Mary Kay Inc.

Poised to celebrate its 40th anniversary in 2003, Mary Kay Inc. not only enjoys a rich heritage, but also has one of the best-known brands in the world. And when you add pink Cadillacs, charismatic founder Mary Kay Ash, a bevy of high-quality cosmetics and hundreds of thousands of independent beauty consultants, you begin to realize how the Dallas-based company has grown into one of the largest direct sellers of skin care and color cosmetics in the world. Mary Kay Inc.’s 2001 global wholesale sales topped $1.4 billion – the third consecutive year of record sales – and the company’s sales force includes more than 900,000 independent beauty consultants operating in 33 markets on five continents.

“While the United States is our largest market, comprising nearly three quarters of our total dollar volume,” says President and COO David Holl. “Our largest international markets include Mexico, China, Russia and Canada, but all of our international markets are successful and growing.”

It’s no exaggeration that women are the crux of Mary Kay’s work force and customer base – roughly 99 percent of the company’s independent sales consultants and the lion’s share of its customers are women. “A Mary Kay business provides an openended professional solution, free of glass ceilings and corporate downsizing,” the company explains to potential consultants. “Members of the independent sales force are free to advance to the status they choose at their own pace. Mary Kay Ash’s vision continues to provide one of the most attractive pathways to financial independence, flexibility and fulfillment.

“Few other opportunities offer the best of so many worlds – the freedom to be one’s own boss and the infrastructure and support of a multi-billion-dollar corporation, as well as the camaraderie of an enterprising and enlightened community of women.”

Currently, more than 17,000 women worldwide hold the title of Mary Kay Independent Sales Director and some 250 women worldwide have reached the highest position within the company’s sales force – Mary Kay Independent National Sales Director.

The success women are achieving in their Mary Kay careers seems to mirror the recent momentum of women in the workplace. A March 2000 Small Business Association (SBA) study reported that 9.1 million women-owned businesses in the United States currently represent 40 percent of all businesses; women-owned businesses generate more than $3.6 trillion in sales and employ 27.5 million people; and women are starting new firms at twice the rate of any other group.

“Our mission is to enrich women’s lives – it’s short, simple and to the point,” Holl says. “Women come into the opportunity with a few simple expectations, but they’re not all the same. Some see it as a chance to make money, while others view it as an opportunity to be a part of a bigger community. Also, some women who come to Mary Kay leave successful careers in the corporate world because they realize how difficult it is to raise a family while pursuing a career that has little flexibility. At the same time, they choose not to sit at home while the children are at school; instead, they seek to build a meaningful career that they control. Mary Kay offers a tremendous opportunity for women who want to be their own boss, set their own schedule and determine their own success.”

The organizational structure of Mary Kay’s independent sales force includes the following: consultants, star consultants, sales directors and national sales directors. Within the sales director level, there are senior sales directors and executive senior sales directors. “Out of our more than 620,000 independent sales force members in the United States, roughly 13,000 are sales directors and 150 are national sales Directors,” Holl says.

According to Lisa Madson, an independent national sales director from Madison, Wis., “Every person in the Mary Kay organization – whether she’s earning the use of her first career car or is a $2 million independent sales director – has a vital role. Every person in a unit makes a difference; it could be just that one person’s order that makes you a record-breaker. So when you treat everyone as important – not just the top achievers – everyone pitches in for the team goal.” Madson adds that she learned that lesson from Mary Kay Ash herself, who credited her own success in dealing with people to the fact that she pretended that every single person she met had a sign around his or her neck that read, “Make me feel important.”

Not Your Mother’s Mary Kay

With baby boomers well into their 40s and 50s, Mary Kay is successfully tapping into the huge market’s skin care and cosmetic needs. The company’s most successful product line is its TimeWise® skin care and moisturizer products, which include patented anti-aging properties for the face and body. While the interest in anti-aging has really burgeoned in the past 10 years, Holl explains, “Skin care has always been the backbone of our business and our anti-aging products have further enhanced it. Body care has become increasingly important to baby boomers – people are taking better care of themselves as they age. Enhanced technology and refined formulations have had a significant impact on our ability to launch effective products.”

Mary Kay is also in the midst of lassoing a whole new demographic – 18- to 24-year olds. “Velocity® – a broad, youth-oriented product line – was introduced late last year and has been a blockbuster launch for us,” Holl says. “But while Velocity products enabled us to tap a new segment of the population, we were challenged to balance Mary Kay’s traditional values and principles with the MTV generation.

