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Mary Kay Inc.
Type Privately held company
Founded Dallas, Texas (1963)
Headquarters Addison, Texas
Key people Mary Kay Ash, Founder
Richard R. Rogers, Executive Chairman
David Holl, CEO
Industry Personal care products
Products Skin care, cosmetics, sun protection, perfume
Revenue $2.4 Billion in 2007[1]
Employees Independent sales force of 1.8 million worldwide (2008) [1]
Website Mary Kay Inc.

- Mary Kay is a brand of skin care and color cosmetics sold by Mary Kay Inc. Mary Kay World Headquarters is located in Addison, Texas, United States, a Dallas suburb. Mary Kay Ash founded Mary Kay Inc. on Friday, September 13, 1963. Richard Rogers, Mary Kay's son, is the executive chairman, and David Holl is president and was named CEO in 2006.[2]

The company has been criticized by opponents who call it a "product-based pyramid scheme," relying on constant recruitment of new sellers who purchase inventory so those who recruited them can earn commissions. However, opponents also recognize that the operations of the company are not in violation of any laws. [3]

Contents

Markets Mary Kay is in

Mary Kay Entered the market
Year Market Year Market Year Not Known Market
1963 USA 1993 Singapore ? Switzerland
1971 Australia 1993 Russia 1993 Moldova
1978 Canada 1990 UK ? Netherlands
1980 Argentina 1994 Brazil ? Lithuania
1984 Uruguay 1994 Japan ? Latvia
1986 Germany 1995 China ? Estonia
1988 Malaysia 1995 Portugal ? Dominican Republic
1988 Mexico 1996 Finland
1988 Thailand 1997 Czech Republic
1991 New Zealand 1997 Ukraine
1991 Guatemala 1999 El Salvador
1991 Taiwan 1999 Hong Kong
1992 Spain 2000 Kazakhstan
1992 Sweden 2000 Philippines
1993 Bermuda 2000 Slovakia
1993 Brunei 2001 Korea
1993 Chile 2002 Uzbekistan
1993 Guatemala 2005 Moldova
2000 Malaysia 2006 India
1993 New Zealand 2006 Poland
1993 Norway 2008 India

A grey market serves vendors of Mary Kay Cosmetics in other countries.

The products

The original nine skin care products were based upon a recipe from a tanner, allegedly whose skin was much smoother, and clearer than his age would indicate.

In the United States, roughly 200 products are currently available. In other countries, fewer products are available, because they are reformulated to meet local laws or, more commonly, consumer preferences. For example, Asian makeup is sometimes much whiter than European makeup. African makeup has traditionally been more ochre than European makeup.

Some products, such as Mary Kay Whitener, are created for a specific country, or geographic region. Other products, such as the Mary Kay Limited Edition, are created to reflect seasonal changes.

In the early 1990s, recognizing that the majority of both its customers and consultants were women of color, Mary Kay introduced colors that were more suitable for that market.

PETA celebrated a semi-victory in the cosmetics industry in 1989, when Mary Kay Cosmetics announced a moratorium on animal testing.[4] The sought-for victory --- fur coats are not prizes --- came in 1996, when Mary Kay stopped offering fur coats as incentive awards for its sales force [5]. The final push may have been a series of embarrassing cartoons that appeared in newspapers across the country in the years immediately preceding the ban. In 1989 they were published in The Night of the Mary Kay Commandos[6] by Berke Breathed. A famous line from the book reads Even their Uzis are pink.

In 1995, to adhere to the laws of The People's Republic of China, Mary Kay opened a plant in Hangzhou to manufacture and package products. A European plant was opened in 1997, in La Chaux-de-Fonds, Switzerland, to serve the European market but was closed in 2003.

