Mary Kay’s Attempt to Counteract Pink Truth

In January 2007, Mary Kay Cosmetics launched a web initiative to help counteract the effect of Pink Truth’s wide dissemination of information.

Mary Kay consultants got news of Mary Kay Inc.’s latest attempt to “deal” with the information being put forth by Pink Truth. I had heard that corporate decided to do a website that told the “real truth” about Mary Kay, and I believe this is it!

I applaud corporate for making an attempt to address some of the issues. On the other hand, what good does it do to sit there and chant “we’re not a pyramid scheme”???? Why not change the facets of the company that make it a product-based pyramid scheme?

Darrell, you and Sean Key can only keep your hands over your eyes so long. Make some real changes instead of sitting there yelling “LA LA LA LA” while covering your ears.

At some point, you will have to decide to make some real changes, or face the reality that Mary Kay Inc.’s sales will continue to drop. When will you two decide to step up?

The announcement:

 

I am excited to tell you about a new feature that will be available soon on Marykay.com. It’s a mini-site called Just the FAQs, which is designed to answer commonly asked questions about the Mary Kay opportunity.

Whether it’s a prospective Independent Beauty Consultant, a customer or simply a visitor, this site provides clear and easy access to important information about the Mary Kay opportunity and the founding philosophies upon which it was built.

A similar site will be located on the Mary Kay InTouch® Web site, with much of the same information, plus topics specifically for Mary Kay independent sales force members.

We’ve chosen a few questions to begin with, including,

  • “The Mary Kay business opportunity: What does it really take to succeed?”
  • “How much inventory do I need to purchase as a new Independent Beauty Consultant?”
  • “How often does Mary Kay introduce new products? How will that affect my ability to sell my inventory?”
  • “What is a pyramid scheme?”
  • “Is Mary Kay a pyramid scheme?”

We will make this site viewable to Mary Kay Independent Sales Directors later today on the Mary Kay InTouch® Web site.

We plan to keep the site fresh with additional questions and answers on a continual basis.

I look forward to seeing you at Be Great! Leadership Conference 2007!

Best regards,

Darrell Overcash
President, Mary Kay U.S.

So what kinds of questions and answers do they have for the Mary Kay sales directors? Here are a few for starters, with my comments in bold!

**The Mary Kay Business Opportunity: What Does It Really Take to Succeed?**

Independent Sales Directors and Independent National Sales Directors talk about living their dreams, and you question just what it takes to get there. You may have heard them talk about the flexibility of a Mary Kay business and how it’s enabled them to spend quality time with their families. They can enjoy such rewards as the use of a Career Car and monetary earnings that perhaps allowed them to give up their full-time jobs. How is it possible to have it all?

Make no mistake: These women have worked very hard to get where they are today. When people hear Mary Kay Ash’s philosophy of “God first, family second, career third,” they may misinterpret what she meant. Keeping one’s priorities in balance doesn’t mean you don’t have to work hard or make sacrifices to be successful. What does set the Mary Kay opportunity apart from a typical corporate job, however, is that you have more flexibility.

Mary Kay Ash was known for being one of the hardest-working people you’d ever meet. As the founder of what she called the “Five O’Clock Club,” her day began no later than 5 a.m. She chose to sacrifice an hour or two of sleep to achieve a jump-start on her day. Many Independent Beauty Consultants choose to join the Five O’Clock Club so they can accomplish what they need to before dropping their children off at school. On the other hand, maybe sleep is too precious to you, and you’d rather focus the bulk of your efforts during the second half of the day. Or perhaps you’d rather schedule your appointments around your children’s activities, holding skin care classes while they are in school. Or maybe you prefer to work your business on weekends instead. The choices are limitless.

By contrast, in corporate America, odds are good your employer expects you to be at the office, at a minimum, from 9 a.m. to 5 p.m. You probably don’t have the flexibility to decide your own work hours. You might be lucky enough to work for a company that offers flextime, but nonetheless, it’s rare you would be able to pick your own hours as you see fit.

