I. Executive summary 3 II. Situation analysis 3 Industry 4 Internal 4 Customer 5 Competition 6 Macro 7 SWOT 7 III. Primary Research and Key Findings 7 Focus groups 7 Personal interviews 8 Beauty Parties 8 Consumer Online Shopping Survey 8 Job Survey 11 IV. Consumer Decision Journey Process 12 Target Markets 12 Market Segmentation and Personas 12 Strategy Overview 13 Goals 14 Consumer Decision Journey Model 14 Mary Kay IBC Journey 16 Positioning Statement 16 Messaging 17 V. Consumer Experience 17 VI. Millennializing the Job 19 VI. Measurement and Evaluation 21 VII. References 23 VIII. Appendices 24

Executive Summary The goals of the Mary Kay Case Challenge are to “reimagine, reinvent, and revolutionize the Mary Kay personal beauty experience and beauty party, and develop an integrated marketing plan that will increase the number of Mary Kay IBCs and also sales among next generation non-users, ages 18-24.” To address this challenge we took a data-driven approach relying on secondary data, along with personal interviews, focus groups, and two surveys. We also hosted a Mary Kay party, attended an IBC meeting, and met with Rebbecca Evans: a Mary Kay National Sales Manager. All of this information was used to develop a plan to improve the millennial perception of the Mary Kay brand and the Mary Kay employment opportunity. We propose that Mary Kay change both the way it interacts with its customers and its IBCs. We are proposing that Mary Kay go back to its beginnings and focus on the individual customer and the individual IBC. Mary Kay needs to build mutually beneficial relationships between them and their customers, between them and their IBCs and between the IBCs and their clients. The end goal is to have IBCs and customers connect to the Mary Kay brand and consider it as their brand. To do this we have developed a plan/campaign called “My Mary Kay Experience” So what does the “My Mary Kay Experience?” It is a series of personalized interactions between Mary Kay and its customers and IBCs. To accomplish this we are proposing a fresh approach to the direct selling model with a new Social Media platform, a new approach to the party experience and a new brand extension, MYNE by Mary Kay, a line of products targeted at the millennial audience. Situation Analysis: Beauty Industry Analysis According to the Consumer Market Outlook report, the beauty industry is part of the beauty and personal care industry. The beauty industry is divided into six sub-markets: skin care, hair care, color, fragrance, toiletries, and personal hygiene. Mary Kay participates in the cosmetics, skin care, and fragrances sub-markets. Together these submarkets were valued at $26.8 billion and have experienced 2.15% growth in the past three years. Overall, this is a mature industry with slow growth potential. Over the past three years, the cosmetics market has been a bright spot with revenue increases of 4.4% annually, and is expected to grow at 4.5% annually over the next three years. The key takeaway is that of the markets in which Mary Kay participates, only the cosmetics market is forecasted to grow by more than 4% annually. Mary Kay cannot rely on industry growth to fuel their future sales. Revenues in the U.S. Beauty and Personal Care Industry Cosmetics Skin Care Fragrances Beauty Total Industry Total Rev (in Ann. % Rev (in Ann. % Rev (in Ann. % Rev (in Ann. % Rev (in Ann. % $mil) change $mil) change $mil) change $mil) change $mil) change 2014 7,176 14,125 4,439 25,740 58,103 2015 7,452 3.80% 14,133 0.06% 4,618 4.00% 26,203 1.80% 61,298 5.21% 2016 7,803 4.70% 14,399 1.90% 4,647 0.60% 26,849 2.50% 62,494 1.91% 2017 (est.) 8,124 4.10% 14,381 -0.10% 4,672 0.50% 27,178 1.20% 64,427 3.00% 2018 (est.) 8,480 4.40% 14,386 0.04% 4,707 0.70% 27,574 1.50% 66,595 3.26% 2019 (est.) 8,845 4.30% 14,366 -0.10% 4,735 0.60% 27,946 1.30% 68,788 3.19% 2014-16 627 4.37% 274 0.97% 208 2.34% 1,109 2.15% 4,391 3.78% 2016-21 (est.) 1,042 4.45% -33 -0.08% 88 0.63% 1,097 1.36% 6,294 3.36% Sources: Consumer Market Outlook 2017 and IBISWorld Industry Report According to IBISWorld some key success factors include: word-of-mouth recommendations, having an experienced workforce, attractive product presentation, and the production of goods currently favored by the market. As a result, the Mary Kay IBCs are crucial to the future success of the company. There has been a significant shift in the retail channels through which skin care and cosmetics products are sold. Over the past five years the three channels with the largest percentage gains were Internet retailers with a 14% annual growth, beauty specialty stores such Sephora and Ulta with 7% growth, and department store sales with a 3% growth. Direct selling sales have been stagnant due in part to increased competition from beauty specialty stores, department stores, and e-commerce. U.S. Beauty & Personal Care Revenues (2011 vs. 2016), by Distribution Channel Grocery Beauty Mass Dept. Internet Direct All Retailers Drugstores Specialists Merchants Stores Retailing Selling Others 2011 Rev (in $mil) 12,828 8,349 6,635 7,796 5,474 3,096 3,705 7,409 2016 Rev (in $mil) 13,436 9,062 8,937 8,437 6,187 5,249 3,812 7,374 Annual Change 2011-16 1% 2% 7% 2% 3% 14% .5% -0.1% Sources: Fung Global Retail & Technology; Euromonitor

