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

habits.1. 3. 7. 8. internet selling. 10. 4. which includes door-to-door selling. 6. 5. For a company to be able to do business with people with different preferences. . Direct selling is one form of direct marketing. catalogue selling and home party selling. 9. 12. 2. 11. Abstract Meaning of Direct Marketing and Direct Selling Introduction to Direct Marketing and Direct Selling Overview of cosmetics industry Future trends in Cosmetics Industry Research methodology Research Objective Research Design Data Collection Method Sampling technology Analysis & interpretation Limitations Conclusions Recommendation Bibliography Annexure ABSTRACT The dissertation aims to identity and investigate the factors involved in direct selling in relation to cosmetics industry.

MEANING 1.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. The results were analyzed and interpreted. There are two main . The population consisted of people living in Faridabad. In order to test the research work. a survey was conducted and questionnaire was prepared.

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

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

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

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

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

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

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

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

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

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

The DSA Code of Ethics requires that member companies do this. High entry fees should be a warning sign. Companies belonging to the Direct Selling Association "buy back" unsold marketable products purchased within the prior 12 months if you decide to quit the business. 2." or buying large inventories of . The start up fees in direct selling companies are generally modest . for 90 percent of the price you paid for them. 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. Start up costs should be minimal. 74 percent of Americans have purchased goods or services through direct sales.usually the cost of a sales kit. That's more than the number who have purchased through television shopping and on-line computer services combined. People value the products available through direct selling and 45 percent of Americans want to buy from direct sellers. Beware of opportunities that encourage "front end loading.People like to shop through direct selling According to recent surveys. Pyramid schemes make their money through fees paid by new recruits or by loading inventory or training aids on them. You should be able to return unsold inventory.

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

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

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

among others. (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 10.5 lakh to about 50 lakh for its existing B2B business in the next few years. For the purpose. 5) Then it comes to whole seller. In DIRECT SELLING SYSTEM company provide the product straight to the . 1) Factory manufactures a product." The company also plans to expand its distributors from 1.. 6) Then it comes to retail seller. he added.. 2) Advertisement of the product. 4) Product goes to District Distributor. Though people from 2 to 6 in above procedure. 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. are not improving the quality of the product in anyway. 7) Then consumer buys the product from retailer.retailers to generate repayment of incomes for our distributors. apart from planning to start its training centre either in Mumbai or in Lonavala. we are in the process of in talking LG Electronics India and Subhiksha. are taking money from consumer for just providing the product to the consumer.

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

Bindi and Herbal Cosmetics and Toiletries. and will maintain the highest market value through the forecast period. According to the report. Factors contributing to this steady growth include improvements in the global economy.8 mil) in 2007 to 88.0 mil) in 2008. Exports of Cosmetics & Toiletries from India was 1. Hair care products were worth more than $4 billion in 2008. by 2009. Kajol. In particular.9 billion yen ($782.586. The market for body-care products will remain roughly flat: from 112. and the introduction of new consumer-friendly products. growing at 5.3 million US dollar in 196364 and 25. perfume. There are traditional Toiletries items like Perfumes and Ethers. from 86. with growth of the ingredients expected to be around 5% per year through 2012.are generally low. growth in the segments for mascara and eye shadow will be remarkable. particularly in developing countries. Kum-Kum.6 % per year through 2012.0 bil) in 2007 to 112. Sindoor.2 % per year.0 billion yen ($1. The global market for cosmetics and toiletries ingredients is estimated to be around $14. They will grow from $2. color cosmetics have the highest average annual growth rate. in particular for raw materials originating in developing countries. The report also mentions that the segments for eye make-up products are expected to show steady growth. Fuji Keizai Releases Report on Japanese Cosmetics Market. Bath/ shaving products.0 bil) in 2008. and is expected to increase to 509.9 billion yen ($801. The Indian Cosmetics Industry can match International Standards when comes to quality. the global market for natural beauty products will be worth more than $10 billion. Talcum Powder.7 billion in 2007. price and range.6 billion yen ($4. In end-user segments.351.2 billion yen ($4. and oral hygiene have steady growth rates of 4. Perfumed Hair Oil.7 million in 2012.5 bil) in 2007.1 billion yen ($1.9 million in 2008 to $3. • The Indian Cosmetic Industry continues a beautiful blend of traditional and the modern. • • • • • • • . According to Global Cosmetic Industry Business Magazine.7 million US dollar in 1979-80 and touched 336 million US dollar during 2006-2007. the market for makeup products reached 497.6 bil) in 2008.

