THE ROLE OF DIRECT SELLING IN RELATION TO COSMETIC PRODUCTS

Under the Supervision of Mr. Anil Kumar

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

DECLARATION

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

Ankur nehra

ACKNOWLEDGEMENT

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

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

CERTIFICATE

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

(Signature of the Student)

(Signature of the Faculty Guide)

TABLE OF CONTENETS

1. 2. 9. 3. internet selling. 11. 8. 12. 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. 10. catalogue selling and home party selling. . 7. 5. Direct selling is one form of direct marketing. habits. 6. 4. which includes door-to-door selling.

There are two main . The population consisted of people living in Faridabad. The results were analyzed and interpreted.tastes and expectations it must continuously monitor their expectation level and increase it's efficiency and effectiveness. MEANING 1. 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.

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

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

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

) with consumers or businesses. "Count your blessings. 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.” 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. courage. he smiles will return.” At least if you buy a company’s stock. and if you’re bringing to market the stuff that the other companies just haven’t figured out because you’re ahead in understanding and delivering for the customer. the sun will break out." "Failure will never overtake me if my determination to succeed is strong enough. There are two main definitional characteristics which distinguish it from other types of marketing or advertising. like Coca Cola.” I find too many companies in our industry have focused on the competition." This aspect of direct marketing involves an emphasis on trackable. etc. you kind of know what the company makes. without the use of intervening media. to their deaths." 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. .A whole generation of Americans will retire in poverty instead of prosperity. junk mail. Introduction to direct marketing Direct marketing is a sub-discipline and type of marketing. strength. and confidence. then they’re copying your old stuff. This involves unsolicited commercial communication (spam. particularly when it was Microsoft. the music will play. because they simply are not preparing for retirement now”. The first is that it attempts to send its messages directly to consumers. 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 ahead of the other guy understanding the customer.

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

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

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

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

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

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

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

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

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

DIRECT SELLING -A GROWING INDUSTRY Direct selling companies to slug it out in Rs 5. chairman and managing director. Marketing of Services is likely to emerge as the next growth area.• • • • people employed in the direct selling industry Sales in India through direct selling is estimated at Rs23bn (US$511mn) in 2003. plans are also on the anvil to tie up with retail majors such as LG Electronics and Subhiksha to provide 10% discounts on cash coupons to its distributors.000 crore market. Health & Nutrition products has emerged as the fastest growing category in India. Kolhapur. Bhopal. which are vying for a pie in the Rs 5. Nagpur. Traditionally considered as a profession for women. and Jabalpur. 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. accounting for almost 40% of product sales through direct selling. We will be forming a new subsidiary. Image Multitrade Private Ltd told FE. among others. Mumbai. Ravindra Deshmukh. The men to women ratio in India is gradually changing. more and more men are today directly or indirectly venturing into direct selling. Bhubaneshwar. Pune. Feb 1 The year 2009 is likely to witness intense competition among direct selling Companies in India. Further. "We plan to set up about 50 malls in the next three years at an initial investment of Rs 100 crore in Mumbai. Image Lifestyle Private Ltd in April 2009 through whom we will launch new consumer promotions by partnering with various .000 crore segment.

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

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

and will maintain the highest market value through the forecast period. Kum-Kum.9 billion yen ($801. • • • • • • • . by 2009. According to Global Cosmetic Industry Business Magazine.351. color cosmetics have the highest average annual growth rate. They will grow from $2. price and range.9 billion yen ($782. Talcum Powder. in particular for raw materials originating in developing countries. Bath/ shaving products.0 mil) in 2008.6 % per year through 2012. In end-user segments. growing at 5.8 mil) in 2007 to 88.0 billion yen ($1. Kajol. Sindoor. Bindi and Herbal Cosmetics and Toiletries.7 million in 2012. the market for makeup products reached 497. particularly in developing countries. According to the report. and oral hygiene have steady growth rates of 4.9 million in 2008 to $3.0 bil) in 2007 to 112. perfume.3 million US dollar in 196364 and 25. • The Indian Cosmetic Industry continues a beautiful blend of traditional and the modern.5 bil) in 2007. Hair care products were worth more than $4 billion in 2008. The global market for cosmetics and toiletries ingredients is estimated to be around $14. Fuji Keizai Releases Report on Japanese Cosmetics Market. and the introduction of new consumer-friendly products. Exports of Cosmetics & Toiletries from India was 1. Factors contributing to this steady growth include improvements in the global economy.7 million US dollar in 1979-80 and touched 336 million US dollar during 2006-2007.6 billion yen ($4. There are traditional Toiletries items like Perfumes and Ethers. from 86.7 billion in 2007. The Indian Cosmetics Industry can match International Standards when comes to quality.2 % per year.2 billion yen ($4. growth in the segments for mascara and eye shadow will be remarkable.0 bil) in 2008. and is expected to increase to 509.6 bil) in 2008. The report also mentions that the segments for eye make-up products are expected to show steady growth. In particular.1 billion yen ($1. The market for body-care products will remain roughly flat: from 112. the global market for natural beauty products will be worth more than $10 billion.are generally low.586. Perfumed Hair Oil. with growth of the ingredients expected to be around 5% per year through 2012.

