Marry kay cosmetics;

Sales force incentive.

Presented to:Sir Khurram Shehzad.

Presented by:Sidra Safdar Jafferi.
Preview.
• Best advice for entrepreneurs by Marry Kay Ash.
• 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 plan’s modification.
• Conclusion.
 Best Advice for entrepreneurs.

Every failure, obstacle or hardship is an

opportunity in disguise. Success in many
cases is failure turned inside out. When
you reach an obstacle, turn it into an
opportunity. You have the choice. You can
overcome and be a winner, or you can
allow it to overcome you and be a loser…
Refuse to throw in the towel. Go that
extra mile that failures refuse to travel. It
is far better to be exhausted from success
than to be rested from failure. I believe
that most successful people are ordinary
people with extraordinary
determination.”
 Brief history.

Programs for motivation &

Challenge faced by the company.
 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.

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 1980’s.

• 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.
 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.

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.”
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.
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.”
Company ownership and structure.

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

a sharp drop in company’s 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).
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.
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.

 Meetings for first challenge of Bartlett.

• To break down departmental

fiefdoms:

• Weekly sales & marketing

meetings.

• Creative action teams.

Sales force support.

• Communications.
• Events.
• Sales force incentives.
• Recognition & prizes.
• Financial incentives.
History of VIP car program.

• Between 1983 & 1989,Marry Kay’s 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 cost
trends:
• 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 resale
value of the one & two-year-old cars.
 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 unit’s size & performance may deteriorate.
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 consultant’s 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.
Conclusion.

• The managers reemphasized the extreme sensitivity of beauty

consultants’ actions to changes in the marketing plan.
• Those consultants who had rushed to obtain the cars had relatively
low tenure with Marry Kay.
• These consultants did not have the experience & team strength to
maintain their VIP status.
• They had to forfeit their cars prematurely which was demoralizing
for them and costly for the firm.
• Any change in marketing plan that was not well-received by the
sales 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 be
involved in designing changes in the marketing plan.
THANK YOU.