Three beauty industry trends are prevalent and need to be mentioned. First, to be competitive going forward in the beauty industry it is crucial to embrace the Internet and utilize digital selling platforms (IBISWorld, 2017). The Internet has made it possible to market and sell beauty products to customers in new and innovative ways. Second, there is a growing demand for organic beauty products and products manufactured from natural ingredients. The Global Cosmetic Industry found that natural beauty product sales in the U.S. increased by 9.2%, from 2015 to 2016 while the industry growth overall was 1.9%. This is the way that many niche cosmetic companies have differentiated themselves and their products in this crowded marketplace (Lopaciuk and Miroslaw). The third key trend is the growth in the luxury beauty market. According to Jean-Paul Agon, Chairman and CEO of L'Oreal, the beauty industry has witnessed a significant growth in the demand for luxury beauty products growing by nearly 9%. The Direct Selling Industry Mary Kay’s business model places it in the direct selling industry. The Direct Selling Association and IBISWorld report that this is a $35.5 billion dollar industry in the U.S. However, IBISWorld predicts declining revenues in this industry over the next five years, due mostly to increased competition from online retailers. To be competitive in direct selling business in the future, firms and individuals will need to embrace the integration of the Internet into their selling platforms, including an emphasis on “Social Selling.” The Direct Sales Association reports that the U.S. beauty/personal care retail direct sales have grown by $900 million over the past five years, but declined by $300 million last year. The same online competition faced by the market in general is negatively impacting this segment. The beauty and personal care market has quickly become a digital business and to be competitive in the future direct selling firms need to embrace social selling strategies. It is important to note that direct selling sales via group/party approach has declined by 9.9% over the past five years. This suggests a paradigm shift in how direct selling companies will need to adapt to the digital economy to be successful in the future. U.S. Beauty and Personal Care Direct Sales in the United States 2011 2012 2013 2014 2015 2016 5 Yr. Change US Direct Retail Sales (in $bil) $29.87 $31.63 $32.67 $34.47 $36.12 $35.54 $5.67 Sales % change 5.9% 3.3% 5.5% 4.8% -1.6% 3.8% U.S. Beauty/Pers. Care Dir. Sales (in $mil) $5,300 $5,600 $5,500 $6,000 $6,500 $6,200 $900 Sales % change 5.7% -1.8% 9.1% 8.3% -4.6% 3.4% % sold by Party Plan 30.9% 27.1% 22.5% 22.4% 20.4% 21.0% -9.9% % sold Person to Person 64.9% 68.3% 70.2% 71.5% 71.0% 72.0% 7.1% Source Direct Selling Association Internal Analysis Founded in 1963, Mary Kay has inspired millions of women to pursue their professional goals. Today Mary Kay is a leader in the beauty industry with global revenues of $4 billion and U.S. revenues of $1.678 billion. The table below summarizes their vital metrics. With Mary Kay’s Independent Beauty Consultants (IBC’s) are the lifeblood of their company and are directly related to revenues. The number of active, registered Mary Kay U.S. IBCs has declined from 370,000 in 2011 to 325,000 in 2016. Mary Kay’s U.S. revenues have grown by $235 million, or 3.26% annually, with most of that increase occurring between 2011 and 2014. Over the past two years, sales have slowed to 1.38% annually. During that period, skin care sales have flattened, but cosmetic sales have grown by 3.25%. In summary, in the U.S. Mary Kay is performing below the industry average on a number of metrics. Mary Kay’s Vital Metrics – Revenues in millions 2011 2012 2013 2014 2015 2016 5 Yr. Avg. change Number of IBCs (US) 370,000 350,000 340,000 325,000 325,000 325,000 -2.43% Total US Revenues $1,443 $1,490 $1,562 $ 1,633 $1,664 $1,678 +3.26% % Change 3% 5% 5% 2% 1% Skin Care $654 $683 $713 $743 $742 $742 +3.02% % Change 4% 4% 4% 0% 0% Color Cosmetics $469 $ 485 $512 $539 $563 $574 +4.48% % Change 3% 6% 5% 4% 2% Fragrance $106 $105 $104 $106 $104 $103 -0.04% % Change -1% -1% 2% -2% -1% Others $214 $217 $233 $245 $255 $259 +4.24% % Change 1% 7% 5% 4% 2% Source: Euromonitor BusinessForHom, Smallbusiness.Chron, Forbes, Mary Kay Newsroom e

