EXECUTIVE SUMMARY MARKETING PROBLEM PRODUCT AND BRAND ANALYSIS COMPETITOR ANALYSIS

INDEX

SWOT ANALYSIS MARKETING OBJECTIVES ADVERTISING OBJECTIVES TARGET AND TARGET PROFILE MEDIA OBJECTIVE TARGET COVERAGE REGIONALITY, SEASONALITY AND SCHEDULING MEDIA VEHICLE SELECTION VEHICLE SELECTION RATIONALES MEDIA BUDGET ALLOCATION CREATIVE CONCEPTS CREATIVE STRATEGY CREATIVE EXECUTION PROMOTION AND IMC EFFORTS COPY TESTING AND EVALUATION REFERENCES

EXECUTIVE SUMMARY
Mary Kay has been one of the top direct selling beauty companies in the world since its founding in 1963. The companys founder, Mary Kay Ash, established the company with the desire to, first and foremost, help women around the world feel confident, natural and beautiful, as well as to help make the world a better place. Using the Golden Rule as her companys core principle, Ash helped her company grow into a corporate manifestation of her values and beliefs. Over the last 50 years, Mary Kay has grown to become a top 10 skin care brand globally, as well as a top 15 color makeup brand. Unlike most other beauty and cosmetic companies, Mary Kay is a direct selling company that is not allowed to sell its products within brick-and-mortar establishments. As a result, Mary Kay has consistently trailed behind other well-known cosmetic companies that consumers purchase from in retail locations. The company employs more than 3 million direct sellers, known as Independent Beauty Consultants, in 35 countries around the world. Mary Kay prides itself on being a company that cares. In fact, the company has a number of charities and philanthropies that it contributes to year after year. Its Beauty That Counts program donates millions of dollars toward changing the lives of less fortunate women around the globe. They are also a company that is committed to helping the environment; its Pink Doing Green initiative allows them to assist in reforestation efforts around the world.

Its facilities are also zero-landfill sites, and its packaging materials are made of renewable and recyclable materials. The company also helps women who are victims of domestic violence through its Pink Changing Lives program. Despite its strengths, Mary Kay is struggling to bring in consumers from younger demographics. The company is perceived, by most younger women, as a cosmetic brand that is meant for middle-aged and older women. The company consistently loses younger customers to its competitors, such as Revlon, LOreal and Maybelline. The company has asked for a new ad campaign for the period February 2015 to February 2016. Mary Kay wants the campaign to connect with Gen Y females (females 18-25), raising their brand awareness and positive perception of the Mary Kay brand. As a secondary objective, Mary Kay wants to increase its number of Gen Y IBCs. Using the designated budget of $10 million, Flux has created a campaign for Mary Kay that will help the company connect with Gen Y consumers on a more personal level. Flux intends to raise Mary Kays profit margins by 20 percent by the end of the fiscal year 2015, as well as to increase the companys market share by three percent. We also expect to see a ten percent growth in Gen Y IBC enrollment within two years of the campaigns end. Using creative concepts drafted by Flux, Mary Kay can expect to reach 75% of our primary target audience in the Northeast and 65% of our secondary target audience in the South, West and Midwest by year end 2014, with an average frequency of 4.

MARKETING PROBLEM
Founded in 1963, Mary Kay is one of the largest direct sellers of skincare and cosmetic products, netting roughly $3 billion in worldwide sales annually. After opening its first international venture in Australia in 1971, Mary Kay has seen tremendous growth over the decades, and it now operates in 35 markets around the world. They are not, however, immune to the many problems that a business may or may not encounter. People generally look down upon the direct selling method that Mary Kay employs to sell its products. In fact, many customers feel like theyre being coerced or begged into buying products from IBCs; some even think Mary Kay is nothing more than a pyramid scheme. Mary Kay must utilize its IBCs in a way that better connects with consumers and allows them to feel more comfortable when purchasing from Mary Kay. In addition, the target market that Mary Kay is pursuing for this campaign is not ideal. Women 18-25 do not associate with the Mary Kay brand. The vast majority never even consider Mary Kay when making skincare and cosmetic purchasing decisions. The widely held belief is that Mary Kay is, plain and simple, a brand for middle-aged women. Flux must determine the best method with which Mary Kay can reach out and connect with these young women in a way that shows them the quality of Mary Kay.

