CONTENT

Topic

Page No.

Certificate

Acknowledgement

Chapter 1

Introduction

4 18

Chapter 2
Review Of Literature

19 36

Chapter 3
Research Methodology

37 - 41

Chapter 4
Data Analysis And Data Interpretatiom

42 54

Chater 5
Summary And Conclusion

55 58

Rerences / Bibliography

59 61

Appendix

62 - 65

GURU GOBIND SINGH INDRAPRASTHA UNIVERSITY

CERTIFICATE

This is to Certify That Lovish Guptaworked under my Guidance for the Project
onMarketing System Of Oriflame In India Direct Marketing And Multi-Level
Marketing

Was in Constant Touch with me During the Whole Period and I Approve the matter here to
be Original in Nature and thus, Approved and sent for Evaluation.
I Wish Him All the Best in all his Endevours.

MRS.PARUL RAJ
Associate Professor
Jagan Institute of Management Studies

ACKNOWLEDGEMENT
My sincere thanks go to Mrs. PARUL RAJ my supervisor for this project work, for her
valuable guidance at every stage of preparation and submission of this project report and
collecting the required data for preparation of this project report.

I also convey my thanks to other employees of the organization who have helped me in
carrying out the survey report and getting the required information for preparation of this
project report.

LOVISH GUPTA

INTRODUCTION

1.1CONCEPT AND MEANING

While our vision is to be the #1 Beauty Company Selling Direct, our mission has always been to
fulfil dreams, for people all over the world.

Founded in 1967 by two brothers and their friend, Oriflame is now an international beauty
company selling direct in more than 60 countries worldwide. Our wide portfolio of Swedish,
natural, innovative beauty products are marketed through a sales force of approximately 3.6
million independent consultants, who together create annual sales exceeding some 1.5 billion.

Who We Are
Oriflame offers the leading business opportunity for people, all over the world, who want to start
making money from day one and work towards fulfilling their personal dreams and ambitions
through our unique business concept - Make Money Today and Fulfil Your Dreams Tomorrow.
Respect for people and nature are our fundamental operating principles, which is reflected in
many of our social and environmental policies. Oriflame is proud to support numerous charities
worldwide and is a Co-founder of the World Childhood Foundation.

OUR MARKET

OBJECTIVES OF STUDY

To get an insight of the Oriflame company and its operation in India.

To critically evaluate the marketing system of Oriflame in India Direct Marketing and Multilevel Marketing.

To review the literature relating to Direct Marketing and Multi level marketing.

To inquire about what revolutionary changes taking place in Oriflame after innovation in
marketing system.

To critically evaluate the impact of direct marketing (selling) on the performance of Oriflame.

1.2SCOPE OF STUDY
This project was chosen to know about the customer satisfaction towards Oriflame in
Thoothukudi district. To know the mind set of people towardscosmetics. How oriflame has
impact onthe minds of the customers.

1.4.1 COMPANY PROFILE

Oriflame India Pvt Ltd

Ground Floor , Bi House , 54 , Janpath , Delhi ,110001
+(91)-11-40549500

1.4.2 ORIFLAME VISION AND MISSION

Our Vision is to be the #1 Beauty Company Selling Direct.

Our Mission is to Fulfill Dreams.

1.4.3 PRODUCT RANGE OF ORIFLAME

We have a wide range of high quality beauty products and add 300 new products annually.

Skin Care

Whatever your age or skin type Oriflame has a range of innovative skin care products based on
thewisdom of nature and the best of science. Developed and tested by our Skin Care Research
Centre inIreland, Oriflame Skin Care offers proven, effective solutions to your everyday skin
care needs.

Colour Cosmetics

The world of colour cosmetics is not only about colours. Oriflames approach is to enhance
everywomans natural beauty. Our portfolio offers a wide and sophisticated range of products
with enhancedformulations and trendy packaging. We have products t0 suit every woman, every
mood

and

every

style.

Fragrances

Oriflame offers a qualitative and wide fragrance portfolio ranging from exclusive to the
moremoderately priced. All fragrances are developed in France, the heart of perfumery, to ensure
superiorquality,

innovation

and

10

performance.

Personal & Hair Care

Personal Care includes body care, oral hygiene, foot care, hand care, sun care and even baby
care. Ourextensive and high performance hair and body care products offer you a variety of
ranges to meet yourdaily needs. They are based on or inspired by natural ingredients to make you
feel

clean,

refreshed,healthy

and

relaxed.

Accessories

From hair brushes to handbags, sunglasses to sandals, toothbrushes to teddy bears, make up bags
tomanicure sets, sarongs to scarves, candles to combs, not to mention belts, pedicure sets,
towels,bracelets, necklaces, earrings, toilet bags and seasonal gifts, Oriflame has them all and
11

much,

much,more!

Wellness

Beauty is not just skin deep, it comes from within.Wellness by Oriflame has been carefully
designed in partnership with Swedish scientists and nutritionalexperts to bring innovative, safe
and high quality wellness products that will protect your skins naturalbeauty and help you
achieve

top

performance.

