Mary Kay Cosmetics in Qatar - Assignment Example

?Mary Kay Cosmetics in Qatar Introduction The report aims to determine whether the Mary Kay’s strategy to expand its business to the Middle East, Qatar is a viable venture. For this purpose, the report includes a company and its product lines, environmental analysis of doing business in Qatar, and competitor and consumer analysis. Information presented in the report will help to determine the viability of Mary Kay’s venture of targeting Qatar market. Company/Product Analysis Mary Kay Cosmetics, Inc. is an international manufacturer and distributor of cosmetics. During the 47 years of its existence, Mary Kay Inc. has managed to expand its business to more than 35 markets on five continents. The sales of Mary Kay products reached $2.5 billion in wholesale sales worldwide in 2009, and its global independent sales force exceeded 2 million (Mary Kay, n.d.). Mary Kay, Inc. is a private company, founded by Mary Kay and her son Richard R. Rogers and lead by the Mr. David B. Holl, Chief Executive Officer and President (Business Week 2011). The company offers a broad range of its products, including anti-aging, cleanser, moisturizer, lip and eye care, body care, sun care products as well as makeup products for eyes, lips, and cheeks, foundations, concealers, powders, compacts and applicators, and facial highlighting pens (Business Week, 2011). These products are produced at manufacturing plants in Dallas, Texas and China, and are sold in worldwide, including Europe, South and North America, Oceania, and Asia (Business Week, 2011). The key success of the company’s products promotion partially relates to its staff comprised of sales force and Independent Beauty Consultants. The sales force members represent an integral part of the Mary Kay’s advertising strategy; they work either on door-to-door or in home demonstrations (Mary Kay, n.d.). Thus, the global network of Mary Kay’s consultants enables the company not only to sell its products worldwide but also provide personal support and give beauty advices to its customers. A. Environmental Analysis Political Qatar is politically stable country. Strengthening relations between Qatar and The United States help to set Pro-American climate, favorable for doing international business between these two countries (Wallace, n.d.) The legal environment of Qatar provides relatively favorable climate for foreign investors. The key benefits are referred to: no income tax or social security deductions payable on wages and salaries; corporate tax on foreign companies is 10%; no taxation is payable on exports; customs duties start at just 5% (KMD Consulting, n.d.). However, there are imposed import restrictions of cosmetics in Qatar (Country Codes and International Resources, n.d.). Economic Qatar has a strong economy, driven by revenues from oil and natural gas resources (Wallace, n.d.). This country has shown unprecedented economic growth rate during the last few years (Ministry of Business and Trade, n.d.). According to World Economic Forum of 2010, Qatar has topped other Arab and Middle East countries (Ministry of Business and Trade, n.d.). Due to its highly-efficient and well-performing institutional platforms, effective commodities and stable economic environment, Qatar has topped 139 countries included in the Global Competitiveness Report (GCR) (Ministry of Business and Trade, n.d.). Moving to 17th rank out of 139 countries included in this report, Qatar hit a new record of 5.10 points comparing with its performance during the last few years (Ministry of Business and Trade, n.d.). The country is recognized as one of the highest living standard on earth (Ministry of Business and Trade, n.d.). From the economic perspective, Mary Kay Inc. has profound opportunities to expand its business in Qatar with great success. Socio-Cultural Even though Qatar women wear a covering, they also want to look pretty. This desire is expressed through applying of all modern technologies and innovations presented in cosmetology and surgery. The key issue, Mary Kay needs to take into account while customizing products for Qatar women is their brown skin; the company needs to provide cosmetics (powders, make-up cosmetics, skin care products) appropriate for skin type of Qatari women. Also we should know that Qatari women are educated enough to not allow anyone say he is the brand salesperson to enter their home. Also they need to use/try the product specially the cosmetic before spend their money to buy it. The most important for Qatari women is asking about the brand, if they get good reputation from who use it then they encourage buying it. Building small store as starting their business will be good idea for Qatar case. Technological There were found no obvious threats from the technological perspective. While Mary Kay is planning to import its products to Qatar, it should be aware of new technological developments in the industry. One of the most significant developments that might create an opportunity for Mary Kay’s business in Qatar relates to high speed Internet, with high quality and capacity (John, 2010). Thus, the Cosmetics Company can take an online advantage and communicate its potential customers trough online catalogues and interface. Legal Qatar government has adopted certain laws that create more opportunities and benefits for foreign investors. Thus, for example, the Foreign Investment Law No.13 offers investors the freedom to repatriate all profits to the investor’s country of origin (KMD Consulting, n.d.). Additionally, the Law 1 of 2010 allows foreign investors to have up to 100% ownership in distribution services business (KMD Consulting, n.d.). While setting business in Qatar, Mary Kay Inc. needs to refer to the relevant laws, such as the tax law (Law Decree No. (11) of 1993 on Income Tax or the 1993 Tax Law); Employment law (Labor Law No.