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Mary Kay, Inc.
Transcript of Mary Kay, Inc.
With these calculations and the two failures Mary Kay experienced previously, we have decided that it is too risky to add a hair care line extension to the Indian market. Our calculations have shown that it would not be profitable to launch under these conditions. Even if the conditions were ideal for a profitable launch, our targeted market is only a piece of 3.6%. The market potential is $183,854,966 out of $14,011,200,000. Also with the absence of statistical market data, it would still prove unwise to consider launching.
Founded in 1963 by Mary Kay Ash
Mary Kay’s Total Sales in 2009 were US $2.5 Billion.
Mary Kay, Inc. Sells Through “Direct Sales” Channels with a Presence in 35 Countries.
Problem at Hand:
Sheryl Adkins-Green, Vice President of Brand Development, was asked to determine if launching a Mary Kay “Hair Care” product in India, which is already very saturated with competitors, would be financially profitable.
Beauty and Personal Care Market in India Totaled US $55.6 Billion in 2009
Market is Expected to Grow by 50 Percent from 2010 to 2014.
Hair Care Accounted for 25.2 Percent of the Total Indian Market
Translates into US $14 Billion Potential Market for Mary Kay to Expand Into.
One of the Largest Direct Selling Firms.
2009 Sales Totaled Over $2.5 Billion in Wholesale Sales.
Mary Kay's Founding Principles are Time Tested and Simple
Remains Mary Kay's Philosophy to this Day.
Winner of Several Personal and Business Rewards
Initiated Operations in India in 2008.
Originally Offered 60 Different Products
By 2010 they Offered 90 Different Products
"Mass-Tige" Promotion Strategy
Prices Ranged Roughly 25 to 30 Percent Above Mass Marketed Prices.
Sales Force & Distribution Channels:
Direct Sales Approach
Demonstrate Products to Consumers
Sales Representatives Take 30 to 40 Percent Margins off of SRP.
Estimated Potential Market:
Competitor - Amway :
Gross Margin: Six 6ml sachet
Gross Margin: 100ml Bottles
ALTERNATIVE 1 - DO NOTHING OR MAINTAIN THE STATUS QUO
ADVANTAGES - ALTERNATIVE 1
There is no Financial Loss
Risk Of Offending Spiritual Beliefs
Diverting Production Resources to a Brand That Has Uncertain Future
Not Failing a Third Time
DISADVANTAGES - ALTERNATIVE 1
Missed Opportunity for Market Share Gain
Missed Profits from the $186 Million Potential Hair Care Market
ALTERNATIVE 2 - LAUNCH HAIR CARE LINE IN INDIA
In this alternative there are two different approaches. The first approach would be to launch both the 6 packet sachets along with the 100ml bottle of conditioner. The second approach would be to launch only the 100ml bottles. Both approaches will have the same advantages and disadvantages associated with launch.
ADVANTAGES - ALTERNATIVE 2
Capitalize on the potential profits associated with the hair care market.
Gain outside consumer interest who don’t normally participate in Mary Kay’s other market categories.
India can be a test market for future Global Markets of this type.
Fulfills Mary Kay’s philosophy of enriching and empowering women.
DISADVANTAGES - ALTERNATIVE 2
Huge Initial Sunk Costs
Wasted resources that could have been devoted to other product lines
Launching into a Market that is only 3.6 percent of $14 Billion (Hair Care Market)
Competing against 10 other competitors that already have 77.6 percent of the Hair Care Market
SO, WHAT SHOULD MARY KAY DO?
DO NOT LAUNCH!!