Mary Kay has a social media presence on Facebook, Twitter, Instagram, Pinterest, and YouTube. Their Facebook page has links to their other social media accounts, customer care messaging, and also acts as a hub for tutorial videos, a product spotlight, and has information for IBCs. Mary Kay’s Social Metrics (As of Nov 2017) 2013 2014 2015 2016 2017 Change 2016-17 Instagram (followers) 21,344 56,649 157,546 316,129 397,861 25.85% Facebook (likes) 1,185,994 1,222,994 2,056,313 2,889,632 3,037,320 5.11% YouTube (subscribers) 35,070 54,160 70,520 85,990 98,320 14.34% Twitter (followers) 46,664 55,000 91,200 104,610 111,760 6.83% Pinterest (followers) 31,445 49,938 66,200 97,200 112,091 15.32% Source: Social Blade, Minter.io, Sotrender, waybackmachine.org, Likealyzer Although the social metrics seem good, they are considerably behind their competitors (see the Competitor Analysis). Mary Kay takes pride in their positive community impact and commitment to sustainability. Also, “Mary Kay is committed to the elimination of animal testing! We do not conduct animal testing on our products or ingredients, nor ask others to do so on our behalf, except when required by law. Mary Kay has never wavered from our commitment to use alternative testing methods.” Mary Kay manufactures its own products with a total of 419 products. Within the categories there are 70 skincare skews, 296 color cosmetic products, 23 fragrances, and 30 other products. Annually Mary Kay “invests millions of dollars in research and conducts hundreds of thousands of tests to ensure that every product meets the highest standards of safety, quality and performance.” Currently Mary Kay’s website is promoting 22 new products including 12 new Mary Kay Gel Semi-Shine Lipstick colors, two mask products, and two TimeWise Repair sets. Customer Analysis We took a data driven approach to understand the customers in the skin care and cosmetic industries, Mary Kay customers, and their cosmetic purchase decisions. Based on the 2016 Mediamark Research and Intelligence (MRI), we profiled and evaluated customers in these industries. Profile of Women Identifying as Heavy Users of Skin Care and Cosmetics – Heavy users of skin products are those individuals that use a skin care product 11 or more times per week. MRI estimates that there are more than 33 million heavy user women (see appendix). MRI reports that they tend to be younger, more educated, and earn higher incomes. There are an estimated 9+ million women that are categorized as heavy users of cosmetics (eight or more times per week). Heavy users of cosmetic products are likely to be somewhat younger, but tend to be less educated, and earn lower to middle incomes. Market Skin Care/Cosmetic Heavy Users vs Mary Kay Shoppers Heavy Mary Kay Heavy Mary Kay Heavy Mary Kay Heavy Mary Kay users Skin Skin Care Users Cosmetic users Skin Skin Care Users Cosmetic Care users Cosmetics users Care users Cosmetics users Index Index Index Index Index Index Index Index Index Grad. College + 124 95 88 108 Age 18-24 112 76 158 94 Attended college 100 95 97 88 Age 25-34 103 97 109 132 H S Grad 84 116 101 100 Age 35-44 109 112 110 81 Did not grad. HS 79 86 134 109 Age 45-54 98 96 73 112 <$20K 75 118 97 117 Age 55-64 103 88 99 92 $20K-$29K 70 93 97 82 Age 65+ 83 121 74 88 $30K-$39K 86 98 111 93 White non-Hisp 100 92 92 92 $40K-$49K 90 117 100 98 Lat/Hisp 97 121 135 128 $50K-$59K 95 89 86 92 Asian 136 75 120 66 $60K-$74K 110 117 110 129 Afr. Amer. 85 115 109 118 $75K-$149K 116 96 98 94 Multi-race 115 123 138 122 $150K+ 131 73 103 93 Source: MRI Profile of Mary Kay Skin Care Users – MRI estimates that there are 5.5 million Mary Kay skin care users, which equates to 4.4% of the 18+ female population. These Mary Kay customers are older (35-44 and 65+), less educated (high school graduates), with low to middle incomes (<$20k and $40-75k). In terms of ethnicity, the vast majority of Mary Kay’s skin care customers are white (69%), but Hispanic, African American, and multi-race women are 15-18% more likely to be Mary Kay skin care customers than the general population. Compared to the heavy users of skin care products, Mary Kay users are older, less educated, have lower incomes, and have more African American and Hispanic customers, but fewer