In 2005, wholesale sales of Mary Kay products to the consultants exceeded $2.2 billion.[7] This $2.2 billion figure does not account for products returned by consultants to the company.[8]

Sales volume

Mary Kay Sales Figures
Year Wholesale Volume Consultants Directors National Directors Wholesale volume / Consultants
1963 $198,154[9] 318[9] 0 0 $623.13
1973 unknown 21,069[10] 450(?) 2(?) unknown
1983 $300,000,000[10] 195,000[10] unknown unknown $1,538.46
1989 $400,000,000 200,000 unknown unknown $2,000.00
1991 $511,000,000[11] 220,000[11] unknown unknown $2,322.73
1992 $500,000,000[12] 250,000[12] unknown unknown $2,000.00
1993 $735,000,000[10] 325,000[10] unknown unknown $2,261.00
1994 $850,000,000[13] unknown unknown unknown unknown
1995 $950,000,000[13] unknown unknown unknown unknown
1995 Russia $25,000,000[14] unknown unknown unknown unknown
1996 $1,000,000,000[13] unknown unknown unknown unknown
1997 China $12,000,000[15] 15,000 unknown unknown $800.00
1998 China $7,200,000[15] unknown unknown unknown unknown
2001 $1,400,000,000 800,000 unknown unknown $1,750.00
2001 USA Unknown 500,000[16] unknown unknown unknown
2001 Mexico $20,000,000[17] unknown unknown unknown unknown
2002 $1,600,000,000 850,000 19,000[18] more than 300[18] $1,882.35
2002 USA unknown unknown 13,000[18] unknown unknown
2002 China $120,000,000[15] 120,000[15] unknown unknown $100.00
2003 Just under $1,800,000,000 1,100,000 18,500[19] More than 100[19] $1,636.36
2004 $1,960,000,000[20] 1,300,000[21] 27,000[7] 410[21] $1,507.69
2004 USA unknown unknown unknown 210[21] unknown
2004 Canada $125,000,000[22] 29,357[23] 661[23] 16[23] $4,257.93
2004 United Kingdom $7,700,000[24] 3,500[19] More than 70[19] 0[19] $2,200.00
2005 $2,200,000,000[7] 1,600,000[7] 31,000[7] just under 500[7] $1,375.00
2005 China $300,000,000[25] 400,000[25] unknown unknown $750.00
2005 USA $1,300,000,000[25] 715,000[25] unknown unknown $1,818.18
2005 Canada unknown 32,820[26] 673[26] 17[26] unknown
2005 Argentina unknown 20,000[27] 500[27] 8[27] unknown
2005 Mexico unknown 175,000[28] unknown unknown unknown
2005 United Kingdom unknown 5,000[29] 140[29] 2[29] unknown
2006 Worldwide US$2,250,000,000[30] 1,700,000 +[30] unknown about 500[31] $1,323.53
2006 Canada unknown 34,272[26] 724[26] 18[26] unknown
2006 USA unknown unknown 14,000+[31] unknown unknown
2006 UK unknown 5000 [32] 140[32] 2[32] unknown
2007 Canada unknown 31891[26] 659[26] 25[26] unknown
2007 USA unknown 700,000 14,000[33] 215 [34] unknown
2007 Worldwide US$2,400,000,000 [34][34] 1,700,000 [34] unknown unknown $1,411.76
2008 Canada unknown 30,679 [35] 608 [35] 24 [35] unknown
2008 USA unknown 600,000[36] 13,000[36] unknown unknown
2008 Worldwide $2,600,000,000[37] 1,800,000[37] 34,000[37] 500[37] $1,444,44

Notes:

  • Dollar amounts are in United States Currency;
  • Dollar amounts have not been adjusted for inflation;
  • Official Mary Kay, Inc. policy is to round up their gross Wholesale volume.;
  • Official Mary Kay, Inc. policy is to round down the number of consultants;

Cars

In 1968, Mary Kay Ash purchased the first Pink Cadillac, where it was repainted on site, by the dealership owner, to match the Mountain Laurel Blush in the compact.[38] It was such a good rolling advertisement that Mary Kay Ash decided to reward her top five producers, by providing them with a Pink Cadillac paid for by the company in 1969. Pink was an obvious color choice --- matching the company's eye and lip color palettes. Since 1980, the shade used by the Mary Kay fleet has been exclusive to Mary Kay. Every two years, a Director or National can requalify for a new Cadillac. When the two year lease has expired, the cars are repainted, prior to being auctioned off. The shade of pink has changed over the years. In 1998, the color was changed to "pearlized pink". In honor of its 35th anniversary, the Mary Kay edition, white GMC Jimmy sport utility vehicle was offered in the United States. In 2007, top Independent Sales Directors can still earn the coveted pink Cadillac, however the color changed to black for Independent Sales Directors and smoky platinum for Independent Beauty Consultants.