(14) of 2004); Patents Law (Decree-Law No (30) of2006 on Patents Law) and others (Latham & Watkins, 2009). Even though there is no specific legislation on privacy and data protection, patents can be protected for 20 years (Latham & Watkins, 2009). In order to Mary Kay could import its products in Qatar, it needs to be registered in the Importer’s Register and needs an approval of the Chamber of Commerce (Latham & Watkins, 2009). Environmental There company should be aware about the Qatar’s environment protection from any potentially harmful effects and act according to the local environmental laws (The Oxford Business Group, 2003). B. Competitor Analysis Competition throughout the world in hair care, skin care, fragrance, and make up business is very intense (Datamonitor, 2007). Mary Kay competes in different product categories against a number of multinational companies. Mary Kay’s major competitors include Sephora, Avon Products Inc., L’Oreal S.A., Alticor Inc., Revlon Inc., and Bath and Body Works, Unilever and some others (Datamonitor, 2007). Below are briefly discussed the key three competitors of Mary Kay. Sephora Sephora is a multinational retail beauty chain, selling the cosmetics of both own and chic brands such as Bulgari, Christian Dior, Calvin Klein, Lancome, Clinique, Gucci, and others. These products are sold in a specific retail environment, in which customers are enabled to try on different eyeliners, lipsticks, blushers produced by various manufacturers (Business Week, 2006). An interface between shoppers and salesperson is minimized during sampling a product due to freestanding racks (Business Week, 2006). The total atmosphere within the shops encourages visitors to sample products in Sephora. Potential shoppers can spend as much time as they want by sampling cosmetics and perfumes and the sales assistance is ready to help by simple customer’s request (Business Week, 2006). Thus, Sephora pursues easy-to-shop concept, allowing customers to try and touch samples of cosmetics. Additionally, the company sells its products through its website and provides customer’s favorite hard-to-find products online. Sephora targets women from teenagers to thirty years old women. The key strengths are: ability to sample products, free atmosphere in shops, not obtrusive sales force, strong online presence (three free samples with every online order, free and fast shipping, free birthday gifts, free return, free gift packaging, etc.); wide selection of brands (Sephora Website, n.d.). L’Oreal S.A. L’Oreal, being a leading supplier of hair-color and cosmetics, is another top competitor of Mary Kay. The products are distributed through pharmacies and specialist health and beauty outlets. The company targets women of various ages, from the younger ones to the aging, worldwide. The range of prices depends on demands of women. While analyzing the L’Oreal’s campaigns, it can be assumed that its advertising strategies are often performed through the famous personalities, actresses, or different personalities of all ages. Therefore, average customers believe that they can look as good as celebrities. While the strengths of the company include: the continuing research and innovation; and developed activities in the field of cosmetics, dermatology and pharmaceutics; effective advertising strategy through customization to the culture of target market, its weaknesses are also significant: decentralized organizational structure; difficulty in the control of L’Oreal; comparatively low profit margin; the coordination and control of the activities; image in the worldwide market (L’Oreal, 2008). Revlon Revlon is a global company producing color cosmetics, beauty tools, hair color, skin care, fragrances, anti-perspirant/deodorant and beauty care products (Revlon n.d.). The company targets women of various ages, even 50+. Its products are positioned in drug stores with celebrity and supermodel endorsements, such as Cindi Crawford (Lieblein, 2008). Comparing to L’Oreal, Revlon is priced lower than French cosmetics distributor (Lieblein, 2008). Revlon’s Strengths: famous brand; strong retail presence; strong research and development; high quality products; multiple product category; well managed distribution channels; attractive counters and strong advertising; use of supermodels as the global brand ambassadors (Revlon, n.d.; Adam, 2010). Revlon’s Weaknesses: weak marketing areas (except advertising); continuous changes in corporate structure; weak financial position due to heavy debts and net losses (Adam, 2010). Customer Analysis Firstly, Mary Kay Ahs recognized her typical customer as a Caucasian woman, working and having an increasing disposable income (Camerius, 1989).Later, the company’s market became segmented not only by ethnicity (Caucasian, black, Hispanics women) and nationality but also by usage as consumers gravitated toward brand positions as those formulated for mature skin, for ethnic consumers, for sensitive skin, for contact lens wearers, etc. (Camerius,1989). Today, the company targets women of different age categories with middle, or