“We knew that many of our initial Velocity customers were going to be the daughters of Mary Kay consultants and customers,” he continues. “It’s kind of like how GM said, ‘It’s not your father’s Buick.’We wanted to make sure that while Velocity isn’t ‘your mother’s Mary Kay,’ it doesn’t compromise Mary Kay’s value system, either. In fact,we’ve found that our Velocity line provides an opportunity for mothers not only to teach their daughters about good skin care, it also allows an opportunity for moms to pass on their values as well.”

Other new features Mary Kay has added to its product lines include the MK Signature® collection, which includes new foundations and color formulations, as well as upgraded packaging designs to complement them.

“Women are tempted by cosmetics and have an emotional connection with color products,” says Beth Ludwig, director of Mary Kay global color marketing. “Taking our cue from these women, we’ve created MK Signature to provide customers with an expanded variety of choices to help them stay on top of the trends.” Although many believe Mary Kay is synonymous with skin care and cosmetics, nutritional supplements is another segment the company has added. “We have two vitamin supplement products in the United States – one for men and one for women,” Holl says. “We’re not anticipating additional expansion into nutritional supplements, though we do offer additional products in some of our foreign markets because our customers seek them. Our decision to offer high-quality nutritional supplements in the U.S. supports our holistic approach to looking good, feeling good and living well – it’s what our customers want.” Though once thought of as a company for women only, Mary Kay also has a successful men’s line that includes cologne and skin care products.

International Tastes

Because Mary Kay operates in 33 International markets, it is important that the company’s products and business practices conform to the varied cultures in which Mary Kay products are sold. “We tailor our product line to the needs and desires of local consumers,” reports Holl. “But our business practices remain consistent throughout the world. One might think that a company which from day one has told it’s U.S. employees and independent sales force members to keep their priorities in their proper order – God first, family second and career third – and to operate by the Golden Rule might have difficulty adapting such an approach in nations like Russia or China. That has simply not been the case.”

Having recently returned from attending Mary Kay’s national convention in Russia, Randall Oxford, vice president of global corporate communications, notes, “Mary Kay was only the second non-government entity to be allowed to hold an event in the Kremlin Palace. More than 6,000 Mary Kay Independent Beauty Consultants celebrated a year of accomplishments, and if it were not for the setting and the language, you would have thought you were attending a Mary Kay event in the United States. Hearing these Russian women stand on stage and talk about why this opportunity means so much to them, it was amazing to hear how similar their statements are to what we hear in this country.

“We read comments from our independent beauty consultants in the Far East, as well as other regions of the world, and the messages all resonate the same kinds of things,” Oxford continues. “Women want to be appreciated and recognized, and they want the freedom to raise family, yet earn a good income. The Mary Kay opportunity affords them all of these opportunities.”

Technology Makes a Difference

Mary Kay says it is committed to providing its independent sales force with innovative, business-building resources. For example, the company offers consultants personalized Web sites that allow their customers to order from them 24/7.

“Several years ago, Mary Kay recognized an opportunity to harness the Internet to create a new selling tool for our independent sales force,” Oxford says. “Sales force members can capitalize on the look and feel of a billion-dollar company’s Web page that is personalized for each independent sales force member who purchases one at a nominal price. Customers can consequently jump online and order products from her consultant whenever it is convenient. Harnessing the Internet is a leap forward in the mindset of our sales force – it’s a very valuable tool the company makes available to add momentum to their business.”

Proving its beauty is more than skin deep, Mary Kay has emerged as a technology leader, and today ranks among the giants in e-commerce, which currently accounts for more than 80 percent of the company’s revenues. And while it’s impressive that most of the company’s business is conducted via e-commerce, it’s even more impressive that the company built its infrastructure utilizing in-house talent, partnering with key outside resources. “We will continue to introduce our independent sales force to technological advancements that can help drive their business,” Holl says.

Quality Focus

When it comes to product quality, Mary Kay products have to measure up to expectations. “We have to deliver on the authenticity of the product,” Holl says. “Our consultants and their customers equate quality with value. While our suggested retail price may not be as high as some of the ‘prestige’ brands, Mary Kay® products must be just as good. When it comes to quality, we under promise and over deliver – one of the reasons Mary Kay customers are so loyal.”

