Mary Kay case

1. How would you evaluate Mary Kay's situation from the demand-side and the supply-side?
Mary Kay provides beauty consultants for customers through direct selling, building up a close relationship between consumers and consultants. Mary Kay had continuously grown about 20 years, and its share price raised over 650% during the 1970s and early 1980s. Although Direct Selling decreased from 8% to 6.8% of cosmetics and toiletries sold in United States, there is a potential consumer group: middle-class women, who have become more and more important for the whole industry. As information given, almost 60% women worked outside in 1998, which is much more than 1960, 37.7%. This trend has changed people’s lifestyle and buying habit s, and also represented there’s fewer and fewer casual time women can spend themselves. Not only were their customers less accessible than before but also those beauty consultants had less chances to market their products to consumers.

Mary Kay has launched a new “Direct Support” program, which promoted its sales representatives to send their clients a gift-with-purchase offer for little more than the cost of a stamp. By using this time-saving marketing tool to simplify the operation process, an independent sales member could easily sell their products in addition to their full-time job. An Independent Beauty Consultant was able to potentially earn between $10,000 and $15,000 while not giving up their full-time positions elsewhere. This program not only solved the problem to deal with demographic shift, but also encouraged their consultant to do business.

2. Does Mary Kay's channel design fit in its competition strategy?
Mary Kay used to provide products through the representatives that also consulted consumers who were not knowledgeable enough about beauty and cosmetic products. But nowadays, Direct Selling method must change for the big environment that is more competitive than before. Consumers have got more general knowledge about cosmetics that made the representative not important as before, how to provide some different and fresh things which is attractive to consumers becomes a new issue in cosmetics industry, and also harder to work it out in direct selling which used to sell products through independent consultants. Another, Mary Kay didn’t use internet as a selling and consulting channel that made it less competitive as other firms in this industry, but while they’re planning to change their channels, there’re still things that might be considered like their older consumers who are unfamiliar with internet and online surfing.

3.What's your suggestion for Mary Kay to go online?
We think that online business is a good perspective and Mary Kay should accept and become flexible with the trend on internet, for example, they should develop some advanced technology and attract new customers on internet. They can refresh their brand image to a younger brand to attract younger people on internet by invited some famous movie stars as representatives. By using the channel of internet, Mary Kay can also use network effect to promote their products by invited some famous blogger to use their products and make some comments on their blog to expand their brand awareness.