Mary Kay

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Mary Kay, Inc.
TypePrivately held company
IndustryCosmetics and personal care products
FoundedDallas, Texas (1963)
HeadquartersAddison, Texas
Key peopleMary Kay Ash, Founder
Richard R. Rogers, Executive Chairman
David Holl, CEO, Mindy Volney
ProductsCosmetics, sunscreen
RevenueUS$2.9 Billion in 2011[1]
EmployeesStaff 5,000
Salespeople 3 million worldwide (2011)[1]
Websitewww.marykay.com
 
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For the Greek landscape photographer, see Mary Kay (landscape photographer).
Mary Kay, Inc.
TypePrivately held company
IndustryCosmetics and personal care products
FoundedDallas, Texas (1963)
HeadquartersAddison, Texas
Key peopleMary Kay Ash, Founder
Richard R. Rogers, Executive Chairman
David Holl, CEO, Mindy Volney
ProductsCosmetics, sunscreen
RevenueUS$2.9 Billion in 2011[1]
EmployeesStaff 5,000
Salespeople 3 million worldwide (2011)[1]
Websitewww.marykay.com

Mary Kay, Inc. is an American privately owned multi-level marketing[2]/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.[3][4][5]

Business model[edit]

Mary Kay corporate headquarters in Addison, Texas

Mary Kay sells cosmetics through a multi-level marketing model.[6][7] 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 starter kit in order to qualify.[6]

As a private company, Mary Kay releases few details about the average income of its sellers.[6] In 2005, Mary Kay reported that its wholesale worldwide sales exceeded US$2.2 billion.[8] In 2010, worldwide wholesale figures was reported at US$2.5 billion.[3] 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
YearWholesale VolumeConsultantsDirectorsNational DirectorsWholesale volume / Consultants
1963$198,154[9]318[9]00$623.13
1973unknown21,069[10]450(?)2(?)unknown
1983$300,000,000[10]195,000[10]unknownunknown$1,538.46
1989$400,000,000200,000unknownunknown$2,000.00
1991$511,000,000[11]220,000[11]unknownunknown$2,322.73
1992$500,000,000[12]250,000[12]unknownunknown$2,000.00
1993$735,000,000[10]325,000[10]unknownunknown$2,261.00
1994$850,000,000[13]unknownunknownunknownunknown
1995$950,000,000[13]unknownunknownunknownunknown
1995 Russia$25,000,000[14]unknownunknownunknownunknown
1996$1,000,000,000[13]unknownunknownunknownunknown
1997 People's Republic of China$12,000,000[15]15,000unknownunknown$800.00
1998 People's Republic of China$7,200,000[15]unknownunknownunknownunknown
2001 USAUnknown500,000[16]unknownunknownunknown
2002$1,600,000,000850,00019,000[17]more than 300[17]$1,882.35
2002 USAunknownunknown13,000[17]unknownunknown
2002 People's Republic of China$120,000,000[15]120,000[15]unknownunknown$100.00
2003$1,800,000,0001,100,00018,500[18]More than 100[18]$1,636.36
2004$1,960,000,000[19]1,300,000[20]27,000[8]410[20]$1,507.69
2004 USAunknownunknownunknown210[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[8]1,600,000[8]31,000[8]500[8]$1,375.00
2005 People's Republic of China$300,000,000[24]400,000[24]unknownunknown$750.00
2005 USA$1,300,000,000[24]715,000[24]unknownunknown$1,818.18
2005 Canadaunknown32,820[25]673[25]17[25]unknown
2005 Argentinaunknown20,000[26]500[26]8[26]unknown
2005 Mexicounknown175,000[27]unknownunknownunknown
2005 United Kingdomunknown5,000[28]140[28]2[28]unknown
2006 Worldwide$2,250,000,000[29]1,700,000 +[29]unknownabout 500[30]$1,323.53
2006 CanadaCAD 62,000,000[31]34,272[25]724[25]18[25]CAD $1,809
2006 USAunknownunknown14,000+[30]unknownunknown
2006 UKunknown5000[28]140[28]2[28]unknown
2007 Canadaunknown31891[32]659[25]25[25]unknown
2007 USAunknown700,00014,000[33]215[34]unknown
2007 Worldwide$2,400,000,000[34][34]1,700,000[34]unknownunknown$1,411.76
2008 Canadaunknown30,679[35]608[35]24[35]unknown
2008 USAunknown600,000[36]13,000[36]unknownunknown
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]unknownunknown$3,000
2010 WorldwideUS$2,500,000,000[3]2,000,000[3]unknown600[3]US$1,250
2010 AustraliaA$25,000,000[40]10,000unknownunknownA$2,500
2010 Canadaunknown29573[41]unknown24[41]revenue / consultants
YearWholesale VolumeConsultantsDirectorsNational Directorsrevenue / consultants

