THE ROLE OF

DIRECT SELLING

IN RELATION TO COSMETIC
PRODUCTS

Under the Supervision of

Mr. Anil Kumar

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

DECLARATION
I here by declare that this dissertation report entitled “THE ROLE OF DIRECT
SELLING IN RELATION OF COSMETIC PRODUCTS” has been carried out by me,
Ankur nehra, a student of BBA (Mktg & Sales) in Amity School of business, Amity
University, holding Enrollment Number A3914708072. The research confirms to course
regulations regarding cheating and plagiarism.

I declare that no material contained within this assignment has been used in any other
submission, by the author, for an academic award.

I further declare that the information presented in this project is true and original to the
best of my knowledge.

Ankur nehra

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

It has been a great learning experience working on this project entitled “THE ROLL OF
DIRECT SELLING IN RELATION TO THE COSMETICS INDUSTRY”. I would
like to express my heartiest gratitude to Mr. Anil Kumar who is my faculty guide, for
giving me an opportunity to work under guidance. I would like to thank her for support
and guidance which was a source of encouragement for me throughout this project.

The staffs in Amity Business School, especially in the academic section, which were
always around me, always there to help me in need, my friends, who taught me a lot of
things, they all deserve a word of honor.
CERTIFICATE

This dissertation on “Role of direct selling in relation to cosmetics industry”-is submitted

in partial fulfillment of the requirement Bachelor of business Administration (BBA), of
Amity School of Business, Amity University Uttar Pradesh.

This is a bonafide work conducted by Ankur Nehra

ENRL No.: A3914708072 of BBA batch of 2008- 2011;
Guidance of Mr. Anil Kumar (faculty guide).

(Signature of the Student) (Signature of the Faculty Guide)

TABLE OF CONTENETS
1. Abstract
2. Meaning of Direct Marketing and Direct Selling
3. Introduction to Direct Marketing and Direct Selling
4. Overview of cosmetics industry
5. Future trends in Cosmetics Industry
6. Research methodology
Research Objective
Research Design
Data Collection Method
Sampling technology
7. Analysis & interpretation
8. Limitations
9. Conclusions
10. Recommendation
11. Bibliography
12. Annexure

ABSTRACT
The dissertation aims to identity and investigate the factors involved in direct selling in
relation to cosmetics industry. Direct selling is one form of direct marketing, which
includes door-to-door selling, internet selling, catalogue selling and home party selling.
For a company to be able to do business with people with different preferences, habits,
tastes and expectations it must continuously monitor their expectation level and increase
it's efficiency and effectiveness. In order to test the research work, a survey was
conducted and questionnaire was prepared. The population consisted of people living in
Faridabad. The results were analyzed and interpreted.

MEANING

1. DIRECT MARKETING

Direct marketing is a sub-discipline and type of marketing. There are two main
definitional characteristics which distinguish it from other types of marketing or
advertising. The first is that it attempts to send its messages directly to consumers,
without the use of intervening media.

This involves unsolicited commercial communication (spam, junk mail, etc.) with
consumers or businesses. The second characteristic is that it is focused on driving
purchases that can be attributed to a specific call-to-action. This aspect of direct
marketing involves an emphasis on traceable, measurable positive (but not negative)
responses from consumers (known simply as "response" in the industry) regardless of
medium.

Direct marketers also use media such as door hangers, package inserts, magazines,
newspapers, radio, television, email, internet banner ads, pay-per-click ads, billboards,
transit ads. And according to Ad Age, "In 2008, U.S. agencies generated more revenue
from marketing services than from traditional advertising and media. (Citation needed)

2.DIRECT SELLING

Direct selling is the marketing of products or services to consumers through sales tactics
including presentations, demonstrations, and phone calls. It is sometimes also considered
to be a sale that does not utilize a "middle man" such as a retail outlets, distributors or
brokers. This is needed where the products value needs more explanation and cannot be
purchased off the shelf.

At its best, direct selling can be an opportunity for individuals to find fulfillment, express
their entrepreneurial talents and gain financial independence.

Direct selling involves people and is a part of direct marketing which additionally
involves the use of media, print which is handled by the business.

3. COSMETICS INDUSTRY

Cosmetics are mixtures of surfactants, oils and other ingredients. They are required to be
effective, long lasting, stable and last not least safe to human use. The cosmetics industry
is a multi-billion dollar industry. New brands of cosmetics to appeal to various population
sectors are constantly being developed.
The industry produces a vast array of products, including shaving preparations, perfumes,
colognes, hair preparations, dentifrices, mouthwashes, lipsticks, deodorants, nail products,
creams, and lotions.