Mary Kay has an R&D lab and a large manufacturing plant in Dallas, as well as one in China. The company manufactures about 80 percent of its products in-house and outsources the rest to select suppliers who manufacture products to Mary Kay’s high-quality specifications.

Supplier Relations

Mary Kay views open communication as the key element in dealing with its many suppliers, Holl says. “We can have highly successful products that sell out quickly and though we keep components on hand, we know that with the volume of our sales, we can tap a supplier’s capacity quickly. We cultivate strong supplier relationships that enable us to keep our product pipeline flowing.

“Our suppliers are flexible, service-oriented and deliver their services on time,” he continues. “In fact, we have a Supplier of the Year program which brings select suppliers to Dallas to recognize them for exemplary service. We expect a lot from our vendors, and when they go above and beyond, we want to recognize them. It’s one more way we support our over-arching goal of providing affordable, high-quality products to our independent sales force and their customers.”

Adds Mitchell Kaneff, president and CEO of Arkay Packaging, “Arkay Packaging has been Mary Kay’s Supplier of the Year for three consecutive years and sees this award as a benchmark. But we want to grow and strive beyond. We see Mary Kay as a strategic partner.” Arkay’s Executive Vice President Walter Shield agrees, stating, “Mary Kay is an innovator in packaging design, which is why we work with the company. Mary Kay is very demanding and very rewarding to work with.”

Attractive Future

What differentiates Mary Kay from competitors “comes down to three things: our culture, our independent sales force and our products,” Holl says. “Mary Kay Ash created a culture that is rarely matched in the corporate world. When people experience our company first-hand, they find Mary Kay is a company that lives up to the lofty expectations that surround it.

“It was Mary Kay who incorporated the values of God first, family second and career third and operating by the Golden Rule,” he adds. “We believed in and practiced Golden Rule management long before it became overused by companies that could not deliver on it. Because our independent sales force embodies the company’s philosophy of sharing and giving, Mary Kay Ash’s legacy will continue to thrive.”

What’s more, Holl believes that Mary Kay’s independent beauty consultants represent a major advantage. “If they don’t like a product, it doesn’t sell – it’s as simple as that. They help ensure that our products are high-quality, effective and represent tremendous value. We also have a tremendous advantage because our independent sales force members do more than sell – they teach their customers how to take care of their skin.” Mary Kay expects to continue growing by opening up new markets at a manageable pace, Holl says. “We plan to put additional resources into smaller, high-potential subsidiaries we’ve already established,” he says, “while continuing to make additional investments in technology which we already credit for adding significantly to our momentum in recent years. “We always look for new ways to build and reward our independent sales force,” he continues. “We expect to stay relevant, maintain great leaders, produce great products and generate great ideas.”

Mary Kay’s Vision

Holl and Oxford believe Mary Kay Ash's original vision and intent are alive and well today. “Mary Kay’s legacy will most definitely continue,” Holl says. “We won’t change the principles of the company and we won’t alter our values, but we will adapt to changes in the marketplace. The absolute constant will be our unwavering focus on perpetuating Mary Kay’s vision. Her original intent of enriching women’s lives is today our mission statement – further proof that we’re not going to change.”

Images of Mary Kay can be seen throughout company locations, and her teachings and quotations appear frequently in all company literature. In addition, independent sales force members who spent decades working side by side with Mary Kay – women she frequently referred to as her “daughters” – take great pride in passing on Mary Kay’s wisdom and proven selling techniques.

Attendees at the company sales force events, such as the five back-to-back national conventions held each summer in Dallas and attended by more than 50,000 independent sales force members, are treated to taped speeches in which Mary Kay challenges them to pursue their dreams.

Other company events – such as Leadership Conference, held in January and attended by some 10,000 independent sales directors, and Career Conference, held in early spring in more than 30 cities nationwide – also feature the wisdom and teachings of Mary Kay Ash.

“The simple principles laid out by Mary Kay Ash are perhaps even more relevant today than they were 40 years ago,” Oxford says. “Women today are seeking meaningful careers while hoping to find the flexibility that will enable them to pursue their goals while raising their families. The Mary Kay career opportunity affords them that flexibility – they can plan their lives around their career instead of letting their career dictate their lives.”

