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

3. 10. 2. catalogue selling and home party selling. internet selling. 11. . Direct selling is one form of direct marketing. 8. For a company to be able to do business with people with different preferences. 6. 7.1. 12. 9. 5. habits. which includes door-to-door selling. 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. 4.

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

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

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

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

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

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

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

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

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

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

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

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

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

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. 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. If it is. Switzerland has the highest sales per person at US$51561. as opposed to the person trying to recruit you. Sales per person are the lowest in the world in Indonesia at US$109. but productivity is low.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 • • • • • .3mn in 2003.Need help evaluating a company? Check to see if the company in which you're interested is a member of the Direct Selling Association. 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. In terms of number of people joining the direct selling industry annually. the growth rate has been a higher 15% over the last 10 years and 9% over the last 5 years. Indonesia has the highest number of sales people in the world after US. China banned Direct Selling for a 7 year period in 1998. 7.

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

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

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

7 million US dollar in 1979-80 and touched 336 million US dollar during 2006-2007.7 billion in 2007.0 bil) in 2008. Bindi and Herbal Cosmetics and Toiletries.7 million in 2012. growing at 5. There are traditional Toiletries items like Perfumes and Ethers. and is expected to increase to 509. The market for body-care products will remain roughly flat: from 112. Exports of Cosmetics & Toiletries from India was 1. Talcum Powder. According to Global Cosmetic Industry Business Magazine. particularly in developing countries. In end-user segments.0 mil) in 2008. Kajol. by 2009. color cosmetics have the highest average annual growth rate.0 bil) in 2007 to 112. from 86. They will grow from $2.are generally low. price and range. perfume. Kum-Kum.2 % per year. Factors contributing to this steady growth include improvements in the global economy. Perfumed Hair Oil. with growth of the ingredients expected to be around 5% per year through 2012.5 bil) in 2007.0 billion yen ($1. and oral hygiene have steady growth rates of 4. The Indian Cosmetics Industry can match International Standards when comes to quality. Bath/ shaving products.6 billion yen ($4.9 billion yen ($782. According to the report.6 bil) in 2008. In particular. The report also mentions that the segments for eye make-up products are expected to show steady growth. the market for makeup products reached 497.2 billion yen ($4.351.3 million US dollar in 196364 and 25.8 mil) in 2007 to 88.9 billion yen ($801. and the introduction of new consumer-friendly products.586. Sindoor. the global market for natural beauty products will be worth more than $10 billion. Fuji Keizai Releases Report on Japanese Cosmetics Market.9 million in 2008 to $3. Hair care products were worth more than $4 billion in 2008. The global market for cosmetics and toiletries ingredients is estimated to be around $14.1 billion yen ($1. and will maintain the highest market value through the forecast period. growth in the segments for mascara and eye shadow will be remarkable. in particular for raw materials originating in developing countries. • The Indian Cosmetic Industry continues a beautiful blend of traditional and the modern.6 % per year through 2012. • • • • • • • .

003 with 10. The cosmetics industry is regionally based. As this statistic shows.S. Products that claim to renew cells. • Further. Japan is the second-largest cosmetics market in the world only after the U. According to statistics released by the Ministry of Economy. Firms in the largest five countries (USA. • The herbal cosmetics industry is set for a significant growth depending on the capability of the manufacturers to market their products. minimize pores.057 of these being in Western Japan (the part of the country west of Nagoya). Two West European cosmetics companies have the largest portion. UK.9 billion / Euro 10. 50%. and firms based in North America and in West Europe account for approximately 86% of sales: 43% for each region. The personal care products industry in India is value at Rs. as compared to $36. Firms based in Japan and South Korea also have substantial market share at 14%. in terms of number. the market penetration of cosmetics and toiletries products in India is very low. and restore hydration have created an $83 billion worldwide market. • • • Even with double-digit growth rates. This low market penetration for cosmetics and personal care products in India can be viewed as an . Western Japan is a large beauty market. 2500 crores in consumer price terms. Trade and Industry. The growth of health care products is about 20%. Current per capita expenditure on cosmetics is approximately $0.7 billion (ex-factory) in 2006. Germany and Japan) make up 93% of sales.68 cents.65 in other Asian countries.8% of the total number of salons nationwide. 960 million US dollars.A. in 2007 the number of esthetic salons in Japan reached 18. France. the size of the Japanese cosmetics market reached a total of U5$12. which accounts for 55. but their average sales are the smallest.• China's cosmetic products market ranked the second largest in Asia.

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

thereafter. The Indian Client is a demanding one and expects nothing less than a Versace. and greater product choice and availability.obstacles they face in this country were explaining the concept and. there is much to be said for the tremendous potential for direct selling in India if the companies play their cards right and adapt to the Indian conditions. From concept to completion. The greatest growth was recorded in color cosmetics. the cosmetics industry is heading East .to India. the Indian cosmetics and personal care market has grown 62. Also. THE GROWING COSMETICS INDUSTRY IN INDIA The sun and sales are rising on the Indian cosmetics market. Tupperware salespersons are trained on how to explain why a Tupperware plastic bowl costs Rs. followed far behind by increased sales in fragrance (18%). or a . sun care (13.1 %). a boom in the Indian fashion world has contributed to the rise in demand for professional beauty care products.6% from 1997-2004. justifying the premium prices of their goods. According to Euro monitor. retail store grand openings are the buzz words. For instance. They try to promote the concept that the bowl is worth the investment and offers value for money. 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. and deodorants (10. which has created a growing awareness of the western world. manufacturer I distributor expansions. 120 more than what is available in the market.5%). The reasons for the growing demand for cosmetic products in India also include: greater access to television.3% from 2003-2004. increased advertising in general. Increased disposable income has led to growth in demand for premium products. up 46. Nevertheless. where raw material sources. Such concepts are alien to the conservative middleclass Indian households.

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

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

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

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

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. RESEARCH OBJECTIVE Marketing is a shared interest among us. 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. Messages can be developed and adapted quickly to facilitate one to one relationship with customers.REASEARCH METHOLOGY 1. it can include door-to-door. It is an effective for company to build up customer relationship in new markets. And this focuses on the same. 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. It aims to achieve an immediate quantifiable response and build long-term relationship with customers. Companies using direct marketing will not use any intermediary between its organization and its customers. One thing that is the prime concern for companies today in direct selling is to constantly monitor and measure customer satisfaction level. etc. office-to-office. Direct selling is one form of direct marketing. . therefore this research focuses on use of direct selling techniques in cosmetics industry. When it comes to direct selling then cosmetics industry is the most lucrative industry to study. it is one-twoone relationship. home party selling.

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

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

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

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

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. • • • . 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 will help them to capture the untapped market.

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

ANNEXURE1: • SAMPLE QUESTIONNAIRE .

000 More then 1.. Occupation…………………………………… 5. Name………………………………………….. 00. Income(Per Annual) Below 50. 00.QUESTIONNAIRE 1. If yes.000 6.000 50. 2. then from where did you purchase your cosmetics? Internet Tele-Shopping Catalogue Door to Door .000-1. 4. Gender………………………………………. Have you ever purchased cosmetics through direct selling? Yes No 7. Age…………………………………………… 3.

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……………. Are you satisfied with your purchase? Yes No 10. 9. How often you purchase your cosmetics through direct selling? Weekly Monthly Yearly 11.8.. In future would you prefer purchasing cosmetics through direct selling? Yes No 12.

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

Any others. please specify .