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Mary Kay Cosmetics Inc. Analysis Example



Introduction

Mary Kay Cosmetics Inc. (MKC) is a renowned cosmetics company that was created, developed and finally brought to success as a direct selling enterprise. The company was established in 1963. The founder as well as the symbol and iconic person of MKC was an outstanding person, Mary Kay Ash. Actually, she fostered and molded the sophisticated image of the currently discussed company. Since MKC is a global enterprise, it has a significant record of expansion worldwide. The following analysis aims to evaluate the expansion of the company on the territory of Asia, the relevance and constructiveness of the decisions made by the corporate authorities, and overall efficiency of the given expansion course.

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Analysis

The position of the company in the period when the decision to expand on the territory of Asia was made appeared to be prospective and solid. In 1992, the company had a market share insufficient for its ambitions, namely 11%, but it aspired for more, and the background for potential success was relevant. Actually, one of the key competitors of MKC was Avon Products Inc., which demonstrated the market share of 55%, and it may be regarded as one of the key drivers which led Curran Dandurand to the aforementioned decision.

The background MKC functioned on the global scale and, at that time, was sustainable, innovative, constructive, and even unique. The aspect of uniqueness was directly connected with the personality of Mary Kay Ash who embodied a qualitatively new era for women. The company positioned its primary mission to promote excellent, challenging, and motivating opportunities for women in the business world. It is a crucial difference between MKC and other cosmetic brands of that time: the employees of Mary Kay Cosmetics Inc. made business; built strong personal connections with their customers as well as partners; and taught other women how to be beautiful, successful, and strong; whereas other representatives of this sphere simply sold cosmetic products.

According to Quelch and Laidler (2009), “the company’s powerful culture was based on offering unlimited opportunities for women in business, coupled with a distinctive compensation and recognition plan” (p. 2). Therefore, the company had a strong and prospective background for the course of efficient expansion to the markets of China and Japan.

Nevertheless, there were particular drawbacks and potentially problematic aspects which could interfere with this intention. For instance, the line of stock-keeping units presented by the corporation was insufficient for such demanding markets on the Asian territory. Japan was a mature and, at the same time, lucrative market where a strong and exceptional leader was needed since the experience of direct sales was well-known and popular; therefore, the market faced severe competitive resistance. The market of China was different. To be more precise, it was a comparatively unknown territory in terms of direct selling practice of the cosmetic products.

The country was rapidly growing, and, as a direct result, there were numerous versatile alterations and innovations. It was a tabula rasa with unlimited opportunities and perspectives for MKC, but simultaneously, the risks were also high. China represented a comparatively low individual purchasing power at that time and required a slightly different pricing policy and increased diversity of the cosmetic products lines offered by MKC. Nonetheless, Japan presented serious risks as well since it required absolute excellence and uniqueness of the brand. Therefore, it is apparent that gradual expansion of Asian market in terms of the two aforementioned countries required qualitatively different approach and even strategy, although the initiative was constructive and prospective in general provided the relevant expansion plan was implemented.

First of all, it is essential to underline the crucial significance of decisions made by the company concerning the internal policies, structural paradigm, and overall business vision. The hierarchy of MKC sales forces comprised four levels of employees, namely “beauty consultants, sales directors, senior sales directors, and national sales directors” (Quelch & Laidler, 2009, p. 3). Such a structure guarantees not only consistency of the working process but also permanent control and effective guidance. Mary Kay Ash always highlighted the crucial predetermining meaning of the course of training, guiding, and supporting.

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Moreover, the company incorporated these kinds of activity not only for newcomers but for every beauty consultant and sales director disregarding the period of their involvement in the professional performance at MKC. Such an approach was considered to provide stability due to permanent development of the corporate staff, and, as a result, constant growth of the company’s profitability, enhancement of reputation, and recognition on the global scale. It contributed to the level of competitiveness of MKC among rival organizations and fostered the innovative and creative approach to the business activity. Hence, such a significant background of the corporate culture as well as the solid support by means of efficient communicative and advertising strategies is considered to be sufficient for expansion to Asia.

It is also significant to underline that before 1993 as well as prior to the initiative to expand eastward, the cosmetics production of MKC was presented in nineteen countries abroad. Hence, the company had considerable experience in international business activity. Nevertheless, MKC realized that expansion to the Asian area will be a different experience, and the decision was made to initiate a qualitative alteration in terms of organizational scope of business activity. This endeavor led to the following ramifications: “the formation of global resource groups to support sales subsidiaries worldwide, thereby consolidating the human resource, legal, finance, manufacturing, and marketing functions” (Quelch & Laidler, 2009, p. 4).