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

This change in strategy helped it reap rewards and stage a turnaround.6 billion and that should reach $4. The market for beauty in India has been booming and it's a prime playing field for beauty majors across the globe. Amway estimates its turnover at Rs.a Swedish direct selling company involved in cosmetics -.claims to have done similarly. Television soaps & Magazines and largely Mumbai based.Amway. For the beauty industry the reference points are largely Bollywood (the Indian Film Industry). 200 crores -. 520 crores in 1998-99. The Beauty Business has another parallel with the growth of Indian economy . 1. 375 Million and is growing at rate of 30 to 40 %. Euro monitor estimates that the Industry for products alone minus services to be $ 3. The two biggest . 2. The figure is about Rs. Its flashy prices did not convince the consumers about the quality of the products. This seems to have been the trend with all the major direct sellers. In its second year of operations (1999-2000).a 100 per cent increase. TRENDS IN INDIA HOW have the companies that have touted the benefits of direct selling to the individual fared? They came.opportunity for more significant growth down the road in this country of 1 billion people. with total recorded sales of Rs. 620 crores now. 115 crores as foreign direct investment.4 billion by 2012. It is a market of great interest to international companies. targeting lower prices. they saw but will they conquer? There are about seven-eight companies involved in direct selling in India. ADEX India. Amway expects its business to touch Rs. 1 . The Salon industry is estimated at USD. Oriflame-. 312 crores in 1997-98 and Rs. It has since re-positioned itself to a broader market.it has it's own service sector that is growing as fast as the market for products. pumped in over Rs. a direct selling pioneer. a Division of TAM Media research shows there has been 49% increase in commercial time for Beauty product on TV in 2008.000 crores in 2004.

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

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

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

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

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

which is the reason why we chose to examine this area. etc. RESEARCH OBJECTIVE Marketing is a shared interest among us. Direct is defined as any form of marketing in which the seller communicates response & to build long-term relationship directly with the possible customers. it is one-twoone relationship. It aims to achieve an immediate quantifiable response and build long-term relationship with customers. One thing that is the prime concern for companies today in direct selling is to constantly monitor and measure customer satisfaction level. therefore this research focuses on use of direct selling techniques in cosmetics industry. office-to-office. And this focuses on the same. Messages can be developed and adapted quickly to facilitate one to one relationship with customers. It is an effective for company to build up customer relationship in new markets. Direct selling is one form of direct marketing. 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. When it comes to direct selling then cosmetics industry is the most lucrative industry to study. . Successful marketers need to be aware of the different characteristics that affect consumer behavior. it can include door-to-door. 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.REASEARCH METHOLOGY 1. So. home party selling.

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

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

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

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

They will help them to capture the untapped market. 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. They should add new distribution channels or should increase the intensity of distribution in each channel. • • • . Increase the awareness level among the non-users through extensive promotional methods.

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

ANNEXURE1: • SAMPLE QUESTIONNAIRE .

. 4.. Name…………………………………………. Gender……………………………………….000-1. then from where did you purchase your cosmetics? Internet Tele-Shopping Catalogue Door to Door .000 6. Income(Per Annual) Below 50. 00. 2.000 More then 1. Age…………………………………………… 3. Have you ever purchased cosmetics through direct selling? Yes No 7. 00. Occupation…………………………………… 5. If yes.QUESTIONNAIRE 1.000 50.

Are you satisfied with your purchase? Yes No 10. How often you purchase your cosmetics through direct selling? Weekly Monthly Yearly 11. In future would you prefer purchasing cosmetics through direct selling? Yes No 12.8.. Which brand of cosmetics you prefer? Avon Amway Oriflamme Boutique Wellness Any others please specify……………. Would you recommend this method of purchasing to your friends? . 9.

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

Any others. please specify .