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

5. 6. 7. 9. 11. 10. catalogue selling and home party selling. which includes door-to-door selling. . 4.1. 3. 2. Direct selling is one form of direct marketing. For a company to be able to do business with people with different preferences. 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. internet selling. 12. 8. habits.

The results were analyzed and interpreted.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. DIRECT MARKETING Direct marketing is a sub-discipline and type of marketing. a survey was conducted and questionnaire was prepared. In order to test the research work. There are two main . MEANING 1.

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

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

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

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

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

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

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

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

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

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

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

its leadership. Think longterm 3.Consult with others who have had experiences with the company and its products. Check to see if the products or services are actually being sold to consumers. And read it! 5. Check our list of member companies or look in your local phonebook. 3. Direct selling. depends on selling to customers who use and/or consume the product. like other methods of retailing. average earnings of distributors.Get copies of all company literature. Beware of any business that claims you can get rich by solely using their products or by recruiting new people into the business. realistic costs of doing business. start-up fees.Investigate and verify all information. Identify a company and product that appeal to you." This is a key element of a legitimate business.unreturnable products to reach achievement levels or receive a "special" or larger "discounted" price. and anything else you're concerned about. 2. . About the company. return policies. This requires quality products and services sold at competitive prices. Is the money you'll earn based on the sale of products or services? The answer should be "absolutely. the products or services. Ask questions. 4. 6. Take your time deciding. How to Get Started: 1. You should also believe in the products or services you'll be selling. 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. you can be assured the company has pledged to abide by and uphold the DSA Code of Ethics.Do not assume that "official looking" documents are accurate or complete or even produced by the company. India with about 1. Overview of the direct selling industry • • • The direct selling industry does an estimated sales of over US$88 billion worldwide Almost 49 million people all over the world are engaged in direct selling.24mn direct sellers ranks 11th globally in terms of number of • • • • • . the growth rate has been a higher 15% over the last 10 years and 9% over the last 5 years. 7. with only 50-60% of recruits converting into active consultants USA has the highest number of direct sales people at 13. Sales per person are the lowest in the world in Indonesia at US$109. If it is. Switzerland has the highest sales per person at US$51561.3mn in 2003. The drop out rate however is quite high. as opposed to the person trying to recruit you. China banned Direct Selling for a 7 year period in 1998. In terms of number of people joining the direct selling industry annually.Need help evaluating a company? Check to see if the company in which you're interested is a member of the Direct Selling Association. Indonesia has the highest number of sales people in the world after US.

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

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

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

perfume. According to Global Cosmetic Industry Business Magazine.8 mil) in 2007 to 88. Bath/ shaving products. color cosmetics have the highest average annual growth rate.6 % per year through 2012.6 billion yen ($4. In particular.9 million in 2008 to $3.5 bil) in 2007. and is expected to increase to 509.7 billion in 2007. and oral hygiene have steady growth rates of 4. Bindi and Herbal Cosmetics and Toiletries.7 million US dollar in 1979-80 and touched 336 million US dollar during 2006-2007. Perfumed Hair Oil. 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. price and range. Kajol. growing at 5. According to the report. Hair care products were worth more than $4 billion in 2008. • The Indian Cosmetic Industry continues a beautiful blend of traditional and the modern. in particular for raw materials originating in developing countries. In end-user segments. Fuji Keizai Releases Report on Japanese Cosmetics Market.9 billion yen ($782. They will grow from $2.0 bil) in 2008. • • • • • • • . from 86.9 billion yen ($801. by 2009.1 billion yen ($1. and will maintain the highest market value through the forecast period. particularly in developing countries. and the introduction of new consumer-friendly products.0 bil) in 2007 to 112.6 bil) in 2008. There are traditional Toiletries items like Perfumes and Ethers.0 billion yen ($1.2 billion yen ($4. the global market for natural beauty products will be worth more than $10 billion.351. Talcum Powder. The report also mentions that the segments for eye make-up products are expected to show steady growth. Sindoor. The global market for cosmetics and toiletries ingredients is estimated to be around $14.0 mil) in 2008. Factors contributing to this steady growth include improvements in the global economy. the market for makeup products reached 497.586.2 % per year.7 million in 2012. Exports of Cosmetics & Toiletries from India was 1. growth in the segments for mascara and eye shadow will be remarkable. The Indian Cosmetics Industry can match International Standards when comes to quality. Kum-Kum.are generally low.3 million US dollar in 196364 and 25.

Current per capita expenditure on cosmetics is approximately $0. This low market penetration for cosmetics and personal care products in India can be viewed as an . Firms based in Japan and South Korea also have substantial market share at 14%. and restore hydration have created an $83 billion worldwide market.003 with 10. The growth of health care products is about 20%. 960 million US dollars. 50%. the size of the Japanese cosmetics market reached a total of U5$12. Japan is the second-largest cosmetics market in the world only after the U.S.A.9 billion / Euro 10.• China's cosmetic products market ranked the second largest in Asia.65 in other Asian countries. • 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. France. Firms in the largest five countries (USA. the market penetration of cosmetics and toiletries products in India is very low.8% of the total number of salons nationwide. and firms based in North America and in West Europe account for approximately 86% of sales: 43% for each region. Trade and Industry. As this statistic shows. The personal care products industry in India is value at Rs.68 cents. 2500 crores in consumer price terms. According to statistics released by the Ministry of Economy. Products that claim to renew cells.7 billion (ex-factory) in 2006. • • • Even with double-digit growth rates. as compared to $36. UK. • Further. but their average sales are the smallest. The cosmetics industry is regionally based. Germany and Japan) make up 93% of sales. minimize pores. in 2007 the number of esthetic salons in Japan reached 18.057 of these being in Western Japan (the part of the country west of Nagoya). Two West European cosmetics companies have the largest portion. Western Japan is a large beauty market. which accounts for 55.

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

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

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

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

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

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

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

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

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

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

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

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

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

ANNEXURE1: • SAMPLE QUESTIONNAIRE .

then from where did you purchase your cosmetics? Internet Tele-Shopping Catalogue Door to Door . Gender………………………………………. Occupation…………………………………… 5. 4.000 More then 1.000 50. 00. Income(Per Annual) Below 50. 00. Have you ever purchased cosmetics through direct selling? Yes No 7.000 6. Age…………………………………………… 3. Name…………………………………………..000-1.QUESTIONNAIRE 1.. If yes. 2.

In future would you prefer purchasing cosmetics through direct selling? Yes No 12. 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? .8. 9.. Are you satisfied with your purchase? Yes No 10. How often you purchase your cosmetics through direct selling? Weekly Monthly Yearly 11.

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

please specify .Any others.

Sign up to vote on this title
UsefulNot useful