12

1.4.4 SIZE OF ORGANISATION

Around 1.3 billion Euros in annual sales
More than 3 million Consultants
Approximately 7,000 employees
A product range of approximately 1,000 products.
Co-founder of World Childhood Foundation.
Global R&D centre with more than 100 scientists
Production units in Poland, China, Russia and India
Listed on the Stockholm Nasdaq Exchange
Operations in more than 60 countries of which 12 are operated by franchisees

13

1.4.5 Organisaton Struture of Oriflame

The organisational structure is logical and transparent, with clear roles, responsibilities and
processes that facilitate the effective management of operational risks and enable the Group to
fulfil its goals. This process includes the evaluation by the Board of the business performance
and results through reports that contain results, forecasts and targets. Also, the Board review
theinterim and annual reports before they are presented externally.

1.4.6 Market Share and the Position of the Company in the Industry

14

Largest shareholders
Number of
Shares

Share capital
and voting
rights

Af Jochnick BV

6,327,001

11.7%

Fourth Swedish National Pension Fund (AP4)

5,287,707

9.7%

Robert and Alexander af Jochnick and Family

5,182,735

9.5%

Jonas af Jochnick and Family

4,380,757

8.1%

M&G Investment Management Ltd.

2,256,331

4.2%

Danske Capital Sweden AB

1,813,746

3.3%

Investment AB resund

1,823,775

3.4%

ODIN Forvaltning AS

1,127,581

2.1%

SEB Investment Management

1,089,744

2.0%

TT International

952,772

1.8%

Treasury shares owned by the company / initial issue

100,000

0.2%

Others

23,954,825

44.1%

Total number of issued shares

54,296,974

100.0%

TABLE 1.1

The shareholdings are based on the latest available information which includes shareholder study,
number of shares tendered in the share-for-share exchange offer and disclosure notices. Shareholding
may include holdings of related entities and immediate family members as per the IFRS definition of
related parties

1.5 Company Profile

15

Product offer
Oriflames product offering builds on more than 40 years of skin care and cosmetics expertise
combining the wisdom of nature with the best of science. The Company provides a wide
assortment of distinct products at affordable prices, following its main product offer principles:

High purity ingredients and strict manufacturing standards

Assured product performance at value for money

High ethical standards and stringent environmental policies

Skin Care
Oriflame has a wide range of innovative skin care products, developed and tested by the R&D
facilities in Sweden and Ireland. Oriflame Skin Care offers proven, effective solutions to
everyday skin care needs, with facial moisturisers, anti aging and hand & body products.
Colour Cosmetics
Oriflames colour portfolio offers a wide and sophisticated range of products with formulations
and trendy packaging that enhances every womans natural beauty lipsticks, foundations,
mascaras, eye shadows, nail care and other make-up products.
Fragrance
Oriflame offers a qualitative fragrance portfolio ranging from exclusive to more moderately
priced products, for men, women and the home. Inspiration and trends come from France and all
fragrances are developed in Sweden in collaboration with the most prestigious French perfumers
to ensure superior quality, innovation and performance.
16

Personal & Hair Care

The extensive hair and body care products offer a variety of ranges to meet daily needs for hair
care, oral and feminine hygiene, bath and shower, deodorant and foot care.
Accessories
Oriflames accessories and various other fashion products target women, men and kids, offering
many different trendy tools such as hair brushes, handbags, sunglasses, bathroom accessories,
interesting seasonal gifts as well as a range of high-fashion must-haves.
Wellness
Wellness by Oriflame has been carefully designed in partnership with Swedish scientists and
nutritional experts to bring innovative, safe and high-quality products that bring out beauty from
within, in the areas of vitamins and nutritional shakes.

Market

17

Oriflame is present in more than 60 countries and one of the market leaders in more than half.
Beauty products and direct sales are a compelling combination. The cosmetics industry is
recognised as one of the fastest-growing consumer products sectors and it is the most important
sector for the direct sales industry, representing about one-third of total global direct sales. Direct
sales as a channel is estimated to have more than a fifth of the total cosmetics and toiletry market
in

Eastern

Europe.

This is higher than the global average of approximately 11 percent. Being a cosmetics company
selling direct means that Oriflame competes with major cosmetics manufacturers as well as other
companies selling direct both for end-consumers and for sales consultants. Some of the largest
competitors are the global manufacturers Procter&Gamble, LOral, Beiersdorf and Unilever, as
well as direct sellers such as Avon and Mary Kay.
Oriflame Cosmetics

Natural Swedish Cosmetics

Type

Public
Figure 1.1

Traded as

OMX: ORI SDB

Industry

Cosmetics, food supplements

Founded

1967

Founders

Jonas af Jochnick, Robert af

Jochnick

Headquarters

Switzerland, Sweden

Key people

Magnus Brnnstrm (CEO)

Alexander af Jochnick(Chairman)

Products

18 skincare, perfume,gifts
Cosmetics,

Website

www.oriflame.com

REVIEW OF LITERATURE

19

2.1

WHAT IS DIRECT SELLING?

Direct marketing is an important aspect of the strategic P; penetrating. Direct selling is an

ultimate crucial step in offering value to the customer.
The companies say that direct marketing identifies the unfulfilled needs of the ordinary
customers. The customer would rather be happy if he receives a product of his choice with
proper service person. They (customer) rather think that direct selling impinges on the
customers privacy and in the end the appeal to the customer is lost.
Direct selling- When a company bridges the last link in the genetic value-chain between the
retailer and the residence, and sells its products at the customers door steps itself, the process of
direct selling is complete.
Few years back any companies, believed that direct selling will not work in this country for
them or for them or of the customer. In the post liberalization area, with the dynamic market
conditions the importance of direct selling is being realized and more and more companies, are
opting for this expensive but effective routs. In todays market place the sales- driven company
must transit to a customer-oriented one.
Smart companies do not just sell and demanding customers do not just buy.