Trade and Industry. the market penetration of cosmetics and toiletries products in India is very low. as compared to $36. According to statistics released by the Ministry of Economy. which accounts for 55. Firms in the largest five countries (USA. and restore hydration have created an $83 billion worldwide market.7 billion (ex-factory) in 2006. The growth of health care products is about 20%. but their average sales are the smallest. Japan is the second-largest cosmetics market in the world only after the U. This low market penetration for cosmetics and personal care products in India can be viewed as an . in 2007 the number of esthetic salons in Japan reached 18. France. minimize pores.9 billion / Euro 10. in terms of number. The cosmetics industry is regionally based. As this statistic shows. • • • Even with double-digit growth rates. Current per capita expenditure on cosmetics is approximately $0. 50%. • The herbal cosmetics industry is set for a significant growth depending on the capability of the manufacturers to market their products. Products that claim to renew cells. the size of the Japanese cosmetics market reached a total of U5$12. Germany and Japan) make up 93% of sales.68 cents.003 with 10. • Further. Two West European cosmetics companies have the largest portion. 2500 crores in consumer price terms.65 in other Asian countries.A. Firms based in Japan and South Korea also have substantial market share at 14%.S. and firms based in North America and in West Europe account for approximately 86% of sales: 43% for each region.• China's cosmetic products market ranked the second largest in Asia.057 of these being in Western Japan (the part of the country west of Nagoya). The personal care products industry in India is value at Rs. 960 million US dollars.8% of the total number of salons nationwide. UK. Western Japan is a large beauty market.

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 Division of TAM Media research shows there has been 49% increase in commercial time for Beauty product on TV in 2008.claims to have done similarly. 115 crores as foreign direct investment. The two biggest . 200 crores -. a direct selling pioneer. It has since re-positioned itself to a broader market. pumped in over Rs. 520 crores in 1998-99. 1 . In its second year of operations (1999-2000).a Swedish direct selling company involved in cosmetics -. Television soaps & Magazines and largely Mumbai based. Euro monitor estimates that the Industry for products alone minus services to be $ 3.4 billion by 2012. It is a market of great interest to international companies.6 billion and that should reach $4. Amway estimates its turnover at Rs.opportunity for more significant growth down the road in this country of 1 billion people. they saw but will they conquer? There are about seven-eight companies involved in direct selling in India. The Salon industry is estimated at USD. with total recorded sales of Rs. Oriflame-. This change in strategy helped it reap rewards and stage a turnaround.Amway. 1. The market for beauty in India has been booming and it's a prime playing field for beauty majors across the globe. 312 crores in 1997-98 and Rs. TRENDS IN INDIA HOW have the companies that have touted the benefits of direct selling to the individual fared? They came. 2. targeting lower prices. 620 crores now. ADEX India. This seems to have been the trend with all the major direct sellers.it has it's own service sector that is growing as fast as the market for products. The Beauty Business has another parallel with the growth of Indian economy .a 100 per cent increase. Amway expects its business to touch Rs.000 crores in 2004. 375 Million and is growing at rate of 30 to 40 %. The figure is about Rs.

