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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

If it is.Do not assume that "official looking" documents are accurate or complete or even produced by the company.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. Sales per person are the lowest in the world in Indonesia at US$109.24mn direct sellers ranks 11th globally in terms of number of • • • • • . In terms of number of people joining the direct selling industry annually. 7. India with about 1. The drop out rate however is quite high.3mn in 2003. Indonesia has the highest number of sales people in the world after US. China banned Direct Selling for a 7 year period in 1998. 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. Switzerland has the highest sales per person at US$51561. you can be assured the company has pledged to abide by and uphold the DSA Code of Ethics. but productivity is low. the growth rate has been a higher 15% over the last 10 years and 9% over the last 5 years.

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

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

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

7 billion in 2007. Kum-Kum.6 % per year through 2012. Bindi and Herbal Cosmetics and Toiletries.9 billion yen ($801. According to the report. in particular for raw materials originating in developing countries. In particular. The market for body-care products will remain roughly flat: from 112. Hair care products were worth more than $4 billion in 2008. growth in the segments for mascara and eye shadow will be remarkable. In end-user segments.0 mil) in 2008. Talcum Powder. Bath/ shaving products. The global market for cosmetics and toiletries ingredients is estimated to be around $14. and oral hygiene have steady growth rates of 4. from 86. the global market for natural beauty products will be worth more than $10 billion.2 billion yen ($4. by 2009.586. • The Indian Cosmetic Industry continues a beautiful blend of traditional and the modern. Kajol.are generally low.6 bil) in 2008. with growth of the ingredients expected to be around 5% per year through 2012.351. Sindoor.0 bil) in 2008.0 bil) in 2007 to 112. price and range. They will grow from $2. growing at 5.2 % per year.7 million US dollar in 1979-80 and touched 336 million US dollar during 2006-2007.6 billion yen ($4. Factors contributing to this steady growth include improvements in the global economy.0 billion yen ($1. and the introduction of new consumer-friendly products. perfume.1 billion yen ($1. color cosmetics have the highest average annual growth rate. Fuji Keizai Releases Report on Japanese Cosmetics Market. According to Global Cosmetic Industry Business Magazine. • • • • • • • . and is expected to increase to 509.5 bil) in 2007. particularly in developing countries. and will maintain the highest market value through the forecast period. Exports of Cosmetics & Toiletries from India was 1.8 mil) in 2007 to 88.9 million in 2008 to $3. the market for makeup products reached 497.7 million in 2012.3 million US dollar in 196364 and 25. Perfumed Hair Oil. There are traditional Toiletries items like Perfumes and Ethers.9 billion yen ($782. The Indian Cosmetics Industry can match International Standards when comes to quality. The report also mentions that the segments for eye make-up products are expected to show steady growth.

and restore hydration have created an $83 billion worldwide market. as compared to $36. but their average sales are the smallest. 960 million US dollars. in terms of number. Japan is the second-largest cosmetics market in the world only after the U.68 cents.9 billion / Euro 10. Germany and Japan) make up 93% of sales. This low market penetration for cosmetics and personal care products in India can be viewed as an . the size of the Japanese cosmetics market reached a total of U5$12. The growth of health care products is about 20%. According to statistics released by the Ministry of Economy.8% of the total number of salons nationwide. in 2007 the number of esthetic salons in Japan reached 18.7 billion (ex-factory) in 2006. Current per capita expenditure on cosmetics is approximately $0.S. Firms based in Japan and South Korea also have substantial market share at 14%. Products that claim to renew cells. Firms in the largest five countries (USA.003 with 10. the market penetration of cosmetics and toiletries products in India is very low. • Further. • • • Even with double-digit growth rates.057 of these being in Western Japan (the part of the country west of Nagoya). Western Japan is a large beauty market. Two West European cosmetics companies have the largest portion. France. which accounts for 55.• China's cosmetic products market ranked the second largest in Asia. The cosmetics industry is regionally based. and firms based in North America and in West Europe account for approximately 86% of sales: 43% for each region. minimize pores. UK. Trade and Industry.65 in other Asian countries. 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. The personal care products industry in India is value at Rs. 2500 crores in consumer price terms.A. 50%.

