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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

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THE ROLE OFDIRECT SELLING

IN RELATION TO COSMETICPRODUCTS

Under the Supervision ofMr. Anil Kumar

SUBMITTED BY:ANKUR NEHRAROLL NO. A-68M&SENRL No.: A3914708072

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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

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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.

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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 NehraENRL 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

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1. Abstract2. Meaning of Direct Marketing and Direct Selling3. Introduction to Direct Marketing and Direct Selling4. Overview of cosmetics industry5. Future trends in Cosmetics Industry6. Research methodology

Research ObjectiveResearch DesignData Collection MethodSampling technology

7. Analysis & interpretation8. Limitations9. Conclusions10. Recommendation11. Bibliography12. Annexure

ABSTRACTThe dissertation aims to identity and investigate the factors involved in direct selling in

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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

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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

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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

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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 CookStarting 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

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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

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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

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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

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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. TelemarketingMarketers 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

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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

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earning opportunities to millions of salespeople all over the world.

THE STRONGEST GROWING SECTORDirect 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 SELLINGDirect 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

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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.

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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 directselling 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.

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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-term3. 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.

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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.

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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

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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

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

1) Factory2) ConsumerThis 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

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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

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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

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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

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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.

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Future trends in direct selling of cosmetics

1. RewardsAn 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

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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 unsoldProducts.

3. FlexibilityThe 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.

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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

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at Rs. 200 crores -- a 100 percent increase. Amway expects its business to touch Rs. 1,000 crores in 2002Oriflame -- 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.

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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 oneto 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

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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:-

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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

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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 TECHINQUES1. 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 pointasking 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.

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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.

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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.

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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

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ANNEXURE1:

SAMPLE QUESTIONNAIRE

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QUESTIONNAIRE1. 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

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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

MonthlyYearly

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

No

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

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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

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Coupons

Any others, please specify