In the United States, the 2006 vehicle choice consisted of a Pontiac Vibe, Pontiac Grand Prix or a Cadillac. A Mary Kay director that qualifies for a car may choose from a Cadillac DTS, a Cadillac CTS, or a Cadillac SRX. In 2007 the offered cars were Saturn Vue, Pontiac G6, Pontiac Vibe, Cadillac CTS, and Saturn Aura.[39]

In 2009 GM announced it be discontinuing the Saturn and Pontiac lines forcing Mary Kay to choose new choices for Directors and Consultants to earn. Independent Beauty Consultants can earn the use of a Smokey Platinum Chevy Malibu or cash compensation of $375 a month. Independent Sales Directors can choose a Silver Toyota Camry, Chevy Equinox, or $500 a month. Top Independent Sales Directors can choose between the Pink Cadillac DTS, Cadillac CTS, or cash option.

In 2005 the GM (USA) fleet size was 9,870.[40]

In the United Kingdom, Germany, The Netherlands, Spain and Ukraine, the car is a pink Mercedes-Benz. In Argentina, one receives a pink Ford, while in Taiwan, it is a pink Toyota.[41]. In Australia, one gets to choose between a Ford Falcon, or Volkswagen Beetle.[42] In China, the vehicle is a pink Volkswagen Santana. In the Nordic countries you receive a pink Volvo V50.[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 Car Driver has to pay for a portion of the lease of the car for that month. Meeting the qualifications entitles the Car Driver to pay no monthly lease and 85% of the car insurance, or a pre-determined cash compensation award.[44]

Since the program's inception, more than 100,000 Independent sales force members have qualified for the use of a Career Car or elected the cash compensation option.[8] It is not known how many Directors select the cash option in lieu of the car, but GM estimates that it has built 100,000 pink Cadillacs for Mary Kay.[38]

Earnings

As a private company, Mary Kay Inc. does not make all of its financial information available to the public.[8] As a consequence, there is very little reliable information about actual earnings by consultants.

There are two ways for consultants earn money in Mary Kay:

  • Retail sales;
  • Recruiting;

Recruiting commission earnings

"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 and it does not include income from the Mary Kay tools business.

A press release [45] claimed the following for Canada in 1999:

Of the 16,000+ consultants:

  • The majority earned less than $19,000 Canadian;
  • 173 Sales Directors earned more than $19,000 Canadian;
  • 3 national directors earned more than $100,000 Canadian;

In an April 2005 press release, Mary Kay (Canada)[46] claimed the following for Canada in 2004:

Of the 29,357 independent Mary Kay Consultants:

  • 2,267 earned more than $15,500 Canadian;
  • 331 Sales Directors earned more than $15,500 Canadian;
  • 8 National Directors earned more than $100,000 Canadian;

In an April 2006 press release, Mary Kay (Canada)[46] claimed the following for Canada in 2005:

Out of 32,821 independent Mary Kay Beauty Consultants:

  • 2,356 earned more than $17,000 Canadian;
  • 336 Sales Directors earned more than $17,000 Canadian;
  • 15 National Directors earned more than $100,000 Canadian;

In a February 2007 press release, Mary Kay (Canada)[46] claimed the following for Canada in 2006:

Out of 34,272 independent Mary Kay Beauty Consultants:

  • 2,422 earned more than $16,500 Canadian;
  • 362 Directors earned more $16,500 Canadian;
  • 16 National Directors earned more than $100,000 Canadian;

In February 2009, Mary Kay (Canada) claimed the following for 2008[35]:

  • 2011 consultants earned more than Canadian $100 in commission;
  • 304 Sales Directors earned more than Canadian $16,567.
  • 16 National Directors earned more than Canadian $100,000.