620 crores now. 115 crores as foreign direct investment.it has it's own service sector that is growing as fast as the market for products. 375 Million and is growing at rate of 30 to 40 %. The market for beauty in India has been booming and it's a prime playing field for beauty majors across the globe. ADEX India. pumped in over Rs.a 100 per cent increase. Amway expects its business to touch Rs. targeting lower prices. a direct selling pioneer. The Beauty Business has another parallel with the growth of Indian economy . Euro monitor estimates that the Industry for products alone minus services to be $ 3. It has since re-positioned itself to a broader market. 312 crores in 1997-98 and Rs. Television soaps & Magazines and largely Mumbai based. The figure is about Rs. For the beauty industry the reference points are largely Bollywood (the Indian Film Industry).4 billion by 2012. The two biggest . 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. a Division of TAM Media research shows there has been 49% increase in commercial time for Beauty product on TV in 2008.a Swedish direct selling company involved in cosmetics -.opportunity for more significant growth down the road in this country of 1 billion people. 520 crores in 1998-99. Oriflame-.000 crores in 2004. TRENDS IN INDIA HOW have the companies that have touted the benefits of direct selling to the individual fared? They came.claims to have done similarly. 2.6 billion and that should reach $4. 1 . 1.Amway. The Salon industry is estimated at USD. with total recorded sales of Rs. they saw but will they conquer? There are about seven-eight companies involved in direct selling in India. This seems to have been the trend with all the major direct sellers. Amway estimates its turnover at Rs. 200 crores -. It is a market of great interest to international companies. In its second year of operations (1999-2000).

or a . the Indian cosmetics and personal care market has grown 62. From concept to completion. Such concepts are alien to the conservative middleclass Indian households. They try to promote the concept that the bowl is worth the investment and offers value for money.obstacles they face in this country were explaining the concept and. For instance.6% from 1997-2004. The reasons for the growing demand for cosmetic products in India also include: greater access to television. Increased disposable income has led to growth in demand for premium products. 120 more than what is available in the market.to India. Tupperware salespersons are trained on how to explain why a Tupperware plastic bowl costs Rs. Also. 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. where raw material sources. justifying the premium prices of their goods. The greatest growth was recorded in color cosmetics. THE GROWING COSMETICS INDUSTRY IN INDIA The sun and sales are rising on the Indian cosmetics market. sun care (13.1 %). Nevertheless. and deodorants (10. the cosmetics industry is heading East . a boom in the Indian fashion world has contributed to the rise in demand for professional beauty care products. manufacturer I distributor expansions. The Indian Client is a demanding one and expects nothing less than a Versace. followed far behind by increased sales in fragrance (18%). which has created a growing awareness of the western world. thereafter. and greater product choice and availability. According to Euro monitor. retail store grand openings are the buzz words.5%). up 46. increased advertising in general.3% from 2003-2004. 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.

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. There can be up to nine types of income when you direct-sell. This is awarded on a slab-basis over and above the basic commission. Once you reach a particular target. awarded when you reach a sales target . you have to dedicate yourself to creating a vast network of distributors and consumers and initially attain high levels of personal value. The margins here are generally quite high . Rewards An inherent feature of direct selling is performance based rewards. 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.Channel or a Lancome product. a significant proportion of their income is sourced from others' personal sales value commission. The most basic form of income is the margin at which you buy the product and the retail price (MRP) at which you sell it.called your personal sales value. This is called' pyramid selling. The second is bonus commission. they concentrate more on recruiting people than on selling. But to reach such levels. you can start recruiting people yourself. Future trends in direct selling of cosmetics 1. consequently. This is where the real money is once you go higher up the ladder. Therefore.25-30 per cent.

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

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

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

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

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

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

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

lack of trust on the salesperson and inadequacy of information about the company or the products. This can be due to a bad shopping experience.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. So some respondents believe that direct selling does not provide them with adequate information and is more stressful compared to traditional selling. Some customers might feel that since they have invited the salesperson at their place so they are required to buy something from him or her. 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. bad rapport of the salesperson. Shopping at home is much more convenient and is less expensive. 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. when the sales person is already in one's home. Also the relationship they get with the seller through traditional shopping is also perceived to be shallower as compared to direct selling. On the other hand. this increases their shopping effort whereas in direct selling one often finds sellers easily and conveniently located. not all the customers are 100% satisfied customers. since the consumers are provided with various schemes and discounts. Through direct selling the customer will probably get in contact with the same sales person more than once and therefore a deeper relationship is created between the buyer and the seller.

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

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

ANNEXURE1: • SAMPLE QUESTIONNAIRE .

Occupation…………………………………… 5. 4.000 50.000 6.. Name…………………………………………. 00. then from where did you purchase your cosmetics? Internet Tele-Shopping Catalogue Door to Door .000-1.000 More then 1. 2. 00. Age…………………………………………… 3.. Gender………………………………………. Have you ever purchased cosmetics through direct selling? Yes No 7. If yes. Income(Per Annual) Below 50.QUESTIONNAIRE 1.

. 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……………. Would you recommend this method of purchasing to your friends? . 9.

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

please specify .Any others.

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