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

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

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

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

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

dentifrices. Scott Cook Launched intuit in 1984. perfumes. Scott Cook soon began using the insights he was learning to develop an idea for his own company with computers just coming out at the time. colognes. . nail products. creams. Scott thought there might be a market for basic software hat would help people pay their bills. and lotions. deodorants. “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. hair preparations. mouthwashes.The industry produces a vast array of products. lipsticks.

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

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

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

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

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

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

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

That's more than the number who have purchased through television shopping and on-line computer services combined. Companies belonging to the Direct Selling Association "buy back" unsold marketable products purchased within the prior 12 months if you decide to quit the business. for 90 percent of the price you paid for them.usually the cost of a sales kit. People value the products available through direct selling and 45 percent of Americans want to buy from direct sellers. Companies want to make it easy and inexpensive for you to start. 2." or buying large inventories of . High entry fees should be a warning sign. DIRECT SELLING Considering an opportunity? Here's how to identify legitimate direct selling opportunities: 1.People like to shop through direct selling According to recent surveys. The start up fees in direct selling companies are generally modest . 74 percent of Americans have purchased goods or services through direct sales. Pyramid schemes make their money through fees paid by new recruits or by loading inventory or training aids on them. The DSA Code of Ethics requires that member companies do this. Beware of opportunities that encourage "front end loading. Start up costs should be minimal. You should be able to return unsold inventory.

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

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

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

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

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

Talcum Powder. In end-user segments. and oral hygiene have steady growth rates of 4. and is expected to increase to 509. the market for makeup products reached 497.6 bil) in 2008. Fuji Keizai Releases Report on Japanese Cosmetics Market. Perfumed Hair Oil.1 billion yen ($1.2 % per year. • The Indian Cosmetic Industry continues a beautiful blend of traditional and the modern. Hair care products were worth more than $4 billion in 2008. The market for body-care products will remain roughly flat: from 112. They will grow from $2. Bindi and Herbal Cosmetics and Toiletries. in particular for raw materials originating in developing countries. In particular. price and range.6 billion yen ($4. with growth of the ingredients expected to be around 5% per year through 2012. Bath/ shaving products.6 % per year through 2012. Sindoor. growing at 5. Factors contributing to this steady growth include improvements in the global economy.9 billion yen ($801.586. • • • • • • • .9 million in 2008 to $3. color cosmetics have the highest average annual growth rate.2 billion yen ($4. growth in the segments for mascara and eye shadow will be remarkable. Exports of Cosmetics & Toiletries from India was 1.0 bil) in 2008. Kajol.0 bil) in 2007 to 112. According to Global Cosmetic Industry Business Magazine. particularly in developing countries.7 million in 2012.are generally low.0 billion yen ($1.351. The report also mentions that the segments for eye make-up products are expected to show steady growth.8 mil) in 2007 to 88.0 mil) in 2008. by 2009. and will maintain the highest market value through the forecast period.5 bil) in 2007. the global market for natural beauty products will be worth more than $10 billion. The Indian Cosmetics Industry can match International Standards when comes to quality.3 million US dollar in 196364 and 25. Kum-Kum.9 billion yen ($782. There are traditional Toiletries items like Perfumes and Ethers. and the introduction of new consumer-friendly products. The global market for cosmetics and toiletries ingredients is estimated to be around $14. from 86. perfume.7 billion in 2007.7 million US dollar in 1979-80 and touched 336 million US dollar during 2006-2007. According to the report.

the size of the Japanese cosmetics market reached a total of U5$12. • The herbal cosmetics industry is set for a significant growth depending on the capability of the manufacturers to market their products.A. Firms based in Japan and South Korea also have substantial market share at 14%. minimize pores. The cosmetics industry is regionally based.9 billion / Euro 10. France. Japan is the second-largest cosmetics market in the world only after the U. in 2007 the number of esthetic salons in Japan reached 18. as compared to $36. Firms in the largest five countries (USA.65 in other Asian countries. and restore hydration have created an $83 billion worldwide market. which accounts for 55.003 with 10.S. • • • Even with double-digit growth rates. Trade and Industry. According to statistics released by the Ministry of Economy. Western Japan is a large beauty market. Current per capita expenditure on cosmetics is approximately $0. 50%.• China's cosmetic products market ranked the second largest in Asia. The growth of health care products is about 20%. Two West European cosmetics companies have the largest portion. The personal care products industry in India is value at Rs. Products that claim to renew cells.68 cents. As this statistic shows.057 of these being in Western Japan (the part of the country west of Nagoya). 2500 crores in consumer price terms. and firms based in North America and in West Europe account for approximately 86% of sales: 43% for each region. the market penetration of cosmetics and toiletries products in India is very low.8% of the total number of salons nationwide. but their average sales are the smallest. This low market penetration for cosmetics and personal care products in India can be viewed as an . in terms of number. 960 million US dollars. • Further. UK.7 billion (ex-factory) in 2006. Germany and Japan) make up 93% of sales.

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

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

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

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

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

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

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

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

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

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

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

They will help them to capture the untapped market. Provide better incentives to sales people to increase their motivational level and boost sales. They should add new distribution channels or should increase the intensity of distribution in each channel.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. • • • .

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

ANNEXURE1: • SAMPLE QUESTIONNAIRE .

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

8.. 9. How often you purchase your cosmetics through direct selling? Weekly Monthly Yearly 11. Are you satisfied with your purchase? Yes No 10. Would you recommend this method of purchasing to your friends? . Which brand of cosmetics you prefer? Avon Amway Oriflamme Boutique Wellness Any others please specify……………. In future would you prefer purchasing cosmetics through direct selling? Yes No 12.

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

please specify .Any others.