ankur nrhra | Direct Marketing | Survey Methodology

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

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

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

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

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

dentifrices. Scott thought there might be a market for basic software hat would help people pay their bills.The industry produces a vast array of products. perfumes. mouthwashes. Scott Cook Launched intuit in 1984. and lotions. lipsticks. “SOME SELLING QOUTES” Scott Cook Starting his career at Procter & Grable. 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. creams. nail products. colognes. deodorants. including shaving preparations. hair preparations. .

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

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

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

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

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

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

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

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

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

as opposed to the person trying to recruit you. India with about 1. China banned Direct Selling for a 7 year period in 1998. If it is. In terms of number of people joining the direct selling industry annually. Switzerland has the highest sales per person at US$51561. The drop out rate however is quite high. with only 50-60% of recruits converting into active consultants USA has the highest number of direct sales people at 13. Sales per person are the lowest in the world in Indonesia at US$109.Need help evaluating a company? Check to see if the company in which you're interested is a member of the Direct Selling Association. 7. you can be assured the company has pledged to abide by and uphold the DSA Code of Ethics. Indonesia has the highest number of sales people in the world after US.Do not assume that "official looking" documents are accurate or complete or even produced by the company. 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. the growth rate has been a higher 15% over the last 10 years and 9% over the last 5 years.3mn in 2003.24mn direct sellers ranks 11th globally in terms of number of • • • • • . but productivity is low.

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

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

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

growth in the segments for mascara and eye shadow will be remarkable.7 billion in 2007. Talcum Powder.0 billion yen ($1.2 % per year. price and range. The report also mentions that the segments for eye make-up products are expected to show steady growth. Bath/ shaving products.0 bil) in 2007 to 112. The market for body-care products will remain roughly flat: from 112. • • • • • • • . The global market for cosmetics and toiletries ingredients is estimated to be around $14. Bindi and Herbal Cosmetics and Toiletries. • The Indian Cosmetic Industry continues a beautiful blend of traditional and the modern.are generally low. Sindoor. and oral hygiene have steady growth rates of 4. Kum-Kum. by 2009.2 billion yen ($4. The Indian Cosmetics Industry can match International Standards when comes to quality.9 million in 2008 to $3. growing at 5. particularly in developing countries.6 bil) in 2008. In end-user segments.6 % per year through 2012. and the introduction of new consumer-friendly products.0 bil) in 2008.7 million in 2012. According to Global Cosmetic Industry Business Magazine. Factors contributing to this steady growth include improvements in the global economy.8 mil) in 2007 to 88.9 billion yen ($782.351. color cosmetics have the highest average annual growth rate.5 bil) in 2007.0 mil) in 2008. In particular. Fuji Keizai Releases Report on Japanese Cosmetics Market.3 million US dollar in 196364 and 25. They will grow from $2. Kajol. and is expected to increase to 509. Perfumed Hair Oil.7 million US dollar in 1979-80 and touched 336 million US dollar during 2006-2007. with growth of the ingredients expected to be around 5% per year through 2012. the global market for natural beauty products will be worth more than $10 billion.6 billion yen ($4. in particular for raw materials originating in developing countries.9 billion yen ($801.1 billion yen ($1. and will maintain the highest market value through the forecast period. Hair care products were worth more than $4 billion in 2008. There are traditional Toiletries items like Perfumes and Ethers. Exports of Cosmetics & Toiletries from India was 1. the market for makeup products reached 497.586. from 86. perfume. According to the report.

UK. Two West European cosmetics companies have the largest portion. • • • Even with double-digit growth rates.057 of these being in Western Japan (the part of the country west of Nagoya). This low market penetration for cosmetics and personal care products in India can be viewed as an . the market penetration of cosmetics and toiletries products in India is very low. Japan is the second-largest cosmetics market in the world only after the U. The cosmetics industry is regionally based.65 in other Asian countries. in terms of number. France. as compared to $36.A. • The herbal cosmetics industry is set for a significant growth depending on the capability of the manufacturers to market their products. Western Japan is a large beauty market. the size of the Japanese cosmetics market reached a total of U5$12. 960 million US dollars. Products that claim to renew cells.S. Firms based in Japan and South Korea also have substantial market share at 14%. and restore hydration have created an $83 billion worldwide market. The personal care products industry in India is value at Rs. 2500 crores in consumer price terms. Trade and Industry.003 with 10.68 cents. Firms in the largest five countries (USA. Germany and Japan) make up 93% of sales. in 2007 the number of esthetic salons in Japan reached 18. The growth of health care products is about 20%. Current per capita expenditure on cosmetics is approximately $0.• China's cosmetic products market ranked the second largest in Asia.9 billion / Euro 10. and firms based in North America and in West Europe account for approximately 86% of sales: 43% for each region. According to statistics released by the Ministry of Economy. but their average sales are the smallest.7 billion (ex-factory) in 2006.8% of the total number of salons nationwide. minimize pores. 50%. • Further. As this statistic shows. which accounts for 55.