“SOME SELLING QOUTES”

Scott Cook
Starting his career at Procter & Grable, 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, Scott thought there might be a market for basic software hat would help people pay
their bills. Scott Cook Launched intuit in 1984, which today offers software and online
products to help individuals and small companies manage their finances including the
extremely popular Quicken and QuickBooks packages.
A whole generation of Americans will retire in poverty instead of prosperity, because they
simply are not preparing for retirement now”.
And if you’re ahead of the other guy understanding the customer, and if you’re bringing
to market the stuff that the other companies just haven’t figured out because you’re ahead
in understanding and delivering for the customer, then they’re copying your old stuff.”
At least if you buy a company’s stock, like Coca Cola, you kind of know what the
company makes.”
I find too many companies in our industry have focused on the competition, particularly
when it was Microsoft, to their deaths.”

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.

"Count your blessings. Once you realize how valuable you are and how much you have
going for you, he smiles will return, the sun will break out, the music will play, and you
will finally be able to move forward the life that God intended for you with grace,
strength, courage, and confidence."

"Failure will never overtake me if my determination to succeed is strong enough."

It is those who concentrate on but one thing at a time who advance in this world. The
great man or woman is the one who never steps outside his or her specialty or foolishly
dissipates his or her individuality.

Introduction to direct marketing

Direct marketing is a sub-discipline and type of marketing. There are two main
definitional characteristics which distinguish it from other types of marketing or
advertising. The first is that it attempts to send its messages directly to consumers,
without the use of intervening media. This involves unsolicited commercial
communication (spam, junk mail, etc.) with consumers or businesses. The second
characteristic is that it is focused on driving purchases that can be attributed to a specific
"call-to-action." This aspect of direct marketing involves an emphasis on trackable,
measurable positive (but not negative) responses from consumers (known simply as
"response" in the industry) regardless of medium.

Direct marketers also use media such as door hangers, package inserts, magazines,
newspapers, radio, television, email, internet banner ads, pay-per-click ads, billboards,
transit ads.

The term direct marketing is believed to have been first used in 1961 in a speech by
Lester Wunderman, who pioneered direct marketing techniques with brands such as
American Express and Columbia Records. The term junk mail, referring to unsolicited
commercial ads delivered via post office or directly deposited in consumers' mail boxes,
can be traced back to 1954. The term spam, meaning "unsolicited commercial email", can
be traced back to March 31, 1993. 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.

Benefits and drawbacks

Direct marketing is attractive to many marketers, because in many cases its positive effect
(but not negative results) can be measured directly. For example, if a marketer sends out
one million solicitations by mail, and ten thousand customers can be tracked as having
responded to the promotion, the marketer can say with some confidence that the
campaign led directly to the responses. The number of recipients who are offended by the
junk mail/spam, however, is not easily measured. By contrast, measurement of other
media must often be indirect, since there is no direct response from a consumers
Measurement of results, a fundamental element in successful direct marketing, is explored
in greater detail elsewhere in this article. Yet since the start of the Internet age the
challenges of Chief Marketing Executives (CMOs) are tracking direct marketing
responses and measuring results.

While many marketers like this form of marketing, some direct marketing efforts using
particular media have been criticized for generating unwanted solicitations; For example,
direct mail that is irrelevant to the recipient is considered junk mail, and unwanted email
messages are considered spam. Consumers are demanding an end to direct marketing,
which some advertising agencies are able to provide by using variable data printing and
targeted mailing lists.

Channels

The most common form of direct marketing is direct mail, commonly called junk mail,
send paper mail to all postal customers in an area or all customers on a list. The second
most. common form of direct marketing is telemarketing,{[fact}} in which marketers
contact consumers by phone. The unpopularity of cold call telemarketing (in which the
consumer does not expect or invite the sales call) has led some US states and the US
federal government to create "no-call lists" and legislation including heavy fines. Email
Marketing, including spam may have passed telemarketing in frequency at this point,
and is a third type of direct marketing. A fourth type of direct marketing, broadcast
faxing, is now less common than the other forms. This is partly due to laws in the United
States and elsewhere which make it illegal. A related form of marketing is infomercials.

They are typically called direct response marketing rather than direct marketing because
they try to achieve a direct response via broadcast on a third party's medium, but viewers
respond directly via telephone or internet.

1. Direct mail

Any medium that can be used to deliver a communication to a customer can be employed
in direct marketing,. Probably the most commonly used medium for direct marketing is
junk mail, in which marketing communications are sent to customers using the postal
service. The term direct mail is used in the direct marketing industry to refer to junk
mail, which may also be referred to as admail and may involve bulk mail. Junk mail
includes advertising circulars, free trial CDs, pre-approved credit card applications, and
other unsolicited merchandising invitations delivered by mail or to homes and businesses,
or delivered to consumers' mailboxes by delivery services other than the Post Office. Bulk
mailings are a particularly popular method of promotion for businesses operating in the
financial services, home computer, and travel and tourism industries. In many developed
countries, direct mail represents such a significant amount of the total volume of mail that
special rate classes have been established.

2. Telemarketing
Marketers call telephone numbers. This process may be outsourced to specialist call
centres. The agents sit at computerised work-stations and try to sell the products of the
clients.