It all started with a small group/community of people coming up with the idea of circulation
of certain commodity on demand.

The circulation area was limited to dose friends and relatives.

A sort of verbal sales promotion entirely on basis of faith and personal contacts.

Gradually, the circle grew

20

E.g. Readers digest launched through direct selling where the magazines were available
to customers by post on demand basis. It is only through this method of circulation that an
extensive network was established in the entire world for the Readers Digest. Today it
enjoys one of the largest circulations in the world.

Bull worker- German Company (35 years.)

Starting adds in magazines. Still it is restricted to magazines ads, only never seen in any shop.
Today it is also one of the most popular Gym. Items and exercising machine.
India only adopted this and one every popular coy came up with attractive results- Eureka
Forbes.
Today, many companies have adopted the multilevel marketing model. These are Amway,
AVON, MODICARE, OFIFLAME, LBH, EUREKA FORBES.
After all, these companies have realized that, what could be more effective than a face to face
dialogue between a salesperson and a customer. In an environment where the latter is utterly
receptive her home whereby, the salesperson has a complete control and attention of the
customer, which is very important to communicate (to him) the attributes of his product.
Direct selling is a very important technique in this complex and com0eptitive market place. It
encourages the salesman to go out and clinch a deal. But at the same time direct selling could
result in the lifelong loss of a potential buyer, if it does not maximize customer value. The whole
sale has to be carefully planned and thought over even before making the first call at a
prospective customer, which is of course, not very easy always. Because, it only takes a minute
to clinch a sale but choosing the right minute to contact the customer involves a days work for
a direct marketer. This is all the more necessary because the direct marketer is much like an
21

uninvited guest and, therefore, must ensure that he does not impost on the customers time.
Thus, direct sellers can offer additional value by placing a premium on the customers time.
Times are changing and it is the performance, which is being valued today and not just the
product. So for companies like Eureka Forbes which has to introduce and sell a concept not just
the product direct selling was the best alternative. For many cosmetic manufactures also. The
direct contact between the distributor ensures that the latter actually gets to experience how
smoothly

a lipstick can be applied, or how oil free a moisturizing lotion id Direct Selling,

therefore, is not about crude sales calls but a carefully crafted performance when the products
value to the customer is clearly demonstrated. Today the need is to sell performance, not just
products.
Even in the case of industrial products, the performance over product equation holds equality
true in case of INDAL, which sells its aluminum sheets directly. When its salesmen were trying,
to introduce aluminum applications, they faced resistance from automobile body builders. They
said, aluminum applications was unfit to the used as a roofing material sine it would get
corroded by bird dropping and would, therefore, lead to holes in the roof.
A desperate INDAL, salesman began carrying samples of aluminum sheets with days old bird
droppings with him to prove to builders that INDALS sheets would not get corroded. The bus
manufacturers started replacing steel with cheaper and lighter aluminum.
It is only through direct selling that needed flexibility can be mat. Clearly, b focusing our
performance, and not first the product, the direct marketer can fully demonstrate the value
proposition to the customer.

22

Direct marketing companies have an advantage over conventional selling is that the relationship
between k he company and the customer starts building even before a sale is made. The
salesperson have the

satisfaction of generating a pool of goodwill because. A satisfied

customer in our best salesperson.

Thus the evident advantages that direct selling

have

over conventional selling

can be

summarized as:

ADVANTAGE
Flexibility

STRATEGY
By contracting

customers at their

convenience rather then yours.

Demonstration

Using the opportunities

to conduct

detailed demos at customs at customer

comfort and before potential user and the
buyer both.
Building Relationship Goodwill

By satisfying a customer sight from 1st

call i.e. till the service giving stages.

Reducing confusion and saving time

By giving personalized visits, customers

get attention
attributes

and understand

product

clearly getting confused by

other products.
Multi-level marketing

Using your customer to sell your product

to

other customer

by enlisting direct

sales agents from its customer base.

A deal is closed immediately by reaching By allowing salesperson to take pricing
23

the customer directly.

decisions on the spot when he

can

conclude the deal immediately.

According to the World Federation of Direct Selling Associations, Direct Selling is the
marketing of consumer products directly to consumes, generally in their homes or in the
homes of others, at their work place and other places away from permanent retail
locations. Usually through explanation or demonstration of the products by a Direct
Seller.
The direct selling works on the basis of a distribution channel, which relies on personal touch.
Direct selling has some specific advantages for the customers.
1. Provide time for family and relaxation with is becoming a scarcity.
2. It provides convenience of ordering goods from home.
3. Others personalized service, demos, satisfaction and Customer protection as the most
essential attribute.

2.2

PRODUCTS

Direct selling is the appropriate strategy of marketing for products of high performance items
requiring detailed explanation or demonstration. Some such products can be mentioned here
where the direct selling has bright prospects.
1. Cleaning systems, Vacuum cleaners.
2. Microwave ovens.
24

3. Kitchenware.
4.

High quality cosmetic and toiletries.