BDI FOR MARY KAY PRODUCTS

Eye shadow/ Liner/ Pencil

Facial cleansing/ Toner

Foundation/ Concealer makeup

Lipstick/ Lip gloss

Mascara

Moisturizers/ Creams/ Lotions

Suntan/ Screen

Northeast

90 98 112 91

68 116 99 113

76 79 121 105

55 123 119 100

90 89 107 107

63 117 104 107

87 50 92 168

PRODUCT & BRAND ANALYSIS

The market size for the beauty industry, as measured by total sales, is relatively large in the U.S. (about $92.2 billion). Conversely, the market size for the direct selling industry is low, roughly $8.8 billion. It is a market that is on the rise, however. Direct selling revenue, globally, is estimated to be around $153.7 billion. Revenue within the beauty industry as a whole is expected to grow to $102.3 billion by 2017. Below are the BDI and CDI for Mary Kay products.

Midwest South West

As indicated by the chart above, Mary Kay is not a strong brand in the Northeast. Flux will focus Mary Kays advertising efforts offensively in the Northeast and defensively in the South and West and Midwest.

CDI FOR COSMETICS CATEGORY

Eye shadow/ Liner/ Pencil
Facial cleansing/ Toner
Foundation/ Concealer makeup

Lipstick/ Lip gloss

Mascara

Moisturizers/ Creams/ Lotions

Suntan/ Screen

Northeast Midwest South West

102 95 99 105

99 101 95 108

93 97 101 107

98 94 103 103

92 98 96 114

98 98 97 109

113 96 93 104

Unlike BDI, the CDI for beauty products in all four regions of the country is relatively strong. Flux will primarily use the numbers from its BDI findings for the purposes of this campaign, simply because it is more advantageous for Mary Kay to focus on areas in which it is already known.

CONCEALER

COMPETITOR ANALYSIS
Flux identified Mary Kays primary competitors as CoverGirl, LOral, Maybelline & Revlon. These competitors were chosen based on the size of their market shares within the beauty industry and on the desire to pit Mary Kay against the largest names in cosmetics. As of 2009, the market shares for Mary Kays competitors are as follows: EYE SHADOW

Revlon (1) 7.13%

Maybelline Cover Stick (7) 6.24%

Maybelline Mineral Powd er (2) Cover Girl (5) 5.12%

LOreal (3) 5.91%

LIPSTICK

LOreal Colour Riche (1) Covergirl (2) 8.01% Maybelline (1) 12.32% LOreal (3) 5.72% Revlon (4) 5.48% Maybelline Moisture Extreme (7) 4.5% Covergirl Outlast (3) 8.4% 10.7%

Revlon Super Lustrous(2) 10.6%

Revlon Colour Stay Overtime (5) 4.7%

EYE LINER

Revlon (1) 10.18%

LOreal (6) 3.60%

Maybelline Unstoppable (5) 4.33% 4.88% Covergirl (3) 5.06%

Flux also identified a number of secondary competitors, including Amway, Avon and Herbalife. Their revenues and market shares, as of 2011, are as follows: Amway - $10.9b [1] Market Share: 7.09% [2] Avon - $11.3b Market Share: 7.35% Herbalife - $3.5b Market Share: 2.28%