As a Mary Kay Independent Beauty Consultant, you are your own boss, so you get to decide what time you begin and end your work each day. You determine your own schedule and the rate at which you want to climb the ladder of success. If your goal is simply to supplement the income from your full-time job, the number of hours you devote to your Mary Kay business will likely be relatively small. On the other hand, if you choose to replace and/or exceed your income from your full-time job, you should expect to put in longer hours in order to accomplish that goal.

The point is that you’re free to choose your destiny. You determine the balance of faith, family and career that’s right for you.

So what I hear you saying Darrell, is that it’s all Mary Kay, all the time?

**HOW MUCH INVENTORY DO I NEED TO PURCHASE AS A NEW INDEPENDENT BEAUTY CONSULTANT?**

You’ve just purchased your Starter Kit, and now you are wondering how much inventory you should order to get your business started. The first thing to remember is that purchasing inventory is an individual decision – and it’s certainly not a requirement for you to begin your Mary Kay business. We always recommend that you determine what activity level you intend to pursue in your Mary Kay business and then, if appropriate for your personal circumstances, invest in a level of inventory that supports that activity.

As you contemplate your decision, you may want to consider some of the reasons why Mary Kay Ash believed maintaining an appropriate amount of inventory was beneficial. Among other things, Mary Kay always enjoyed the instant gratification and excellent customer service she could provide a customer who wanted her skin care or color cosmetics products on the spot. She knew that doing so could help build a strong customer base and create loyal customers for life. She also believed that having inventory on hand could help an Independent Beauty Consultant feel more motivated and committed to her Mary Kay business.

If you choose to purchase inventory, you can always rest assured that there will be a multitude of Company-published materials available to you that contain excellent sales tips aimed at helping you successfully sell your products. You also have the opportunity to ask other successful independent sales force members, such as your Independent Sales Director, for tips and advice on selling Mary Kay® products. Sometimes all it takes is a fresh viewpoint to help you generate effective strategies for growing your business.

Finally, if you change your mind or decide that a Mary Kay business is not for you, you can take comfort in knowing that the Company will repurchase, at 90 percent of your original net cost, original and unused Section 1 products, provided such items were purchased by you from the Company within one year prior to return.

Same story, different day. You don’t technically “need” any inventory, and you’re not “required” to have any inventory. But pssssstttt…. if you want to be successful, you’ll have lots! On the other hand, at least they do mention the buyback option.

**HOW OFTEN DOES MARY KAY INTRODUCE NEW PRODUCTS? HOW WILL THAT AFFECT MY ABILITY TO SELL MY INVENTORY?**

Mary Kay Inc. is always looking at new products in order to keep up with current trends and be competitive in the marketplace. In a marketplace driven by innovation, it is critical to stay competitive by introducing new products. Targeted products, which treat special concerns and work along with our core skin care line, are introduced to the product lineup to meet needs that are expressed by consumers. Limited-edition color items are introduced periodically to reflect the trends of the season. Our core product lines are updated once every 3 to 5 years to take advantage of the latest innovations in skin care. And although we don’t do it often, we occasionally update our packaging to ensure that we continue to stay on-trend and keep our presentation current and fresh. Remember that we’re in the fast-changing cosmetics business. Much like the automobile, the fashion and the consumer electronics industries, in the cosmetics industry, newness is what attracts customers to the brand.

The bottom line is that innovation is essential to remaining competitive in our market. While change may be uncomfortable at times, it demonstrates the willingness of both our Company and the independent sales force to deliver products that excite and address the needs and desires of their customers.

The real answer: The products change A LOT. It is part of the company’s official business strategy to continue to get consultants to buy more and more.

**WHAT IS A PYRAMID SCHEME?**

Pyramid schemes are illegal operations in which compensation for representatives’ activities is based primarily on recruiting, not on the sale of legitimate products or services. Typically, in a pyramid scheme, inventory is not repurchased by the company.