5. Educational programs and multimedia items.

Direct selling can be broadly classified as Single Level, Multilevel or Party Plan.
Single Level Direct Selling: A concept, which allows only one level of distributors, who are
recruited directly by the company. This has been used in India for years now.
Multi Level Marketing Network Marketing:

It goes beyond the conventional one level of

distributors. Each distributor can recruit many distributors under, him who in turn can again
further recruit more people under them and all these would constitute a Down Line of the
distributors who initially joined the company. It is a relatively new concept in India.
Party Plan: where the host/hostess organizes a party or a get-together at his/her house or a
venue with the purpose of demonstration the products collectively to the group. All the
participants are aware of the purpose of the meeting and they share the interest. Orders are
obtained during the course of the party or after the demonstration/presentation of the products
is complete.
Although single level and multilevel marketing concepts have been launched in India. Eureka
Forbes, Modi Telstra, INDAL have been selling their products by single level direct selling.
Where s the companies like Amway, AVON

Oriflame

and Modicare have adopted

the

multilevel marketing. The party plan concept has yet to take off in a big way.
There is on thing common to all the methods of Direct Selling, which is ALL OF THEM
ESTABLISH A DIRECT CONTACT between the prospective customer and the company by
cutting down the intermediary steps of the conventional selling.
25

They direct selling concept has the following key points.

1. Truly entrepreneurial,
2. Low/no capital investment,
3. Learnable profession.
By truly entrepreneurial nature it means that three is an open opportunity for earning in
proportion to the efforts. This can be full fledged business p provided all the necessary inputs,
where very one is his/her own boss.
There is practically on or very less capital investment is compared with any other business at the
initial stages. All one needs to do is to get the distributorship with a very nominal fees and start
the business, which brings results in proportion to the efforts put in.
Then, thirdly it has a Learnable nature as a profession. One learns as one carries it on, from
own experiences but there are a very few setbacks to be faced alone as there is always a
company backing the distributors.

2.3

INTERNATIONAL PERSPECTIVE OF DIRECT SELLING

On the International front direct selling has been always an important concept in the marketing
world. This promotion of the direct selling concept is the important objective. To fulfill this
objective the World Federation of Direct Selling Association was established. Today the direct
selling associations are operational in 43 countries all over the World. These associations have
the direct selling companies as their members. The direct selling associations have the principle
objectives such as:
26

1. Promote Direct Selling industry in the particular country.

2.

Meet the collective need of the member companies.

3.

Protect the rights of consumers.

The World Federation of Direct Selling Associations, ensures full protection to consumers and
assures ethical behavior among direct selling company and customer through its cods of
conduct. The member company should:
I)

Respect the right of consumers and promote a healthy environment it the industry.

II)

To serve with honesty, sincerity, and commitment.

2.3.1 Reasons why DSAs are Valued

The direct selling associations are very important bodies in over 43 countries. This is because
of the following features they offer.

Code of conduct as set by DSA.

Voice to talk to the Government.

Help and Advice.

Training and Education.

World-wide Contacts.

Specialists suppliers as Associate Members.

Product diversification.

Encouragement to small and start-up companies.

27

2.4

THE INDIAN SCENARIO

The direct selling concept is relatively new in India. But now with the post-liberalization area
in India, this concept has been adopted by many companies. Thus a need for establishment of
the direct selling association was establishes with the objective of the direct selling industry in
India.
The founder members of Indian Direct Selling Association (IDSA) are:
1. Amway India Enterprises
A 5 Kailash Colony, New Delhi.
2. Avon Beauty Products (I) Pvt. Ltd.
M- 38, G. K. 11, New Delhi.
3. L . Publishers & Distributors Pvt. Ltd.
90-91, M. G. Road, Bangalore.
4. Eureka Farbes
5. Oriflame India (Pvt.) Ltd.,
F 90/12 Oklhla 1, New Delhi.
IDSA outlines d the following basic criteria for the direct selling concept to be carried our
clearly & successfully in India conditions:

Direct selling primarily takes place in the home.

We must be good guests.

If we dont behave, we will be made to behave.

28

Last but not the least Self regulation.

2.4.1 Facilities you get, being a IDSA member

A member company is entitled to carry the ISA logo, which is perceived as the standards bearer of direct
selling.
The association is a platform to be is close touch with the government and have say in policy matters
related to the direct selling industry.
It will promote the direct selling industry through media publicity, seminars events & help in creation k
of a trustworthy image of the entire industry and its promotion. It will educate people about the earning
opportunity it offers and how working with a direct selling company can change peoples lover.
It will promote ethical practice amongst the members & independent distributors, which would promote
a healthy environment in the industry.
It will disseminator information on international trends and new developments in the direct selling
industry taking place world over. Besides offering a unique opportunity to exchange views with the
stalwarts of the industry.
It would encourage new enterprise which, may start at a very small level and may need guidance &
information on the industry.

