Mary Kay

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Mary Kay, Inc.
Type Privately held company
Industry Cosmetics and personal care products
Founded Dallas, Texas (1963)
Headquarters Addison, Texas
Key people Mary Kay Ash, Founder
Richard R. Rogers, Executive Chairman
David Holl, CEO, Mindy Volney
Products Cosmetics, sunscreen
Revenue US$2.9 Billion in 2011[1]
Employees Staff 5,000
Salespeople 3 million worldwide (2011)[1]
Website www.marykay.com

Mary Kay, Inc. is an American privately owned multi-level marketing/direct sales company that sells cosmetics products. According to Direct Selling News, Mary Kay was the sixth largest direct selling company in the world in 2011, with net sales of USD 2.9 billion.[1]

Mary Kay is based in Addison, Texas, outside Dallas. The company was founded by Mary Kay Ash in 1963. Richard Rogers, Mary Kay's son, is the chairman, and David Holl is president and was named CEO in 2006.[2][3][4]

Business model[edit]

Mary Kay sells cosmetics through a multi-level marketing model.[5][6] Mary Kay distributors (called "beauty consultants") can potentially make income by directly selling to people in their community, and also receive a share of sales made by people they recruit into the distribution network. Mary Kay distributors must purchase a $100 dollar starter kit in order to qualify.[5]

As a private company, Mary Kay releases few details about the average income of its sellers.[5] In 2005, Mary Kay reported that its wholesale worldwide sales exceeded US$2.2 billion.[7] In 2010, worldwide wholesale figures was reported at US$2.5 billion.[2] Neither of those figures take into account product returns.

The table below shows the company's reported sales figures in more detail.

Mary Kay Sales Figures
Year Wholesale Volume Consultants Directors National Directors Wholesale volume / Consultants
1963 $198,154[8] 318[8] 0 0 $623.13
1973 unknown 21,069[9] 450(?) 2(?) unknown
1983 $300,000,000[9] 195,000[9] unknown unknown $1,538.46
1989 $400,000,000 200,000 unknown unknown $2,000.00
1991 $511,000,000[10] 220,000[10] unknown unknown $2,322.73
1992 $500,000,000[11] 250,000[11] unknown unknown $2,000.00
1993 $735,000,000[9] 325,000[9] unknown unknown $2,261.00
1994 $850,000,000[12] unknown unknown unknown unknown
1995 $950,000,000[12] unknown unknown unknown unknown
1995 Russia $25,000,000[13] unknown unknown unknown unknown
1996 $1,000,000,000[12] unknown unknown unknown unknown
1997 People's Republic of China $12,000,000[14] 15,000 unknown unknown $800.00
1998 People's Republic of China $7,200,000[14] unknown unknown unknown unknown
2001 $1,400,000,000 800,000 unknown unknown $1,750.00
2001 USA Unknown 500,000[15] unknown unknown unknown
2001 Mexico $20,000,000[16] unknown unknown unknown unknown
2002 $1,600,000,000 850,000 19,000[17] more than 300[17] $1,882.35
2002 USA unknown unknown 13,000[17] unknown unknown
2002 People's Republic of China $120,000,000[14] 120,000[14] unknown unknown $100.00
2003 $1,800,000,000 1,100,000 18,500[18] More than 100[18] $1,636.36
2004 $1,960,000,000[19] 1,300,000[20] 27,000[7] 410[20] $1,507.69
2004 USA unknown unknown unknown 210[20] unknown
2004 Canada $125,000,000[21] 29,357[22] 661[22] 16[22] $4,257.93
2004 United Kingdom $7,700,000[23] 3,500[18] More than 70[18] 0[18] $2,200.00
2005 $2,200,000,000[7] 1,600,000[7] 31,000[7] 500[7] $1,375.00
2005 People's Republic of China $300,000,000[24] 400,000[24] unknown unknown $750.00
2005 USA $1,300,000,000[24] 715,000[24] unknown unknown $1,818.18
2005 Canada unknown 32,820[25] 673[25] 17[25] unknown
2005 Argentina unknown 20,000[26] 500[26] 8[26] unknown
2005 Mexico unknown 175,000[27] unknown unknown unknown
2005 United Kingdom unknown 5,000[28] 140[28] 2[28] unknown
2006 Worldwide $2,250,000,000[29] 1,700,000 +[29] unknown about 500[30] $1,323.53
2006 Canada CAD 62,000,000[31] 34,272[25] 724[25] 18[25] CAD $1,809
2006 USA unknown unknown 14,000+[30] unknown unknown
2006 UK unknown 5000[28] 140[28] 2[28] unknown
2007 Canada unknown 31891[32] 659[25] 25[25] unknown
2007 USA unknown 700,000 14,000[33] 215[34] unknown
2007 Worldwide $2,400,000,000[34][34] 1,700,000[34] unknown unknown $1,411.76
2008 Canada unknown 30,679[35] 608[35] 24[35] unknown
2008 USA unknown 600,000[36] 13,000[36] unknown unknown
2008 Worldwide $2,600,000,000[37] 1,800,000[37] 34,000[37] 500[37] $1,444.44
2009 Worldwide $2,500,000,000[38] 2,000,000[38] 37,000[38] 600[38] $1,250.00
2009 China $600,000,000[39] 200,000[39] unknown unknown $3,000
2010 Worldwide US$2,500,000,000[2] 2,000,000[2] unknown 600[2] US$1,250
2010 Australia A$25,000,000[40] 10,000 unknown unknown A$2,500
2010 Canada unknown 29573[41] unknown 24[41] revenue / consultants
Year Wholesale Volume Consultants Directors National Directors revenue / consultants

