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Mary Kay

Mary Kay Inc. is an American privately owned multi-level marketing company.[3][4][5][6][7] Mary Kay is based in Addison, Texas. The company was founded by Mary Kay Ash in 1963. Richard Rogers, Ash's son, is the chairman, and Ryan Rogers, Ash's grandson, was named CEO in 2022.[8]

History

Foundation–2000

In 1963, Mary Kay Ash founded the company based on a line of cosmetics she had been wearing for several years.[9] She purchased the formula from a woman who had been selling it privately. Originally the company had 318 consultants and sales of $198,154.[10] By 1991, it exceeded $500 million in sales through 220,000 consultants.[11] In 1995, its sales had grown to $950 million.[12]

2001–present

Founder Mary Kay Ash died on November 22, 2001. In March 2020, the company closed operation in Australia and New Zealand.[13][14] In November 2022, David Holl, the company’s CEO since 2006, retired after nearly 30 years with the company but remained chairman of the board.[15] In November 2022, Ryan Rogers was named CEO.[16][17]

Business model

Mary Kay sells cosmetics through a direct marketing model.[18] Mary Kay consultants, called beauty consultants, can make income by directly selling to people in their community, and also receive a commission when they recruit others to begin selling under their distribution network.[19] Mary Kay releases few details about the average income of its sellers.[20]

Manufacturing plants

The company's primary manufacturing plant is in Dallas, Texas.[21] A second plant was opened in Hangzhou, China, to manufacture and package products for that market.[22] A third plant was opened in 1997, in La Chaux-de-Fonds, Switzerland for the European market. The Swiss plant closed in 2003.

Cars

In 1968, Mary Kay Ash purchased the first pink Cadillac from a Dallas dealership, where it was repainted on site to match the "Mountain Laurel Blush" in a compact Ash carried. The Cadillac served as a mobile advertisement for the business. The following year, Ash rewarded the company's top five salespeople with similarly painted 1970 Coupe de Ville cars.[23][24] GM has painted over 100,000 custom cars for Mary Kay. The specific shade has varied over the years from bubble-gum to soft pearlescent pink. GM had an exclusive agreement to sell cars of the specific shade only through Mary Kay. The cars are awarded to consultants as company-paid, two-year leases, and Consultants/Directors who choose to buy the cars at the end of the two-year lease period are only allowed to resell them to authorized dealers. After the lease expires, the cars are repainted before being resold.[25] Mary Kay has different car incentive levels for its Consultants. Consultants can earn the use of a silver Chevrolet Malibu or a cash compensation of $425 a month. Consultants can also earn a black Chevrolet Equinox, Chevrolet Traverse, Mini Cooper or $500 a month. "Top performing" consultants can choose between the pink Cadillac XT5 or XT6, or cash option of $900 a month.[26][27] The specific qualifications for earning the car depend upon the country, and vehicle that is desired. If those qualifications are not met, then the consultant has to pay for a portion of the lease of the car for that month. Meeting the qualifications entitles the consultant to pay no monthly lease and 85% of the car insurance, or a pre-determined cash compensation award.[28] In 2011, a solid black Ford Mustang was introduced as an incentive.[29] In 2014, a black BMW was introduced in its place, although the pink Cadillac remains the top reward for those consultants whose units purchase over $100,000 or more of MK products at wholesale cost in a year.[30]

Consultants

There are two ways for Mary Kay consultants to earn money in Mary Kay: recruiting and retail sales. Recruiting commission earnings reflects the commission and bonuses of 4, 9 or 13% that one earns from the wholesale purchases of MK products by their team or unit. Consultants may also earn a 50% gross profit on products they sell at full retail price. There is no tracking by the company of actual sales. The quoted figure of US$1,057.14 per year (2015) for the average consultant derives from dividing the annual wholesale sales by Mary Kay Inc., by the number of Mary Kay consultants.[31]

Based upon information supplied by Mary Kay (USA) to the Federal Trade Commission,[32] Mary Kay has a 68.6% per annum turnover rate. An 85% per annum turnover figure has been calculated, based upon the data supplied by Mary Kay (Canada).[33] This 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.

Each year the company holds an annual conference and seminar in Dallas, TX. The conference consists of four consecutive events over two weeks.[34]

Research

In 2023, Mary Kay announced a partnership with the European Society for Dermatological Research (ESDR), a non-profit, to create a grant program. The program will grant two scientists $20,000 to go towards research relating to skin health and diseases.[35] Mary Kay stated that the goal would be to treat people who suffer from skin and venereal diseases. Dr. Michael Cangkrama of Switzerland and Dr. Clarisse Ganier of the UK received the grant.[35]

Court cases

Woolf v. Mary Kay Cosmetics

The 2004 court case Woolf v. Mary Kay Cosmetics argued 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 denied certiorari on 31 May 2005.[36] In this case, Woolf was terminated from her position as Independent Sales Director because her unit failed to make production for three consecutive months. Woolf contended that her firing was illegal, because she was suffering from cancer.[37]

Liquidator court cases

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 its business by offering to purchase inventory from discontinued Independent Beauty Consultants, and that Touch of Pink's use of the Mary Kay trademark in reference to Mary Kay products it sells is deceiving.[38] The jury found in favor of Mary Kay and awarded a judgement of $1.139 million.

