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

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

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

The first is that it attempts to send its messages directly to consumers. internet banner ads. agencies generated more revenue from marketing services than from traditional advertising and media. This involves unsolicited commercial communication (spam. newspapers. email. U. without the use of intervening media.) with consumers or businesses. radio. 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. junk mail. transit ads. "In 2008. pay-per-click ads. package inserts. distributors or . billboards. The second characteristic is that it is focused on driving purchases that can be attributed to a specific call-to-action. magazines. (Citation needed) 2.S. demonstrations.DIRECT SELLING Direct selling is the marketing of products or services to consumers through sales tactics including presentations. Direct marketers also use media such as door hangers. This aspect of direct marketing involves an emphasis on traceable.definitional characteristics which distinguish it from other types of marketing or advertising. And according to Ad Age. etc. and phone calls.

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

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

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

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

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

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

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

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

Anyone can do it. There are prominent people in the society who started their careers in direct selling. In Europe there are two supranational associations: the first one is the Federation of European Direct Selling Associations (FeDSA). Direct selling offers flexible work schedules. 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. Earn in proportion to your own efforts. Receive training and support from an established company. The level of success you can achieve is limited only by your willingness to work hard. • • • • Set your own goals and determine yourself how to reach them. Direct selling involves people and is a part of direct marketing which additionally involves the use of media. which is founded in spring 2007. print etc. Direct selling is a good way to own a business.Most of the national direct selling associations are represented in the World Federation of Direct Selling Associations (WFDSA). the second one is the Direct Selling Europe. Earnings are in proportion to efforts. Direct selling is a good way to earn extra income. .

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

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

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

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

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

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

Kajol. growing at 5.6 bil) in 2008. In end-user segments. Kum-Kum. and oral hygiene have steady growth rates of 4.are generally low.6 % per year through 2012.2 billion yen ($4. Exports of Cosmetics & Toiletries from India was 1.0 mil) in 2008. Bindi and Herbal Cosmetics and Toiletries.7 billion in 2007.9 billion yen ($801. The market for body-care products will remain roughly flat: from 112. with growth of the ingredients expected to be around 5% per year through 2012.7 million US dollar in 1979-80 and touched 336 million US dollar during 2006-2007. and will maintain the highest market value through the forecast period.3 million US dollar in 196364 and 25. Talcum Powder. perfume. Bath/ shaving products. Hair care products were worth more than $4 billion in 2008. The report also mentions that the segments for eye make-up products are expected to show steady growth.8 mil) in 2007 to 88. The Indian Cosmetics Industry can match International Standards when comes to quality. Factors contributing to this steady growth include improvements in the global economy. growth in the segments for mascara and eye shadow will be remarkable. Fuji Keizai Releases Report on Japanese Cosmetics Market. the market for makeup products reached 497. • • • • • • • . Perfumed Hair Oil.7 million in 2012.9 million in 2008 to $3. by 2009. and the introduction of new consumer-friendly products. • The Indian Cosmetic Industry continues a beautiful blend of traditional and the modern. In particular.5 bil) in 2007. They will grow from $2.0 bil) in 2008. There are traditional Toiletries items like Perfumes and Ethers. According to the report.6 billion yen ($4. the global market for natural beauty products will be worth more than $10 billion. According to Global Cosmetic Industry Business Magazine.9 billion yen ($782.1 billion yen ($1. price and range.0 billion yen ($1. from 86.0 bil) in 2007 to 112. color cosmetics have the highest average annual growth rate. particularly in developing countries.586.351. Sindoor.2 % per year. in particular for raw materials originating in developing countries. and is expected to increase to 509. The global market for cosmetics and toiletries ingredients is estimated to be around $14.

057 of these being in Western Japan (the part of the country west of Nagoya).65 in other Asian countries. Japan is the second-largest cosmetics market in the world only after the U. which accounts for 55. Products that claim to renew cells. Western Japan is a large beauty market. • Further. but their average sales are the smallest. Trade and Industry. This low market penetration for cosmetics and personal care products in India can be viewed as an . • The herbal cosmetics industry is set for a significant growth depending on the capability of the manufacturers to market their products.68 cents. and restore hydration have created an $83 billion worldwide market. Firms based in Japan and South Korea also have substantial market share at 14%. Germany and Japan) make up 93% of sales. UK. 2500 crores in consumer price terms. the size of the Japanese cosmetics market reached a total of U5$12.A. and firms based in North America and in West Europe account for approximately 86% of sales: 43% for each region. in terms of number. 960 million US dollars. in 2007 the number of esthetic salons in Japan reached 18. The growth of health care products is about 20%. Firms in the largest five countries (USA. • • • Even with double-digit growth rates. The personal care products industry in India is value at Rs.• China's cosmetic products market ranked the second largest in Asia. 50%. the market penetration of cosmetics and toiletries products in India is very low. as compared to $36. According to statistics released by the Ministry of Economy. Current per capita expenditure on cosmetics is approximately $0.9 billion / Euro 10.003 with 10. Two West European cosmetics companies have the largest portion.8% of the total number of salons nationwide. As this statistic shows.S. minimize pores.7 billion (ex-factory) in 2006. France. The cosmetics industry is regionally based.

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

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

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

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

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

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

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

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

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

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

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

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

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

ANNEXURE1: • SAMPLE QUESTIONNAIRE .

00.QUESTIONNAIRE 1..000 50. Income(Per Annual) Below 50. Occupation…………………………………… 5. then from where did you purchase your cosmetics? Internet Tele-Shopping Catalogue Door to Door . Age…………………………………………… 3. Name………………………………………….. 2. 00.000 More then 1. Gender………………………………………. 4.000-1.000 6. Have you ever purchased cosmetics through direct selling? Yes No 7. If yes.

. Which brand of cosmetics you prefer? Avon Amway Oriflamme Boutique Wellness Any others please specify……………. Are you satisfied with your purchase? Yes No 10. 9. How often you purchase your cosmetics through direct selling? Weekly Monthly Yearly 11.8. Would you recommend this method of purchasing to your friends? . In future would you prefer purchasing cosmetics through direct selling? Yes No 12.

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

Any others. please specify .

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