3. 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. Coupons in newspapers and magazines cannot be considered direct
marketing, since the marketer incurs the cost of supporting a third-party medium (the
newspaper or magazine); direct marketing aims to circumvent that balance, paring the
costs down to solely delivering their unsolicited sales message to the consumer, without
supporting the newspaper that the consumer seeks and welcomes.

4. Direct response television marketing

TV-response marketing-Le infomercials-can be considered a form of direct marketing,

since responses are in the form of calls to telephone numbers given on-air. This both
allows marketers to reasonably conclude that the calls are due to a particular campaign,
and allows the marketers to obtain customers' phone numbers as targets for telemarketing.
Under the Federal Do-Not-Call List rules in the US, if the caller buys anything, 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. Major players are firms like avc,
Thane Direct, and Interwood Marketing Group then cross-sell, and up-sell to these
respondents.

5.Direct selling
Direct selling is the sale of products by face-to-face contact with the customer, either by
having salespeople approach potential customers in person, through indirect means such
as Tupperware parties.

Introduction to Direct Selling.

Direct selling can be considered as the oldest distribution channel in history. It is part of
the man's basic need to exchange goods and to communicate. In the Middle Age, direct
sellers were called "peddlers" who contributed to the development of trade by bringing
novelties from large cities to little villages. Rural areas and small towns were supplied
with basic goods only through the travelling salesmen. In the first part of the 20th century,
innovative products such as vacuum cleaners or washing machines were first marketed
through direct selling because these revolutionary products required a demonstration that
only a direct seller could offer. Today at the beginning of the 21st century, direct selling is
a dynamic, vibrant and growing sector of activity providing earning opportunities to
millions of salespeople all over the world.
THE STRONGEST GROWING SECTOR
Direct selling suits the sale of almost every category of goods that can be found in
traditional retail locations and in department stores. It is also very convenient for the sales
of services such as telecoms, gas and electricity supplies.
Cosmetic and personal care products, household items and wellness are the strongest
sectors in direct selling. Other products categories include food and beverages, nutritional
products, jewellery and clothes, books, toys and game, home improvement products, etc.
Direct selling companies range from those with smaller than 1 million € annual turnover
to medium size and large firms with turnovers above 1 billion €. Some companies operate
in just a few countries, some even on a worldwide basis but many more are national or
often locally based. Several well known multinational corporations have adopted direct
selling as channel of distribution for some of their brands (Loreal, Virgin Companies,
Yves Rocher, Bertelsmann, Reader's Digest, Citigroup, Unilever, Time Life, etc.). A
majority of direct selling companies manufacture and control the production of their
goods. They invest heavily in research, training and marketing but are also socially
responsible companies involved in community programs at local and international levels.

DIRECT SELLING
Direct selling is the marketing of products or services to consumers through sales tactics
including presentations, demonstrations, and phone calls. It is sometimes also considered
to be a sale that does not utilize a "middle man" such as a retail outlets, distributors or
brokers. This is needed where the products value like in Insurance, needs more
explanation and cannot be purchased off the shelf.

At its best, direct selling can be an opportunity for individuals to find fulfillment,
express their entrepreneurial talents and gain financial independence. At its worst, it can
become a kind of pyramid scheme.

Some direct selling associations, for example the Bundesverband Direktvertrieb

Deutschland, the direct selling association of Germany, have given themselves codes of
conduct which lead to a fair partnership both with customers and salesmen.
Most of the national direct selling associations are represented in the World Federation
of Direct Selling Associations (WFDSA). In Europe there are two supranational
associations: the first one is the Federation of European Direct Selling Associations
(FeDSA), the second one is the Direct Selling Europe, which is founded in spring 2007.

Direct selling involves people and is a part of direct marketing which additionally
involves the use of media, print etc.

There are prominent people in the society who started their careers in direct selling.

Benefits of Direct Selling

• Direct selling is a good way to meet and socialize with people.

• Direct selling offers flexible work schedules.
• Direct selling is a good way to earn extra income.
• Direct selling is a good way to own a business.
• Earnings are in proportion to efforts.

Anyone can do it.

• Set your own goals and determine yourself how to reach them.
• Earn in proportion to your own efforts. The level of success you can achieve is
limited only by your willingness to work hard.
• Own a business of your own with very little or no capital investment.
• Receive training and support from an established company.
People like to shop through direct selling

According to recent surveys, 74 percent of Americans have purchased goods or services

through direct sales. That's more than the number who have purchased through television
shopping and on-line computer services combined. People value the products available
through direct selling and 45 percent of Americans want to buy from direct sellers.

DIRECT SELLING

Considering an opportunity?
Here's how to identify legitimate direct selling opportunities:

1. Start up costs should be minimal. The start up fees in direct

selling companies are generally modest - usually the cost of a sales kit. Companies want
to make it easy and inexpensive for you to start. Pyramid schemes make their money
through fees paid by new recruits or by loading inventory or training aids on them. High
entry fees should be a warning sign.

