Mary Kay in Thailand Essay Example

she proved to be a talented salesperson and trainer. The decision to retire in 1963 came when she was passed over for a promotion for man that she had trained.

He received more than double her salary at the time of his promotion. At first her intention was to write a book for women in business. As time went on her book slowly became a business plan and eventually she found herself and her son starting Mary Kay Cosmetics with $5,000 in savings.Mary Kay products include skin care (cleansers, moisturizers, men’s skin care, and other needs), makeup (lips, eyes, cheeks, powders, foundations), spa and body products, fragrances, and various other products for men. Company focus is on empowering women to operate their own businesses as saleswomen for Mary Kay.

As Independent Sales representatives or “beauty consultants”, women have dominated the direct sales profession with more than 75% of the sales force consisting of women. The direct sales industry is a growing marketplace with more than $100 billion worth of goods and services sold annually through direct sales.This has been an attractive form of employment for the Mary Kay distributors as they have the ability to balance life and work, set their own hours and earn based on their own motivation. Mary Kay is a member of the Direct Selling Association.

The DSA is a “U. S national trade association of firms that U. S that manufacture and distribute goods and services sold directly to consumers through an independent sales force. Mary Kay Inc.has been a member of the DSA since 1970, and Mary Kay executives have a history of involvement with the organization.Several have served or currently serve

on the governing board and have been instrumental in shaping policies for the industry, particularly the Code of Ethics. ” Mary Kay Global The first international location was Australia in 1971.

Since then, Mary Kay has expanded into several international markets including the United States. They are as follows: ArgentinaFinlandMalaysiaPortugalUkraine AustraliaGermanyMexicoRussiaUnited Kingdom BrazilGuatemalaMoldovaSlovakiaUruguay CanadaHong KongNew ZealandSpain ChinaIndiaNorwaySwedenCzech RepublicKazakhstanPhilippinesTaiwan El SalvadorKoreaPolandThailand We intend to enter into the Thai market with the TimeWise® anti-aging and anti-wrinkle products that are designed to bring out the younger looking skin with fewer lines and wrinkles while reducing the effects of aging. According to Mary Kay, the product line is “a supercharged formula that stimulates cellular activity, significantly increases the skin’s hydration level and begins the firming and toning process. ” The active ingredients in this product are Retinol (Vitamin A), Vitamin E, Evening Primrose Oil, and Alpha Hydroxy Acids.We believe that this product would be of benefit to the working women in Thailand as they have health and beauty needs that are similar to the women in the U. S.

According to the Department of State, the “cosmetic industry in Thailand is among the fastest growing sectors in Asia. " The total market size for this sector was estimated at 287. 5 million USD in 1997. The market increased on an average of 20 percent in 1995. However, the economic slowdown in 1996, and the economic crisis in mid 1997 have slowed the market growth to 15 percent.

The major trade barrier for cosmetics is the high tariff rate. The Thai Government has classified cosmetics as luxury products and has subjected them to high duty rates of 30 percent, plus 10 percent surcharge.

This represents an increase of 20 percent in October 1997. Total imports of make-up and skin care products were USD44. 6 million in 1997, an increase of 6 percent from 1996.

Imports are expected to grow at an average of 5 percent in the next few years. ” Mary Kay’s firm specific advantages are its brand image, distribution network and its manufacturing capability.These factors will allow Mary Kay to competitive in this industry. The Mary Kay brand is known for its quality product line that provides a comprehensive system for all beauty and make up needs.

Adaptable to all skin types, the product line uses all natural ingredients. The distribution network of consultants provides high impact direct sales activity and reaches the market through viral marketing and corporate promotions. The manufacturing plants in Dallas and China can produce and estimated 70,000 units of cosmetics per day. Market Trend AnalysisWomen consumers make up 97 percent of the cosmetic market. The target for the Mary Kay anti aging and anti wrinkle products is the 15 million Thai women between the ages of 18 and 55 that use make-up and skin care products. The average member of this group will have an average educational background and middle to upper class economic status and typically will spend 10-20 percent of their monthly income on beauty products.

Geographically, the target market would live in Bangkok or its close regions due to its economical status and high percentage of skilled and professional workers .Competition and Market Barriers In the Thai cosmetic industry there are some major importers of skin care and make-up products. The United States was the leader in importing skin care and

make-up products to Thailand in 1997. France, Japan and the U. K were also major importers to the region with market shares of 18.9, 15. 3 and 8. 1 respectively. According the U. S Foreign Commercial Service and U. S Department of State, imported skin care products have an advantage over the local manufacturers in that the imported goods are a much higher quality product in comparison.

The Market Thailand is recovering from a recent economic slowdown because of political uncertainty. According to the U. S Commercial Service, Thailand has a strong customer base of over 20 million salary- earning women between 15 and 55 and the overall growth of the skin care product market is expected to grow at 15-20 percent. 0 percent of the imported cosmetics are high-end facial and skin care products. Facial products have the largest share of the market yielding an estimated worth of $205 million in 2006. Product Function The Mary Kay TimeWise® age fighting products are specifically designed to reduce or minimize the appearance of fine lines and wrinkles.

Mary Kay suppliers can submit the product formula in advance and request from the Thai FDA a product classification before importing the products into Thailand. (U. S Foreign Commercial Service and U. S Dept. of State, 2006) Labelling requirementsSince the enactment of the Cosmetics Control Act of 1993, all products are required to have labels in the Thai language. According to the U.

