1. Why has MKC not been as successful as Avon in penetrating international markets?
Mary Kay and Avon are two similar companies cosmetic of direct selling in USA. But by 1992, international sales of Mary Kay represent only 11% on the $ 1 billion total, in contrast, Avon products derived over 55% of its $3.6billion retail sales from international markets in 1992.
Why? There are 4 reasons.
The first is the strategy copy, MKC use the marketing strategy, products and communications of the US to different subsidiaries without sufficient local modifications. For example, in Canada, US sales director were allowed to go to Canada to recruit and build sales areas. After 15 years of operation like this, someCanadian consumers perceived MKC as out of date.
The second is wrong pricing. MKC didn’t adjust price of product according to the local market conditions when it penetrated a new market.
The third is autonomy. The system of management is too complex. The managers of subsidiaries make the decisions.
The forth is low brand awareness, MKC didn’t supply adequate resource allocations to develop thebrand. They didn’t do a lot of communication in order to meet the objectives of market shares.
2. What criteria should Dandurand use in deciding how to prioritize foreign market entry opportunities?
The company also needs to perform macro analysis of various countries to see which nations are most attractive to enter; Mary Kay has to enter marketswhere her competitors are already implemented. Mary Kay Cosmetics attracts women who are not only interested in looking glamorous and teaching others on how to take care of their skin, but also those who are interested in being independent, successful, and having their own businesses
The firm is well advised to enter markets where presence of women in workforce, independence is positively seen.*
3. What are the arguments for and against MKC entry in:
0 Japan (for/against)
* Because of the high level of the economy in Japan the company can invest there
* Direct selling method and especially party plan methods are already an accepted way of selling products in Japan
Besides being amature market, the Japanese cosmetic market is also growing at a slower rate of 3% compared to America’s 4.4%
Risk high and cost high to enter the Japanese market
Japanese market is mature and many competitors are present in Japan so if the company enters there it will take 4 to 5 years to make profits.
1 China (for/against + comparison of the two markets)* Arguments for:
1. Population: there is a large population in china, and the urban population is increasing, and will continue to increase.
2. Favorable policy: the new policy of china provided a good economical environment for foreign companies to invest in china.
3. Higher-income: the income of urban middle class increased. They are the major users, so the demand for cosmetic marketis increasing.
4. Active cosmetics marketing in China: cosmetics became an important branch of Chinese’s light industry during the 1980s; the government attached great importance of the cosmetic industry, so it’s a very good chance to enter Chinese market for the foreign cosmetics companies.
* Arguments against:1. Instability of politics: At that time new policies had just been implemented, there was still political struggle between conservatives and reformers; this might affect the future development of economy.
2. High tariff and the devaluation of the Chinese currency: the goods were imported into china along with the problem of high tariff and the devaluation of the Chinese currency which would...