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

Consultant turnover rate

A 68.6% per annum turnover figure has been calculated based upon information supplied by Mary Kay (USA) to the FTC.[48]

A 85% per annum turnover figure has been calculated, based upon the data supplied by Mary Kay (Canada).[46] 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.

Retirement income

Individuals who qualified as National Director, prior to the age of sixty, are given the status of National Director Emeritus at age sixty five. This status entitles them to a retirement income that is equal to 60% of the average of the best three of the last five years prior to retirement. That monthly is paid to the retiree or their surviving family for 15 years. There is no retirement plan for other consultants.

Controversial Aspects

A number of criticisms have been leveled at the company by current and former Mary Kay Consultants.

Woolf v Mary Kay Cosmetics

Woolf v Mary Kay Cosmetics
Northern District of Texas
Full case name Claudine Woolf v. Mary Kay, Inc.
Date decided 20 October 2004
Citations Northern District of Texas 301 cv 688-57
Transcripts http://www.5thcoa.courts.state.tx.us/cgi-bin/as_web.exe?c05_05.ask+D+800147
Judges sitting Justices Morris, Moseley, and FitzGerald
Case history
Prior actions 191st Judicial District Court Dallas County, Texas Trial Court Cause No. 00-05612-J
Subsequent actions Certiorari Denied 31 May 2005.[49]
Case opinions
Workplace Rights do not apply to independent contractors.

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 USA ruled Certiorari Denied 31 May 2005.[49]

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

Mary Kay Inc v Touch of Pink Cosmetics
Northern District of Texas
Full case name Mary Kay Inc v Amy L Weber, Scott J Weber and Touch of Pink Cosmetics
Citations Northern District of Texas 3:2008cv00776
Judges sitting Judge A. Joe Fish

In May 2008, Mary Kay Inc sued Touch of 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.[51][52]

On 20 July 2009, Mary Kay Inc sued Pink Face Cosmetics for violation of 15:1051 Trademark Infringement.[53]. 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.

Mary Kay Ash Charitable Foundation

Established in 1996, the mission of the Mary Kay Ash Charitable Foundation is two-fold:
• Committed to eliminating cancers affecting women by supporting top medical scientists who are searching for a cure for breast, uterine, cervical and ovarian cancers.
• Committed to ending the epidemic of violence against women by providing grants to women’s shelters and supporting community outreach programs.

In May, 2006 The Foundation awarded 13 cancer research grants of $100,000 each to esteemed doctors and medical scientists in the United States. In October 2006, the Foundation awarded $20,000 grants to 150 women’s shelters across the United States for a total of $3 million.

Additional information about the MKACF and annual fundraising/donations can be found on their website.

In popular culture

  • Mary Kay was parodied as "Lila Lee" in the Murder, She Wrote episode "Murder by Appointment Only."
  • The Kathy Bates character in "Fried Green Tomatoes" became a consultant and progressed to a pink Cadillac driving Sales Director.
  • Mary Kay was parodied as "Carrie Fay" in the Honey, I Shrunk the Kids episode "Honey, You're So Transparent."
  • The made-for-TV movie "Hell on Heels: The Battle of Mary Kay" shows Mary Kay Ash (played by Shirley MacLaine) and her competition with Jinger Heath (Parker Posey), founder of BeautiControl Cosmetics.
  • In "Hell's Bells," an episode of Buffy the Vampire Slayer, it is alluded to that Anya is a Mary Kay Consultant. She wears a suit and talks about holding a skincare class. Xander also refers to the fact that she has a pink car.
  • A series of cartoons later published in 1989 as The Night of the Mary Kay Commandos[6] by Berke Breathed.
  • In the Seinfeld episode "The Wig Master", Kramer is lent a Mary Kay pink Cadillac from his parking lot.
  • On an episode of That '70s Show entitled "Eric's Naughty No-No", his Aunt Paula (played by Valerie Harper), Kitty's sister, is a Kathy May Cosmetics Representative, complete with a pink car that was awarded to her for being a top sales representative.
  • In Season 5 of Weeds, Mary Kay Cosmetics is parodied as "You're Pretty Cosmetics." Celia Hodes includes marijuana with the costmetics she sells as an incentive to her customers.
  • Mary Kay was parodied as "Lady June" in the Designing Women episode, "The Junies", when the character, Charlene, began selling "Lady June Belle" products and eventually meets "Lady June".
  • A subplot of the book Divine Secrets of the Ya-Ya Sisterhood features a woman selling a thinly veiled copy of Mary Kay called Beautiere (with a grand prize of a pink Chrysler awarded to prolific salesladies).