Notes:

  • Unless otherwise stated, dollar amounts are in United States Currency, which has not been adjusted for inflation;

Manufacturing plants[edit]

The primary manufacturing plant is in Dallas, Texas.

A second plant was opened in Hangzhou, China to manufacture and package products for that market. A third plant was opened in 1997, in (La Chaux-de-Fonds) Switzerland, for the European market. The Swiss plant closed in 2003.

Cars[edit]

In 1968, Mary Kay Ash purchased the first Pink Cadillac, where it was repainted on site, by the dealership owner, to match the Mountain Laurel Blush in the compact.[42] It was such a good rolling advertisement that Mary Kay Ash decided to reward her top five producers, by providing them with a Pink Cadillac paid for by the company in 1969. Pink was an obvious color choice, matching the company's eye and lip color palettes. Since 1980, the shade used by the Mary Kay fleet has been exclusive to Mary Kay. Every two years, a Director or National Director (often referred to simply as a "National") can requalify for a new Cadillac. When the two year lease has expired, the cars are repainted, prior to being auctioned off. The shade of pink has changed over the years. In 1998, the color was changed to "pearlized pink". In honor of its 35th anniversary, the Mary Kay edition, white GMC Jimmy sport utility vehicle was offered in the United States. In 2007, top Independent Sales Directors can still earn the coveted pink Cadillac.

In the United States, the 2006 vehicle choice consisted of a Pontiac Vibe, Pontiac Grand Prix or a Cadillac. A Mary Kay director that qualifies for a car may choose from a Cadillac DTS, a Cadillac CTS, or a Cadillac SRX. In 2007 the offered cars were Saturn Vue, Pontiac G6, Pontiac Vibe, Cadillac CTS, and Saturn Aura.[43]

In 2009 GM announced it would be discontinuing the Saturn and Pontiac lines, forcing Mary Kay to choose new choices for Directors and Consultants to earn. Independent Beauty Consultants can earn the use of a Smokey Platinum Chevy Malibu or cash compensation of $375 a month. Independent Sales Directors can choose a Silver Toyota Camry, Chevy Equinox, or $500 a month. Top Independent Sales Directors can choose between the Pink Cadillac DTS, Cadillac CTS, or cash option of $900 a month.[44]

