Marry Kay Cosmetics Case.

8/8/2019 Marry Kay Cosmetics Case.

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Marry kay cosmetics;

Sales force incentive.

Presented to:Sir Khurram Shehzad.

Presented by:Sidra Safdar Jafferi.


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Preview.Preview.

Best advice for entrepreneurs by Marry KayAsh.

Brief history:

Programs for motivation.

Challenge faced by the company.

Company background.

Mission of the organization.

Revised mission in 1987.

Company philosophy.

Company ownership and structure.

Organization structure.

Role of internal organization.

Sales force support.

History of VIP car program.

The current challenge.

Objectives of marketing plans modification.

Conclusion.


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Brief history.

Programs for motivation &

Challenge faced by the company.


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Programs for motivation.

Three car programs were introduced by the company for

motivation of employees:

VIP (very important performer) car program in 1984:

To motivate its top performing, non director beauty

consultants.

Pink Cadillac program in 1969:

For which only director level consultants were eligible.

The Pink Buick program:

For sales directors.

The car programs proved to be really effective.


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Challenges faced by the company.

The cost of running the program had escalated substantially.

The cost of VIP program had skyrocketed.

The number of leased cars approached 3000 in early 1980s.

1000 Cadillacs and 1000 Buicks were in force in 1989.

The number of car winners doubled from 1.25% in 1986 to

2.5% by year end 1988.

Company faced difficult challenge of containing further

program cost increases without upsetting incentive system.


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Company background.

It was an international manufacturer & distributor of

premium skin care, hair care & body products.

Products were sold throughout USA by networking of 175000

independent women.

Marry kay also sold internationally in seven countries.

In 1988,the company achieved record sales of 406 million dollars.


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Mission of the organization.

To be a teaching oriented organization that provided

women with exceptional opportunities for professional

achievement, economic success, recognition, personal

development & independence.


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Revised mission in 1987.

To achieve preeminence in the manufacturing, distribution

& marketing of personal care products by providing

personalized service, value, convenience & innovative

solutions to consumer needs through our independent sales

force.


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Company philosophy.

Every person associated with the company from chairman

Emeritus to the newest recruit, lives by these golden rules:

Do unto others as you would have them do unto

you.

Priorities of God first, family second & career

third.


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Company ownership and structure.

In 1984,a decline of 14% in sales & 8% in earnings had triggered

a sharp drop in companys share price.

In 1985,Chairman Marry kay & her son, Richard Rogers led a

management leveraged buyout for a price of approximately 315

million dollars.

In 1987, Rogers became Chairman & Dick Bartlett, was named

president & Chief operating officer (COO).


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Organization structure.

President Bartlett placed himself at the bottom of the

organization, surrounding by staff support functions.

Above him were the four operating divisions:

Marketing.

Sales. Resource & development.

Manufacturing & distribution.

Customer base of 15 to 20 million households were

placed at the top of organization structure.


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Role of internal organization.

To support the independent sales force of 175,000 beauty

consultants.

To update & improve the quality & selection of our

products.

To refine our facilities & procedures.

To anticipate & respond to the consultant needs.


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Meetings for first challenge of Bartlett.

To break down departmental

fiefdoms:

Weekly sales & marketing

meetings.

Creative action teams.


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Sales force support.

Communications.

Events.

Sales force incentives.

Recognition & prizes.

Financial incentives.


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History of VIP car program.

Between 1983 & 1989,Marry Kays car programs increased from 1100

cars to 5000 cars.

Most of this increase was due to VIP car program introduced in 1984.

By mid 1989,VIP cars in force numbered 3000.

Increased VIP participation was accompanied by several external costtrends:

The cost to Marry Kay of leasing the cars had increased with interest

rates.

Automobile insurance premiums had escalated faster than both inflation

& prices of Marry Kay products.

General motors discontinued the Oldsmobile Firenza ,reducing the resalevalue of the one & two-year-old cars.


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The current challenge.

According to Richard Wiser, vice president of financial planning &

analysis:

Over the last several years, we've watched the cost of the car

programs & of commissions creep up relative to sales. Car expenses in

particular have really jumped up since 1985.

President Dick Bartlett continued: Richard is right. In fact, those VIP consultants who really do want

additional income & recognition may rush into directorship

prematurely. They may qualify before they have a large, strong team

base & sufficient experience.

That's bad for everyone. The consultant must fight a frustrating

uphill battle to retain her director status. And from our perspective,

her units size & performance may deteriorate.


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Objectives of modification of marketing plan.

To improve profit margins by reducing overall beauty consultant

compensation as a percent of sales.

To enhance the beauty consultants career path with more distinct

milestones & forms of reward.

To make cost reductions elsewhere in the marketing plan while

preserving sales force morale & motivation.

To minimize the cost to the form of maintaining low performing

consultants.


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Conclusion.

The managers reemphasized the extreme sensitivity of beautyconsultants actions to changes in the marketing plan.

Those consultants who had rushed to obtain the cars had relativelylow tenure with Marry Kay.

These consultants did not have the experience & team strength tomaintain their VIP status.

They had to forfeit their cars prematurely which was demoralizingfor them and costly for the firm.

Any change in marketing plan that was not well-received by thesales force of over 175,000 beauty consultants could be disastrous to

the company. Management therefore, had scheduled the first Marry Kay

Summit Meeting & invited all national sales directors to beinvolved in designing changes in the marketing plan.


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THANK YOU.

Marry Kay Cosmetics Case.

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