Mary Kay Inc. is a privately owned American multilevel marketing company that sells cosmetic products. According to Direct Selling News, Mary Kay is the sixth largest multi-level marketing company in the world by 2015, with a wholesale volume of US $ 3.7 billion. Mary Kay is based in Addison, Texas, outside Dallas. The company was founded by Mary Kay Ash in 1963. Richard Rogers, son of Mary Kay, is chairman, and David Holl is president and was appointed CEO in 2006.
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Business model
Mary Kay sells cosmetics through a dual marketing model. Mary Kay distributors (called beauty consultants) have the potential to generate revenue by selling directly to people in their community, and also receive commissions on wholesale purchases made by the people they recruit into the distribution network. The distributor Mary Kay had to buy a $ 100 starter kit to qualify. As a private company, Mary Kay released some details about the average income of the sellers. In 2005, Mary Kay reported that worldwide wholesale sales exceeded US $ 2.2 billion. In 2010, worldwide wholesale numbers were reported at US $ 2.5 billion. By 2015, worldwide wholesale numbers are reported to reach US $ 3.7 billion. None of these numbers takes into account product returns.
The table below shows the sales figures reported by the company in more detail.
Note: Unless otherwise stated, the dollar amount in the United States currency, which has not been adjusted for inflation;
Manufacturers
The main manufacturing plant in Dallas, Texas. The second plant was opened in Hangzhou, China, to produce and package products for that market. The third factory opened in 1997, at (La Chaux-de-Fonds) Switzerland, for the European market. The Swiss factory was closed in 2003.
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Car
In 1968, Mary Kay Ash bought the first pink Cadillac from a Dallas dealer, where it was repainted on the site to match "Mountain Laurel Blush" in a compact Ash brought. Cadillac works as a mobile ad for a business. The following year, Ash rewarded the company's top five salespeople with a 1970s Coupe de Ville that was painted the same. GM has painted more than 100,000 special cars for Mary Kay. Special shadows have varied over the years from chewing gum to the pearlescent white effect. GM has an exclusive agreement to sell cars with special shelter only through Mary Kay. Cars are offered to the distributor as a two-year lease, and distributors who choose to buy a car are only allowed to resell it to authorized dealers. After the lease expires, the car is repainted before reselling.
Mary Kay has a different incentive level for her consultant. Independent Beauty Consultants may obtain the use of a white Chevy Cruze, in August 2014 introducing limited edition Red color lipstick options for a limited time, or cash compensation of $ 375 per month. The Independent Sales Director may choose a Ford Fusion black, Chevy Equinox, or $ 500 per month. The top Independent Sales Director may choose between a pink Cadillac CTS, or a $ 900 cash option per month. Specific qualifications for getting a car depend on the country, and the desired vehicle. If the qualification is not met, then the distributor must pay a portion of the rental car for that month. Qualifying assigns distributors the right to not pay monthly rent and 85% of car insurance, or a pre-determined cash compensation award. In 2011, the solid Ford Mustang was introduced as an incentive. By 2014, black BMWs are introduced in place, although the pink Cadillac remains the top prize for distributors whose units buy more than $ 100,000 or more in a year. There is no tracking by the actual sales company.
Earnings for salespeople
There are two ways for a consultant to make money at Mary Kay:
- Recruit
- Retail sales
Recruit commission earnings
"Recruitment commission income" reflects commissions and bonuses of 4, 9 or 13% earned from purchasing wholesale teams or their units. These bonuses come directly from the Mary Kay company and not from the consultant team or specific units. This excludes revenues from retail sales nor excludes income from Mary Kay's tool business. In February 2010 Mary Kay (Canada) claimed the following revenue for its sales force:
- 29,675 people are consultants throughout the year;
- 1878 consultants generate more than CAD 100 in commissions;
- 276 of 553 sales directors earn over CAD 17,471 in commissions;
- 15 out of 23 national directors generate more than CAD 100,000 in commissions;
For the National Director Mary Kay (USA), the average gross income of 2006 (before business expenses) was $ 175,443.
Retail sales revenue
Mary Kay consultants get a 50% gross profit on products sold at full retail prices. The quoted figure of US $ 1,057.14 per year (2015) for the average consultant was obtained by dividing the annual wholesale sales by Mary Kay Inc., with the number of consultants Mary Kay. This figure does not take into account returns on account products, eBay, auctions, sales at discounted prices, and purchases by "personal use consultants" which will lower this figure.
Consultant turnover rate
The 68.6% annual turnover rate has been calculated based on information provided by Mary Kay (USA) to the Federal Trade Commission. The 85% annual turnover rate has been calculated, based on data supplied by Mary Kay (Canada). The document excludes individuals who earn a commission and are in the company for less than a year. It also excludes individuals who are in the company for more than a year but does not get commission checks.
Court case
Woolf v. Mary Kay Cosmetics
Court case of 2004 Woolf v. Mary Kay Cosmetics was originally decided to support plaintiff, Claudine Woolf. By doing so it marks the first time that workplace rights can be applied to independent contractors working from their homes. This decision remains and is then reversed after the appeal. The Supreme Court rejected certiorari on 31 May 2005. In this case, Woolf was dismissed from his post as director because his unit failed to produce production for three consecutive months. Woolf argued that his shooting was illegal, because of his medical condition - he had cancer. Trial case liquidator
In May 2008, Mary Kay, Inc., sued Touch of the Pink Cosmetics, a website that sells products from former Mary Kay consultants at very cheap prices. The company claims that Touch of Pink interferes with its business by offering to buy inventory from discontinued consultants, and that the touch of Mary Kay's trademark use by Pink refers to Mary Kay's deceptive product. The jury found support of Mary Kay and awarded a $ 1.139 million valuation.
On July 20, 2009, Mary Kay, Inc., sued the Young Red Face Cosmetic for trademark infringement. The specific problem seems to be the use of Mary Kay's name, in selling Mary Kay products on eBay and other Internet venues for less than the cost of a product wholesaler.
Animal testing
In 1989, the company announced a moratorium on animal testing on its products, following pressure from animal rights groups. They were among the first in their industry to do so and signed the pledge of PETA. In 2012, as the company expanded into China, the Chinese government required Mary Kay to comply with Chinese law requiring animal testing on all health and beauty products. The Chinese government did this test, not Mary Kay. So Mary Kay has been removed from the "Do not Test on Animals" list to the "Do Test" list.
References
Source of the article : Wikipedia
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