2. You should be able to return unsold inventory. Companies belonging to the Direct
Selling Association "buy back" unsold marketable products purchased within the prior 12
months if you decide to quit the business, for 90 percent of the price you paid for them.
The DSA Code of Ethics requires that member companies do this. Beware of
opportunities that encourage "front end loading," or buying large inventories of
unreturnable products to reach achievement levels or receive a "special" or larger
"discounted" price.

3. Is the money you'll earn based on the sale of products or services? The answer
should be "absolutely." This is a key element of a legitimate business. Direct selling, like
other methods of retailing, depends on selling to customers who use and/or consume the
product. This requires quality products and services sold at competitive prices. Beware of
any business that claims you can get rich by solely using their products or by recruiting
new people into the business. You should also believe in the products or services you'll be
selling.

How to Get Started:

1. Identify a company and product that appeal to you. Check our list of member
companies or look in your local phonebook.
2. Take your time deciding.
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. Think long-
term
3. Ask questions.
About the company, its leadership, the products or services, start-up fees, realistic
costs of doing business, average earnings of distributors, return policies, and anything
else you're concerned about.
4.Get copies of all company literature.
And read it!
5.Consult with others who have had experiences with the company and its products.
Check to see if the products or services are actually being sold to consumers.
6.Investigate and verify all information.
 Do not assume that "official looking" documents are accurate or complete or even
produced by the company, as opposed to the person trying to recruit you.
7.Need help evaluating a company?
Check to see if the company in which you're interested is a member of the Direct
Selling Association. If it is, you can be assured the company has pledged to abide by
and uphold the DSA Code of Ethics.

Overview of the direct selling industry

• The direct selling industry does an estimated sales of over US$88 billion
worldwide
• Almost 49 million people all over the world are engaged in direct selling.
• In terms of number of people joining the direct selling industry annually, the
growth rate has been a higher 15% over the last 10 years and 9% over the last 5
years.
• The drop out rate however is quite high, with only 50-60% of recruits converting
into active consultants
• USA has the highest number of direct sales people at 13.3mn in 2003.
• Indonesia has the highest number of sales people in the world after US, but
productivity is low. Sales per person are the lowest in the world in Indonesia at
US$109. Switzerland has the highest sales per person at US$51561.
• China banned Direct Selling for a 7 year period in 1998.
• India with about 1.24mn direct sellers ranks 11th globally in terms of number of
 people employed in the direct selling industry
• Sales in India through direct selling is estimated at Rs23bn (US$511mn) in 2003.

• Health & Nutrition products has emerged as the fastest growing category in India,
accounting for almost 40% of product sales through direct selling.
• Marketing of Services is likely to emerge as the next growth area.
• The men to women ratio in India is gradually changing. Traditionally considered
as a profession for women, more and more men are today directly or indirectly
venturing into direct selling.

DIRECT SELLING -A GROWING INDUSTRY

Direct selling companies to slug it out in Rs 5,000 crore market.

Mumbai, Feb 1 The year 2009 is likely to witness intense competition among direct
selling Companies in India, which are vying for a pie in the Rs 5,000 crore segment.

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. Further, 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.

Ravindra Deshmukh, chairman and managing director, Image Multitrade Private Ltd told
FE, "We plan to set up about 50 malls in the next three years at an initial investment of Rs
100 crore in Mumbai, Pune, Bhubaneshwar, Nagpur, Kolhapur, Bhopal, and Jabalpur,
among others. We will be forming a new subsidiary, Image Lifestyle Private Ltd in April
2009 through whom we will launch new consumer promotions by partnering with various
retailers to generate repayment of incomes for our distributors. For the purpose, we are in
the process of in talking LG Electronics India and Subhiksha, among others." The
company also plans to expand its distributors from 1.5 lakh to about 50 lakh for its
existing B2B business in the next few years, apart from planning to start its training centre
either in Mumbai or in Lonavala, he added.

Traditional System v/s Direct Selling system?

As we all know that in TRADITIONAL SYSTEM of business a product reaches to the

consumer through following procedure...
1) Factory manufactures a product.
2) Advertisement of the product. (So that people know about the product)
3) Product goes to C & F agents.
4) Product goes to District Distributor.
5) Then it comes to whole seller.
6) Then it comes to retail seller.
7) Then consumer buys the product from retailer.

This way a product manufactured @ Rupees 5-6 in the factory is reached to the consumer
purchasing it @ Rupees 10. Though people from 2 to 6 in above procedure, are not
improving the quality of the product in anyway, are taking money from consumer for just
providing the product to the consumer.

In DIRECT SELLING SYSTEM company provide the product straight to the

consumer, so there are only two people in the whole transaction.

1) Factory
2) Consumer
This way company returns the money back to the consumer, which it saved by not paying
money the people from step 2 to 6 in traditional system.