Mary Kay
STRENGHTS
Mary Kay is a top 10 skin care and a top 15 color makeup brand globally. Displays corporate social responsibility with: Mary Kay Pink Doing Green (reforestation ef forts); a zero-landfill global manufacturing facility 100 percent biodegradable packaging. The Mary Kay Foundation which donated more than $31 million to domestic shelters and programs against domestic violence. Partnering with the Love is Respect organization to create the nations first and only dating abuse text message helpline. Mary Kay is an official sponsor of Project Runway, which is a show that connects with our target. Mary Kay brand is ranked 2nd in the beauty and personal care market, 6th in skin care and 9th in color in comparison to its competitors. Offers business opportunities to consumers with a 50% commission. Mary Kay has a social networking presence within the top 10 of all beauty companies. IBCs allow consumers to try Mary Kay products before actually buying them.

SWOT ANALYSIS

WEAKNESSES
The direct selling model highlights the personal care and experience of IBCs, but at the cost of convenience. Rather than simply picking up eye shadow while making other purchases, the process of getting makeup from Mary Kay involves contacting your IBC, waiting for shipping, etc.. The average IBC, at the age of 42, is very unlikely to connect with our target audience. Mary Kay products are more expensive than their competitors.

Mary Kays own positioning is weakening the brand. Younger females see the company as one that makes products for middle-aged and older women, not women their own age.

Competitors
Cover Girl STRENGHTS
Celebrity endorsements. Affiliated with philanthropies, such as the Safe Drinking Water program. Large presence on Facebook and Twitter, the two largest social media sites. Offers in-store discounts. Cheaper products than other beauty brands

OPPORTUNITIES
Sales in beauty industry is expected to grow. A new target market brings with it new opportunities for the brand to expand its product offerings and overall brand tone. Marketing to a younger demographic offers Mary Kay the chance to position itself in a completely new light, one in which the company can appear more vibrant and current, rather than neutral and outdated.

WEAKNESSES
Doesnt have a green product line. Large product mix that changes often, affects product and brand loyalty.

THREATS
Direct selling is only about 11% of total beauty sales revenue; retail brands comprise 80%. Unlike its primary competitors, Mary Kay is not allowed to sell its products within brick- and-mortar establishments. This gives the competition a significant advantage over the company.

THREATS
Clutter in retail beauty market. Online commerce is the fastest growing segment of the beauty industry.

LOreal STRENGHTS
Positioned as high-end consumer cosmetics. Strong social media presence on Twitter, Facebook, Instagram. Sponsor of Mercedes Benz fashion week

THREATS
Clutter in retail beauty market. *Online commerce is the fastest growing segment of the beauty industry.

Revlon STRENGHTS
Celebrity endorsements. Positioned as sexy and trendy, which appeals to our target.

WEAKNESSES
Weaker presence on social networks such as Facebook and Twitter, in terms of likes and followers. Fast-changing product mix.

THREATS
Clutter in retail beauty market. Online commerce is the fastest growing segment of the beauty industry.

MARKETING OBJECTIVES
Our marketing objectives are to: 1.Increase sales over the next fiscal year by 20 percent. 2.Increase market share in the direct selling cate- gory by three percent. 3.See a 10 percent growth rate of IBCs from tar get market within two years of the campaign, with expectations to grow over time.

ADVERTISING OBJECTIVES
Our advertising objectives are to: 1.Increase awareness among target, informing them of the brands products and features (females ages 18-25). 2.Increase positive perception among target. 3.Increase consideration for product purchase and for the Mary Kay business opportunity among target audience.

