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

catalogue selling and home party selling. 2. 4. 8. 11. Direct selling is one form of direct marketing. 10. . For a company to be able to do business with people with different preferences. internet selling. which includes door-to-door selling. 9. habits. 3. 5.1. 7. Abstract Meaning of Direct Marketing and Direct Selling Introduction to Direct Marketing and Direct Selling Overview of cosmetics industry Future trends in Cosmetics Industry Research methodology Research Objective Research Design Data Collection Method Sampling technology Analysis & interpretation Limitations Conclusions Recommendation Bibliography Annexure ABSTRACT The dissertation aims to identity and investigate the factors involved in direct selling in relation to cosmetics industry. 12. 6.

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

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

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

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

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

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

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

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

Rural areas and small towns were supplied with basic goods only through the travelling salesmen.Direct selling is the sale of products by face-to-face contact with the customer. Direct selling can be considered as the oldest distribution channel in history. . Today at the beginning of the 21st century. direct selling is a dynamic. In the Middle Age. vibrant and growing sector of activity providing earning opportunities to millions of salespeople all over the world. through indirect means such as Tupperware parties. 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. It is part of the man's basic need to exchange goods and to communicate. 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. Introduction to Direct Selling.

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

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

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

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

Indonesia has the highest number of sales people in the world after US. The drop out rate however is quite high. but productivity is low.3mn in 2003. the growth rate has been a higher 15% over the last 10 years and 9% over the last 5 years. Sales per person are the lowest in the world in Indonesia at US$109. as opposed to the person trying to recruit you.Need help evaluating a company? Check to see if the company in which you're interested is a member of the Direct Selling Association.Do not assume that "official looking" documents are accurate or complete or even produced by the company. 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. Switzerland has the highest sales per person at US$51561.24mn direct sellers ranks 11th globally in terms of number of • • • • • . If it is. 7. with only 50-60% of recruits converting into active consultants USA has the highest number of direct sales people at 13. China banned Direct Selling for a 7 year period in 1998. India with about 1. In terms of number of people joining the direct selling industry annually. you can be assured the company has pledged to abide by and uphold the DSA Code of Ethics.

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

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

which it saved by not paying money the people from step 2 to 6 in traditional system. The industry produces a vast array of products. perfumes. so there are only two people in the whole transaction. long lasting. creams. deodorants. dentifrices. Tariffs on raw materials . • • • Metal dyes are used in finger nail polish and also the use and concentration of heavy metals play an important role in cosmetics production. nail products. 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. AN OVERVIEW OF THE COSMETICS INDUSTRY • Cosmetics are mixtures of surfactants. 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. mouthwashes. stable and last not least safe to human use.consumer. oils and other ingredients. lipsticks. colognes. They are required to be effective. and lotions. including shaving preparations. hair preparations.

with growth of the ingredients expected to be around 5% per year through 2012. In particular. and the introduction of new consumer-friendly products. and oral hygiene have steady growth rates of 4.586. Kajol. Sindoor.7 million US dollar in 1979-80 and touched 336 million US dollar during 2006-2007. Hair care products were worth more than $4 billion in 2008.0 bil) in 2008.9 billion yen ($782. the market for makeup products reached 497. Talcum Powder. They will grow from $2. • The Indian Cosmetic Industry continues a beautiful blend of traditional and the modern.are generally low. growing at 5. According to Global Cosmetic Industry Business Magazine.351. growth in the segments for mascara and eye shadow will be remarkable. the global market for natural beauty products will be worth more than $10 billion.2 % per year. Bindi and Herbal Cosmetics and Toiletries.7 million in 2012.0 mil) in 2008. According to the report. particularly in developing countries. The market for body-care products will remain roughly flat: from 112.0 billion yen ($1.9 billion yen ($801. price and range. Factors contributing to this steady growth include improvements in the global economy. and will maintain the highest market value through the forecast period. Exports of Cosmetics & Toiletries from India was 1. There are traditional Toiletries items like Perfumes and Ethers. by 2009.7 billion in 2007. perfume.1 billion yen ($1.2 billion yen ($4. in particular for raw materials originating in developing countries.9 million in 2008 to $3.5 bil) in 2007. color cosmetics have the highest average annual growth rate.3 million US dollar in 196364 and 25.8 mil) in 2007 to 88. from 86.6 % per year through 2012. The report also mentions that the segments for eye make-up products are expected to show steady growth. Fuji Keizai Releases Report on Japanese Cosmetics Market. The global market for cosmetics and toiletries ingredients is estimated to be around $14. Kum-Kum.0 bil) in 2007 to 112.6 billion yen ($4. In end-user segments. Perfumed Hair Oil. • • • • • • • . The Indian Cosmetics Industry can match International Standards when comes to quality. and is expected to increase to 509.6 bil) in 2008. Bath/ shaving products.