29

2.5

MULTILEVEL MARKETING MODEL

2.5.1 Can this radical distribution model really work in India?

Network marketing began life in 1886 when door to door salesman avid H. McConnel founded
the California Perfume Company, and set up a sales team using the concept. His first saleslady
Mrs. P.F.E. Albee not only vended the little to perfume set. But also recruited other women to
her team. McConnels next company Avon set up in 1928 followed the system faithfully.
In todays Network aged MLM can be a multi-marketing solution. It ahs the power to rush the
product into the customers home neatly by passing the complex conventional system. Its
advantage, being that it asks for no investments in advertising, promotion and infrastructure
building. The MLM company completely bypasses the retail chain, distributing products
through person to person contacts.

2.5.2 Unique selling proposition of Multilevel Marketing

A lot of companies world over have adopted MLM model where a concentric and ever
growing ring of distributors help carry products from the company to the customers. MLM
offers some unique features above the conventional system.
1. No formal marketing infrastructure is required. The investment for setting up an
collaborate marketing system comprising of sales person, showrooms, or even an extensive
marketing dept. Is not required.
2. The products are always sold directly to customers. This gives a very personalized
service to them. Thus buildings strong relationships. The products are presented and
30

demonstrated right

is customers home, which adds value to them

requiring special

attention. This facility can not be experienced while purchasing at the retail shops.
3. Distributors belong to the target customer group. The model emphasizes to use the
customer to sell our products to other customers. And this is possible when the
distributors become our best customers. Only if a distributor who is a satisfied customer
will become an effective salesperson. The findings show that the distributors of MLM
companies in the US on an average sell only 10% of their products to new customers.
These. MLM distributors themselves account for out every five customers.
4. The conventional retail route is completely bypasses .i. e.
Warehouse

Depot

Distributor

Retailer route.

5. Advertising and promotions are not necessary. Once an awareness is

the prospective customers about the product range not
advertising of products. The
ding to

generated among

much of an investment is required in

product quality doses the rest, i.e., it makes the customer

them provided the service is more than satisfying. Here the word of

mouth is

more important and effective than sales promotions.

The MLM system utilizes a multi-tiered sales force of independent distributors none of them
employees to sell products directly to the customers, and earn commission at 2 levels:

The first level is in the form of the difference between the distributors cost & selling prices
i.e., 25% of mark up.

The second is in the form of a proportion of the commissions earned by other distributors
whom she recruits on the companys behalf.

31

As this calls for an ever expanding network to be formed. According to Inderjit Sial, 35,
Chairman, Oriflame international, The margin on each product sold is 25% but the main
income booster is really the number of people a distributor can sponsor, thus netting the
percentage income on group turnover. Thus, a distributor becomes truly successful only when
she starts recruiting others.

2.5.3 Who is the Ideal customer for product using MLM system?
This system is distinct and thus targets a specific segment of the market where reside its
customers. The MLM targets members of he middle class Indian families specially house wives
who would be very interested in an opportunity offering extra income. Though the companies
in the country have all prices their products in the premium slot: Oriflames

and Avons

cosmetic are both among the most expensive produces in their genres. But, the real customers
for KLM is not one of the 6lac super rich Indian consumers, who are normally the target your
premium products. Instead the model relies on turning its distributors into customers, the best
customer is the distributors herself since she buys on whole sale prices and gets he best deal.
So the focus is on converting the distributors into the consumers.
2.5.4

For what Products is MLM and Ideal?

MLM being a Quick cost effective channel for distribution of products. If the products are fast
moving consumer goods targeted at niche markets such as specialized cosmetic or premium
fragrances it could offer a convenient distribution network.
But the MLM model can just build a relationship with the customer. Unless the transactions can
deliver greater value than transaction can deliver grater value than making purchases at retail
outlets. So either a price discount, or the ability to test the product in the comfort of the home.
32

If a customer is getting personalized service an a demonstration of the product t a time of her

convenience in her own home, why would she prefer to sweat it out in the marketplace?
MLM can score over the conventional system only if your product is a Novelty. Or the
customer has developed a close relationship with your brand.
MLM is best suited for products, which fall in the following bracket:
The products that are purchased neither extremely often nor extremely rarely, and are neither
too cheep, are suited for multi-level marketing.
Products priced too high or too low will not offer the kind of value that the MLM buying
experience offer. MLM works better for consumer non-durable than for durable. Products at
the highest consumption level, such as food, cant be effectively sold at home. The ideal
product are thus the house hold cleaners and e.g. Medicare. Personal care products e.g. Oriflame
& Avon.
High-value durables like TV on or air conditioners, buying which normally

involves

comparing rival brands before making a choice. However Innovative products where there are
few brands to chose from can find customers through forms of direct selling including of
course MLM.

2.6

MLMS BENEFITS

1. Distribution network grown continuously.

2. Companies can maintain high margins on their products. The cost of marketing will never
exceed 25 per cent of its direct selling price. After all, the distributors primary commission

33

is a mark up on this price with out the company having to pay her anything. The income
from registration fees will softens its codes continuously.
3. Entering new markets is both quicker & easier. As there are new recruitments and expansion
of network he new markets are explored through new distributors. This without any
additional investment and effort on companys part except the improvement of services and
delivery system.
4. Overheads are low since no infrastructure is necessary
5. Innovative products can be well-demonstrated New products with innovative ideas and
specialized features can gain special attention of the customer once demonstrated in the
comfort of his home. The products, which are very specific to customer, needs could be
presented

in

personalized

atmosphere

to make. The consumer understands the

importance of these products.