TARGET AND TARGET PROFILE

Numbers in parentheses indicate indices from Choices3 psychographic research. For the purposes of this campaign, Flux has chosen females aged 18-24 as Mary Kays primary target audience. This demographic is full of impulse buyers who like to change brands simply for the sake of novelty (111 & 118, respectively). They are not particularly brand loyal (86), and they depend more on their own research when buying products rather than relying on the opinions of their families and friends (73). Fortunately for Mary Kay, these women prefer to purchase products from companies that sell through representatives who work from home (265). Flux surveyed a number of women within Mary Kays primary target audience. Some of the most relevant findings are below: (Andrea-if theres a way to visually show this in the book rather than through this big block of text, Jeong would prefer that.) 1.55 percent of those surveyed spend the least of their money per month on beauty products. 2.68 percent dont follow beauty brands on social media, and of those who do follow one or more, Sephora is the most followed brand. 3.As much as 85 percent of those surveyed in dicated that they would consider following a beauty brand on social media. 4.In terms of content, 72 percent want to see on

line tutorials from beauty brands, and 54 percent want to see beauty trends. 5.Mary Kays target looks to magazines and web sites the most for beauty inspiration. 6.92 percent trust friends for beauty advice more than anyone else. 7.84 percent worry more about moderate prices on beauty products than anything else. 8.82 percent purchase the same beauty brands time and time again. 9.62 percent would not sell the products of a brand they like.

Flux has also designated Mary Kays secondary target audience as women aged 30-34. This demographic was chosen based on a comparison of Choices3 indices of multiple demographics, as illustrated below. Mary Kay product usage: Women 25-29: 250 30-34: 275 35-39: 184 40-44: 266 Mary Kays competitors target audiences are as follows: Revlon - 18-24; 25-34 Maybelline - 18-24; 25-34 Covergirl - 18-24; 25-34 Loral - because LOral owns many brands, there are many different target audiences

MEDIA OBJECTIVE
Our objective is to reach 75% of our primary target audience in the Northeast and 65% of our secondary target audience in the South, West and Midwest by year end 2014, with an average frequency of 4.

TARGET COVERAGE
Flux intends to advertise Mary Kay defensively in the South, West and Midwest and offensively in the Northeast. Within Mary Kays primary target audience, Flux expects an average reach of 43 million nationwide, with an average frequency of 3. Within Mary Kays secondary audience, Flux anticipates an average reach of 27 million, with an average frequency of 5. Flux believes that its objectives will assist Mary Kay in reaching its stated advertising and marketing objectives primarily because, with a higher emphasis on reach to the companys primary audience, the campaign has a higher likelihood of being seen by millions of Millennial women.

Regionality
After thorough research, Flux discovered that Mary Kay needed a defensive campaign in three of the four regions in the U.S., as the brand is already well-known in those areas of the country. Because the Northeast has potential to grow, Flux intends to advertise more heavily in the region, compared to the rest of the country. We will allocate our advertising budget accordingly:
South 17% Northeast 50%

REGIONALITY, SEASONALITY & SCHEDULING

West 17% Midwest 16%

The people in the Northeast are all likely to purchase Mary Kay products if they are informed of the quality the brand has to offer. Conversely, in the rest of the country, people are already more likely to purchase Mary Kay, so we do not see a need to advertise as heavily in those regions.

Seasonality
Flux believes that makeup is not a product that is worn more often during some parts of the year and less often during other parts; its a product that is in demand year-round. However, it is important to recognize the increase in consumer demand and shopping during the holiday season. Therefore, we have decided to set the campaign on a continuous schedule with slightly heavier emphasis on the holiday season because of gift giving.

Scheduling
Due to the seasonality of the campaign, Flux has designated the campaign to run on a continuity schedule for optimal target coverage and because of the perennial aspect to cosmetic products.

MEDIA VEHICLE SELECTION

Flux conducted the necessary research to determine the appropriate media vehicles to utilize for Mary Kays campaign. Our findings and selections are as follows: TV Early and Late Fringe: high/low Average index of Q1: 108 Average index of Q5: 95 Outdoor: high/low Average index of Q1: 111 Average index of Q2: 93 Internet use at work: high/low Average index of Q1: 119 Average index of Q2: 77 Print

TV

VEHICLE SELECTION RATIONALES

Mass reach and cost-efficiency are the two primary benefits to using TV, and those are two benefits Flux intends to take advantage of. Of all forms of advertising, respondents to a survey conducted by GCI Magazine said the one medium that influences them most was TV (25%). [3]

Outdoor
Drawn from our psychographic research with Choices3, Flux determined that Mary Kay customers are more likely to purchase based on their feelings rather than objective information. We needed something that would make an impact with our target audience. Therefore, rather than choosing traditional forms of outdoor advertising, Flux chose alternative, guerilla advertising that would connect with Mary Kays customers on a personal level.

