Mary Kay Case Analysis
In 1999, Mary Kay’s senior executives were contemplating a new strategy. This new strategy was necessary to face stagnant sales, changing consumer trends and increased competition.
I. Background
A. Industry and Distribution Channel
Mary Kay was a direct seller of cosmetics and toiletries. This direct sales force consisted mainly of women who sell full-time or part-time through home demonstrations. The company’s product line included items such as skin creams, cosmetics, fragrances and other personal care products. From 1963 through the 1990s, this direct sales force primarily made up the distribution channel. In the case of Mary Kay, the direct sales force was the distributors and consumers. Thus, the direct sales force bought and then sold the products through a social network. This type of direct selling is called a network marketing organization (NMO). In this NMO, the distributors were responsible for selling products and recruiting new distributors.
B. Distributor Profile
The average profile of the Mary Kay NMO distributor in 1992 was a white, married mother with an age between 35 and 44. She had some college education and a working husband with a household income from $25,000 to $30,000. The management staff should realize the existing NMOs did not cover other demographic segments of the market. Hence, other personal care product providers in this distribution channel were supplying products for most of the demand in other age brackets, income brackets and racial classes. Since the “Guiding Principles” of the founder influenced the strategies and decision process of the management staff, other distribution channels usage occurred less extensively.
C. Firm Mission
The “Guiding Principles” were a set of rules that created the following company mission, “Enriching Women’s Lives”. The meaning of the founding principles are explained:
1) We will do this in tangible way, by offering quality products to consumers, financial
I. Background
A. Industry and Distribution Channel
Mary Kay was a direct seller of cosmetics and toiletries. This direct sales force consisted mainly of women who sell full-time or part-time through home demonstrations. The company’s product line included items such as skin creams, cosmetics, fragrances and other personal care products. From 1963 through the 1990s, this direct sales force primarily made up the distribution channel. In the case of Mary Kay, the direct sales force was the distributors and consumers. Thus, the direct sales force bought and then sold the products through a social network. This type of direct selling is called a network marketing organization (NMO). In this NMO, the distributors were responsible for selling products and recruiting new distributors.
B. Distributor Profile
The average profile of the Mary Kay NMO distributor in 1992 was a white, married mother with an age between 35 and 44. She had some college education and a working husband with a household income from $25,000 to $30,000. The management staff should realize the existing NMOs did not cover other demographic segments of the market. Hence, other personal care product providers in this distribution channel were supplying products for most of the demand in other age brackets, income brackets and racial classes. Since the “Guiding Principles” of the founder influenced the strategies and decision process of the management staff, other distribution channels usage occurred less extensively.
C. Firm Mission
The “Guiding Principles” were a set of rules that created the following company mission, “Enriching Women’s Lives”. The meaning of the founding principles are explained:
1) We will do this in tangible way, by offering quality products to consumers, financial