Asian customers. Mary Kay is underperforming in the skin care market with 18-24 year olds, along with educated, and more affluent women. Profile of Mary Kay Cosmetics Users – According to MRI there are 6.6 million Mary Kay cosmetics users. Compared to the heavy users of cosmetics products, Mary Kay users are older, and have lower incomes. Mary Kay is underperforming in the cosmetics market with 18-24 year olds, educated, and more affluent women, but they are reaching some older millennials (25-34 year olds). We reviewed a number of relevant surveys and reports to better understand the millennial beauty customer. According to surveys by Poshly and Pixability, 67% of millennial, heavy-users in the beauty category begin their purchase journey online and 73% use their phones for research/gathering information while in-store. Millennials are 67% more likely to purchase makeup if it came with a tutorial on how to apply it. According to the 2017 Mintel “Millennial Beauty Consumer” study millennials are more likely than average to: splurge for premium brands, choose natural offerings, and use a combination of different brands. Since three in ten millennial women rank brand among their top three beauty purchase influencers, brand extensions can drive incremental sales among current brand-loyal users, while boosting reputations to better reach new users. Free samples and the opportunity to try products are important drivers of new beauty product trials by millennials, but do not underestimate the value of recommendations by friends, family, and online influencers/beauty gurus. Ethical claims serve as a secondary consideration for millennials as 16% look for cruelty-free products, 12% look for environmentally-friendly products, and 5% look for charitable brands. Direct Selling Jobs Industry - Customers The Direct Selling Association reports that there were 20.5 million people involved in direct selling in the U.S. in 2016. This was a 1.5% increase from 2015, completing a five-year growth period resulting in nearly five million more people involved in this industry. Only 25% of these individuals are working as independent direct sellers, with 15% working full-time jobs, and 85% working part-time jobs. Direct Sales in the United States 2011 2012 2013 2014 2015 2016 5 Year Change People Involved in Direct selling (in mil) 15.6 15.9 16.8 18.2 20.2 20.5 4.90 People % Change 1.9% 5.7% 8.3% 11.0% 1.5% 6.3% Source Direct Selling Association Competitor Analysis According to IBISWorld (2017) competition with the beauty industry is fierce and, “Barriers to entry have been lowered, creating a competitive threat to the established players from a large number of independent specialty and niche brands, which have had success in attracting customers, especially millennials.” While there has been a proliferation of these new competitors, there are seven “mega- companies” in the beauty market that control over 180 beauty brands, and account for more than 90% of the market. This concentration of competitive market shares results in very powerful companies that have the resources to buy any new successful brand and control channels. Beauty and Personal Care Revenues in Millions by Company and Their Brands in the US (Per Year) Company Brand 2011 2012 2013 2014 2015 2016 % growth Estee Lauder 5,005 5,248 5,462 5,643 6,007 6,326 5% MAC Cosmetics 822 903 980 1,082 1,180 1,078 Smashbox Cos. 160 183 206 224 262 314 Coty Inc 2,045 2,143 2,098 2,138 2,159 4,225 21% CoverGirl 1,387 1,356 1,386 1,334 1,353 1,099 Rimmel 146 66 202 210 221 187 L'Oreal 7,734 8,156 8,841 9,046 9,480 10,587 7% Urban Decay $140 (est) $253.8 (est) 368 426 485 592 Maybelline 1,154 1,232 1,230 1,185 1,289 1,413 J & J 3,724 3,758 3,797 3,897 4,036 4,520 4% Neutrogena 1,354 1,390 1,432 1,505 1,597 1,680 Sephora 395 $599 (est) $804 (est) $1,009 (est) $1,214 (est) 1,421 34% Ulta Beauty 1,657 2,021 2,483 3,017 3,657 4,533 35% Mary Kay 1,444 1,491 1,562 1,633 1,665 1,679 3% Avon 1,324 1,178 985 817 664 574 -11% Rodan+Fields - 108 196 330 624 1,000 206% Source: Passport/Euromonitor In addition, customers are shifting channels and preferences that are profoundly changing the competitive make-up of the industry. This has created new competition for both online and brick and click beauty stores such as Sephora and Ulta, which have both reported revenue growth of more than 30% annually. Despite all of this competition, Mary Kay is still ranked as the 17th largest Global Beauty Brand