followed far behind by increased sales in fragrance (18%). manufacturer I distributor expansions. From concept to completion. They try to promote the concept that the bowl is worth the investment and offers value for money. a boom in the Indian fashion world has contributed to the rise in demand for professional beauty care products. or a . According to Euro monitor.1 %).3% from 2003-2004. Such concepts are alien to the conservative middleclass Indian households. and greater product choice and availability.6% from 1997-2004. sun care (13.5%).obstacles they face in this country were explaining the concept and. the Indian cosmetics and personal care market has grown 62. The reasons for the growing demand for cosmetic products in India also include: greater access to television. there is much to be said for the tremendous potential for direct selling in India if the companies play their cards right and adapt to the Indian conditions. Tupperware salespersons are trained on how to explain why a Tupperware plastic bowl costs Rs. THE GROWING COSMETICS INDUSTRY IN INDIA The sun and sales are rising on the Indian cosmetics market.to India. Nevertheless. up 46. retail store grand openings are the buzz words. Increased disposable income has led to growth in demand for premium products. and deodorants (10. where raw material sources. the cosmetics industry is heading East . The success of contestants from India at various well known international beauty pageants in the last few years has also contributed to making Indian women more conscious of their appearance and more aware of western cosmetic products and brands. The greatest growth was recorded in color cosmetics. Also. The Indian Client is a demanding one and expects nothing less than a Versace. justifying the premium prices of their goods. thereafter. which has created a growing awareness of the western world. 120 more than what is available in the market. increased advertising in general. For instance.

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

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

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

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

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

RESEARCH DESIGN: In this research work descriptive studies are undertaken to conduct the survey. I designed a questionnaire consisting of 17 questions related to the main topic and then I interviewed 100 responded be sure of getting a high response rare the survey was conducted on one to one basis. descriptive research can be said to have a low requirement for internal validity. describes data and characteristics about the population or phenomenon being studied. The description is used for frequencies. descriptive research cannot be used to create a causal relationship. where one variable affects another. Although the data description is factual.e. accurate and systematic.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. when and how. 2. Descriptive research answers the questions who. • What is descriptive research? Descriptive research. Thus. 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:- . In other words. also known as statistical research. questionnaires. prior to writing descriptive research. Often the best approach. the research cannot describe what caused a situation. is to conduct a survey investigation. where. what. averages and other statistical calculations.

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

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

lack of trust on the salesperson and inadequacy of information about the company or the products. Also the relationship they get with the seller through traditional shopping is also perceived to be shallower as compared to direct selling. 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. . This can be due to a bad shopping experience. On the other hand. bad rapport of the salesperson. So some respondents believe that direct selling does not provide them with adequate information and is more stressful compared to traditional selling. since the consumers are provided with various schemes and discounts. 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. not all the customers are 100% satisfied customers. Shopping at home is much more convenient and is less expensive. 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. 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. At the same time the price can be perceived as lower in direct selling because the buyer is willing to pay more. 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. • • • .RECOMMENDATIONS • The direct selling cosmetics product quality on a continuous basis and provide better offerings to the consumers. They will help them to capture the untapped market. Provide better incentives to sales people to increase their motivational level and boost sales.

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

ANNEXURE1: • SAMPLE QUESTIONNAIRE .

Age…………………………………………… 3. Name…………………………………………. 00.000-1.. Income(Per Annual) Below 50.. 00. Have you ever purchased cosmetics through direct selling? Yes No 7. If yes. 4. Occupation…………………………………… 5.000 6. 2.000 50.QUESTIONNAIRE 1. Gender……………………………………….000 More then 1. then from where did you purchase your cosmetics? Internet Tele-Shopping Catalogue Door to Door .

Would you recommend this method of purchasing to your friends? . In future would you prefer purchasing cosmetics through direct selling? Yes No 12.8. 9. Are you satisfied with your purchase? Yes No 10.. Which brand of cosmetics you prefer? Avon Amway Oriflamme Boutique Wellness Any others please specify……………. How often you purchase your cosmetics through direct selling? Weekly Monthly Yearly 11.

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

please specify .Any others.

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