Mary Kay and Market Saturation
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….