Companies operating such scams are not permitted to be members of the Direct Selling Association (“DSA”). Mary Kay and the DSA have strongly endorsed effective anti-pyramid legislation and enforcement. Many states, including Texas, have adopted effective anti-pyramid laws.

We encourage anyone considering a direct-selling opportunity to find out if the company in which they’re interested is a member of the DSA, of which Mary Kay is a longtime member. Member companies pledge to abide by and uphold DSA’s strict Code of Ethics. Included in the DSA Code of Ethics is, among other things, the requirement that the member company repurchase inventory from the representative at 90 percent of the original net cost. This is a key distinguishing feature that allows law enforcement officials to easily identify a legitimate direct-selling company.

Newsflash: There are illegal and legal pyramid schemes. Mary Kay just so happens to be a legal pyramid scheme.

**IS MARY KAY A PYRAMID SCHEME?**

Absolutely not. Pyramids are illegal. The following points concerning the Mary Kay marketing plan are of particular importance in distinguishing it from illegal pyramid schemes:

A. There is one wholesale sale (Company to Independent Beauty Consultant) and one retail sale (from Beauty Consultant to customer) of Mary Kay® products. There are no levels of wholesalers between the Company and the consumer through which products pass at varying discounts before sales. Thus everyone, whether Independent Beauty Consultant or Independent Sales Director (Sales Director of sales unit of Independent Beauty Consultants), purchases all cosmetics products directly from the Company at the same published wholesale prices for resale to consumers of their choice. Everyone has the opportunity to buy at the same discount irrespective of their status on the independent sales force career path.

B. Every Mary Kay independent sales force member begins as an Independent Beauty Consultant with the purchase of a Starter Kit. No compensation is earned by anyone on this Starter Kit purchase. The products and sales tools included in the Starter Kit are designed to introduce a new Independent Beauty Consultant to Mary Kay and help her begin building her business. No “investment” is required and no status on the independent sales force career path may be purchased by the payment of fees or by the purchase of a given quantity of products from the Company or anyone else. There are thus no “sales” of “levels,” “positions,” “distributorships” or “franchises” by the Company or any of the Independent Beauty Consultants.

D. Elevation from Independent Beauty Consultant to Independent Sales Director does not involve the payment of any fee, rebate, premium or hidden discount of any kind to either the Company or anyone else. Elevation, at the election of any Independent Beauty Consultant, is based strictly upon individual effort and ability.

E. Any Mary Kay Independent Beauty Consultant who terminates her contractual relationship with the Company may return unsold products in original and unused condition, and these will be repurchased by the Company per the terms of the Independent Beauty Consultant Agreement at 90 percent of her original net cost.

F. The Company pays all commissions directly to Independent Beauty Consultants and Independent Sales Directors. The commissions are paid based upon monthly purchases and recorded on computer reports furnished with the commission payments. The entire marketing structure is based on and intended to foster retail sales to ultimate consumers. Commissions paid on any products returned for repurchase by the Company by an Independent Beauty Consultant terminating her Independent Beauty Consultant Agreement, pursuant to Item E above (i.e., products not sold at retail), are charged back to the commission recipient.

This idea of “levels” through which products pass is not the hallmark of a pyramid scheme, as Mary Kay would lead you to believe. A pyramid scheme exists when the masses at the bottom put money into the scam so that those at the top can receive their big commission checks. Although Mary Kay has a product which makes it appear to be a legitimate business opportunity, because so little of the product is actually sold to an end user, the product is irrelevant. What becomes relevant is the fact that money is passing through the various levels, and those at the top are being enriched by a transfer of money from the lower levels to them.

And we do realize that people are NOT recruited to sell products. They are recruited in order to recruit others. Everything Mary Kay Cosmetics does is geared toward recruiting.

While no status in the company can technically be purchased, it is done by every DIQ (director-in-qualification) who puts in her own money to activate recruits and make minimum production requirements. That is equivalent to purchasing the level, and Darrell and Sean know it.

Nice try. Now how about some real changes?