The Thai FDA requires the following documents. Taken from U. S Commercial Service, 2006) A notarized Certificate of Free Sale or a Certificate of Manufacture issued by the manufacturer in the manufacturing country and notarized by a Notary Public

in the U. S.

Full ingredient/ composition listing issued by the manufacturer and notarized by a Notary Public. Both documents have to be legalized by the Thai Consulate in Washington, DC or the American Embassy in Bangkok, Thailand. Product Manufacturing Mary Kay develops tests, manufactures and packages the majority of its own products at its state-of-the-art plants in Dallas and China.Aesthetics of packaging The highly competitive cosmetic industry relies on image to market and sell its products in the industry. The images and words on the packaging are key factors to brand recognition. Brand loyalty usually rests with only the premium high-end cosmetic products.

Promotion Strategy To promote the Mary Kay anti aging and anti-wrinkle cream, we will leverage Mary Kay’s existing infrastructure in the country, while utilizing targeted messaging to reach our key demographic. The target demographic is:Low income segment- this group is the largest market segment in Thailand. The group is comprised of teenagers, college students, and young, single working women. According to Department of State, in Thailand this group consumes 60 percent of the total cosmetic market and earns, on average, up to 150 USD a month. Middle Income Group- this group is made of professional working women. The average income is 150 to 1,000 USD a month.

This group of consumers makes up 35 percent of the cosmetic market. Mary Kay will use “push and pull” promotional strategies to reach these target demographics. In Thailand, Mary Kay will use the assistance of local advertising companies to develop targeted advertising for television and the major women’s magazines. The agency’s responsibility is to develop the ads, while creating a focused message that will resonate with the

Thai culture. The advertising will be focused on educating the public about the health benefits of using skin care systems that contain anti-aging and anti-wrinkle ingredients.

The ads will not be intended to drive sales, rather to send a message to the consumer and solidify the company’s image.This activity, in turn, will support the field sales force and help reinforce the need for the product. Mary Kay will also employ the use of public relation campaigns to highlight the accomplishments of the sales team and further promote the value of using anti-aging and anti-wrinkle cream. The majority of the promotional activity will come from the sales force using direct sales.

The salesforce will utilize viral marketing to spread the benefits of using skincare systems to reduce the effects of aging. In the retail centers, Mary Kay will use Price Promotions- incentives that will periodically drive sales at the counter and promote new products or treatment systems. Gift with purchase- providing customers with a free product sample to try new anti-aging products and systems. Point-of-sale displays- teach the value of maintaining proper skin health and promote the new anti-aging systems as the solution. In addition to the aforementioned, Mary Kay will participate in the Thailand Health and Beauty Show, organized by The Department of Export Promotion (DEP), Ministry of Commerce.

The 2008 event is held in November at the Impact Convention Center in Nonthaburi, Thailand.Delivery Profile The strength of the Mary Kay sales system is that Mary Kay utilizes the personal selling strength of its “beauty consultants” or independent representatives, retail outlets using mass marketing/self-service outlets and hybrid approach using a Mary Kay e-commerce site and a local representative.

Direct Sales The Mary Kay core sales model is direct selling. This model is similar to the method used by other U.S companies such as Amway, Avon and Nu Skin. According to the U. S Commercial Service, Direct sales “account for approximately USD158 million or 55 percent of the local retail market for make-up and skin care. Products marketed in this way are locally manufactured foreign brand names or indigenous brand names. Prices are reasonable and correspond with market expansion. The target is low to middle income customer groups.

” Characteristics of the direct sales force Direct selling is selling products or services directly to the customer outside of a retail location. Beauty consultants work with customers one-on-one or in groups. In the direct sales industry, 75 percent of the sales force are women. The typical profile of a direct sales representative is one who: Values the entrepreneurial venture Generally likes people Wants less structure in the work environment Seeks a supplemental income Wants unlimited earning potential. Role of independent distributors In Thailand, the independent representative serves several functions for the import of Mary Kay products.

The independent representative must provide sales support and other valuable services. For importing Mary Kay products, independent representatives register the products with the Thai FDA, work with customs, and assist with warehousing and logistics. Independent representatives have exclusive rights with Mary Kay distribution mass Marketing outlets In addition to using direct sales methods in Thailand, Mary Kay will use mass marketing outlets to reach the younger, less affluent target market. Self-service outlets are targeted to the low to medium-income groups.

Skin creams make up 43 percent of market sales. Although products sold

in this venue make up only 8 percent of sales, estimated sales is expected to increase to over 20 percent. (U. S Department of State, 2006) With the expansion of the Internet into Thailand, Thailand now has 8,465,800 users on the Internet.

The expected expansion is 15. 6% (estimated).In attempt to leverage the ubiquity of the Internet, Mary Kay will sell its products through a hybrid approach consisting of consultative selling and catalog sales. The customer can use the Internet to locate the product and pricing, then through the Mary Kay Internet site, an independent representative is contacted to close the sale.

This approach allows the independent sales representative to benefit from the “pulling” power of the Internet to drive sales and eliminates geographical boundaries. Price The cost of the Timewise® products in Thailand will be based on the Thai baht.Conversion is based on the current spot exchange rate of 31. 7297 THB/$.