On 20 July 2009, Mary Kay, Inc., sued Pink Face Cosmetics for trademark infringement.[39] 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.[39]

References

  1. Mary Kay Company Quick Facts Mary Kay Company Quick Facts Retrieved 2017-01-28^
  2. Mary Kay Forbes, retrieved 12 February 2021^
  3. Multi-Level Marketing or Illegal Pyramid Scheme? Government of Michigan, retrieved 2020-02-07^
  4. Laura Richards. How MLMs — multilevel marketing schemes — are hurting female friendships The Washington Post, 2019-01-22, retrieved 2020-02-07^
  5. Melanie Hicken. The money behind Herbalife, Mary Kay and others CNN Money, 2013-01-10, retrieved 2020-02-07^
  6. Alex Ebert. Trade Group for Amway, Mary Kay Wants States to Limit Labor Suits Bloomberg Law, 2018-04-30, retrieved 2020-02-07^
  7. Del Valle Gaby. Multilevel marketing companies say they can make you rich. Here's how much 7 sellers actually earned. Vox, 2018-10-22, retrieved 2020-02-07^
  8. Mary Kay Forbes, retrieved 2023-04-05^
  9. Moriah Ballard. Women's History Month: Founder of Mary Kay Cosmetics was a Houston native whose legacy continues to empower others 💄 KPRC, 2024-03-05, retrieved 2024-03-12^
  10. Mary Kay Ash 20th Century American Leaders Database, Harvard Business School, retrieved 2010-10-20^
  11. James W. Camerius, James W. Clinton. Avon Products, Inc: Developing a Global Perspective Direct Selling Education Foundation, 1993, retrieved 2010-10-20^
  12. Company Retrospective Mary Kay (UK), retrieved 2010-10-20^
  13. James Hall. Mary Kay blames 'market conditions' for closing Australian operation new.com/au, 2020-03-06^
  14. Megan Macdonald, Kate Higgins. MLM make-up brand Mary Kay announces exit from Australia and NZ, citing 'market conditions' ABC News, 2020-03-06, retrieved 2022-08-26^
  15. Mary Kay CEO to step down, hand reins to grandson of Mary Kay Ash Dallas News, 2022-11-01, retrieved 2023-04-17^
  16. Mary Kay CEO to step down, hand reins to grandson of Mary Kay Ash Dallas News, 2022-11-01, retrieved 2023-07-06^
  17. Mark Seal. The Pink People Texas Monthly, 1985-08-01, retrieved 2023-09-30^
  18. Helaine Olen. Mary Kay Preys on Women Forbes, retrieved 2023-11-16^
  19. Skip Hollandsworth. Hostile Makeover Texas Monthly, 1995-11-01, retrieved 2023-10-11^
  20. Melanie Hicken. The money behind Herbalife, Mary Kay and others CNN Money, 10 January 2013, retrieved 12 April 2014^
  21. Evan Hoopfer. Take a look inside Mary Kay's new $100M DFW facility bizjournals.com, 2018-11-05, retrieved 2021-12-06^
  22. Hangzhou Mary Kay Cosmetics Co in Beauty and Personal Care (China) www.marketresearch.com, retrieved 2021-10-01^
  23. Mark Maynard. 50th anniversary of the Mary Kay pink Cadillac San Diego Union-Tribune, 2019-01-19, retrieved 2023-03-16^
  24. Mark Maynard. 50th anniversary of the Mary Kay pink Cadillac San Diego Union-Tribune, 2019-01-19, retrieved 2023-10-26^
  25. Brett Clanton. Mary Kay Inc. Loves Cadillac, and the Feeling Is Mutual The Ledger, 27 June 2006, retrieved 21 May 2014^
  26. Mary Kay Sales Director Earnings: Less Than Minimum Wage Pink Truth, 13 November 2015, retrieved 5 April 2018^
  27. Jonathan Lopez. Here's How Much It Costs To Get A Free Mary Kay Cadillac GM Authority, 14 August 2021, retrieved 2 June 2022^
  28. Brochure: Mary Kay Career Car Plan Guidelines — February 2005.^
  29. Ford Mustang revs up as Mary Kay's newest ride www.leftlanenews.com, retrieved 5 April 2018^
  30. Chris Woodyard. BMWs joins pink Cadillacs in Mary Kay's fleet USA TODAY, retrieved 2023-03-16^
  31. Carol Edgar. The Hot Pink Empire of Mary Kay Ash Texas Monthly, 1979-04-01, retrieved 2023-08-25^
  32. Mary Kay Letter to the FTC regarding proposed changes in the rules governing MLMs.^
  33. Mary Kay Canadian Earnings^
  34. Barbie pink gets Mary Kay competition as nearly 20,000 descend on Dallas Dallas News, 2023-07-24, retrieved 2023-09-06^
  35. Mary Kay backs skin health research with $20k grant www.cosmeticsbusiness.com, retrieved 2023-11-16^
  36. [ Order List:544 US]^
  37. FindLaw's Court of Appeals of Texas case and opinions. Findlaw, retrieved 2021-10-01^
  38. http://www.mlmlegal.com/legal-cases/MaryKay_v_Weber.php February 20, 2009^
  39. Mary Kay Suing Another Product Liquidator Pink Truth, July 23, 2009, retrieved April 11, 2018^
  40. and^