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

12. . For a company to be able to do business with people with different preferences. 11. 2. 4. Abstract Meaning of Direct Marketing and Direct Selling Introduction to Direct Marketing and Direct Selling Overview of cosmetics industry Future trends in Cosmetics Industry Research methodology Research Objective Research Design Data Collection Method Sampling technology Analysis & interpretation Limitations Conclusions Recommendation Bibliography Annexure ABSTRACT The dissertation aims to identity and investigate the factors involved in direct selling in relation to cosmetics industry. which includes door-to-door selling. catalogue selling and home party selling. 10. 6. 5. 7. 3.1. Direct selling is one form of direct marketing. 8. 9. internet selling. habits.

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

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

express their entrepreneurial talents and gain financial independence. At its best. 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. 3. direct selling can be an opportunity for individuals to find fulfillment. COSMETICS INDUSTRY Cosmetics are mixtures of surfactants. print which is handled by the business. oils and other ingredients. . stable and last not least safe to human use. long lasting. The cosmetics industry is a multi-billion dollar industry. They are required to be effective. New brands of cosmetics to appeal to various population sectors are constantly being developed.

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

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

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

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

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

through indirect means such as Tupperware parties. 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. Introduction to Direct Selling. 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. either by having salespeople approach potential customers in person. direct sellers were called "peddlers" who contributed to the development of trade by bringing novelties from large cities to little villages. In the first part of the 20th century. 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. direct selling is a dynamic. . Direct selling can be considered as the oldest distribution channel in history.Direct selling is the sale of products by face-to-face contact with the customer.

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

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

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

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

the growth rate has been a higher 15% over the last 10 years and 9% over the last 5 years.24mn direct sellers ranks 11th globally in terms of number of • • • • • . 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.Do not assume that "official looking" documents are accurate or complete or even produced by the company. you can be assured the company has pledged to abide by and uphold the DSA Code of Ethics. 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. 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.3mn in 2003. but productivity is low. China banned Direct Selling for a 7 year period in 1998. 7. If it is. Indonesia has the highest number of sales people in the world after US. In terms of number of people joining the direct selling industry annually.

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

Though people from 2 to 6 in above procedure. 2) Advertisement of the product." The company also plans to expand its distributors from 1.5 lakh to about 50 lakh for its existing B2B business in the next few years.. 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. For the purpose. (So that people know about the product) 3) Product goes to C & F agents. 4) Product goes to District Distributor. In DIRECT SELLING SYSTEM company provide the product straight to the . 7) Then consumer buys the product from retailer. This way a product manufactured @ Rupees 5-6 in the factory is reached to the consumer purchasing it @ Rupees 10. 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. 1) Factory manufactures a product. are not improving the quality of the product in anyway. he added.retailers to generate repayment of incomes for our distributors.. among others. 6) Then it comes to retail seller. are taking money from consumer for just providing the product to the consumer. 5) Then it comes to whole seller.

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

Sindoor. Exports of Cosmetics & Toiletries from India was 1.351. • • • • • • • . According to the report.6 bil) in 2008. growing at 5.9 billion yen ($801. color cosmetics have the highest average annual growth rate. the global market for natural beauty products will be worth more than $10 billion.2 % per year.1 billion yen ($1.0 bil) in 2008.6 billion yen ($4. Hair care products were worth more than $4 billion in 2008. Bath/ shaving products.0 bil) in 2007 to 112. Fuji Keizai Releases Report on Japanese Cosmetics Market. and will maintain the highest market value through the forecast period.0 mil) in 2008. with growth of the ingredients expected to be around 5% per year through 2012.are generally low. the market for makeup products reached 497.0 billion yen ($1.5 bil) in 2007.2 billion yen ($4.9 million in 2008 to $3. particularly in developing countries. Bindi and Herbal Cosmetics and Toiletries. in particular for raw materials originating in developing countries. price and range. and oral hygiene have steady growth rates of 4. The global market for cosmetics and toiletries ingredients is estimated to be around $14. The Indian Cosmetics Industry can match International Standards when comes to quality.8 mil) in 2007 to 88.9 billion yen ($782. perfume. Factors contributing to this steady growth include improvements in the global economy.7 billion in 2007. Kajol. The market for body-care products will remain roughly flat: from 112.7 million in 2012. • The Indian Cosmetic Industry continues a beautiful blend of traditional and the modern. Perfumed Hair Oil. According to Global Cosmetic Industry Business Magazine.7 million US dollar in 1979-80 and touched 336 million US dollar during 2006-2007. Talcum Powder. and is expected to increase to 509.586. from 86. In end-user segments.6 % per year through 2012. In particular. Kum-Kum. The report also mentions that the segments for eye make-up products are expected to show steady growth. growth in the segments for mascara and eye shadow will be remarkable. and the introduction of new consumer-friendly products. They will grow from $2.3 million US dollar in 196364 and 25. There are traditional Toiletries items like Perfumes and Ethers. by 2009.

