics market. or a . For instance. the cosmetics industry is heading East . The greatest growth was recorded in color cosmetics. and greater product choice and availability.

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

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

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

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

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

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

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

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

So some respondents believe that direct selling does not provide them with adequate information and is more stressful compared to traditional selling. . This can be due to a bad shopping experience. providing door-to-door service which reduces the whole shopping effort.CONCLUSION AND RECOMMENDATIONS CONCLUSION Most of the people believe that shopping in shops and malls is much more time consuming and expensive than shopping at home. since the consumers are provided with various schemes and discounts. 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. 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. not all the customers are 100% satisfied customers. On the other hand. Shopping at home is much more convenient and is less expensive. 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. lack of trust on the salesperson and inadequacy of information about the company or the products. bad rapport of the salesperson. Through direct selling the customer will probably get in contact with the same sales person more than once and therefore a deeper relationship is created between the buyer and the seller. Most consumers find traditional shopping is more time consuming since they usually go to more than one shop in order to be satisfied and therefore.

They should add new distribution channels or should increase the intensity of distribution in each channel. Increase the awareness level among the non-users through extensive promotional methods. Provide better incentives to sales people to increase their motivational level and boost sales. 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.

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

ANNEXURE1: • SAMPLE QUESTIONNAIRE .

000 6.000 50.000-1. Name…………………………………………. 4. then from where did you purchase your cosmetics? Internet Tele-Shopping Catalogue Door to Door . Age…………………………………………… 3. 2.000 More then 1. Occupation…………………………………… 5. Gender………………………………………. Have you ever purchased cosmetics through direct selling? Yes No 7... If yes. Income(Per Annual) Below 50. 00. 00.QUESTIONNAIRE 1.

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

Yes No 13. If yes. please mention? Cash Discount Free Gifts Coupons . Did you find your purchase. 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. Whether you like to go for schemes? Yes No 16.

please specify .Any others.

Sign up to vote on this title
UsefulNot useful