Written by Lazy Gardens
Explaining the concept of market saturation, and why it’s next to impossible to build a viable retail selling business with Mary Kay.
I’ve noticed some Mary Kay training material that misuses the term “market saturation,” probably out of ignorance rather than malice. The materials claim that since Mary Kay users are only about 10% of the population, that the market is not saturated and there is lots of room for new consultants.
It’s misleading. In economics, “market saturation” describes the situation where a product has become so widely distributed within the intended market that the cost of reaching the remainder is greater than the profit from anything they might buy. The cosmetics market in the US is 99.999% saturated – at any income level, anyone who wants to wear cosmetics has them or can get them.
“Market share” – the correct term – is how big a slice of the product pie a company has. Mary K ay literature indicates that Mary Kay Cosmetics has about 10% market share. (I feel this is way too high, particularly since Kline & Company’s 2004 Global Cosmetics & Toiletries study pegged direct sales at 10% of the global market for cosmetics and beauty products. This figure includes ALL direct selling companies, so Mary Kay’s share of the market is smaller than 10%.)
This 10% figure promoted in Mary Kay literature looks promising: it looks like there’s 90% available for you to sell into!
But it’s not that easy. For MK to expand, the independent beauty consultants have to get a cosmetics user to switch brands, and the user may not want to incur the “cost of switching”. Yes, another economics term – I used to hang out with marketing suits at lunch.
A rational consumer will not switch to a lower price product if the switching costs in terms of monetary cost, effort, time, uncertainty, and other reasons, are greater than the price differential between the two products. Needless to say, switching the consumer to a higher priced product is going to be even harder. You have to get their “mindshare” first, and usually work on their emotions. That requires a lot of advertising (L’Oreal’s “you’re worth it” campaign), emphasizing special features (Volvo’s safety first campaign), and searching for emotional hooks into the consumer’s mind (most ads for expensive baby diapers).
By not advertising consistently and effectively as a corporation, and by prohibiting consultants the usual small businessperson’s routes to local mindshare, such as local ads and public displays, Mary Kay has damaged their consultants’ ability to compete for market share in the US. But as long as the consultants can be convinced it’s their fault, and keep ordering wholesale, corporate has no reason to take the expensive route of getting mindshare.
Note from PinkTruth: Let’s not forget one of the most daunting costs of switching to Mary Kay that everyone always seems to forget: the knowledge that as a Mary Kay customer, you’ll likely be hounded repeatedly to attend guest events, do a practice interview, or “give your opinion” on the marketing plan….
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And what percentage of the population is already closed to the possibility of MK, either because they’ve been annoyed by it too many times or because they were consultants already? They churn through thousands and thousands of women every year. That’s got to add up, and I doubt most of the women who’ve escaped the business have any great desire to keep buying the dreck.
Yep, Mary Kay burns through 40,000 women per month in the U.S. That’s a lot of former consultants!
Also there are 13 M.A.C. counters in the State of VA and 6 MK consultants in my old town I lived in VA alone. If I put in 3 zip codes from the county I lived in (i can only remember those) and count only the IBC’s listed in those particular town I got 18 consultants in a 10 mile radios. 1 M.A.C counter is in that same area.
In my new town and state I would go to that same M.A.C counter, but there are 6 consultants within 10 miles. So I will drive 45 minutes to get to that M.A.C. counter, and I have to drive through all 3 of those towns. So on my way to the M.A.C. counter, I will drive through at least 24 MK consultants.
And that isn’t Marker saturation?
…and 80% will be gone by the end of the year and another six will take their place.
I remember in about 2001, I was a bartender at a Holiday Inn and we had the MK people in for the weekend staying and going to various shindigs at the Convention Center next door. They were horrible. They were insistent on us splitting the check in 12 different ways so they could save it for “their taxes”. We (bartenders and servers) could not stand them, and they would want to change their food orders ten minutes after they put it in. But I also felt sorry for them, it was clear that many of the younger ones (the ones who were most adamant about getting receipts) didn’t have any money or were very worldly. At the end of the year, 90% of them would not even be in it. These top MK recruiters, directors, etc exploit these young, economically disadvantaged girls. That’s how they got me into it many years prior.
Wow. I had never thought of the ‘no advertising’ concept mk has like that. Something to chew on.