Note: 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 from a Dallas dealership, where it was repainted on site to match the "Mountain Laurel Blush" in a compact Ash carried. The Cadillac served as a mobile advertisement for the business. The following year, Ash rewarded the company's top five salespeople with similarly painted 1970 Coupe de Ville cars. GM has painted over 100,000 custom cars for Mary Kay. The specific shade has varied over the years from bubble-gum to near-white pearlescent effects. GM had an exclusive agreement to sell cars of the specific shade only through Mary Kay. The cars are offered to distributors as two-year leases, and distributors who choose to buy the cars are only allowed to resell them to authorized dealers. After the lease expires, the cars are repainted before being resold.[42]

Mary Kay has different incentive levels for its consultants. Independent Beauty Consultants can earn the use of a white Chevy Cruze, in August 2014 introduced the limited edition Lipstick Red color option also for limited time, or cash compensation of $375 a month. Independent Sales Directors can choose a black 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.[43]

The specific qualifications for earning the car depend upon the country, and vehicle that is desired. If those qualifications are not met, then the distributor has to pay for a portion of the lease of the car for that month. Meeting the qualifications entitles the distributor to pay no monthly lease and 85% of the car insurance, or a pre-determined cash compensation award.[44]

In 2011, a solid black Ford Mustang was introduced as a possible incentive. In 2014, a black BMW was introduced in its place, although the pink Cadillac remains the top reward for those distributors who sell $100,000 or more in a year.[45]

Earnings for salespeople[edit]

As a private company, Mary Kay Inc. does not make all of its financial information available to the public.[5] There is very little reliable information about actual earnings by consultants.

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

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:[46]

For Mary Kay (USA) National Directors, the 2006 median gross income (prior to business expenses) was $75,443.[47]

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 does not take into account product returns, eBay, auctions, sales at a discount, and purchases by "personal use consultants" which would lower this figure.[citation needed]

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.[48]

An 85% per annum turnover figure has been calculated, based upon the data supplied by Mary Kay (Canada).[49] 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[50] 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.[51]

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.[52][53]

On 20 July 2009, Mary Kay Inc sued Pink Face Cosmetics for violation of 15:1051 Trademark Infringement.[54] 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.[55]

“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.” [56]

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. ^ Michigan Attorney General Bill Schuette. "Multi-Level Marketing or Illegal Pyramid Scheme? Consumer Alert". State of Michigan. Retrieved July 27, 2014. 
  3. ^ a b c d e 2011 Press Kit The Company
  4. ^ Mary Kay Company Information page[dead link]]
  5. ^ a b Mary Kay At-A-Glance — June 2006
  6. ^ a b c Hicken, Melanie (10 January 2013). "The money behind Herbalife, Mary Kay and others". CNN Money. Retrieved 12 April 2014. 
  7. ^ Sole-Smith, Virginia (August 2012). "The pink pyramid scheme". Harper's Magazine. Retrieved 12 April 2014. (subscription required)
  8. ^ a b c d e f MK Corporate Press Kit 2006[dead link]
  9. ^ a b "Mary Kay Ash". 20th Century American Leaders Database. Harvard Business School. Retrieved 2010-10-20. 
  10. ^ a b c d e Mary Kay Corporate Milestones[dead link]
  11. ^ 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]
  12. ^ 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]
  13. ^ a b c "Company Retrospective". Mary Kay (UK). Retrieved 2010-10-20. [dead link]
  14. ^ Stanley, Alessandra (1996-08-14). "Avon and Mary Kay Create Opportunities for Women". Moscow: New York Times. p. D1. Retrieved May 2014. 
  15. ^ a b c d "China consumer goods: Still off the doorstep". Economist Intelligence Unit (Economist Group). 2005-06-21. Retrieved 2010-10-20. (subscription required)
  16. ^ Providing Mary Kay Employees with Own Webpages Saves Millions (pg. 2)
  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.  Check date values in: |date= (help)[dead link]
  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. ^ Clanton, Brett (27 June 2006). "Mary Kay Inc. Loves Cadillac, and the Feeling Is Mutual". The Ledger. Retrieved 21 May 2014. 
  43. ^ Pink Truth
  44. ^ Brochure: Mary Kay Career Car Plan Guidelines — February 2005.
  45. ^ Ford Mustang revs up as Mary Kay’s newest ride
  46. ^ Earnings Representation
  47. ^ US National 1206 Commission[dead link]
  48. ^ Mary Kay Letter to the FTC regarding proposed changes in the rules governing MLMs.
  49. ^ Mary Kay Canadian Earnings
  50. ^ Fired Mary Kay Worker Wins Lawsuit
  51. ^ Order List:544 US
  52. ^ http://www.pinktruth.com/images/MKCorp/touchofpink.pdf
  53. ^ Evan Clark (2008-03-09). "Mary Kay Sues Former Sales Rep.". Women's Wear Daily. [dead link]
  54. ^ Northern District of Texas Case 3:09-cv-01363-L
  55. ^ Vartan, Starre. "Avon, Estee Lauder and Mary Kay under fire for animal testing", The Miami Herald, Miami, 27 February 2012. Retrieved 8 March 2012.
  56. ^ Editorial Team, OneGreenPlanet.Org. "Top Cosmetic Companies Reportedly Resume Animal Testing", One Green Planet, 17 February 2012. Retrieved 8 March 2012.

Links[edit]