THE ROLE OF DIRECT SELLING IN RELATION TO COSMETIC PRODUCTS

Under the Supervision of Mr. Anil Kumar

SUBMITTED BY: ANKUR NEHRA ROLL NO. A-68 M&S ENRL No.: A3914708072

DECLARATION

I here by declare that this dissertation report entitled “THE ROLE OF DIRECT SELLING IN RELATION OF COSMETIC PRODUCTS” has been carried out by me, Ankur nehra, a student of BBA (Mktg & Sales) in Amity School of business, Amity University, holding Enrollment Number A3914708072. The research confirms to course regulations regarding cheating and plagiarism. I declare that no material contained within this assignment has been used in any other submission, by the author, for an academic award. I further declare that the information presented in this project is true and original to the best of my knowledge.

Ankur nehra

ACKNOWLEDGEMENT

Above all I want to express my gratitude to the God Almighty, who gave me life. , Amity School of Business, the place where I have spent most memorable days of my life, the place that has always inspired to deliver my best, I owe all my motivation and success. I am not the most popular names of this institution, but I want to be the most motivated and most inspired person from this place.

It has been a great learning experience working on this project entitled “THE ROLL OF DIRECT SELLING IN RELATION TO THE COSMETICS INDUSTRY”. I would like to express my heartiest gratitude to Mr. Anil Kumar who is my faculty guide, for giving me an opportunity to work under guidance. I would like to thank her for support and guidance which was a source of encouragement for me throughout this project. The staffs in Amity Business School, especially in the academic section, which were always around me, always there to help me in need, my friends, who taught me a lot of things, they all deserve a word of honor.

CERTIFICATE

This dissertation on “Role of direct selling in relation to cosmetics industry”-is submitted in partial fulfillment of the requirement Bachelor of business Administration (BBA), of Amity School of Business, Amity University Uttar Pradesh. This is a bonafide work conducted by Ankur Nehra ENRL No.: A3914708072 of BBA batch of 2008- 2011; Guidance of Mr. Anil Kumar (faculty guide).

(Signature of the Student)

(Signature of the Faculty Guide)

TABLE OF CONTENETS

12. 8. 6. 9. 11. which includes door-to-door selling. habits. 10. 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. For a company to be able to do business with people with different preferences. internet selling. 2.1. 4. 3. catalogue selling and home party selling. . 5.

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

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

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

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

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

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

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

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

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

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

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

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

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

but productivity is low. The drop out rate however is quite high.Do not assume that "official looking" documents are accurate or complete or even produced by the company. you can be assured the company has pledged to abide by and uphold the DSA Code of Ethics.3mn in 2003. with only 50-60% of recruits converting into active consultants USA has the highest number of direct sales people at 13. China banned Direct Selling for a 7 year period in 1998. the growth rate has been a higher 15% over the last 10 years and 9% over the last 5 years. 7. In terms of number of people joining the direct selling industry annually. 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.24mn direct sellers ranks 11th globally in terms of number of • • • • • . Sales per person are the lowest in the world in Indonesia at US$109. Switzerland has the highest sales per person at US$51561. India with about 1. If it is. 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. as opposed to the person trying to recruit you.

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

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

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

According to the report. and is expected to increase to 509. perfume. by 2009. The report also mentions that the segments for eye make-up products are expected to show steady growth. the global market for natural beauty products will be worth more than $10 billion. the market for makeup products reached 497. • • • • • • • .9 billion yen ($801.5 bil) in 2007.7 million in 2012. In particular. Fuji Keizai Releases Report on Japanese Cosmetics Market.7 billion in 2007. particularly in developing countries.0 bil) in 2008. from 86. Bindi and Herbal Cosmetics and Toiletries. Sindoor. Perfumed Hair Oil. and the introduction of new consumer-friendly products.351.2 % per year. Talcum Powder. According to Global Cosmetic Industry Business Magazine.0 billion yen ($1. Hair care products were worth more than $4 billion in 2008. In end-user segments. Factors contributing to this steady growth include improvements in the global economy. growth in the segments for mascara and eye shadow will be remarkable. Kajol. growing at 5.3 million US dollar in 196364 and 25.8 mil) in 2007 to 88. Exports of Cosmetics & Toiletries from India was 1. Kum-Kum.0 mil) in 2008.9 million in 2008 to $3. They will grow from $2.1 billion yen ($1.6 billion yen ($4. with growth of the ingredients expected to be around 5% per year through 2012. There are traditional Toiletries items like Perfumes and Ethers. color cosmetics have the highest average annual growth rate.0 bil) in 2007 to 112. and will maintain the highest market value through the forecast period. The Indian Cosmetics Industry can match International Standards when comes to quality. The market for body-care products will remain roughly flat: from 112. in particular for raw materials originating in developing countries. • The Indian Cosmetic Industry continues a beautiful blend of traditional and the modern.7 million US dollar in 1979-80 and touched 336 million US dollar during 2006-2007. The global market for cosmetics and toiletries ingredients is estimated to be around $14. Bath/ shaving products.586. price and range.are generally low.6 % per year through 2012.9 billion yen ($782.6 bil) in 2008. and oral hygiene have steady growth rates of 4.2 billion yen ($4.

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

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

Also. The reasons for the growing demand for cosmetic products in India also include: greater access to television. retail store grand openings are the buzz words. For instance. The greatest growth was recorded in color cosmetics. Such concepts are alien to the conservative middleclass Indian households. sun care (13.to India. From concept to completion.obstacles they face in this country were explaining the concept and. 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. They try to promote the concept that the bowl is worth the investment and offers value for money. manufacturer I distributor expansions.3% from 2003-2004.5%). 120 more than what is available in the market. Increased disposable income has led to growth in demand for premium products. and greater product choice and availability. followed far behind by increased sales in fragrance (18%). thereafter. where raw material sources. a boom in the Indian fashion world has contributed to the rise in demand for professional beauty care products. According to Euro monitor. the cosmetics industry is heading East . THE GROWING COSMETICS INDUSTRY IN INDIA The sun and sales are rising on the Indian cosmetics market. up 46. the Indian cosmetics and personal care market has grown 62.1 %). Tupperware salespersons are trained on how to explain why a Tupperware plastic bowl costs Rs. justifying the premium prices of their goods. Nevertheless. which has created a growing awareness of the western world. there is much to be said for the tremendous potential for direct selling in India if the companies play their cards right and adapt to the Indian conditions. The Indian Client is a demanding one and expects nothing less than a Versace. or a . and deodorants (10.6% from 1997-2004. increased advertising in general.

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

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

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

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

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

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

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

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

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

Increase the awareness level among the non-users through extensive promotional methods. They will help them to capture the untapped market.RECOMMENDATIONS • The direct selling cosmetics product quality on a continuous basis and provide better offerings to the consumers. 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.

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

ANNEXURE1: • SAMPLE QUESTIONNAIRE .

.QUESTIONNAIRE 1.000 50. Occupation…………………………………… 5. then from where did you purchase your cosmetics? Internet Tele-Shopping Catalogue Door to Door . 00. Income(Per Annual) Below 50. Have you ever purchased cosmetics through direct selling? Yes No 7. Gender………………………………………. Age…………………………………………… 3. If yes. 00.000 6. 4..000 More then 1. Name………………………………………….000-1. 2.

How often you purchase your cosmetics through direct selling? Weekly Monthly Yearly 11. 9.8.. In future would you prefer purchasing cosmetics through direct selling? Yes No 12. Are you satisfied with your purchase? Yes No 10. 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? .

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

please specify .Any others.