Mary Kay’s Story

Mary Kathlyn Wagner was born on May 12, 1918, near Houston. At a young age, she cared for her invalid father while her mother was supporting the family as a waitress. Ash credits her mother for instilling within her a work ethic and ambitious spirit with the simple admonition, “You can do it!”

Ash married Houston radio personality Ben Rogers at 17 and had three children. They divorced after Rogers entered the Army. The single mom moved to Dallas and took a part-time job for Stanley Home Products, selling household goods at parties in women’s homes in the late 1930s. She studied to become a doctor, but decided to focus on sales full-time as her success grew. A decade later, she joined another direct-sales company, World Gifts, as national sales director.

According to Mary Kay’s Web site, Ash quit in 1963 when a male colleague hired as her assistant was promoted over her at twice her salary. Out of w ork, Ash began to collect her thoughts for a how-to career book for women.

The musings turned into her idea for Mary Kay Cosmetics. Ash bought a formulation for a skin-care cream developed by an Arkansas tanner, promoted it as a beauty product and recruited friends to sell.

The company was profitable almost immediately, generating nearly $200,000 in revenues the first year. Mary Kay Cosmetics grew rapidly in the 1970s, breaking $100 million in sales in 1979, and consequently sold stock to the public. But sales slumped in the mid-1980s. Shares of the company lost more than 75 percent in value, and Ash grew tired of having to answer to shareholders who didn’t seem to understand her direct-selling business. In 1985, Ash and her family borrowed to buy the company back and take it private.

Ash became chairman emeritus in 1987. Her son, Richard Rogers, who co-founded the company with his mother in 1963 and worked side-by-side with her until taking a “sabbatical” in the early ‘90s, resumed his leadership position in June 2001 as chairman and CEO.

Ash wrote three best sellers: A 1981 autobiography called Mary Kay; a business book, Mary Kay on People Management, in 1984; and a motivational volume, Mary Kay – You Can Have It All, in 1995. Ash passed away last November after being in fragile heath for several years.

Mary Kay’s initial goal was to provide women with an unlimited opportunity for personal and financial success, which the company still maintains as its singular focus. Mary Kay grew her dream from a small Dallas direct sales company to one of the largest direct sellers of skin care and color cosmetics in the world. Fortune magazine has recognized the company as one of the 100 Best Companies to Work for in America, and also named Mary Kay one of the 10 best companies for women.

The Mary Kay Ash Charitable Foundation was created in 1996 to provide a vehicle to help support the issues Mary Kay held so close to her heart – finding a cure for cancers affecting women and putting an end to violence against women. The Foundation has since given millions of dollars to these causes. In 2001, Mary Kay Inc. and the Mary Kay Ash Charitable Foundation underwrote the production of an hour-long documentary, “Breaking the Silence: Journeys of Hope,” which tells the moving stories of women who had the courage to break the cycle of domestic violence. The program, which continues to air on PBS stations throughout the U.S., offers hope and encouragement to women who find themselves in violent situations.

Recognizing Mary Kay’s groundbreaking campaign to stop domestic violence, the Direct Selling Association recently awarded the company its prestigious “Vision for Tomorrow” award that recognizes a direct selling company whose community service efforts have substantially improved the quality of life in their communities.

Not surprisingly, Mary Kay Ash won countless awards recognizing her tireless efforts to enrich women’s lives worldwide.

Earlier this year, she was honored as a Dallas Business Hall of Fame Laureate “in recognition for her lifetime achievements and for demonstrating inspiring business and community leadership, industry vision and service as a business and civic role model in the community.”

Mary Kay was also named “Most Outstanding Woman in Business in the 20th Century” by viewers of Lifetime Television in 1999, and was elected to the “National Business Hall of Fame” by Fortune in 1996. The National Association of Women Business Owners awarded Mary Kay their “Pathfinder Award” in 1995, and the Direct Selling Association honored her with their “Living Legend” award in 1992. Earlier, she was included among “America’s 25 Most Influential Women” in 1985 by The World Almanac and Book of Facts, and one the first women to be selected as a “Horatio Alger Distinguished American” in 1978. “Mary Kay’s generous spirit was legendary throughout her career and she gave hope to women who lacked opportunity and self-esteem,” Holl says. “Her true legacy will be the flexible career opportunity she created that today is providing personal and financial success for women around the world.”

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