(Global Cosmetic Industry 2017) and one one of the largest individual beauty brands. The beauty industry is becoming more digital. Companies must build and maintain a strong online presence to be successful in marketing to millennials. As the table below indicates, most of the brands targeted at millennials like MAC, Anastasia Beverly Hills, NYX and Urban Decay have strong social media presences across platforms. While Mary Kay has a significant number of Facebook followers they are far behind in other platforms and they will need to address this issue if they want to target millennials moving forward. Social Media Presence as of Nov. 2017 Company Facebook Likes Twitter Followers Instagram Followers YouTube Subscribers S M. Footprint MAC Cosmetics 18,724,528 1,444,680 16,959,037 457,866 37,586,111 Sephora 16,456,930 2,327,841 13,100,010 906,355 32,791,136 Anastasia Bev. Hills 1,485,751 456,769 15,025,078 141,451 17,109,049 NYX Cosmetics 1,871,127 923,976 12,125,876 138,843 15,059,822 Urban Decay 3,885,473 1,157,258 9,118,682 113,351 14,274,764 Maybelline 4,703,016 647,139 5,990,179 182,831 11,523,165 Smashbox Beauty 1,828,337 609,362 3,675,541 62,760 6,176,000 e.l.f. 2,155,832 360,935 3,008,840 96,559 5,622,166 Neutrogena 4,907,413 47,612 289,317 21,306 5,265,648 Clean & Clear 4,513,261 117,014 91,810 34,018 4,756,103 Mary Kay 3,043,341 111,976 402,092 98,609 3,656,018 Macro Analysis The macro environment surrounding the skin care and beauty industry is trend-driven and ever- changing. We focused on prevalent trends with the potential to impact Mary Kay’s marketing plans. Millennials Online Usage – In a 2017 study by Ipsos, it was found that millennials (ages 18-34) spend an average of 53 hours online each week while 35-51 year olds spending an average of 45.4 hours connected. Young millennials 18-24 spend 65% of their digital time on their smartphones and its apps while older millennials (ages 25-34) spend 60% of their time connected (comScore). Unemployment Rate – The national unemployment rate stands at 4.1%, its lowest rate since 2000 (BLS). The unemployment rate for 20-24 year olds is currently 7.3%, as recent high school and college graduates struggle to get the jobs skills and experience needed to help them start their careers (Forbes). Natural/Organic Orientation – Millennials are living a healthier lifestyle than older generations. According to Mintel, 52% of millennials prefer products with natural, organic ingredients. Allied Market Research estimated that organic personal care and cosmetic products will reach $19.8 billion by 2020, a 10.2% market share increase. Neilson.com claims, nearly 75% of millennials are willing to pay extra for sustainable offerings, and millennials rank 10% higher than other age cohorts on paying more for “greener” products. SWOT Analysis Strengths Weaknesses Brand awareness: 90% agree that Mary Kay is well-known Mobile apps are difficult to navigate Strong presence: $1.7 billion in US revenues in 2016 Weak digital training for IBCs Diverse product portfolio Declining sales force Experienced workforce Product accessibility: must purchase through Strong research & development IBC Wide distribution channels Inability to coordinate online presence with Dedicated salesforce internal goals

Opportunities Threats Online presence & social media: millennials spend 53 hours Intense competition from online and free- online per week standing retail Promote involvement in philanthropy & sustainable activities Grass-root beauty brands Growth in luxury beauty market Slow industry growth at 4.5% Competitive opportunities to earn extra income Technological innovations Primary Research: Focus Groups We started our primary research on Mary Kay by conducting three focus groups with low, medium, and heavy beauty product users. The results were summarized using word clouds (see Appendix ). The focus groups agreed that skin care was more important than cosmetics with the most important attributes being:

7 variety, ingredients, availability, skin-compatibility, product samples, company reputation, and that it “simply works.” The primary influencers included: family, friends, YouTube vloggers, social media personalities, beauty gurus, and the ability to try the product. The respondents perceive Mary Kay as a brand for elderly, white women with very little product variety. They also felt that the products are slightly over-priced, hard to access, and the parties were time-consuming and high-pressure. When asked about becoming IBCs, most immediately said “no,” but a few heavy-users were open to this idea as long as the products really worked. Personal Interviews To better understand the IBC experience, we conducted two personal interviews with Mary Kay IBCs. The first IBC we interviewed was an older millennial who has been with the company for two years. She said that although Mary Kay emphasizes running your own business, they fail to provide the proper training and support. The main struggle with the beauty parties is attendance. She claims that it is difficult to find people interested in hosting a party, but also finding people who will actually show up. The second interview was with a Sr. National Sales Director and two-time recipient of Mary Kay’s prestigious “Go Give Award.” She felt that Mary Kay Corporate needed to make the job and parties more appealing to millennials. She explained that Mary Kay used to call the parties beauty shows, skin care classes, and girl’s night out and now they are beauty parties. She also talked about Mary Kay’s strict social media policies and how they limit what IBCs can do with social media, and in their ability to market to millennials. Both IBCs talked about the Mary Kay business model and their concerns about taking each other’s customers. Beauty Parties Members of our team attended two Mary Kay parties. After each event, participants were asked to write a reflective note on their experiences individually, summarized here: The first party was a Mary Kay success event hosted by local IBCs. The event was informative on IBC’s work culture and the Mary Kay direct selling model. After about 45 minutes there was a demonstration of a complete Mary Kay facial. This process lasted nearly three hours. Towards the end of the event, all the participants were asked to fill out forms with their personal information. As motivation to sign these forms they were entered into a raffle for participating. The participants felt uncomfortable giving out personal information and also felt pressured not to decline. The second Mary Kay party was a traditional, three-hour, in-house party attended by seven of our members. The first portion of the party focused on the information about the company and all the great benefits and opportunities of becoming an IBC. The second portion of the party was a facial session, featuring eight different Mary Kay products. Participants agreed that the IBC was friendly. However, they felt that the party was too long and poorly scripted with the IBC reading information from the back of the flip cards, and suggesting that she was not well-informed. The major concern included feeling pressured to provide their individual, friends’, and family members’ information. Another major concern was that they were trying to be “sold” on becoming an IBC rather than into buying any products. Lastly, the participants felt that the presentation centered around looking younger and anti-aging, which would be more relevant for an older audience. Consumer Online Beauty Shopping Survey We decided to survey 18-24-year-old women to better understand their behavior and opinions toward beauty products and Mary Kay. The survey was conducted online, and consisted of 135 questions with a final sample size of 907 women respondents. This resulted in 122,445 data points which we further reviewed via crosstab analyses. After examining the demographic data, we determined the participants represent the target market. Of the 907 respondents, 623 were younger millennials (age 18-24) and 164 were older millennials (age 25-34). In terms of ethnicity, 46.2% were White non-Hispanic, 24% Hispanic, 12.9% Asian, 5.8% African American, and 10.9% two or more races. This is a diverse sample which mirrors the local market. The complete survey can be found in Appendix Spending Rates In the past year, estimate the amount you spent on: none $1-49 $50-99 $100-199 $200-300 >$300 Total skin care purchases 5.4% 43.7% 25.5% 16.7% 6.0% 2.7% Total cosmetic purchases 7.9% 29.4% 26.1% 22.7% 8.6% 5.3% Key Takeaway: We found that 74.6% of the respondents spend less than $100 a year on skin care products while 86.1% spend less than $200 on cosmetic products annually, with 49.1% spending less than $50 for skin care, and 36.6% spending more than $100 on cosmetics. Time Spent On an average day, how much time do you spend... none 1-7 minutes 8-15 minutes 15-30 minutes >30 minutes On skin care activities 4.5% 48.3% 31.2% 13.3% 2.7% Putting on make-up 21.2% 18.7% 23.0% 23.3% 13.8%