AN OVERVIEW OF THE COSMETICS INDUSTRY

• Cosmetics are mixtures of surfactants, oils and other ingredients. They are
required to be effective, long lasting, stable and last not least safe to human use.
The cosmetics industry is a multi-billion dollar industry. New brands of cosmetics
to appeal to various population sectors are constantly being developed.

• The industry produces a vast array of products, including shaving preparations,

perfumes, colognes, hair preparations, dentifrices, mouthwashes, lipsticks,
deodorants, nail products, creams, and lotions.

• Standards for the materials used in these products have been upgraded and many
are now equal to the material specifications for the pharmaceutical industry.

• Metal dyes are used in finger nail polish and also the use and concentration of
heavy metals play an important role in cosmetics production. Tariffs on raw materials
are generally low, in particular for raw materials originating in developing countries.

• The Indian Cosmetic Industry continues a beautiful blend of traditional and the
modern. There are traditional Toiletries items like Perfumes and Ethers, Perfumed
Hair Oil, Talcum Powder, Kajol, Sindoor, Kum-Kum, Bindi and Herbal
Cosmetics and Toiletries.

• Exports of Cosmetics & Toiletries from India was 1.3 million US dollar in 1963-
64 and 25.7 million US dollar in 1979-80 and touched 336 million US dollar
during 2006-2007. The Indian Cosmetics Industry can match International
Standards when comes to quality, price and range.

• The global market for cosmetics and toiletries ingredients is estimated to be

around $14.7 billion in 2007, with growth of the ingredients expected to be around
5% per year through 2012. Factors contributing to this steady growth include
improvements in the global economy, particularly in developing countries, and the
introduction of new consumer-friendly products.

• According to Global Cosmetic Industry Business Magazine, by 2009, the global

market for natural beauty products will be worth more than $10 billion.

• In end-user segments, color cosmetics have the highest average annual growth
rate. They will grow from $2,586.9 million in 2008 to $3,351.7 million in 2012,

• Hair care products were worth more than $4 billion in 2008, and will maintain the
highest market value through the forecast period, growing at 5.2 % per year. Bath/
shaving products, perfume, and oral hygiene have steady growth rates of 4.6 % per
year through 2012.

• Fuji Keizai Releases Report on Japanese Cosmetics Market, According to the

report, the market for makeup products reached 497.2 billion yen ($4.5 bil) in
2007, and is expected to increase to 509.6 billion yen ($4.6 bil) in 2008. The
market for body-care products will remain roughly flat: from 112.0 billion yen
($1.0 bil) in 2007 to 112.1 billion yen ($1.0 bil) in 2008.

• The report also mentions that the segments for eye make-up products are expected
to show steady growth, from 86.9 billion yen ($782.8 mil) in 2007 to 88.9 billion
yen ($801.0 mil) in 2008. In particular, growth in the segments for mascara and
eye shadow will be remarkable.
 • China's cosmetic products market ranked the second largest in Asia. Japan is the
second-largest cosmetics market in the world only after the U.S.A. According to
statistics released by the Ministry of Economy, Trade and Industry, the size of the
Japanese cosmetics market reached a total of U5$12.9 billion / Euro 10.7 billion
(ex-factory) in 2006.

• Further, 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), which
accounts for 55.8% of the total number of salons nationwide. As this statistic shows,
Western Japan is a large beauty market. The growth of health care products is about
20%. The personal care products industry in India is value at Rs. 2500 crores in
consumer price terms.

• The herbal cosmetics industry is set for a significant growth depending on the
capability of the manufacturers to market their products. Products that claim to
renew cells, minimize pores, and restore hydration have created an $83 billion
worldwide market.

• The cosmetics industry is regionally based, and firms based in North America and
in West Europe account for approximately 86% of sales: 43% for each region.

• Firms based in Japan and South Korea also have substantial market share at 14%.

• Two West European cosmetics companies have the largest portion, 50%, in terms
of number, but their average sales are the smallest, 960 million US dollars. Firms
in the largest five countries (USA, UK, France, Germany and Japan) make up 93%
of sales.

Even with double-digit growth rates, the market penetration of cosmetics and toiletries
products in India is very low. Current per capita expenditure on cosmetics is
approximately $0.68 cents, as compared to $36.65 in other Asian countries. This low
market penetration for cosmetics and personal care products in India can be viewed as an
opportunity for more significant growth down the road in this country of 1 billion people.
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 $ 3.6 billion and that should reach $4.4 billion by 2012. It is a market
of great interest to international companies.

The Beauty Business has another parallel with the growth of Indian economy - it has it's
own service sector that is growing as fast as the market for products. The Salon industry
is estimated at USD. 375 Million and is growing at rate of 30 to 40 %.

ADEX India, a Division of TAM Media research shows there has been 49% increase in
commercial time for Beauty product on TV in 2008. For the beauty industry the
reference points are largely Bollywood (the Indian Film Industry), Television soaps &
Magazines and largely Mumbai based.