It was a smart and relevant decision since the planned expansion appeared to be not opportunistic as the majority of previous international interventions used to be. Moreover, the essence of the organizational policy change guaranteed aspects crucial in the given context, such as clear communication with the customers of subsidiary companies, transparent policies, and excellent quality of the offered cosmetic products. Dandurand, who headed the global marketing group, chose a constructive strategy claiming that the first step in the expansion to Japan and China was the establishment of high standards of MKC brand, while the second one comprised the course of localization practice targeted to meet the needs and priorities of the local customer audience. This approach is prospective as far as the localization of the corporate services and production course on the initial stage of expansion may eventually result in the decrease of quality, devaluation of standards, and qualitative change of the brand.

Actually, the first outcomes were as follows: “Asia was evolving as one of the fastest growing and most dynamic regions of the world. Its share of world GDP was scheduled to reach 32% by the year 2000, up from 24% in 1988” (Quelch & Laidler, 2009, p. 7). The outcomes confirm that the first steps in the process of Asian expansion were relevant, timely, constructive, and efficient. It is also essential to emphasize that Japan appeared to be an ideal area for the development of a high-standardized and excellent quality direct selling business since 1,120,000 women participated in the scope of direct selling in 1992. Consequently, the country became the global leader in the aforementioned sphere of business activity.

Mary Kay Cosmetics provided Japanese women, who were eager to work, improve, and succeed, with challenging and simultaneous appealing conditions of work. To be more precise, women received an excellent opportunity to be engaged into the industry of their dream; be taught the enigmatic science of beauty and glamour; communicate and socialize at the meetings, parties, and conferences; earn significant revenue for such an activity; and develop as a personality. Therefore, a direct selling practice based on the party plan method and adopted by the beauty consultants of MKC should be considered a grounded and prospective decision.

The aspect of distribution is one more essential point in MKC expansion practice. It involved franchise systems, general distributorships, and door-to-door sales (Quelch & Laidler, 2009). It is apparent that the company of such a scale could not count only on direct sales while expanding within two promising markets. Therefore, they incorporated several kinds of distribution so that the company was promoted faster, and the beauty consultants had the appropriate support in the course of business activity.

The success of MKC in China was miscellaneous since there was a considerable difference between the purchasing power of the customers from rural and urban areas. This contrast was predetermined by the increasing prosperity of the urban strata of Chinese population and simultaneous decline of the rural one. Nonetheless, MKC managed to make this disadvantageous and challenging aspect partially beneficial for the company’s purpose: it offered the less fortunate layer of society the possibility to learn and work, thus sustaining its business activity in the decaying areas.

The overall vision of the makeup line should also be discussed. When entering the new markets, the MKC authorities did not alter the whole line according to the local preferences and national authenticity. It was a constructive decision since the glamour line was positioned as a universal and globally accepted. The Japanese and Chinese wanted to look like famous celebrities known worldwide, and Mary Kay Cosmetics offered them such a possibility, presenting a global beauty collection. Hence, the decision and the branding strategy was right since it contributed to the global status of the company, its sustainability, and potential success, especially in terms of makeup cosmetics sales.

The next seminal decision to be made was the emphasis in terms of the brand positioning, either as the glamour provider or the skin treatment leader. According to the aforementioned perception of the makeup lines by the Japanese and Chinese women, it is apparent that the major emphasis should have been put on the decorative cosmetics since the target audience preferred facial treatment only from their native providers because of their authenticity and ethnic comprehension of their natural needs.

Finally, it is relevant to highlight the efficiency of promotional campaigns both in Japan and China. The implementation of Japanese advertising policies was considerably more expensive in comparison with the Chinese one as well as the amount of overall entry costs. MKC focused its attention as well as significant financial assets on this aspect since the competitors were strong, well-established, and constantly increasing; and the company urgently needed overall recognition and demand. The promotional practice was expected to provide the sufficient level of this recognition, and it appeared to be worth the money that MKC had spent on it.

Conclusion

Therefore, Mary Kay Cosmetics, Inc. made a right and prospective decision to enter Japan and China. The strategies and approaches to the course of new market entry are considered to be constructive, efficient, and aligned with the general vision and mission statement of the company. Moreover, the direct selling type of the company, relying on the prominent party plan method and the majority of shades in makeup line, and priorities in the corporate culture were preserved in their original form in order to highlight the authenticity and uniqueness of the production and the label. Furthermore, the brand was positioned properly within the new area of impact as a global sophisticated cosmetics brand.

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