high incomes (Revlon.n.d.). Qatar market size, RSP, US$M, 2009 (Source: Euromonitor, cited in Cochrane, 2010) Beauty & personal care 53.9 Color cosmetics 13.3 Fragrance 6.1 Hair care 7.7 Skin care 9.9 Premium cosmetics 10.7 According to Cochrane (2010), during the global economic downturn, Qatar had one of the highest growth rates in the world. Rapid economic growth and significant markets share of youth segment in the Middle East opens new opportunities for multinational cosmetics corporations, including Mary Kay (Cochrane, 2010) C. Information Needs In order to formulate its marketing strategy, Mary Kay needs to gather relevant and timely information about the potential customers for setting its business in Qatar. The information needs are presented in the list of questions, grouped into 4 categories: demographic and socioeconomic characteristics, brand awareness, and customer motivation. Demographic characteristics: What are the sex breakdowns in Qatar? What are the age breakdowns in Qatar? Social status (upper/upper-middle/middle/lower class) in % What percentage of women in Qatar are national or non national? Do working women Sponsor mostly or non sponsor? Socioeconomic characteristics: What are the employment levels for women in Qatar? What are their average incomes? What are the major spending habits of women in Qatar? Are Qatar women seeking new opportunities for job? How much do Qatari women spent on cosmetics monthly/weekly? What type of cosmetics do Qatari women needs/use more: hygiene, moisturizers, foundation, shadow, etc.? Brand awareness: What foreign cosmetics brands are the most famous among Qatar women? Which segment perceives Mary Kay’s product the best? Are Qatar women brand conscious or they care mainly about price and quality? How does spend differ by each segment type? Customer motivation: What advertisement campaigns of cosmetics have the strongest effect on the customer’s motivation (sales, celebrities, free-samples, etc.)? What forces may influence the purchasing decision of the women (friends, relatives, media, sales person/consultant, etc.)? Is the direct sales advertising method useful in Qatar? Do the customer prefer to test/try the production before buying it? D. Secondary Research Findings Population in Qatar According to the Qatar Statistics Authority (n.d.), the total population within the country exceeded 1,677,046 by March, 2010.Below is presented a table, which indicates what the female/male population is (Qatar Statistics Authority, n.d.). Females 397,498 Males 1,279,547 Total 1,677,045 Interestingly, but the males population is more than three times larger than the females. This fact is important information, which should be taken into account by Mary Kay, while developing its strategy. However, this data fails to provide full vision of the situation because the total female population includes women of all ages from 0+ to 80+ years. For more clear vision, below is presented the table of female population, divided by age categories: 0-14 15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-59 60+ 108,283 25,616 34,899 49,905 44,886 35,339 26,736 19,415 19,055 39,755 Thus, we see that neither of the female age categories (except infants and children) exceeds 50 thousands. This fact narrows the Mary Kay’s opportunity for capturing relatively large market share. The largest female categories are in the age between 20-39 years. Qatari women in the workforce Another significant issue that needs to be discovered relates to the tendencies regarding Qatari women in the workforce. Relying on the Felder & Vuollo (2008) it can be assumed that by understanding what occupations Qatari women are usually entering, Mary Kay will be enabled to better understand the lifestyle of its potential target market and to develop appropriate marketing and advertisement strategies. Even though, Qatar relates to the Arab countries where large numbers of women remain illiterate, Qatari women are better educated than Qatari men (Felder & Vuollo, 2008). The main tendency observed is that the female participation in the workforce is dramatically increasing in Qatar (Felder & Vuollo, 2008). Thus, for example, the share of Qatari women labor force has more than doubled in the past 20 years (Felder & Vuollo, 2008). Additionally, Qatari women are also working in their own businesses (Felder & Vuollo, 2008). It means that women in this country become more independent and self-sufficient. The higher incomes they receive the more they can spend on their needs, which undoubtedly include personal care products. Considering the Mary Kay’s mission and strategic vision, these trends in Qatari female population reveal significant opportunities for the cosmetics distribution company. Conclusion Summarizing the all information and data analyzed in the report, it becomes possible to set clearly the Management Decision Problem and the Marketing Research Problem. The Management Decision Problem is indentified in such direction: whether should Mary Kay enter Qatari market? Will the entry decision be reasonable and profitable in a long-term perspective? The Marketing Research Problem will require determining potential market share of cosmetics users (determined mainly through age categories) and to analyze the extent to which Mary Kay’s products and job opportunities will satisfy the previously determined needs. References: Adam (2010). Revlon SWOT Analysis. Free SWOT analysis. 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