TRENDS IN INDIA

HOW have the companies that have touted the benefits of direct selling to the individual
fared? They came, they saw but will they conquer? There are about seven-eight
companies involved in direct selling in India, with total recorded sales of Rs. 312 crores
in 1997-98 and Rs. 520 crores in 1998-99. The figure is about Rs. 620 crores now.
1 .Amway, a direct selling pioneer, pumped in over Rs. 115 crores as foreign direct
investment. In its second year of operations (1999-2000), Amway estimates its turnover at
Rs. 200 crores -- a 100 per cent increase. Amway expects its business to touch Rs. 1,000
crores in 2004.
2. Oriflame-- a Swedish direct selling company involved in cosmetics -- claims to have
done similarly. Its flashy prices did not convince the consumers about the quality of the
products. It has since re-positioned itself to a broader market, targeting lower prices. This
change in strategy helped it reap rewards and stage a turnaround.

This seems to have been the trend with all the major direct sellers. The two biggest
obstacles they face in this country were explaining the concept and, thereafter, justifying
the premium prices of their goods. For instance, Tupperware salespersons are trained on
how to explain why a Tupperware plastic bowl costs Rs. 120 more than what is available
in the market. They try to promote the concept that the bowl is worth the investment and
offers value for money.

Such concepts are alien to the conservative middleclass Indian households. Nevertheless,
there is much to be said for the tremendous potential for direct selling in India if the
companies play their cards right and adapt to the Indian conditions.

THE GROWING COSMETICS INDUSTRY IN INDIA

The sun and sales are rising on the Indian cosmetics market. From concept to completion,
the cosmetics industry is heading East - to India, where raw material sources,
manufacturer I distributor expansions, retail store grand openings are the buzz words.
According to Euro monitor, the Indian cosmetics and personal care market has grown
62.6% from 1997-2004. The greatest growth was recorded in color cosmetics, up 46.3%
from 2003-2004; followed far behind by increased sales in fragrance (18%), sun care
(13.5%), and deodorants (10.1 %).

Increased disposable income has led to growth in demand for premium products. The
reasons for the growing demand for cosmetic products in India also include: greater
access to television, which has created a growing awareness of the western world;
increased advertising in general; and greater product choice and availability. 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. Also, a
boom in the Indian fashion world has contributed to the rise in demand for professional
beauty care products.

The Indian Client is a demanding one and expects nothing less than a Versace, or a
Channel or a Lancome product. It comes as no surprise therefore that they expect
nothing less than a luxurious experience at an equally prestigious Salon or Spa.

Future trends in direct selling of cosmetics

1. Rewards
An inherent feature of direct selling is performance based rewards. There can be up to
nine types of income when you direct-sell. The most basic form of income is the margin
at which you buy the product and the retail price (MRP) at which you sell it. The margins
here are generally quite high - 25-30 per cent.

The second is bonus commission, awarded when you reach a sales target - called your
personal sales value. This is awarded on a slab-basis over and above the basic
commission. This is where the real money is once you go higher up the ladder.
Once you reach a particular target, you can start recruiting people yourself. At this point
you will receive a percentage commission on the total of their sales value and,
consequently, of everyone who they recruit. This is called' pyramid selling.
As people go higher up the network pyramid, they concentrate more on recruiting people
than on selling. Therefore, a significant proportion of their income is sourced from others'
personal sales value commission. But to reach such levels, you have to dedicate yourself
to creating a vast network of distributors and consumers and initially attain high levels of
personal value.
What is the initial investment? Nothing at all, if you wish. It also differs from company to
company. But it is generally divided into two types. Companies such as Tupperware
expect an initial deposit which makes you eligible for credit for the value of products you
buy. This credit would be settled once you sell the products.

Other companies, such as Oriflame, give you credit once you reach a particular target
level and are a priority distributor.
Amway, on the other hand, insists that you pay for the goods when you collect them and
not when you sell. This system initially puts people off as they are scared of getting
stuck with products they cannot sell. One way of getting around this is to have a personal
understanding with your customers. You can collect the money from your customers and
place an order thereby making instant profits as you only pay the cost price. This
requires building a relationship based on trust.

2. Merits

Low start-up costs: The costs incurred in this business are minimal. The only real costs
are the initial joining fee - Rs. 100-300 and the initial deposit (in some companies, if you
decide to use the credit facility). Oriflame has a registration fee of Rs.250. Costs incurred
in travelling when meeting people can be avoided if you go to community meetings or
gatherings or, even, house parties. In the US and the UK, where direct sellers such as
Tupperware and Ann Summers hold parties to woo customers.

Product buy-back policy and low inventory: Another merit is that if you have a good
relationship with your customers, you need not hold stocks. Even if you do, most
companies have product buy-back policies; that is, they will buy-back products you
cannot sell. However, companies Business Line spoke to said that due to the high levels
of training given, distributors are rarely left with unsold
Products.