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

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

and greater product choice and availability. Such concepts are alien to the conservative middleclass Indian households. a boom in the Indian fashion world has contributed to the rise in demand for professional beauty care products.1 %). Nevertheless. sun care (13.3% from 2003-2004. 120 more than what is available in the market. which has created a growing awareness of the western world. They try to promote the concept that the bowl is worth the investment and offers value for money. the Indian cosmetics and personal care market has grown 62. 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. up 46.obstacles they face in this country were explaining the concept and.to India. followed far behind by increased sales in fragrance (18%). or a . Tupperware salespersons are trained on how to explain why a Tupperware plastic bowl costs Rs. manufacturer I distributor expansions. thereafter. retail store grand openings are the buzz words. The reasons for the growing demand for cosmetic products in India also include: greater access to television.5%). The Indian Client is a demanding one and expects nothing less than a Versace. The greatest growth was recorded in color cosmetics. Increased disposable income has led to growth in demand for premium products.6% from 1997-2004. The success of contestants from India at various well known international beauty pageants in the last few years has also contributed to making Indian women more conscious of their appearance and more aware of western cosmetic products and brands. Also. where raw material sources. justifying the premium prices of their goods. THE GROWING COSMETICS INDUSTRY IN INDIA The sun and sales are rising on the Indian cosmetics market. the cosmetics industry is heading East . For instance. increased advertising in general. and deodorants (10. According to Euro monitor.

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

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

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

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

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

also known as statistical research. The description is used for frequencies. when and how. describes data and characteristics about the population or phenomenon being studied. what.e. is to conduct a survey investigation. In other words. averages and other statistical calculations. • What is descriptive research? Descriptive research. accurate and systematic. 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:- . 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.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. 2. where. descriptive research can be said to have a low requirement for internal validity. Often the best approach. Descriptive research answers the questions who. Although the data description is factual. prior to writing descriptive research. where one variable affects another. Thus. RESEARCH DESIGN: In this research work descriptive studies are undertaken to conduct the survey. the research cannot describe what caused a situation. descriptive research cannot be used to create a causal relationship. questionnaires.

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

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

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. Shopping at home is much more convenient and is less expensive. when the sales person is already in one's home. 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 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. Also the relationship they get with the seller through traditional shopping is also perceived to be shallower as compared to direct selling.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. This can be due to a bad shopping experience. not all the customers are 100% satisfied customers. Most consumers find traditional shopping is more time consuming since they usually go to more than one shop in order to be satisfied and therefore. lack of trust on the salesperson and inadequacy of information about the company or the products. bad rapport of the salesperson. . providing door-to-door service which reduces the whole shopping effort. 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.

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

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

ANNEXURE1: • SAMPLE QUESTIONNAIRE .

00. Occupation…………………………………… 5.000 More then 1. Have you ever purchased cosmetics through direct selling? Yes No 7. Name…………………………………………. 00..000 50. Income(Per Annual) Below 50. then from where did you purchase your cosmetics? Internet Tele-Shopping Catalogue Door to Door .000-1. Gender………………………………………. Age…………………………………………… 3. If yes. 2.QUESTIONNAIRE 1..000 6. 4.

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

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

please specify .Any others.

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