References

  1. ^ a b 2008 Press Kit – Mary Kay: The Independent Sales Force
  2. ^ Mary Kay Company Information page
  3. ^ Steven Oberbeck (2008-05-15). reprint "Utah woman a star in pink". Salt Lake Tribune. http://www.sequence-inc.com/index.php?option=com_content&view=article&id=203 reprint.  
  4. ^ http://www.peta.org/about/victories4.asp
  5. ^ Fur Is Dead > History of Our Fur Campaign
  6. ^ a b http://www.amazon.com/Night-Commandos-Featuring-Smell-O-Toons/dp/0316107387 The Mary Kay Commandos
  7. ^ a b c d e f MK Corporate Press Kit 2006
  8. ^ a b c Mary Kay At-A-Glance - June 2006
  9. ^ a b Mary Kay Ash | 20th Century American Leaders Database
  10. ^ a b c d e Mary Kay Corporate Milestones
  11. ^ a b Avon Product Report
  12. ^ a b U Texas Article
  13. ^ a b c Mary Kay (UK)
  14. ^ Avon and Mary Kay
  15. ^ a b c d http://www.eiu.com/index.asp?layout=IWArticleVW3&article_id=1289170114&refm=iwIndustry&industry_id=40000004
  16. ^ CIO
  17. ^ US Mexico Chamber of Commerce
  18. ^ a b c Mary Kay Cosmetics
  19. ^ a b c d e Mary Kay (UK)
  20. ^ Family Business
  21. ^ a b c Mary Kay Corporate Press Kit 2005
  22. ^ Seller Beware
  23. ^ a b c Mary Kay (Canada) Reported earnings 2004
  24. ^ Hoovers Mary Kay (UK) Reports
  25. ^ a b c d More Chinese Women Donning Mary Kay Uniforms
  26. ^ a b c d e f g h i Mary Kay (Canada) Reported earnings
  27. ^ a b c Mary Kay (Argentina)
  28. ^ Mary Kay (Mexico)
  29. ^ a b c Mary Kay (UK)
  30. ^ a b Company Information
  31. ^ a b 2007 Press Kit
  32. ^ a b c UK Company Information
  33. ^ march 2008 Directors Commission
  34. ^ a b c d Utah woman a star in pink
  35. ^ a b c d 2008 Earnings Representation
  36. ^ a b [ http://directmag.com/casehistories/0109-shasteen-works-makeover/]
  37. ^ a b c d [1]
  38. ^ a b Ledger Article
  39. ^ Brochure: Mary Kay Career Car Plan Guidelines - July 2007
  40. ^ Mary Kay GM Fleet
  41. ^ Mary Kay (United Kingdom)
  42. ^ Mary Kay (Australia)
  43. ^ Mary Kay Nordic
  44. ^ Brochure: Mary Kay Career Car Plan Guidelines - February 2005.
  45. ^ http://web.archive.org/web/20000916131228/www.marykay.ca/home/EarningStatement.htm
  46. ^ a b c d Mary Kay Canadian Earnings.
  47. ^ US National 1206 Commission
  48. ^ Mary Kay Letter to the FTC regarding proposed changes in the rules governing MLMs.
  49. ^ a b Order List:544 US
  50. ^ Fired Mary Kay Worker Wins Lawsuit
  51. ^ http://www.pinktruth.com/images/MKCorp/touchofpink.pdf
  52. ^ Evan Clark (2008-03-09). "Mary Kay Sues Former Sales Rep.". Women's Wear Daily. http://wwd.net/issue/article/124767/.  
  53. ^ Northern District of Texas Case 3:09-cv-01363-L







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