In 2005 the GM (USA) fleet size was 9,870. In the United Kingdom, Germany, The Netherlands, Spain and Ukraine, the car is a pink Mercedes-Benz. In Argentina, one receives a pink Ford, while in Taiwan, it is a pink Toyota.[45] In Australia, one gets to choose between a Ford Falcon, or Volkswagen Beetle.[46] In China, the vehicle is a pink Volkswagen Santana. In the Nordic countries you receive a pink Volvo V50.[47]

The specific qualifications for earning the car depend upon the country, and vehicle that is desired. If those qualifications are not met, then the Car Driver has to pay for a portion of the lease of the car for that month. Meeting the qualifications entitles the Car Driver to pay no monthly lease and 85% of the car insurance, or a pre-determined cash compensation award.[48]

Since the program's inception, more than 100,000 Independent sales force members have qualified for the use of a Career Car or elected the cash compensation option.[4] It is not known how many Directors select the cash option in lieu of the car, but GM estimates that it has built 100,000 pink Cadillacs for Mary Kay.[42]

For 2012 the cars available are the Chevrolet Malibu, Chevrolet Equinox, Toyota Camry, and the Cadillac CTS, SRX & Escalade Hybrid as well as a newcomer. At the annual Mary Kay convention in Dallas in July 2011, executives announced that new, 2012 model-year Ford Mustang painted in black will become available as an incentive to keep the company’s salespeople productive. For 2013, the Chevrolet Malibu was replaced with the Chevrolet Cruze.[49] In January 2014, Mary Kay replaced the black Ford Mustang with a Black BMW 320i.

Earnings for salespeople[edit]

As a private company, Mary Kay Inc. does not make all of its financial information available to the public.[4] There is very little reliable information about actual earnings by consultants.

There are several ways for consultants to earn money in Mary Kay:

  • Recruiting;
  • Retail Sales;

Recruiting commission earnings[edit]

"Recruiting commission earnings" reflects the commission and bonuses that one earns from the wholesale purchases of their downline. It does not include income from retail sales nor does it include income from the Mary Kay tools business.

In February 2010 Mary Kay (Canada) claimed the following incomes for its salesforce:[50]

  • 29,675 people were consultants during the year;
  • 1,878 consultants earned more than CAD 100 in commission;
  • 276 of the 553 sales directors earned more than CAD 17,471 in commission;
  • 15 of the 23 national directors earned more than CAD 100,000 in commission;

For Mary Kay (USA) National Directors, the 2006 median gross income (prior to business expenses) was $75,443.[51]

Retail Sales Earnings[edit]

There is no reliable data for earnings from retail sales. The quoted figure of US$1,250 per year (2010) for the average consultant was derived by dividing the annual wholesale sales by Mary Kay Corporate, by the number of consultants in Mary Kay. This figure is obviously incorrect, as it does not take into account product returns, eBay, auctions, sales at a discount, and purchases by "personal use consultants" --- all of which would lower this figure.

Consultant turnover rate[edit]

A 68.6% per annum turnover figure has been calculated based upon information supplied by Mary Kay (USA) to the Federal Trade Commission.[52]

An 85% per annum turnover figure has been calculated, based upon the data supplied by Mary Kay (Canada).[53] That document excludes individuals who earn a commission and are in the company for less than one year. It also excludes individuals who are in the company for more than one year, but do not earn a commission check.

Court cases[edit]

Woolf v Mary Kay Cosmetics[edit]

The 2004 case Woolf v. Mary Kay Cosmetics, was originally decided in favor of the plaintiff, Claudine Woolf. In doing so it marked the first time[54] that workplace rights could be applied to independent contractors who worked from their home. This decision was stayed and then reversed after an appeal. The Supreme Court denied certiorari on 31 May 2005.[55]

In this case, Woolf was terminated from her position as director because her unit failed to make production for three consecutive months. Woolf contended that her firing was illegal, because of her medical condition — she was suffering from cancer.

Liquidator court cases[edit]

In May 2008, Mary Kay Inc sued Touch of the Pink Cosmetics, a website that sells product from former Mary Kay consultants at heavily reduced prices. The company claims that Touch of Pink interferes with their business by offering to purchase inventory from discontinued consultants, and that their use of the Mary Kay trademark in reference to Mary Kay products they sell is deceiving.[56][57]

On 20 July 2009, Mary Kay Inc sued Pink Face Cosmetics for violation of 15:1051 Trademark Infringement.[58] The specific issue appears to be the use of the Mary Kay name, in selling Mary Kay products on eBay, and other Internet venues, for less than the wholesale cost of the products.