3. Flexibility
The flexible nature of direct selling is one of the main reasons for its growth. Nothing is
fixed except the selling price.
Rewards are directly proportionate to your efforts: So you can earn as much or as little as
you want - the more time you invest the greater the rewards.
Most products involved in direct selling are easy to relate to and hence easy to sell. Most
people know how to value and judge cosmetics and household cleaning items. There is
comfort in familiarity.

4. Critical success factors

The critical success factor is your ability to sell and interact with people. Your business
thrives on repeat-customers and the focus should be on inducing trial. Once you have
convinced the customer to at least try it, the product will speak for itself.

According to Tupperware India managing director, Mr. Pradeep Mathur: "Direct selling
works by introducing new people into the business. The more people selling or buying
your products, the bigger your business. It is a new concept and needs explaining." Your
success ultimately depends on the relationship you develop with your customer. Be
assertive but not pushy. Be honest.

One distributor Business Line spoke to says she does not recommend products that she
believes do not offer value for money. For instance, she does not recommend the nail
polish her firm sells as she believes it is too expensive. Your customer will appreciate
such honesty.

And, finally, be patient. It takes a while to develop good relationships and a network.
Worth the while?
It is not a bad way of making money and meeting people at the same time. 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. You do not want to be stuck with expensive cosmetics and plastic
bottles you cannot sell.

Be sure of your customers. They might ask you to order a product and later change their
mind.
Direct selling might be a good option if you want to earn some extra money in your own
time. But it is not secure as the main source of income.

Indian experience

HOW have the companies that have touted the benefits of direct selling to the individual
fared? They came, they saw but will they conquer? There are about seven-eight
companies involved in direct selling in India, with total recorded sales of Rs. 312 crores
in 1997-98 and Rs. 520 crores in 1998-99. The figure is about Rs. 620 crores now.
Amway, a direct selling pioneer, pumped in over Rs. 115 crores as foreign direct
investment. In its second year of operations (1999-2000), Amway estimates its turnover
at Rs. 200 crores -- a 100 percent increase. Amway expects its business to touch Rs.
1,000 crores in 2002
Oriflame -- a Swedish direct selling company involved in cosmetics -- claims to have
done similarly. Its flashy prices did not convince the consumers about the quality of the
products. It has since re-positioned itself to a broader market, targeting lower prices. This
change in strategy helped it reap rewards and stage a turnaround.

This seems to have been the trend with all the major direct sellers. The two biggest
obstacles they face in this country were explaining the concept and, thereafter, justifying
the premium prices of their goods. For instance, Tupperware salespersons are trained on
how to explain why a Tupperware plastic bowl costs Rs. 120 more than what is available
in the market. They try to promote the concept that the bowl is worth the investment and
offers value for money.

Such concepts are alien to the conservative middleclass Indian households. Nevertheless,
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.
REASEARCH METHOLOGY

1. RESEARCH OBJECTIVE

Marketing is a shared interest among us, which is the reason why we chose to examine
this area. I believe that marketing will be more and more important for companies when
trying to build strong relationships with customers. Companies using direct marketing
will not use any intermediary between its organization and its customers; it is one-two-
one relationship. Direct is defined as any form of marketing in which the seller
communicates response & to build long-term relationship directly with the possible
customers, rather than shops or agents'.

It aims to achieve an immediate quantifiable response and build long-term relationship

with customers. Direct marketing often consists of interactive communication and has the
being customized to match the needs of specific target markets. Messages can be
developed and adapted quickly to facilitate one
to one relationship with customers. Direct selling is one form of direct marketing; it can
include door-to-door, office-to-office, home party selling, etc. It is an effective for
company to build up customer relationship in new markets. One thing that is the prime
concern for companies today in direct selling is to constantly monitor and measure
customer satisfaction level. And this focuses on the same. Successful marketers need to
be aware of the different characteristics that affect consumer behavior. When it comes to
direct selling then cosmetics industry is the most lucrative industry to study. So, therefore
this research focuses on use of direct selling techniques in cosmetics industry.
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.e. questionnaires.

2. 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.

• What is descriptive research?

Descriptive research, also known as statistical research, describes data and characteristics
about the population or phenomenon being studied. Descriptive research answers the
questions who, what, where, when and how.

Although the data description is factual, accurate and systematic, the research cannot
describe what caused a situation. Thus, descriptive research cannot be used to create a
causal relationship, where one variable affects another. In other words, descriptive
research can be said to have a low requirement for internal validity.
The description is used for frequencies, averages and other statistical calculations. Often
the best approach, prior to writing descriptive research, is to conduct a survey
investigation.

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 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. Although they are
often designed for statistical analysis of the responses, this is not always the case. The
questionnaire was invented by Sir Francis Galton.
Questionnaires have advantages over some other types of surveys in that they are
cheap, do not require as much effort from the questioner as verbal or telephone
surveys, and I often have standardized answers that make it simple to compile data.
However, such standardized answers may frustrate users. Questionnaires are also
sharply limited by the fact that respondents must be able to read the questions and
respond to them. Thus, for some demographic groups conducting a survey by
questionnaire may not be practical.
As a type of survey, questionnaires also have many of the same problems relating to
question construction and wording that exist in other types of opinion polls.

