Mary Kay Case Analysis
Ethan Greenberg
Marketing 357-003
2/1/10
Executive Summary
The case of ‘Mary Kay Cosmetics- Asian Market Strategy’ details and outlines
ideas and concepts related to the MKC’s strategies and methods of moving their product
lines into foreign territories. Curran Dandurand, Senior Vice President of MKC, had a lot
of decision making to do in terms of identifying potential target markets throughout Asia
and understanding the needs and wants of female youths and young working women who
fit into the companies core target audience. The management team at MKC conducted
focus groups and heavily run research to find out what the cultural preferences and ease
of adaptability into new products is in countries like Japan and China. Dandurand’s
objective was to find the most effective way of entering into these potential new markets
without looking back and regretting any strategies gone forward with.
In the early 1990’s there were numerous cosmetic manufacturers in Japan, 5 of
which accounted for 69% of domestic sales. Foreign made cosmetics were considered
high status products that had the potential to boom if marketed and put forth into the
market effectively with quick consumer response. Japanese women on the whole were
concerned about cosmetic and skin care products and thus MKC saw that with an
effective advertising campaign and promotional outline it could become a big seller in
Japan. At this time, China had 3000 cosmetics producers with limited product lines.
Young working Chinese women considered skin care and cosmetics important parts of
their daily life and their buying habits. In some of the big cities like Shanghai and
Beijing, consumers on the whole liked buying luxury goods, were loyal to established
local brands and liked to try new products. Several foreign companies who entered into
China at the time did not show signs of good sales in China. One company that did prove
successful was Avon because of its low cost full product line and its choice to go forward
with a joint venture with a Chinese company. MKC would have to make a lot of
sacrifices and go through with a lot of costs up front in order to produce effective
advertising and promotional campaigns that would help their brand become a great force
not only in Asian territories but in countries all over.
1. MKC has not been as successful as Avon in penetrating international markets
because Avon was able to come out with a full product line that Chinese
consumers were easily able to adapt to due to an effective ad campaign. Avon was
always able to maintain a low pricing scheme, and their products were convenient
to the consumer as they were available both at the workplace and through home
delivery. The management team at Avon was able to identify the unmet needs of
consumers in China and was able to build a reputable brand reputation quickly
and with ease. Avon was able to prove to consumers in China that they were more
than willing to do business in a foreign market. Avon clearly understood that
these consumers responded well to several new products that have been
introduced in the past, and they did not show any hesitation in exposing the
Chinese consumer to their full product line. It could be seen that Chinese
distribution channels were more accessible to the US than the channels through
Japan, thus Avon was able to readily conduct business through these channels
with a fair amount of ease. Avon has been effective in outlining its current and
long term goals for brand penetration and acceptance, and going through each
step of their strategy as they planned it out initially has been essential in their
ability to grow and thrive in these markets.
2. MKC should be highly critical and observant of the consumers they are looking at
in foreign markets before deciding to go through with outlining global product
strategies that may differ from strategies brought forth domestically. The
important thing is to seize any worthwhile opportunity and when a door opens in a
country where the cosmetics industry is suffering or the consumer response to
cosmetics has continually grown, the MKC should make it a priority to build its
brand awareness in those areas. It would be wise for MKC management to
discover foreign territories where cosmetic and skin care products may be either
not readily available or not yet fully established as a big market force locally.
MKC could also search for markets where several cosmetic brands have been well
established and the majority of the female demographic enjoys cosmetics and is
looking for new alternative brands that may be new and innovative and marketed
differently. Any opportunity where there are not as many barriers to entry and
where the market is lagging in a strong leader in the cosmetics industry is one to
take advantage of.
The executive team in the companies’ foreign marketing and advertising
divisions should make it a priority to understand the consumer they are going
after through surveys, focus groups and other marketing research tactics that have
proven to be effective with other major cosmetic brands. If MKC finds that these
foreign consumers respond well to ads being run in the US, then it would be to
their advantage to seize the opportunity and run the ads in the initial stages of
entry. There is a lot that can be learned from consumer feedback because there
have been many cases in the past of companies entering into foreign markets and
introducing products that is the complete opposite of what the local consumer is
going after.
3. It would be beneficial and favorable for MKC to enter into Japan because skin
care and make up products have proven to be big among Japanese women, more
money is spent for skin care products by Japanese women than American, the
methods of distributing products have been effective there, and the consumers
accepting cosmetics as high status products would help the process of penetrating
into the market. MKC would not be wise to enter into Japan because there are
already numerous successful cosmetics businesses that exist, it would be hard to
predict their acceptance of new yet to be established brands, competitors may
choose to adjust their prices to keep up with MKC and there was a history of
American companies not succeeding in Japan.
It would be a good choice for MKC to enter into China because of Chinese
cosmetics companies who do not provide full product lines, Chinese working
women think highly of skin care and cosmetics products, many Chinese
consumers enjoy luxury goods, they like to try new products that come out, new
brand launches have proven to be successful in cities like Shanghai, and MKC’s
ability to conduct strong research would help in identifying specific needs of the
Chinese consumer. MKC should not enter into China because of the highly
competitive cosmetics industry, local competitors have an edge due to their loyal
consumer base, Chinese competitors have a longer local history and better
understanding of changes in the market, foreign companies that entered into
China have proven to be unsuccessful, there are uncertainties in the market and
local market trends in Chinese cities that hard to predict, in cities like Shanghai
consumers are only loyal to local brands and MKC’s ad expenditure initially may
set them back too greatly for the first few years.
4. When it comes to entering into Japan, I would recommend a full line cosmetic
offering at a low price so that consumers can see that they are getting the most out
of what they are paying for. MKC should be well aware that Japanese women see
cosmetics and skin care products important to fulfill their beauty and health
needs, so introducing their full product line at the outset and not hiding and major
product offerings would be wise. After studying the average pricing strategies of
competitors, it would be a good strategy to start slightly cheaper than the average
competitor so the consumer can recognize an opportunity to save money. It would
be effective to work closely with locally run retailers and wholesalers so that the
products are distributed in a widespread way to some of the most reputable sellers
throughout the country. At the start, it would be beneficial to promote the major
product offerings through TV ads, major publication ads and online ads or
wherever the majority of young female professionals look for the newest in
fashion, beauty and cosmetics.
When entering to China, to penetrate into the market quicker it may help by
offering a full product line at a reasonable price. If MKC were to only offer a
partial product line, they would be competing directly with more companies
because more Chinese companies are only offering limited product lines. It is
likely that more consumers are anxious for a product line that has a more
complete package, one that will prevent the consumer from buying an assortment
of items as opposed to one complete package with everything together all in one.
Initially coming out with a price that is comparable to competitors but affordable
for the average middle class consumer would be a viable option. MKC can
promote itself with ads that set themselves apart from competitors, in the major
cities and metropolitan areas where a lot of the fashion and beauty brands
promote heavily.
5.
Putting myself in the position of MKC I would first enter into China not
only because many young professional women enjoy cosmetics products and
adapt easily to new brands and new luxury items that come out, but also because
Shanghai and Beijing have different market trends, and if strategies don’t work in
one city then there is an opportunity to fix things get them to work in the other.
The consumer preferences, product acceptance and buying behavior differ from
city to city in China, so if MKC is looking for at a variety of promotional
strategies to employ, it could use them instead of trying to penetrate the market
with one outlying strategy that may prove to be ineffective. With extensive
research before market entry and the ability to adapt to market changes, MKC
could prove to be a big success in various parts of China where American
companies did not fair well because of inability to understand Chinese market
trends and the behavior of Chinese consumers.