• • • Even with double-digit growth rates. which accounts for 55. France. Firms in the largest five countries (USA. but their average sales are the smallest. 960 million US dollars. as compared to $36. Firms based in Japan and South Korea also have substantial market share at 14%. • The herbal cosmetics industry is set for a significant growth depending on the capability of the manufacturers to market their products.8% of the total number of salons nationwide. According to statistics released by the Ministry of Economy. the market penetration of cosmetics and toiletries products in India is very low. the size of the Japanese cosmetics market reached a total of U5$12. in 2007 the number of esthetic salons in Japan reached 18.003 with 10.057 of these being in Western Japan (the part of the country west of Nagoya). and restore hydration have created an $83 billion worldwide market. The personal care products industry in India is value at Rs. Germany and Japan) make up 93% of sales. and firms based in North America and in West Europe account for approximately 86% of sales: 43% for each region. Current per capita expenditure on cosmetics is approximately $0.9 billion / Euro 10.S. The growth of health care products is about 20%. Trade and Industry. 50%. Products that claim to renew cells. in terms of number. This low market penetration for cosmetics and personal care products in India can be viewed as an . Two West European cosmetics companies have the largest portion. UK. 2500 crores in consumer price terms.A.• China's cosmetic products market ranked the second largest in Asia. • Further. As this statistic shows. Western Japan is a large beauty market.7 billion (ex-factory) in 2006. minimize pores.68 cents. The cosmetics industry is regionally based. Japan is the second-largest cosmetics market in the world only after the U.65 in other Asian countries.

targeting lower prices. with total recorded sales of Rs. The market for beauty in India has been booming and it's a prime playing field for beauty majors across the globe. Euro monitor estimates that the Industry for products alone minus services to be $ 3.it has it's own service sector that is growing as fast as the market for products. a Division of TAM Media research shows there has been 49% increase in commercial time for Beauty product on TV in 2008. Television soaps & Magazines and largely Mumbai based. 620 crores now. 1 . 200 crores -. The Beauty Business has another parallel with the growth of Indian economy . In its second year of operations (1999-2000). Oriflame-. 312 crores in 1997-98 and Rs. 1. It has since re-positioned itself to a broader market. The Salon industry is estimated at USD. TRENDS IN INDIA HOW have the companies that have touted the benefits of direct selling to the individual fared? They came. It is a market of great interest to international companies. The figure is about Rs. 115 crores as foreign direct investment. they saw but will they conquer? There are about seven-eight companies involved in direct selling in India.claims to have done similarly. This seems to have been the trend with all the major direct sellers. 375 Million and is growing at rate of 30 to 40 %. a direct selling pioneer.6 billion and that should reach $4.4 billion by 2012.000 crores in 2004. For the beauty industry the reference points are largely Bollywood (the Indian Film Industry). 520 crores in 1998-99. This change in strategy helped it reap rewards and stage a turnaround. pumped in over Rs.Amway. The two biggest .a 100 per cent increase. ADEX India. Its flashy prices did not convince the consumers about the quality of the products.a Swedish direct selling company involved in cosmetics -. 2. Amway estimates its turnover at Rs.opportunity for more significant growth down the road in this country of 1 billion people. Amway expects its business to touch Rs.

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

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

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

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

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

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

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

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

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

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

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

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

ANNEXURE1: • SAMPLE QUESTIONNAIRE .

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

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

Yes No 13. 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. Whether you like to go for schemes? Yes No 16. Did you find your purchase. cost and time effective? Yes No 15. If yes.

please specify .Any others.