Animal testing[edit]

In 1989 the company announced a moratorium on animal testing of its products, after pressure from animal rights groups. They were among the first in their industry to do so and to sign the PETA pledge.

However, in 2012 Mary Kay returned to animal testing, because it is required by law in China for all health and beauty products. Thus Mary Kay has been removed from PETA's "Don't Test on Animals" list to the "Do Test" list.[59]

“We do not conduct animal testing on our products or ingredients, nor ask others to do so on our behalf, except when absolutely required by law,” says Crayton Webb, director of corporate communications for Mary Kay, in a statement. “There is only one country where we operate where that is the case—China.” [60]

Mary Kay Ash Charitable Foundation[edit]

Established in 1996, the mission of the Mary Kay Ash Charitable Foundation is two-fold:
• Committed to eliminating cancers affecting women by supporting top medical scientists who are searching for a cure for breast, uterine, cervical and ovarian cancers.
• Committed to ending the epidemic of violence against women by providing grants to women’s shelters and supporting community outreach programs.

In May 2006 The Foundation awarded 13 cancer research grants of $100,000 each to esteemed doctors and medical scientists in the United States. In October 2006, the Foundation awarded $20,000 grants to 150 women’s shelters across the United States for a total of $3 million. Celebrities who support this organization are Jennifer Hanson, Miranda Lambert, Naomi Judd, Jewel etc.

References[edit]