2.7

MLM s DRAWBACKS

1. Sales forecasting is difficult leading to inventories. Unless the company builds up a strong
database of its distributors, their orders. Prospective distribution and past & present high
selling products it become virtually impossible to avoid out off-stock situations. Other
major problem

is that probing into future is difficult as market is very uncertain get

dissatisfied even once. Winning back the customer is almost impossible today.
2. Consumer relationship cannot be developed. The strong brand equity through the system is
difficult to be built. The absence of advertising will limit brand awareness to only these
customers whom distributors actually call. The prices

34

and discounts being

arbitrarily

extended by the sales team to meet their volume targets may disturb the value equation of
the brand.,
3. Distributors often become the largest customer. Top ranking distributors usually buy most of
the products themselves instead of expanding the network. Thus the products are either
consumed by the distributor herself, or sold to other distributors. So, while company may
be satisfied with volumes, the drawback is that it may nit be growing to market
4. The company will never be in touch with the real consumers of its products hence the MLM
distributors are its effective customers. Tracking

customers tastes. Checking their

perceptions and monitoring their satisfaction level is there fore impossible.

5. The company cannot control the sales team/s actions. The company Cannot keep a vigil on
the sales targets and proceeding of its sales force is as possible in conventional system.
This concept is a success world-wide for customer care products, Household goods and
childcare and entertainment product. The top ten Multinational Markets in the World are:

35

COMPANY

PRODUCTS

Amway Corporate

Household

goods,

personal

care

&

nutritional products.
Avon Products

Cosmetic, jewelry, home furnishing, baby

care products.

Brite Music Enterprises

Childrens

song

books,

cassettes,

records.
Discovery Toys

Educational toys, books, games.

Encyclopaedia Britannica

Educational publications.

Mary kay Cosmetics

Cosmetics, skin-care products

Oriflame

Cosmetics, skin-care

Time-Life Books

Educational publications.

Tupperware home

Food-storage

containers,

and childrens toys.

The Hanover Shoe Inc.

Shoes.

36

kitchenware,

RESEARCH METHODOLOGY

37

RESEARCH METHODOLOGY

3.1

Formulation of the Research Question

The Research Questions/Hypothesis used is imperative in directing the scope and process of this
dissertation. The Research questions/hypothesis established for the present study clearly brings
out the present state of hospitality industry by stating various arguments opinion based on
investigation and statements put across here, which are subject to verification throughout the
dissertation. Hence, the conclusion drawn at last either seeks to support or reject the Hypothesis.
A

careful

study

of

numerous

texts,

articles

and

research

materials

on

the

Mult-Level Marketing : Oriflame A Case Study. Further, this study gave a sound framework
for this research. These relations were tested in the light of opinions, given by people belonging
to this industry. So as a first step towards proving this topic, these opinions were recorded and
put down on comments

3.2

Secondary Research

To assert the validity of the subject, a secondary research in the form of a Literature review was
undertaken. The objective was to collect thoughts of experts on the subject matter.
All necessary theoretical information relating to the subject was initially obtained through
various textbooks & journals. To supplement this, academic research journals concerning to this
topic both technical and occasional were also consulted. I myself also visited number of libraries
to collect the information.

38

3.3

Data Collection

The method of structured interview was adopted in Data Collection. Here, questionnaires were
prepared (see Appendix) and questions were presented in the same order and same wordings to
all interviewees of the Customers. The interviewer had full command on the questionnaire all
along the interview process.
My aim throughout was to extract as much honest opinion and information from these interviews
as possible.
Also, the objective was to achieve quantitative as well as qualitative data. The structured
interviews included a set of questions, with utmost sincerity and sensitivity to make it sure that
they veritably measured up to the degree of efficacy and validity characterizing the essence of
the present study.

3.4

Limitation of the Study

Though, Im satisfied with what I have done for the final project, yet I can say that I had
performed much better than this if I would have more time to finish this project. Apart from this,
while conducting interview I faced so many problems and sometimes I got frustrated when the
approached customer took the interview lightly. It was really very tough to make them ready for
answering the questions.
Besides these, everything I found well in doing this task and it can be emphatically said that
there is limitation of everything and so nothing I found new in my case. Whatever experienced I
have gained, I will make use of these in my future professional life.

39

3.5

Interview Questions formulation

Open-ended questions were chosen for the questionnaire.

The classification of questions that were chosen in the Questionnaire were Open Type. The
author feels:

The questions were easy to ask.

It gave the respondents the opportunity to express their views on the Industry and its
practices.

They are appropriate for the subject matter.

Allowed a great deal of freedom to probe various areas and to raise specific queries
during the course of the interview.

3.6

Questionnaire Design

The author had a set of ideas and expected result based on those ideas from the questionnaire.
For this reason questions were:

Related to the field of study

Related to the research hypothesis.

Besides, deciding what to ask, the author subsequently identified the guidelines as to how the
questions should be asked. It included:

Questions must bear significance to concerned area of research.

Questions must seek information, unattainable from other sources.

40

They must be short as possible but comprehensive enough to allow the author to derive
his requirement of his research.

Questions were well laid out

Utmost care was taken to avoid ambiguity in the questions.