Internet
Flux will rely heavily on social media as a form of advertising for Mary Kays campaign. Our target audience strongly relies on social media as a form of communication; by leveraging our campaign across various social media platforms, Mary Kay will gain the recognition and traction needed to compete with other top beauty brands.

Print
In the same survey conducted by GCI Magazine, magazines were the second most effective advertising medium for U.S. beauty consumers [4]. We have chosen Lucky, Allure and Vogue as our main vehicles, considering the high composition that each of those magazines has. The subscribers of the these magazines comprise a large portion of our target audience, and many of them are Mary Kay users as well.

MEDIA BUDGET ALLOCATION

MEDIAFLOWCHART
JAN FEB MAR APR MAY JUN JUL AUG SEPT OCT NOV DEC TOTAL
$10 M $769,226 $769,226 $769,226 $769,226 $769,226 $769,226 $769,226 $769,226 $769,226 $769,226 $769,226 $1538514

TV Early Fringe
$96,153 $96,153 $96,153 $96,153 $96,153 $96,153 $96,153 $96,153 $96,153 $96,153 $96,153 $192,317 $1.25 M

IMC/Promotional efforts $ 2,100,000 TV early and late fringe $ 2,500,000

Late Fringe

$96,153

$96,153

$96,153

$96,153

$96,153

$96,153

$96,153

$96,153

$96,153

$96,153

$96,153

$192,317 $1.25 M

Internet $38,461 & Social

$38,461

$38,461

$38,461

$38,461

$38,461

$38,461

$38,461

$38,461

$38,461

$38,461

$76929

$500 K

Outdoor/ Guerrilla $ 2,000,000 Internet/ Social Media $ 500,000 Copytesting $ 400, 000

Print $ 2,500,000 Lucky Vogue Allure

Outdoor/ $153,846 $153,846 $153,846 $153,846 $153,846 $153,846 $153,846 $153,846 $153,846 $153,846 $153,846 $307,694 $2.0 M Guerilla PRINT Lucky Vogue Allure IMC PROMO
$64,102 $64,102 $64,102 $64,102 $64,102 $64,102 $64,102 $64,102 $64,102 $64,102 $64,102 $128,211.33 $833, 333.33

$64,102

$64,102

$64,102

$64,102

$64,102

$64,102

$64,102

$64,102

$64,102

$64,102

$64,102 $128,211.33 $833, 333.33 $64,102 $128,211.34 $833, 333.34 $2.1 M

$64,102

$64,102

$64,102

$64,102

$64,102

$64,102

$64,102

$64,102

$64,102

$64,102

$161,538

$161,538

$161,538

$161,538

$161,538

$161,538

$161,538

$161,538

$161,538

$161,538

$161,538

$323082

Copy $30,769 Testing

$30,769

$30,769

$30,769

$30,769

$30,769

$30,769

$30,769

$30,769

$30,769

$30,769

$61,541

$400 K

CREATIVE CONCEPTS
Flux wanted to create a message for Mary Kay that would connect with the companys primary target audience in a way that related to them and made them feel like Mary Kay understands their age group. Flux came up with a number of creative alternatives for Mary Kays campaign. One of our ideas would have been focused on creating a new product line that featured more bright and vibrant colors that pop for the younger audience. Another would have focused on various skin types and how Mary Kay can help its users maintain healthy, beautiful skin. Our third concept, and the one we ended up choosing, focused on leaving nothing to chance and feeling confident after applying Mary Kay makeup. Once our creative concepts were created, Flux conducted concept testing among a group of 30 women that fit our target demographic criteria. Our findings are as follows: 65 percent of those surveyed approved of the concept chosen over the other two being considered. 80 percent of respondents liked our campaign ideas over Mary Kays current ad campaigns Only 30 percent needed further explanations of the campaign after seeing our ads

