Case Summary:
Mary Kay Cosmetics: Asian Market Entry
The article outlines the decision making process of Vice President of Mary Kay Cosmetics Curran Dandurand whether to enter two major Asian markets: Chinese and Japanese. The author shows how circumstances on the local markets, consumers’ needs, even the type of skin and associations about cosmetics of specific nation force the product adaptation to those markets. Dandurand provides evaluation of two markets entry opportunities: Chinese and Japanese.
These two countries have different economy, policies, and demographic situation, own history and culture. The article demonstrates how specific conditions of each country are essential for further planning and successful launching the product in international markets.
We can see the core differences first of all in the economic ground. The population of China exceeds the population of Japan more than in 9 times. But at the same time per capita GNP in Japan in 44 times higher than Chinese. Consequently, these differences in economies are reflected in the purchase power of population and in start-up cost. The buyer power of potential consumers is one of the most important factors that is taken to the consideration while facing the decision about Asian market entry.
It was estimated that start-up investment cost for China is $2.00 million, when for Japan- $10.0 million.
Another important factor is that compare to China, Japan was the largest direct selling market in the world.
The effect of the philosophy of company and selling strategy is obvious. Mary Kay mission is not just to supply women with cosmetics, but also with business opportunities and skin care system. To figure out how profitable the entering Asian market can be for MKC, it’s necessary to investigate the demand, needs, and preferences of Chinese and Japanese women. That is exactly what the author did in this article.
Japanese women preferred part-time jobs with flexible schedules, which was definitely advantage for MKC. Another favorable factor is that Japanese consumers believed that they have sensitive skin which requires extensive care, that’s why they spent more than 400$ on cosmetics. It is three time more than American women do. Also big demand for foreign makeup products provide for MKC promising conditions.
Talking about Chinese women, the situation is different. The average consumer (women) earned only 50$ per month, that distinctly decreased their purchase power compare to Japanese women. But in the same time Chinese women still tend to spend money on skin care, and consider this is important.
China market is more complicated, because economic differences as well as the difference in demand occur across the regions. That means product should be adopted to specific region or not to be moved to some regions at all.
The cost of promotion also affected on the decision. It was estimated that the brand promotion in Japan would require $3 million per year, while in China – $400 thousands.
Another important consideration is competition. The biggest competitor of MKC in direct sales is Avon. Dandurant mentions that Avon is much more successful in penetrating the international market than MKC due to its smart strategic planning and marketing campaign. First of all, Avon always tried to adapt not only the whole cosmetic line to Chinese females’ demand, but to adapt the price as well. Also, a big role played the distribution channels. Avon used person-to-person method, while MKC used “party” method.
Based on all factors mentioned before, especially the growing number of competitors, the decision had to be made in the soonest time. The question was which sale technique to implement on Asian market: to stick with party plan or use a new one. Secondly, it was decided for MKC to enter both markets with skin care and make up products, but with local adaptations. The price had to be adopted as well, reasonably to purchase power. The third issue was, how to possess the MKC- how to differentiate it from competitors’.