Mary Kay Cosmestics: Asian Market Entry

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Harvard Business School 9-594-023 Rev. July 26, 1996 Mary Kay Cosmetics: Asian Market Entry In February 1993, Curran Dandurand, senior vice president of Mary Kay Cosmetics Inc.’s (MKC) global marketing group, was reflecting on the company’s international operations. MKC products had been sold outside the United States for over 15 years, but by 1992, international sales represented only 11% of the $1 billion total. In contrast, one of MKC’s U.S. competitors, Avon Products Inc., derived over 55% of its $3.6 billion sales (at wholesale prices) from international markets in 1992. Dandurand wondered how MKC could expand international operations and which elements of MKC’s culture, philosophy, product line, and marketing programs were transferable. She wanted to define the critical success factors for MKC internationally and establish a marketing strategy for future international expansion. Specifically, she was currently evaluating two market entry opportunities: Japan and China. The first was a mature but lucrative market where cosmetics marketing and direct selling were well-known and accepted. The second was a rapidly growing and changing but relatively unknown market with substantially lower individual purchasing power. The Cosmetics and Direct Selling Industries In 1992, worldwide retail sales of facial treatments and color cosmetics products exceeded $50 billion, with the United States accounting for $16 billion. The top four companies in the U.S. cosmetics market in 1992 were Procter & Gamble with $4.3 billion cosmetics retail sales, Estee Lauder, Avon, and Revlon. L’Oreal, a subsidiary of Nestle, dominated the world market with $5.9 billion in retail sales, followed by Procter & Gamble, Avon, Unilever, Shiseido, Revlon, Colgate-Palmolive, Estee Lauder, SmithKline Beecham, and Gillette. Retail sales by the U.S. direct selling cosmetics industry were

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