[E-marketing] Case3 Mary Kay -- Question 1

1.     How would you evaluate Mary Kay’s situation from the demand side and supply side? (Mary Kay is to be entitled as MK)

Ans:

First, we need to specify the demand side refering to MK’s customers; the supply side means the company MK and its independent Beauty Consultants. And we discuss the demand side—customers first.

 

Customers  

   The typical direct sales consumers are middle-class women. However, MK’s sales started to level off since 1994. Many industry observers attributed the decline to the changing lifestyles and shifting buying habits of the company’s consumers. The demographic and social changes in the 1980s intensified throughout the 1990s. The following are the details:

 

(1)  In 1998, almost 60 percent of women over 16-year-old worked outside the home, compared with 37.7 percent in 1960. Managing full-time jobs along with the greater part of child-rearing and housekeeping responsibilities, women were becoming increasingly time-impoverished. Many of them no longer had time for the cosmetics parties and other face-to-face social interactions that had driven sales in previous years. Some of them sent product requests to MK consultants late at night to their personal email accounts.

 

(2)  The MK target market was growing older and older.

 

(3)  The MK consumers were more sophisticated than they had been 20 years earlier in their make-up choice, purchase, and use. Cosmetics counters were providing the type of counsel that MK consultants had always offered. Women now knew how to apply make-up, so there was less need for the intensive education that skin-care classes used to provide.

 

(4)  The Internet was becoming more widely used. More and more Americans were using the Internet to do their shoppings. Forrester Research even estimated that online health-and-beauty sales would leap from $509 million in 1999 to $6 billion by 2003.

 

As for the supply side, we divide it into two parts: a) Mary Kay itself and b) the relationship between MK and its Independent Beauty Consultants.

Mary Kay

(1) Favored high-touch approach instead of high-tech

Founded on a kitchen table in 1963, MK had been a relatively low-tech operation which was built on personal relationships. Technology had never been a driving force to the company. Most of their executives considered the high-tech approach to be at odds with the high-touch approach. MK’s guiding principle was enriching the lives of women in the independent sales force. The loyal relationship between the firms and the distributors was a unique attribute of the direct selling model at its best. The concept of direct selling, also known as network marketing organization (NMO),  didn’t have retail storefronts, nor did they advertise extensively. Rather, they relied heavily on their distributors to sell their products and build brand equities through their social networks. NMO helped MK save the costs of storefronts, and each distributor is like a storefront who sold products to people with whom they interacted in their daily lives. It was a good way for viral marketing, which also save costs of advertisements. And the loyalty of consumers for distributors and MK’s products based on NMO tended to be long lasting and prominent.

 

(2) Launched its purely informative website

In 1996, MK launched its corporate website. The site was purely informative, providing data on MK products and career opportunities. Because of its guiding principle, MK did not rush to build a website to market to its end consumers.

 

(3) Outdated internal systems and processes had caused the following problems:

(a) Time-consuming monthly sales reports

It took 3 weeks to generate, print, and mail monthly sales reports to sales force members, which was too late for them to react and attempt to reach next sales goals. As a result, in 1996, MK developed a simple, low-cost soft program with the capacity to send electronic sales reports to independent Sales Director-level consultants.

 

(b)Unable to support the increased off-hour phone call loading

Outdated technology system was unable to handle increased off-hour calls; so orders were lost because beauty consultants could not get through.

 

(c)Supply chain problems

Inventory stock-outs were common with new, limited-edition products launches. And backorders were common during new promotions.

 

Relationship between MK and Independent Beauty Consultants

(1) Part-time consultants

Increasing number of women were entering the workforce affect not only MK consumers but also its consultants. 70 to 75 percent of MK independent Beauty Consultants were working at jobs outside MK, juggling a full-time job, a sales network, and her family.

 

(2) Increased off-hour calls

Many consultants worked other jobs from 9:00 a.m. to 5:00 p.m., increasing number of consultants were attempting to phone in their product orders after 5:00 p.m., but some of the calls were blocked due to the outdated technology system.

 

(3) Half of the orders were received at the end of the month

With approximately 50 percent of orders being received by mail during last week of the month, it was time and cost-prohibitive to check with the consultants regarding substitutions. As a result, consultants didn’t always get the products they needed. The sales force’s frustration level was growing and this had an impact on retention: doing business with MK was taking more effort than some part-time beauty consultants were willing to extend.

 

(4)  Consultants started their own websites

By 1996, a handful of MK consultants had started their own websites, some containing outrageous claims about product performance and results. Rather than forbidding its beauty consultants from having an online presence, MK introduced the Internet Personal Page Program which helped MK maintain control of the MK brand online.

[E-marketing] Case3 Mary Kay -- Question 2

2.     Does Mary Kay's channel design fit in its competition strategy?

Ans:

No. Management still disagreed with the use of technology as a core strategic component. On the contrary, MK’s competitors were responding to the demographic and consumer buying changes by exploring using the Internet as an alternative sales channel. By the mid 1990s, MK was using many disparate technology platforms and had not invested in current IT. Insisting on direct sales force plus purely informative website, MK’s channel design seemed conservative and limited. We therefore think MK should take competitors’ new sales channels into consideration and learn from them if the alternatives were appropriate.