The segment selected for the interview process viz. Customer Level was reached out to receive
more accurate and balanced data.

3.7

Choice of Sample

Lot of importance was given for selecting the right sample. I ensured that the characteristics of
the sample were the same and that it belonged to the cosmetic industry. It was also imperative to
select a sample from which data could be analysed and conclusions drawn. The criteria, which
was decided upon by me was Delhi .

41

DATA ANALYSIS AND

DATA INTREPRETATION

42

Ques 1 . Are you aware of multi level marketing ?

Yes
No

72
3

Yes 96% of people know Multi level Marketing

Ques 2 . What is your profession ?

43

96%
4%

Teenager
Housewife
Working Women

26
31
18

41.3 % are Housewife

34.7 % are Teenager
24% are working Women

Ques 3 . Age Group

44

34.7%
41.3%
24%

10 20 Years
20 30 Years
30 40 Years
40 50 Years
50 and 50 above

10
33
32
0
0

13.3 %
44 %
42.7 %
0%
0%

13.3% of customer are with the age group of 10 20 Years

44% of customer are with the age group of 20 30 Years
42.7% of customer are with the age group of 30 40 Years

Ques 4. What do you think as about the customer service of Oriflame ?

45

1 Excellent
2
3
4
5 Not So Good

25
23
15
9
3

33.3 %
30.7 %
20 %
12 %
4%

33.3 % of customer think that the customer service of oriflame is gave 1 point as excellent while
4% of customer think that that the customer service of oriflame is not so good.

46

Ques 5. How much do you think , Oriflame is quick responsive toward your Complaints ?
To Great Extent
To Some Extent
It is Satisfactory

40
22
13

53.3 %
29.9 %
17.3 %

53.3 % customer think that Oriflame is quick responsive toward your Complaints to a great
extent
29.9 % customer think that Oriflame is quick responsive toward your Complaints to some extent
17.3 % customer think that Oriflame is quick responsive toward your Complaints is satisfactory

47

Ques 6 . Do You know Oriflame provide you its product through Direct Marketing ?
Yes
No
May be

62
1
12

82.7%
1.3 %
16 %

Yes 82.7 % Customer knows that Oriflame provide you its product through Direct Marketing

48

Ques7 . Why did you Choose Oriflame ?

Price
Availability
Brand Name
Quality

6.7 %

12
16
46

16 %
21.3 %
61.3 %

61.3 % customer choose oriflame because of Quality

21.3 % customer choose oriflame because of Brand Name
16 % customer choose oriflame because of Availability
6.7 % customer choose oriflame because of Price

49

Ques 8 . What do you think that Oriflame while serving its products to customer adopts the
best system ?
1 Poor
2
3
4
5
6
7
8
9
10 Best

7
1
6
2
3
4
15
23
10
4

9.3%
1.3%
8%
2.7%
4%
5.4%
20%
30.7%
13.3%
5.3%

Almost more than half of customer Gave 8 out of 10 for serving its products to customer adopts
the best system

50

Ques 9 . Which product Range do you prefer ?

Skin care
Colour Cosmetics
Fragnances
Personal And Hair Care
Accessories
Wellness
All Of Above

71
51
38
52
23
4
6

94.7 % customer prefer Skin care

68% customer prefer colour cosmetics
50.7% customer prefer fregnancec
69.3% customer prefer Personal and Hair Care
30.7% customer prefer Accessories
5.3% customer preferWellness
8% customer preferAll Of Above

51

94.7%
68%
50.7%
69.3%
30.7%
5.3%
8%

Ques 10. Do you have any advantage of Oriflames direct selling system?
Yes
No
May be

58
5
12

77.3%
6.7%
16%

Yes 77.3 % of customer have advantages of oriflames direct selling system

52

Ques 11. Which aspect of Marketing Mix do you consider the most while buying a
Product ?
Product Mix
Price Mix
Place Mix
Promotion Mix

20
8
2
45

26.7%
10.7%
2.6%
60%

Most of customer consider Promotion the most while buying a product

53

Ques 12. Do you think any of followings are competitor of Oriflame ?

Amway
Avon
Other
No one

51
5
1
18

68.9%
6.7%
1.4%
23%

68.9 % of customer think that Amway is competitor of oriflame

54

SUMMARY AND CONCLUSION

55

6. Summary and Conclusion

Based on my observations made during the training & detailed discussions with the employees
and also with the distributors by way of informal interviews, following are my recommendation
with respect to the marketing strategy of Oriflame India Pvt. Ltd.

Related to sales and marketing.

