Is Mary Kay an international firm, a multinational firm, or a transnational firm based on its marketing strategy? Why?Mary Kay Inc. is a direct sales cosmetics company founded in 1963 by Mary Kay Ash, with the support of Richard Rogers, who currently is the company’s executive chairman. It activates in 35 countries, where it has revenues of over $3.7 billion, with the highest volume of sales outside the US being in China, Russia and Mexico. It employs over 3.5 million independent sales people in these territories and approximately 65 per cent of its revenues are made outside of the US (Mary Kay). It competes fiercely with similar brands, such as Avon, Oriflame or Amway’s line of cosmetic products. It employs an MLM (multi-level marketing strategy), in which sales people are paid a commission of the products price, encouraging customers and would be customers to become members in order to obtain a reduction in the price of the products (Sparks, John R. and Joseph A. Schenk, 850).
In its current state, it can be defined as a multinational company as it has a central headquarters in the US and relies heavily on independent salespeople to run its business. There are proximately 5000 staff, working in various positions, either in production, supply or administration, compared to the 3.5 million independents that actually disperse the products in the target countries (Mary Kay). There is a vast contrast between the Eastern and Western markets; given their higher population they produce more revenues for the company. The types of products that are popular in Asia are those that are anti – acne as well as any that contain whitening products; this highlights the differences between the western and eastern markets a divide on which Mary Kay capitalizes (Oh, Chang Hoon and Alan M. Rugman 167).
To conclude, Mary Kay is a multinational company that targets their products according to their culture and adjusts their marketing strategy accordingly.
What global market-entry strategy did Mary Kay use when it entered India?
In order to enter India, the company used direct investment, actively seeking a local partner that would allow them to market their products, while maintaining the brand values. In the presented material, three key strategies emerged: the building of a supply chain that could cope with the identified demand, to gain an impressive sales force and to construct the brand locally (GCI). They compared the local market with the Chinese one and discovered that while similar in potential customers, there were serious differences. India was poorer and less developed, lacking the infrastructure present in China, facts which presented them with an array of supply chain issues. The pricing of the products had to be adjusted, in order to be affordable for the domestic population. However, they could not target all of the social strata and thus they oriented themselves towards the middle class, as they could be easily be converted from one brand to the other.
Is Mary Kay A Global Brand? Why Or Why Not?
The company also saw potential in the rapid digitalization of the Indian market, enabling their sales people to set up sale points by using the company’s digital infrastructure. This lead to a resounding success for the company as it attracted the youth, and also allowed the traditional sales channels to function in the other demographics. This combination of direct and digital marketing led to a situation in which the reputation of the brand was increased both in inner familiar circles, leading to word of mouth referrals and to the propagation of the brand in online circles (CGI). However, they decided to continue to improve their local staff in order to attract more people and assure that the products were steadily available. To create this effect, they used the production facilities in China as a base from which the products would be readily available in the subcontinent. Thus, the brand managed to create a lasting position on the Indian cosmetics by inducing a paradigm shift in regards to how cosmetics are marketed in the country.
While a multinational company in essence due to its sales model and structure, the products are globally known. By descending upon the Asian market, they assured their survival in some of the fastest growing economies on the planet, that also have the largest population growth, and the largest population. Their globalization started shortly after expanding from the US, and after fierce competition with other providers on the Western markets. However, at the moment they do not dominate only the Asian market. By being present in Australia, they managed to capture the Pacific economic area as well, including the Philippines, Taiwan, South Korea, New Zeeland and Singapore (Mary Kay). It also has a significant presence in Brazil. All of these countries have large populations and have an impact on the global level
Their presence in 35 countries shows how a small, family run company has managed to become a world class cosmetics provider in half a century. This success relates to management as well, and streamlined supply chains. The first factory was set up in the US, close to Dallas. This was later expanded into China, allowing the company to grasp on the markets presented above. China has great transport links with its neighbouring countries and similarly strong trade routes. By accessing that market, they were able to expand their presence by simply following the path of trade. Nonetheless the strength of the brand relies heavily on its workforce, the independent beauty consultants which first and forefront are the brand (Banks, Jane and Patricia R. Zimmerman 86). By seeing how the look, act, feel and talk, people are influenced and the ideas, the core vision of the company travels. This mobility, not hindered so much by geography or culture, is what allowed the company to spread.
To conclude Mary Kay is a cosmetics company with a multinational structure and a global approach that has managed to become a serious player in global economics by adapting its core values to the cultures it targeted.
- Banks, Jane, and Patricia R. Zimmerman. “The Mary Kay way: The feminization of a corporate discourse.” Journal of Communication Inquiry 11.1 (1987): 85-99.
- “GCI”. Mary Kay Expands In India, 2017, http://www.gcimagazine.com/marketstrends/regions/bric/160558835.html.
- “Marykay”. Company Quick Facts, 2017, https://www.marykay.com/en-us/about-mary-kay/company-and-founder/company-quick-facts.
- Oh, Chang Hoon and Alan M. Rugman. “Regional Sales Of Multinationals In The World Cosmetics Industry”. European Management Journal, vol 24, no. 2-3, 2006, pp. 163173. Elsevier BV, doi:10.1016/j.emj.2006.03.006.
- Sparks, John R. and Joseph A. Schenk. “Explaining The Effects Of Transformational Leadership: An Investigation Of The Effects Of Higher-Order Motives In MultilevelMarketing Organizations”. Journal Of Organizational Behavior, vol 22, no. 8, 2001, pp. 849-869. Wiley-Blackwell, doi:10.1002/job.116.