Key Takeaway: Our data shows that 16% of the participants spend 15 minutes or more on their daily skin care routine and 37.1% spend over 15 minutes on make-up. Beauty Consulting Habits In the past year, estimate the # of times you: none 1 2-3 4-6 6-10 >10 Attend a skin care/cosmetics "party" 85.5% 9.7% 3.6% 0.6% 0.4% 0.2% Visited a skin care consultant at a Department Store 71.1% 14.2% 10.0% 3.2% 0.6% 0.9% Visited a skin care consultant at a Beauty Store 62.9% 17.6% 13.9% 3.8% 1.1% 0.6% Tried a different cosmetic product 14.4% 17.5% 34.0% 18.1% 7.3% 8.6% Tried a different skin care product 20.2% 21.8% 34.8% 13.4% 5.3% 4.4% Key Takeaway: The majority of respondents have not attended a skin care and cosmetic party (85.5%) and did not visit consultants at either department stores or beauty stores. However, 34% have tried four or more cosmetic products and 23.1% have tried four or more skin care products. Skin Care Importance Factors How important are each of the following factors Not at all Important Somewhat Important Very Important Mean Rank in selecting skin care products? The Product Works 1.9% 5.8% 92.3% 2.90 1 Product Quality 1.1% 11.4% 87.4% 2.86 2 Skin Sensitivity 8.9% 25.5% 65.6% 2.57 3 Product Availability 7.0% 41.8% 51.3% 2.44 4 Price 6.1% 53.2% 40.7% 2.35 5 Key Takeaway: When making a skin care purchase the most important factor was whether or not the product works followed by product quality. Cosmetic Importance Factors How important are each of the following factors Not at all Important Somewhat Important Very Important Mean Rank in selecting cosmetic products? The way it makes me look 2.5% 7.5% 90.1% 2.87 1 Product Quality 1.6% 11.5% 86.9% 2.85 2 Skin Sensitivity 8.9% 24.9% 66.1% 2.56 3 Product Availability 7.5% 36.4% 56.2% 2.48 4 Price 6.9% 44.7% 48.4% 2.41 5 Key Takeaways: When selecting cosmetic products the most important factor was the way the product made them look, followed by product quality. Overall, the most important factors for selecting skin care and cosmetic products were similar with the main goal of seeing positive results. Attitudes towards Skin Care and Cosmetics Strongly Strongly Disagree Neutral Agree Mean Disagree Agree Skin care: Skin care is important to me 3.7% 1.5% 9.0% 36.7% 49.1% 4.26 There is a wide range of quality in skin care products 2.8% 2.0% 14.0% 42.3% 38.9% 4.13 For skin care products, it is worth it to pay more 2.4% 7.5% 31.5% 34.2% 24.4% 3.71 I like to tell others when I find a great skin care product 3.4% 5.2% 21.3% 36.7% 33.4% 3.91 I am interested in trying new skin care products 3.0% 8.7% 27.4% 42.1% 18.7% 3.65 I regularly repurchase the same skin care products 2.3% 3.6% 13.2% 44.8% 36.2% 4.09 Cosmetics: Cosmetics are important to me 4.0% 6.8% 18.0% 35.5% 35.8% 3.92 There is a wide range of quality in cosmetic products 1.9% 2.6% 11.7% 34.2% 49.7% 4.27 When it comes to cosmetics it is worth it to pay more 3.8% 9.9% 37.6% 30.2% 18.4% 3.49 I like to tell others when I find a great cosmetic product 3.0% 5.0% 18.3% 38.4% 35.2% 3.98 I am interested in trying new cosmetics products 3.0% 5.4% 19.1% 38.3% 34.2% 3.95 I regularly repurchase the same cosmetic products 2.1% 4.4% 13.6% 43.3% 36.6% 4.08 Key Takeaways: One critical finding is that 85.8% of respondents perceive skin care as more important than cosmetics (71.3%). Participants see that it is worth it to pay more for skin care and cosmetic products in order to achieve working results. The data shows that there is slightly more variety in cosmetic products than skin care products. Both skin care and cosmetic purchasers like to share their product findings with others. The participants are slightly more willing to experiment with cosmetic products than skin care products. Both skin care and cosmetic users regularly repurchase the same products to achieve consistent results.

Attitudes toward Beauty Parties Strongly Strongly Attitudes towards skincare/cosmetics parties Disagree Neutral Agree Mean Rank Disagree Agree There is pressure to buy products at these events 4.9% 3.0% 31.5% 30.5% 30.2% 3.78 1 I prefer more personalized attention rather than 4.4% 9.2% 42.3% 31.7% 12.4% 3.38 2 attending a beauty party Beauty parties are a waste of time 6.5% 17.7% 45.1% 18.1% 12.7% 3.13 3 Beauty parties are educational 15.2% 8.2% 45.3% 25.5% 5.8% 2.98 4 Beauty parties are wonderful social events 15.4% 8.1% 47.0% 23.3% 6.2% 2.97 5 Beauty parties are entertaining 14.0% 10.2% 49.6% 21.4% 4.7% 2.93 6 Key Takeaways: 60.7% of survey participants believe that there is a lot of pressure to purchase products at beauty parties. 