The products have o be given the right image in the customers mind. A study of what the
customer wants from this product range, is to be done. This is necessary because, Oriflames
belief systems. How much value does the customer give to the natural skin care products?
This is to be found, then this value is to be delivered through advertising and perception
building.
Indians do value the natures extractions and natural formulations a lot. It is thus; here
Oriflame can find place in Customers mind. The concept of home made recipes and face
parts for improving and beautifying skin is age old in India. it is till very alive in Indian
society and minds. Oriflame products are all natural preparations and this fact is to be
emphatically propagated in the market. Indians would definitely accept the pure and natural
skin care products that offer them same goodness of nature and plant extracts. Only thing
been an added advantage of easy and convenient use, smooth applicability, some saving
process and socially respectable positive demonstration appeal. Thus the ingredients used
are to be ;highlighted which are similar to the once famous in India since old ages. It will
have a greater impact on Indian minds. Highlight the ingredient and its positive features.
More emphasis should be given to the fact that products are meant for Indian conditions. The
concept looks westernized during the training sessions. It has to be Indianised by making some

56

points more prominent. The Indian skin is very different from the European skin especially the
skin colour this is due to the presence of special pigments in relatively more active state than
in western conditions. The atmospheric pollution is much more in India than in western
countries. There the amount of dust and pollutants is lesser. Thus the main problem in those
countries in is the sunrays which harm the skin. Indian skin is adopted towards this heat by
presence of coloured pigments. Here, the skin has to be protected against he pollution and
harmful dust in air. The Oriflame products have these protective qualities also but they are not
emphasized. People have to be made aware of this fact so that they start realizing the need for
protecting their skin against these odds.
The brand name has to be built in the market people still compare it with Shahnaz being
herbal. But Shahnaz products re very concentrated and Oriflame products are very mild and
harmless. Thus the name has to be built with respect to this. They need to aggressively
advertise its products to build a strong image in the mind of average customers.
The products are of a very superior quality and a customer becomes so use t9o these that he
does not like using any other afterwards this fact is to be highlighted during sessions and by
advertising also. By developing a new punch line specifying this.
The distributor profile should be given encouraged to generate more awareness and share
their experiences existing brands in the market.
Distributors are not very confident of the sales once they take up distributorship. They have
to be motivated by illustrating successful examples.
The out of stock situation should be avoided by keeping a minimum safety stock. This
problems will be soon settled with the manufacturing being started at Noida soon.
57

 There should be more Distribution centres for he distributors to have an easy & quick
availability of orders. The courier services are cousing a lot of delays.
The top achievers should be monitored closely for their selling methods, if found working
against the norms of direct selling, should be handled accordingly.
One strategy to compensate for he lack of choice which is the strong point of conventional
system in needed. The customer has a lot of options to choose from at the retail shop. The
strategy can be to widen the product range: MLM should try and sell several products
simultaneously. Oriflame has already brought is entire range of 60 products in India. there
are plan to expand its portfolio to over 300 in next 2 years. As a result , the wide ranges
will be available

Internal Analysis & Suggestions

There is a lot of time loss and disturbance in day to day functioning in the customer service
call due to queer handling. As the girls attend to query calls, it disrupts their normal
functioning or the job they were performing. This causes delays and minor tasks are being
postponed further. This hampers the daily on the line processing.
Suggestion : There should be a separate query cell comprising of 2 operators. They should
be exclusively handling queries.

A grievance-handling cell should be performed, handled by 1 person, who listens to

problems or a suggestion box for letters should be kept.

58

BIBLIOGRAPHY

59

BIBLIOGRAPHY

BOOKS
Blackwell R. D., Miniard P.W. and Engel, J.F. (2001), Consumer Behavior, 9th Edition, Vikas
Publishing House, New Delhi.
Kotler, P. (2000), Marketing Management, Millennium Edition, Prentice Hall of India, New
Delhi.
Schiffman L.G. and Kaunk L.L. (2000), Consumer Behavior, 6 th Edition, Prentice-Hall of India
Pvt. Ltd., New Delhi.

MAGAZINES

Womens Era

Fashion World

Alive

Femina

Business World

Business Today

NEWSPAPERS

Times of India
60

Poineer

Financial Express

Economic Times (Brand Equity)

SOURCES OF OTHER INFORMATION

Escorts Library

PHD House

FICC Library

61

APPENDIX

62

Questionnaires

Ques 1 . Are you aware of multi level marketing ?

1. YES
2. NO
Ques 2 . What is your profession ?
1. Teenager
2. Housewife
3. Working Women
Ques 3 . Age Group
1. 10 20 Years
2. 20 30 Years
3. 30 40 Years
4. 40 50 Years
5. 50 and 50 above
Ques 4. What do you think as about the customer service of Oriflame ?
1. Excellent
2.
3.
4.
5. Not So Good
Qes 5. How much do you think , Oriflame is quick responsive toward your Complaints ?
1. To Great Extent
2. To Some Extent
3. It is Satisfactory
Ques 6 . Do You know Oriflame provide you its product through Direct Marketing ?
1. Yes
2. No
3. May be

63

Ques 7 . Why did you Choose Oriflame ?

1.
2.
3.
4.

Price
Availability
Brand Name
Quality

Ques 8 . What do you think that Oriflame while serving its products to customer adopts the best
system ?
1. Poor
2.
3.
4.
5.
6.
7.
8.
9.
10. best
Ques 9 . Which product Range do you prefer ?
1.
2.
3.
4.
5.
6.
7.

Skin care
colour cosmetics
fregnancec
Personal and Hair Care
Accessories
Wellness
All Of Above

Ques 10. Do you have any advantage of Oriflames direct selling system?
1. Yes
2. No
3. May be
Ques 11. Which aspect of Marketing Mix do you consider the most while buying a Product ?
1.
2.
3.
4.

Profuct Mix
Price Mix
Place Mix
Promotion Mix
64

Ques 12. Do you think any of followings are competitor of Oriflame ?

1.
2.
3.
4.

Amway
Avon
Other
No one

65