Case Study
Founded in 1963 by Mary Kay Ash and her son Richard, Mary Kay Inc. is a company that has long believed in the power of women. Dedicated to making life more beautiful for women, the company was founded on the Golden Rule of “praising people to success,” and on the principle of placing faith first, family second, and career third. Before her death in 2001, Mary Kay Ash received numerous awards that exemplified her personal beliefs, which were embedded as the heart and soul of the company.
Beauty and Personal Care Products and Direct Selling
While the economic situation is such that consumers are scaling back on spending for high-end nonessential items, many beauty and personal care products are considered necessities. At the same time, beauty and personal care products do not have country boundaries—such products are universal. According to one report, beauty and personal care products are a cornerstone of the direct selling industry and, likewise, direct selling is good for the beauty and personal care products industry. By 2009, direct sellers were capturing more than $10 billion in annual sales of beauty and personal care products.
Direct selling is a method of distributing products directly to the consumer via person-to-person selling or party plan selling and away from permanent retail locations. According to the Direct Selling Association, there are an estimated 15.1 million people involved in direct selling in the United States, with more than 66 million people engaged worldwide. Interestingly, more than 80% of direct sellers in the United States are women. The predominance of women in the direct selling marketplace has proven especially important for direct sellers like Mary Kay Inc.
Mary Kay Inc. develops and manufactures beauty and personal care products for both women and men. The company spends millions of dollars, and conducts more than 300,000 product tests to ensure that Mary Kay products meet the highest standards of quality, safety, and performance. With products ranging from skin care to makeup to spa and body to fragrances, the company sells its products through its direct sales force of more than two million independent beauty consultants in countries such as Argentina, Armenia, Australia, Brazil, Canada, China, the Czech Republic, El Salvador, Finland, Germany, Guatemala, Hong Kong, India, Kazakhstan, Korea, Malaysia, Mexico, Moldova, New Zealand, Norway, the Philippines, Poland, Portugal, the Russian Federation, Slovakia, Spain, Sweden, Taiwan, Ukraine, the United Kingdom, the United States, and Uruguay. The company’s worldwide wholesale sales topped $2.5 billion in 2009. With women as its primary target market, Mary Kay has stayed abreast of changing buyer behavior. For example, the company knows the younger generation expects to touch and experiment with products, so the company offers products, shades, packaging, and forms that both enable and encourage the potential user to try something new. Although there are geographic differences among preferences (e.g., Asian women focus on skin care, while Latin American and some European women are more interested in color cosmetics and fragrances), the company has found that, worldwide, women are more similar than dissimilar in their preferences.
While the company has been successful product-wise with the younger demographic, Mary Kay Inc. has been particularly astute at tapping into this changing demographic with respect to its independent sales consultants. The average age of the Mary Kay consultant is now 36 years old, and the company’s fastest growing segment of consultants is in the 24- to 35-year-old age group. Representing the future of the company, Mary Kay Inc. can provide these women with the opportunity to meet any goal they are willing to work toward—whether it is additional income or financial independence. Yet, the company recognizes other direct-selling companies want to harness the power and dynamic of this age group. These young leaders are known for wanting increased flexibility, unlimited earning power, and the freedom to experiment in their work lives. There is a vast market opportunity for Mary Kay Inc. in the millennial generation, and the company wants to take advantage of that opportunity to usher in a new era of direct selling of Mary Kay products.
Solution
Mary Kay has earned its success and reputation through direct selling its beauty and personal care products. The company was founded by Mary Kay in 1963. The company has ensured products match the expectations of customers through high-end performance and quality of its products since its inception. The success of the company can be noted in light of sales, number of the company in 2009 which exceeded $2.5 billion in the wholesale market. There are already two million independent direct sellers of the company which are selling beauty and personal care products. However, recently the company identified that the younger generation is demanding more of these beauties and personal care products and direct sellers should also be young so that they can exploit the opportunities in the market. Therefore, Mary Kay is presently going through a change in demographics in the market and change in demographics of direct sellers who are vital for the sales of the company. Thus, the younger generation should be targeted with the help of younger independent consultants worldwide. Mary Kay has to focus on age segmentation, but it should enrich this segment by integrating family life cycle and gender segmentation because of the importance of these segmentations.