 

   Take Avon as example. Avon launched its first kiosk, or beauty center, in a mall in 1998 and was planning to open approximately 60 more by middle of 1999. But only limited products were available; shoppers who requested other products were referred to Avon representatives. Women interested in becoming ‘Avon Ladies’ could sign up at the beauty center. Avon hoped the kiosks would attract the attention of the younger consumer segment that was critical to its long-term viability. In 1999, Avon even announced plans to sell Avon products in retail stores and offer a full catalog for consumers to order directly from Avon.

 

   The executives envisioned Avon would one day be a single source for everything a women wanted to buy, with at least 3 ways to buy it: through an Avon Lady, in a store, or online.

 

   As for Tupperware, the management viewed Tupperware parties as a competitive advantage over alternative storage solutions. We consider it a good way for PR and buzz marketing. The company began to sell its full line of products on the Tupperware website since 1999. Like Avon, it planned to open shopping mall kiosks. It began selling products on the Home Shopping Network and announced plans to use direct mail channel by the end pf 1999.

 

Despite forays into other channels, Tupperware promised to remain loyal to its sales force and continue to sell via the traditional Tupperware party.

 

Comparing with the competitors’ multi-channel strategies mentioned above, MK didn’t provide online sales and kiosks for fear of competing with its beauty consultants. The following is the channel structure for MK.

   It’s a direct channel design without the role of retailer. Instead, MK put emphasis on the power of beauty consultants. But it was not active enough to expand the social networks and gain new and young consumers. MK should increase the accessibility of its products and it could take reference from its competitors’ initiatives. Furthermore, IT and supply-chain problem mentioned in Q1 should be addressed, as well as the issues and negotiations with beauty consultants. In brief, MK needed to decide the appropriate strategy to solve the declining sales problems and keep up with the changes in the marketplace. 

[E-marketing] Case3 Mary Kay -- Question 3

3. What's your suggestion for Mary Kay to go online?

Ans:

In our opinion, MK should recognize and accept the fact that the Internet is the trend, and IT is crucial to it company development. Even if some advanced technology is needed to practice, MK should by all means reduce the contradiction with beauty consultants and rearrange the positioning of consultants, the Internet, and other devices.

 

   Another essential issue is to attract new consumers while maintaining the old ones’ loyalty. There should be some new and interesting marketing strategy to receive more market visibility. We suggest MK work with online shopping centers to acquire more young and fresh consumers.

[E-marketing] Pre-campaign strategy of Google AdWords Challenge

Client Profile

Established in 2001, with 95 employees, National Archives Administration (entitled as NAA, URL: http://www.archives.gov.tw/), is the central archives authority in Taiwan and mainly responsible for providing continued access to national archives of politics, economics, disasters as well as records before 1949, nearly 400,000 items now. People can apply to use the archival materials through visit, mail, phone-call or website. While it is free to use the archives, fees of reproduction are needed to be charged. The Services Division of NAA is assigned to promote its image and services, but it doesn’t pay much attention to online marketing.

     Most customers of NAA are researchers for academic purpose and the family members of victims of political incidents, and there are average about 160 users and 70,000 pages copied per year. The user group is still small and NAA have to identify its potential customers. Although having competitors providing similar service, like Academic Historica and Archives of Institute of Modern History of Academic Sinica, NAA has the unique right to transfer archives from government agencies by law. Besides, NAA has spent $600,000 to build web systems until now and $70,000 to maintain them annually.

With abundant information in various format and user-friendly interactive modules, however, the multi-layered searching function of NAA website is not so convenient to use. When seeking for information, users have to be redirected to other systems, and that make new comers feel confused. In Google, NAA is in 5/10 PageRank and with 753 incoming links, but not available in Analytics. Currently, NAA sends newsletters by e-mail to 4,000 customers once a month, holds exhibitions periodically and issues related publications.

In order to increase public awareness, NAA considers conducting online marketing, and hopes the AdWords campaign can help figuring out the effect. 

Proposed AdWords Strategy

Our target audiences are academic researchers and those interested in records about political incidents victims in Taiwan, so the ads will be displayed in Chinese. We set politics, economy and disasters as our focuses for academic researchers. Besides, we focus on individuals and reporters caring for official documents about political victims. We propose 2 Ad Groups with 2 versions for each focus, and list over 90 keywords covering from broad concepts to specific ones, such as political incidents, 228 incident; and 10 negative keywords, like Chiang Kai-Shek, as filter. Our concept is to set various perspectives to attract different groups of users, no matter who have any idea of archival information they are looking for. Here are examples.

We choose search network to place our AdWords ads. Here’s the process of our strategy. 

For the purpose of targeting and identifying potential customers, we plan to put all keywords and negative keywords during 3 weeks, but launch one Ad group for each focus only in the first week to test the wording attraction. From the beginning of second week, we would adapt or increase the Ad groups according to the performance report providing by Google and continue to make adjustments in the 3rd week. As the 2nd week is the critical one in our ad serving strategy, we allocate the budget of $200 to three weeks in the proportion of 3:4:3, and then portion those out for daily spending. Based on our research, there is no online ad competitor for NAA, so we would not take keyword bidding basically.

By implementing high relevant keywords to fulfill highly targeted strategy, we hope that we are able to maintain high quality scores to reduce our campaign cost, and get more impressions as well as clicks to enhance the CTR.

To sum up, our strategy is to match CPC and the minimum bid with the lowest cost for higher web traffic through our success metrics in 3 aspects. The first aspect is to enhance 30% visits of the landing page. Moreover, we hope to increase 10% incoming links from the current 753 links. We finally hope to increase PageRank from 5/10 to 5.5/10 through this campaign.