  1. ^ a b c Direct Selling News, June 01, 2012: DSN Global 100: The Top Direct Selling Companies in the World Retrieved 2012-07-14
  2. ^ a b c d e 2011 Press Kit The Company
  3. ^ Mary Kay Company Information page[dead link]]
  4. ^ a b c Mary Kay At-A-Glance — June 2006
  5. ^ a b c Hicken, Melanie (10 January 2013). "The money behind Herbalife, Mary Kay and others". CNN Money. Retrieved 12 April 2014. 
  6. ^ Sole-Smith, Virginia (August 2012). "The pink pyramid scheme". Harper's Magazine. Retrieved 12 April 2014. (subscription required)
  7. ^ a b c d e f MK Corporate Press Kit 2006[dead link]
  8. ^ a b "Mary Kay Ash". 20th Century American Leaders Database. Harvard Business School. Retrieved 2010-10-20. 
  9. ^ a b c d e Mary Kay Corporate Milestones[dead link]
  10. ^ a b Camerius, James W.; Clinton, James W. (1993). "Avon Products, Inc: Developing a Global Perspective" (PDF). Washington, DC: Direct Selling Education Foundation. Retrieved 2010-10-20. [dead link]
  11. ^ a b Flynn, Keli (2010-05-30). "Mary Kay Cosmetics". Handbook of Texas Online. Denton, Texas: Texas State Historical Association. Retrieved 2010-10-20. [dead link]
  12. ^ a b c "Company Retrospective". Mary Kay (UK). Retrieved 2010-10-20. 
  13. ^ Stanley, Alessandra (1996-08-14). "Avon and Mary Kay Create Opportunities for Women". Moscow: New York Times. p. D1. Retrieved 2010-10-20. 
  14. ^ a b c d "China consumer goods: Still off the doorstep". Economist Intelligence Unit (Economist Group). 2005-06-21. Retrieved 2010-10-20. 
  15. ^ CIO[dead link]
  16. ^ "Monthly Calendar, 2002". US Mexico Chamber of Commerce. Retrieved 2010-10-20. 
  17. ^ a b c Mary Kay Inc. (2001-11-22). "Mary Kay Inc. 2003 Fact Sheet" (Press release). Retrieved 2010-10-20. 
  18. ^ a b c d e "Just the FAQs". Mary Kay (UK). Retrieved 2010-10-20. 
  19. ^ Family Business[dead link]
  20. ^ a b c Mary Kay Corporate Press Kit 2005
  21. ^ Kaye, Marcia (December–January 2005). "Parent Time: Mary Kay Cosmetics". Today's Parent. Retrieved 2010-10-20. 
  22. ^ a b c Mary Kay (Canada) Reported earnings 2004
  23. ^ "Mary Kay Cosmetics (U.K.) Ltd.". Hoovers, Inc. Retrieved 2010-10-20. 
  24. ^ a b c d Glick, Julia (2006-08-04). "More Chinese Women Donning Mary Kay Uniforms". The San Diego Union-Tribune. Associated Press. Retrieved 2010-10-20. 
  25. ^ a b c d e f g h Mary Kay (Canada) Reported earnings
  26. ^ a b c Mary Kay (Argentina)
  27. ^ Mary Kay (Mexico)
  28. ^ a b c d e f "The Mary Kay Opportunity". Mary Kay (UK). Retrieved 2010-10-20. 
  29. ^ a b "Company Information". Mary Kay. Archived from the original on 2007-04-28. Retrieved 2010-10-20. [dead link]
  30. ^ a b "2007 Press Kit" (Press release). Mary Kay. 2007. Archived from the original on 2008-06-27. Retrieved 2010-10-20. 
  31. ^ Mary Kay Around The World
  32. ^ Mary Kay (Canada) Reported earnings
  33. ^ "March 2008 Directors Commission" (PDF). Applause. Mary Kay. July 2008. p. 17. Retrieved 2010-10-20. 
  34. ^ a b c d Oberbeck, Steven (2008-05-15). "Utah woman a star in pink". The Salt Lake Tribune (Sequence, Inc.). Retrieved 2010-10-20. 
  35. ^ a b c 2008 Earnings Representation
  36. ^ a b Johnson, Grant (2009-01-01). "Beauty Secrets | Mary Kay's Rhonda Shasteen works on brand makeover". Directmag.com. Retrieved 2010-10-20. 
  37. ^ a b c d [1][dead link]
  38. ^ a b c d http://www.marykay.com/content/company/images/cpk_thecompany.pdf
  39. ^ a b Barboza, David (26 December 2009). "Direct Selling Flourishes in China". The New York Times. Retrieved 12 May 2010. 
  40. ^ Speedy, Blair (2 March 2011). "Mary Kay Survives Retail Slump". The Australian. Retrieved 3 March 2011. 
  41. ^ a b http://www.marykay.ca/ContentPage.aspx?FileName=/home/earnings-representation.html
  42. ^ a b Ledger Article
  43. ^ Brochure: Mary Kay Career Car Plan Guidelines — July 2007
  44. ^ Pink Truth
  45. ^ Mary Kay (United Kingdom)
  46. ^ Mary Kay (Australia)
  47. ^ Mary Kay in Nordic countries
  48. ^ Brochure: Mary Kay Career Car Plan Guidelines — February 2005.
  49. ^ Ford Mustang revs up as Mary Kay’s newest ride
  50. ^ Earnings Representation
  51. ^ US National 1206 Commission[dead link]
  52. ^ Mary Kay Letter to the FTC regarding proposed changes in the rules governing MLMs.
  53. ^ Mary Kay Canadian Earnings
  54. ^ Fired Mary Kay Worker Wins Lawsuit
  55. ^ Order List:544 US
  56. ^ http://www.pinktruth.com/images/MKCorp/touchofpink.pdf
  57. ^ Evan Clark (2008-03-09). "Mary Kay Sues Former Sales Rep.". Women's Wear Daily. [dead link]
  58. ^ Northern District of Texas Case 3:09-cv-01363-L
  59. ^ Vartan, Starre. "Avon, Estee Lauder and Mary Kay under fire for animal testing", The Miami Herald, Miami, 27 February 2012. Retrieved 8 March 2012.
  60. ^ Editorial Team, OneGreenPlanet.Org. "Top Cosmetic Companies Reportedly Resume Animal Testing", One Green Planet, 17 February 2012. Retrieved 8 March 2012.

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