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

4.1. 6. 10. 2. habits. catalogue selling and home party selling. . 8. 3. For a company to be able to do business with people with different preferences. which includes door-to-door selling. 9. Direct selling is one form of direct marketing. 12. 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. 7. 5. internet selling.

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. MEANING 1. The results were analyzed and interpreted. The population consisted of people living in Faridabad.

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

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

lipsticks. 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 soon began using the insights he was learning to develop an idea for his own company with computers just coming out at the time. nail products. perfumes. Scott thought there might be a market for basic software hat would help people pay their bills. hair preparations. colognes. “SOME SELLING QOUTES” Scott Cook Starting his career at Procter & Grable. dentifrices. deodorants. mouthwashes. and lotions. including shaving preparations.The industry produces a vast array of products. . creams. Scott Cook Launched intuit in 1984.

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

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

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

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

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

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

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

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

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

Indonesia has the highest number of sales people in the world after US.Need help evaluating a company? Check to see if the company in which you're interested is a member of the Direct Selling Association.Do not assume that "official looking" documents are accurate or complete or even produced by the company. The drop out rate however is quite high. Switzerland has the highest sales per person at US$51561.3mn in 2003. If it is. 7. you can be assured the company has pledged to abide by and uphold the DSA Code of Ethics. the growth rate has been a higher 15% over the last 10 years and 9% over the last 5 years. India with about 1. 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. Sales per person are the lowest in the world in Indonesia at US$109. with only 50-60% of recruits converting into active consultants USA has the highest number of direct sales people at 13.24mn direct sellers ranks 11th globally in terms of number of • • • • • . but productivity is low. China banned Direct Selling for a 7 year period in 1998. In terms of number of people joining the direct selling industry annually. as opposed to the person trying to recruit you.

Further. DIRECT SELLING -A GROWING INDUSTRY Direct selling companies to slug it out in Rs 5.000 crore segment. Bhopal. Kolhapur. The men to women ratio in India is gradually changing. Image Multitrade Private Ltd told FE. more and more men are today directly or indirectly venturing into direct selling. Pune. Feb 1 The year 2009 is likely to witness intense competition among direct selling Companies in India. Bhubaneshwar. "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. Nagpur. chairman and managing director. Image Lifestyle Private Ltd in April 2009 through whom we will launch new consumer promotions by partnering with various . Ravindra Deshmukh. Health & Nutrition products has emerged as the fastest growing category in India. Mumbai.000 crore market. and Jabalpur. 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. We will be forming a new subsidiary. Mumbai-based Image Multitrade Private Ltd is planning to launch new corporate initiatives through a subsidiary called Image Lifestyle to foray into the retail mall segment. which are vying for a pie in the Rs 5. among others. Traditionally considered as a profession for women. Marketing of Services is likely to emerge as the next growth area. accounting for almost 40% of product sales through direct selling.

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

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

Hair care products were worth more than $4 billion in 2008.are generally low. Factors contributing to this steady growth include improvements in the global economy. The global market for cosmetics and toiletries ingredients is estimated to be around $14.7 billion in 2007. and is expected to increase to 509. Kum-Kum.1 billion yen ($1. According to the report.0 bil) in 2008. Exports of Cosmetics & Toiletries from India was 1. Perfumed Hair Oil. the market for makeup products reached 497. perfume.6 bil) in 2008.0 bil) in 2007 to 112. and will maintain the highest market value through the forecast period.7 million US dollar in 1979-80 and touched 336 million US dollar during 2006-2007.6 % per year through 2012. The report also mentions that the segments for eye make-up products are expected to show steady growth. and the introduction of new consumer-friendly products. Bindi and Herbal Cosmetics and Toiletries.9 million in 2008 to $3.3 million US dollar in 196364 and 25. in particular for raw materials originating in developing countries.351. Bath/ shaving products.8 mil) in 2007 to 88.5 bil) in 2007.0 billion yen ($1.9 billion yen ($782. growth in the segments for mascara and eye shadow will be remarkable. the global market for natural beauty products will be worth more than $10 billion. price and range. There are traditional Toiletries items like Perfumes and Ethers. • • • • • • • . particularly in developing countries.9 billion yen ($801. Talcum Powder. from 86.2 % per year. Fuji Keizai Releases Report on Japanese Cosmetics Market. with growth of the ingredients expected to be around 5% per year through 2012. Sindoor. by 2009. color cosmetics have the highest average annual growth rate.7 million in 2012. They will grow from $2. According to Global Cosmetic Industry Business Magazine.2 billion yen ($4. In end-user segments. In particular.6 billion yen ($4. The Indian Cosmetics Industry can match International Standards when comes to quality. Kajol. and oral hygiene have steady growth rates of 4. growing at 5. The market for body-care products will remain roughly flat: from 112. • The Indian Cosmetic Industry continues a beautiful blend of traditional and the modern.0 mil) in 2008.586.

Firms in the largest five countries (USA. The personal care products industry in India is value at Rs. • • • Even with double-digit growth rates. Germany and Japan) make up 93% of sales. and restore hydration have created an $83 billion worldwide market. 2500 crores in consumer price terms. the market penetration of cosmetics and toiletries products in India is very low.003 with 10.65 in other Asian countries.68 cents. Products that claim to renew cells. Japan is the second-largest cosmetics market in the world only after the U. as compared to $36. According to statistics released by the Ministry of Economy. • Further.A.S. the size of the Japanese cosmetics market reached a total of U5$12. This low market penetration for cosmetics and personal care products in India can be viewed as an . Western Japan is a large beauty market. 960 million US dollars. UK.9 billion / Euro 10. The growth of health care products is about 20%. Firms based in Japan and South Korea also have substantial market share at 14%. The cosmetics industry is regionally based. in terms of number. which accounts for 55.• China's cosmetic products market ranked the second largest in Asia. • The herbal cosmetics industry is set for a significant growth depending on the capability of the manufacturers to market their products. Current per capita expenditure on cosmetics is approximately $0. but their average sales are the smallest. minimize pores. and firms based in North America and in West Europe account for approximately 86% of sales: 43% for each region. 50%. Trade and Industry. France.8% of the total number of salons nationwide. in 2007 the number of esthetic salons in Japan reached 18.7 billion (ex-factory) in 2006.057 of these being in Western Japan (the part of the country west of Nagoya). Two West European cosmetics companies have the largest portion. As this statistic shows.

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

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

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

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

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

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

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

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

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

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

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

RECOMMENDATIONS • The direct selling cosmetics product quality on a continuous basis and provide better offerings to the consumers. Provide better incentives to sales people to increase their motivational level and boost sales. • • • . They will help them to capture the untapped market. Increase the awareness level among the non-users through extensive promotional methods. They should add new distribution channels or should increase the intensity of distribution in each channel.

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

ANNEXURE1: • SAMPLE QUESTIONNAIRE .

00..000-1. 00.QUESTIONNAIRE 1. 2.000 More then 1..000 6. then from where did you purchase your cosmetics? Internet Tele-Shopping Catalogue Door to Door .000 50. Have you ever purchased cosmetics through direct selling? Yes No 7. 4. Age…………………………………………… 3. Occupation…………………………………… 5. If yes. Income(Per Annual) Below 50. Gender………………………………………. Name………………………………………….

8. 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. Would you recommend this method of purchasing to your friends? .. Are you satisfied with your purchase? Yes No 10. 9. In future would you prefer purchasing cosmetics through direct selling? Yes No 12.

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

please specify .Any others.

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