Importance of different Customer Segmentations for Mary Kay
In the context of changing customer segmentations in the market for Mary Kay, it is important to look into the importance of each of the customer segments which can affect the company’s business. Important customer segmentation for the company can be ethnicity, gender, age, and family life cycle as these segmentations can affect the business of the company very much (Iacobucci, 2016). The importance of each of these segmentations concerning the company is going to be provided in the following.
Ethnicity
Ethnicity is not very much important for Mary Kay because it is noted in the beauty and personal care market that similarities of preferences of women in this market are more than dissimilarities. Although, there is a difference in preferences based on ethnicity like Asian women prefer skin care while Latin Americans are interested in beauty and personal care products related to color cosmetics and fragrances. Moreover, the worldwide business of the company is in many countries, and the company has not strictly followed any segmentation based on ethnicity. However, there might be some differences which can come up with little modifications in the products made for each market. Broadly, this segmentation is less important for the company in a changing demographic context (Wilson & Gilligan, 2012).
Gender
The most important segmentation for Mary Kay Inc is based on gender as the majority of direct sellers and customers of the company belongs to the female gender. The company has to consider this segment in its business very much. It is a fact that the company’s customers are male as well, but they do not constitute a majority. Regarding the sales force for direct selling, the United States has 80 percent of direct sellers are those females. Moreover, beauty and personal care product are the priority of females, and it is not purchased on priority by male customers. Moreover, the range of beauty and personal care products represents female preferences and wants more than male customers. Therefore, gender segmentation for the company is the most important (Mary Kay, 2016).
Age
Gender is an important segmentation for Mary Kay, but in the recent and growing environment of the industry, age segmentation is getting more important because of the high profitability through this segmentation. In the recent market scenario, the younger generation has been of central importance because it may provide increased profitability for the company. In simple words, the millennial generation is the most profitable segment for the company in the future, and this falls underage segmentation. Therefore, the company has to focus on this segmentation and to address this segment; the company has recognized the need to hire consultants or direct sellers of a young age. Currently, the average age of consultants of the company is 36, and the consultants with age from 24 to 35 are the fastest growing. A young consultant can better sell products to the young generation, and this is the most profitable segment for the company as well (Meyers, 2016).
Family Life Cycle
Family life cycle segmentation is also important for Mary Kay because the millennial generation is going through the independence and coupling and marriage family life cycles. In these cycles, a person gets more sensitive about her beauty and personal care. Therefore, the company has to look into family life cycles as well, so that it can find out which segment is being targeted by the company. The younger generation and women have been found to be important segmentations for the company, and they should be considered in light of the family life cycle stage as well (Wilson & Gilligan, 2012).
Loyalty, Technology, Personalization, and Time Savings
In the company’s approach to one-to-one marketing, the time savings is less important because the company is not facing any issue which can highlight the need for saving time. The company is committed to ensuring providing products to a younger segment and in so doing; the company has been hiring younger consultants. It is not thinking about consuming less time, but its priority is to give customers better experiences from the products. Therefore, time saving is the least important in the approach to one-to-one marketing.
However, personalization is the most important because personalization is the most important tenet of one-to-one marketing because direct seller looks into the needs and wants of individuals and in so doing personalized experience for customers is ensured. However, the use of technology and loyalty are moderately important because their role is only assisting.
Conclusion
The paper concludes that Mary Kay Inc. has been performing well in the beauty and personal care market for decades and the company has been successful because of its effective direct selling techniques. It is found that the company should give importance to the segmentations of gender, age, and family life cycle while the segmentation of ethnicity is less important among segmentations. However, the most important segmentation for the company is age because the younger generation is ensuring more profitable for the company and this purpose; the company is also hiring younger direct sellers. It is recommended that the company should prioritize age segmentation and this segmentation should be enriched with the family life cycle and gender segmentation as well.
References
Iacobucci, D. (2016). Marketing Management (5 ed.). Boston: Cengage Learning.
Mary Kay. (2016, January 14). Iconic Beauty Company’s Independent Sales Force Growing Younger And More Diverse. https://newsroom.marykay.com/en/releases/
iconic-beauty-companys-independent-sales-force-growing-younger-and-more-diverse
Meyers, E. (2016, July 10). How millennials are putting a new face on Dallas’ iconic Mary Kay. https://www.dallasnews.com/business/retail/
2016/07/25/millennials-becoming-new-face-mary-kay
Wilson, R. M., & Gilligan, C. (2012). Strategic Marketing Management (3 ed.). New York: Routledge.
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