520 crores in 1998-99.Amway. 312 crores in 1997-98 and Rs. 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. This change in strategy helped it reap rewards and stage a turnaround. The figure is about Rs. The two biggest . targeting lower prices.4 billion by 2012. 200 crores -. with total recorded sales of Rs. It is a market of great interest to international companies.opportunity for more significant growth down the road in this country of 1 billion people. a Division of TAM Media research shows there has been 49% increase in commercial time for Beauty product on TV in 2008. The market for beauty in India has been booming and it's a prime playing field for beauty majors across the globe. Euro monitor estimates that the Industry for products alone minus services to be $ 3. For the beauty industry the reference points are largely Bollywood (the Indian Film Industry). they saw but will they conquer? There are about seven-eight companies involved in direct selling in India.a Swedish direct selling company involved in cosmetics -. 1 . It has since re-positioned itself to a broader market. 1. 2. pumped in over Rs. 115 crores as foreign direct investment. Amway estimates its turnover at Rs. The Salon industry is estimated at USD. a direct selling pioneer. ADEX India. 620 crores now. Amway expects its business to touch Rs. TRENDS IN INDIA HOW have the companies that have touted the benefits of direct selling to the individual fared? They came.000 crores in 2004.claims to have done similarly. In its second year of operations (1999-2000). The Beauty Business has another parallel with the growth of Indian economy .it has it's own service sector that is growing as fast as the market for products. Oriflame-.6 billion and that should reach $4.a 100 per cent increase. 375 Million and is growing at rate of 30 to 40 %. Television soaps & Magazines and largely Mumbai based.

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. retail store grand openings are the buzz words. a boom in the Indian fashion world has contributed to the rise in demand for professional beauty care products. and deodorants (10.3% from 2003-2004. thereafter. the Indian cosmetics and personal care market has grown 62. justifying the premium prices of their goods. and greater product choice and availability. Increased disposable income has led to growth in demand for premium products. THE GROWING COSMETICS INDUSTRY IN INDIA The sun and sales are rising on the Indian cosmetics market. From concept to completion. manufacturer I distributor expansions. or a . Tupperware salespersons are trained on how to explain why a Tupperware plastic bowl costs Rs. 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.to India.obstacles they face in this country were explaining the concept and. Nevertheless.5%). Also. 120 more than what is available in the market. The Indian Client is a demanding one and expects nothing less than a Versace. followed far behind by increased sales in fragrance (18%). For instance. the cosmetics industry is heading East .1 %). where raw material sources. sun care (13. increased advertising in general. up 46. The reasons for the growing demand for cosmetic products in India also include: greater access to television. there is much to be said for the tremendous potential for direct selling in India if the companies play their cards right and adapt to the Indian conditions. The greatest growth was recorded in color cosmetics. Such concepts are alien to the conservative middleclass Indian households. According to Euro monitor.6% from 1997-2004.

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

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

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

thereafter. Amway expects its business to touch Rs. Such concepts are alien to the conservative middleclass Indian households. 200 crores -. Amway estimates its turnover at Rs. It has since re-positioned itself to a broader market. The two biggest obstacles they face in this country were explaining the concept and. 115 crores as foreign direct investment.claims to have done similarly.a 100 percent increase. targeting lower prices. For instance. This change in strategy helped it reap rewards and stage a turnaround. a direct selling pioneer. . justifying the premium prices of their goods. 1. In its second year of operations (1999-2000).000 crores in 2002 Oriflame -.Amway. They try to promote the concept that the bowl is worth the investment and offers value for money. 120 more than what is available in the market. Nevertheless. pumped in over Rs. 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. Tupperware salespersons are trained on how to explain why a Tupperware plastic bowl costs Rs.a Swedish direct selling company involved in cosmetics -. there is much to be said for the tremendous potential for direct selling in India if the companies play their cards right and adapt to the Indian conditions.

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

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

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

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

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

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

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

ANNEXURE1: • SAMPLE QUESTIONNAIRE .

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

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

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

please specify .Any others.

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