3. Data collection method

1. Primary data: A survey was conducted by using a questionnaire answered by 100

respondents living in Faridabad. The aim of the survey was to study the role of direct
selling in relation to cosmetics industry.

2. Secondary data: Direct selling is a part of direct marketing and has existed as a
marketing- strategy for more than 100's of years. For this reason there exists many
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.

Therefore there are two main sources of data -primary and secondary.
Primary research is conducted from a scratch whereas secondary research also known as
desk research already exists, as the information is collected for other purposes.

3. SAMPLING TECHINQUES
1. Random sampling is the method of sampling which has been used in this research
work.
• Sampling is that part of statistical practice concerned with the selection of
individual observations intended to yield some knowledge about a population of
concern, especially for the purposes of statistical inference.
• In random sampling, also known as probability sampling, every combination
of items from the frame, or stratum, has a known probability of occurring, but these
probabilities are not necessarily equal. 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. Furthermore, once the sample has been taken
the sampling error associated with the measured results can be computed.

2. SAMPLE POPULATION: Consists of the total population living in Faridabad.

3. SAMPLE SIZE: A sample size of 100 people is drawn randomly from the sample
population.

LIMITATION OF RESEARCH

1. Some respondents were not motivated to respond.

2. The respondents had limited knowledge. Eg.:- There is no point
asking respondents questions about a particular product they do not use.
3. To some respondents, all alternatives seemed equally attractive or logically.
4. Since the research was conducted on one to one basis so the cost of conduction the
research was high.
5. Since respondents were ignorant and were not ready to answer.
6. Some respondents were ignoring some questions.
7. Some questions were incorrectly completed.
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. Shopping at home is much more
convenient and is less expensive, since the consumers are provided with various
schemes and discounts. At the same time the price can be perceived as lower in direct
selling because the buyer is willing to pay more, when the sales person is already in
one's home. Most consumers find traditional shopping is more time consuming since
they usually go to more than one shop in order to be satisfied and therefore, this
increases their shopping effort whereas in direct selling one often finds sellers easily
and conveniently located, providing door-to-door service which reduces the whole
shopping effort. Also the relationship they get with the seller through traditional
shopping is also perceived to be shallower as compared to direct selling. Through
direct selling the customer will probably get in contact with the same sales person more
than once and therefore a deeper relationship is created between the buyer and the
seller.

On the other hand, not all the customers are 100% satisfied customers. This can be due
to a bad shopping experience, bad rapport of the salesperson, lack of trust on the
salesperson and inadequacy of information about the company or the products. So
some respondents believe that direct selling does not provide them with adequate
information and is more stressful compared to traditional selling. 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.
RECOMMENDATIONS

• The direct selling cosmetics product quality on a continuous basis and provide
better offerings to the consumers.

• They should add new distribution channels or should increase the intensity of
distribution in each channel. They will help them to capture the untapped market.

• Increase the awareness level among the non-users through extensive promotional
methods.

• Provide better incentives to sales people to increase their motivational level and
boost sales.
BIBLIOGRAPHY

Website
• www.avon.co.in
• www.oriflamme.co.in

• en.wikipedia.org/wiki/Direct_marketing
• www.wisegeek.com/what-is-direct-marketing.htm
• www.direct-marketing.net/
• www.marketingteacher.com/lesson.../lesson-direct-marketing.html
• www.direct-marketing-association-india.org/dm_report_outline.asp
• www.rdmipl.com/
• www.directmarketingmag.com/

Journals and Magazines

• House Keeping
• Femina
• Cosmopolitan
ANNEXURE1:

• SAMPLE QUESTIONNAIRE
QUESTIONNAIRE
1. Name………………………………………….
2. Age……………………………………………
3. Gender………………………………………...
4. Occupation……………………………………
5. Income(Per Annual)

Below 50,000

50,000-1, 00,000

More then 1, 00,000

6. Have you ever purchased cosmetics through direct selling?

Yes

No

7. If yes, then from where did you purchase your cosmetics?

Internet

Tele-Shopping

Catalogue

Door to Door
8. Which brand of cosmetics you prefer?

Avon

Amway

Oriflamme

Boutique Wellness

Any others please specify……………..

9. Are you satisfied with your purchase?

Yes

No

10. How often you purchase your cosmetics through direct selling?
Weekly

Monthly
Yearly

11. In future would you prefer purchasing cosmetics through direct selling?
Yes

No

12. Would you recommend this method of purchasing to your friends?

 Yes

No

13. What was the range of personal care products you purchased?

Very Expensive

Expensive

Marginally Expensive

Not Very Expensive

14. Did you find your purchase, cost and time effective?

Yes

No

15. Whether you like to go for schemes?

Yes

No

16. If yes, please mention?

Cash Discount

Free Gifts

Coupons
Any others, please specify