CREATIVE STRATEGY
The chosen tagline for Mary Kays new campaign is Leave nothing to chance. Most of the promotional advertising for Mary Kay will be centered around this tagline. Many of our spots will show a side by side comparison between a young woman who chose to apply Mary Kay makeup and one who didnt. The woman who chose to wear Mary Kay will be successful in her endeavors, while the one who didnt will fail. Mary Kays guerilla campaign will utilize a series of wall-sized chalkboards that will be scattered across the nation on a number of university campuses. These chalkboards will prompt passersby to write their goals and ambitions on the chalkboards, filling in the blanks after the phrase, If life gives me the chance, I will. Flux is targeting the Northeast more heavily due to the offensive advertising strategy for that region. The boards will be placed on the following university campuses: Northeast Penn State NYU Rutgers Harvard South Texas A&M

West UC Berkeley Midwest Michigan State University Mary Kays social campaign, on the other hand, will utilize the vibrant colors of nature to connect with its Gen Y consumers. Users can connect with Mary Kay by photographing beautiful, natural vistas and uploading them to Facebook. Mary Kay will then create a makeup product for that user based on the color scheme provided, such as eyeshadow or mascara. In addition, Flux will utilize Instagram for video tutorials for the application of Mary Kays products for consumers to watch.

CREATIVE EXECUTION

TV

OUTDOOR

INTERNET/ SOCIAL

Become an IBC and get the chance to..

SOCIAL MEDIA/

for you and your best friend

LOS ANGELES
INCLUDING
TICKETS TO
and

WIN A TRIP TO

THE GRAMMY AW ARDS A FULL MAKEOVER

provided by

and

PRINT

PROMOTION & IMC EFFORTS

Flux will be conducting a contest among Mary Kay IBCs to better promote the role of IBCs within the company, as well as to facilitate the accomplishment of Mary Kays secondary campaign objective. Current IBCs of any age will have their names put into a drawing for a chance to win an all expenses paid trip to the 2015 Grammys for themselves and a chosen friend if, and only if, they recruit one or more IBCs within the target demographic of 18-25. Any woman within that target demographic who becomes an IBC will also have their names placed in the drawing for them and a friend as well.

COPY TESTING & EVALUATION

Flux fully expects Mary Kays new campaign to be a success. We will monitor the effectiveness of the campaign through a number of methods, including: Social interaction and engagement using Radian6 Sales monitoring and tracking through IBCs Monitoring the number of IBCs in the company and tracking the increase in IBC starter pack requests throughout the campaign period. Tracking increases or decreases in positive perception and brand awareness through online product reviews and other chatter pertaining to Mary Kay as a brand.

THANK YOU!

REFERENCES
Emmert, J. (2012, June 01). 2012 dsn global 100: The top direct selling companies in the world. Retrieved from DirectSelling News website: http://directsellingnews.com/index.php/view/ dsn_global_100_the_top_direct_selling_companies_ in_the_world/P6#.UpvNzWSidDL Silcox, B. D. (2013, March 01). Direct sellings billion dollar markets. Retrieved from DirectSelling News website: http://directsellingnews.com/index.php/view/di rect_sellings_billion_dollar_markets6#.UpvPUm SidDL (2013, June 20). Us beauty consumers analyzed in new infographic. Retrieved from GCI Magazine website: http://www.gcimagazine.com/marketstrends/ consumers/women/US-Beauty-Consumers-Anal yzed-in-New-Infographic-212367011.html Simmons OneView - Choices3