[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.