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.

Date: Name: Ankur nehra

Enroll:A3914708072
 ACKNOWLEDGEMENT

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
 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

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 secondary data.
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.

LIMITATION OF RESEARCH

No study is free from limitations. The limitations of this study can

be:

.This research only covers the secondary data.

.Due to the availability of only secondary data, authentication of

the data is not sure.
· Since the authentication of the data is not sure, the result of the
project may not be precise.

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
Journals and Magazines
• House Keeping
• Femina
• Cosmopolitan