44.1% of participants enjoy having personalized attention more than attending a party. Attitudes Towards Mary Kay Attitudes towards Mary Kay Strongly Disagree Disagree Neutral Agree Strongly Agree Mean Rank Mary Kay is a well-known brand 3.6% 6.1% 28.0% 45.7% 16.7% 3.66 1 It is easy to buy Mary Kay products 7.4% 26.0% 43.2% 26.2% 4.6% 3.02 2 Mary Kay rips off their employees 3.4% 10.8% 70.3% 11.5% 4.0% 3.02 3 Mary Kay has high quality products 5.9% 12.4% 59.8% 18.9% 3.0% 3.01 4 I am knowledgeable of the Mary Kay 19.4% 20.7% 23.8% 28.1% 8.0% 2.85 5 direct selling model I would consider becoming a Mary Kay 52.4% 24.3% 20.0% 2.5% 0.9% 1.75 11 Beauty Consultant Key Takeaways: From the 11 questions asked pertaining to attitudes towards Mary Kay, every question besides “Mary Kay is a well-known brand” had a mean value of 3.0 or less. This indicates that attitudes towards Mary Kay tend to be either neutral or negative. Only 3.4% of the respondents said that they would consider becoming a Mary Kay IBC. Influence on Purchases Please rate the following activities/individuals in terms of influence Not at all Somewhat Very Mean Rank on your skin care/cosmetic purchases influential Influential Influential Friends 3.60% 35.50% 60.90% 2.57 1 Reputation 6.30% 33.70% 60.10% 2.54 2 Self-trials 8.80% 30.30% 60.90% 2.52 3 Social media reviews 10.30% 35.50% 54.20% 2.44 4 Personalized skin care advice 10.80% 48.50% 40.80% 2.3 5 Online tutorials 17.20% 38.70% 44.10% 2.27 6 Beauty gurus 22.80% 40.90% 36.30% 2.14 The brand supports causes I believe in 19.40% 48.60% 32.00% 2.13 Key Takeaways: We found that the biggest influence on skin care and cosmetic purchases is friends, followed by the reputation of the product. Further, Millennials are influenced by self-trials, social media reviews and personalized advice. These factors highlight the importance for Mary Kay to establish a good reputation through word of mouth and a strong social media presence, offering individualized advice, when targeting Millennials. Brand Perceptions of Major Beauty Brands Based on our data, we were able to plot the current brand perceptions of millennials. We relied on the top three competitors among millennials (L’Oreal, Neutrogena, LUSH) and Mary Kay.

Key Takeaways Mary Kay is perceived similarly to L’Oreal, but quite differently from LUSH. Mary Kay is perceived to be serious, conservative, traditional, and classic. Millennial Attitude Towards Part-Time Job Survey One of the main tasks was to find ways to recruit more millennial IBCs so we conducted a survey to better understand millennial’s attitudes and opinions regarding part time jobs. We found that 50% of our sample are employed part-time. In total, our samples consisted of 265 participants that answered 82 questions, which resulted in 21,713 data points. Degree of Importance (Part Time Jobs) How important are the following in your Not at all Not very Somewhat Very Extremely Mean Rank search for a part-time job? important important important important important Schedule flexibility 0.4% 1.3% 14.7% 39.6% 44.0% 4.25 1 Ethical behavior of the employer 1.3% 1.3% 14.2% 37.8% 45.3% 4.24 2 Learning new skills to help me in the future 1.8% 3.6% 18.2% 32.4% 44.0% 4.13 3 Gain work experience 1.3% 5.3% 21.8% 28.9% 42.7% 4.06 4 Income potential 0.4% 5.8% 17.8% 43.1% 32.9% 4.02 5 Guaranteed compensation 1.3% 7.6% 19.6% 33.8% 37.8% 3.99 6 Key Takeaway: We found that the most important factors in a part time job (rated extremely and very important) are schedule flexibility, ethical behavior of the employer, learning new skills that will help me in the future, gaining work experience, income potential, and guaranteed compensation. Degree of Importance (Learning from Part Time Jobs) How important is it to learn the following skills in Not at all Not very Somewhat Very Extremely Mean Rank your part-time job? important important important important important Communication skills 1.3% 2.2% 8.4% 43.6% 44.4% 4.28 1 Presentation skills 5.3% 10.2% 21.3% 37.3% 25.8% 3.68 2 Computer skills 3.6% 12.9% 23.6% 42.2% 17.8% 3.58 3 Networking skills 7.1% 10.2% 26.7% 30.7% 25.3% 3.57 4 Writing skills 8.4% 10.7% 26.7 34.7% 19.6% 3.46 5 Entrepreneurial skills 11.1% 16.4% 28.0% 26.2% 18.2% 3.24 6 Key Takeaway: We asked respondents to state the degree of importance across 18 attributes related to the skills learned in a part time job setting. Our survey shows that respondents are interested in learning communication, presentation, computers, networking, and writing skills. Degree of Interest (Part Time Job Categories) How interested would you be in the following part time Would never Not very Somewhat Very Extremely Mean Rank job categories? do this interested interested interested interested Run your own online business 10.7% 14.2% 29.8% 28.0% 17.3% 3.27 1 Personal assistant 11.1% 24.4% 34.2% 23.6% 6.7% 2.90 2 Run your own brick and mortar business 18.2% 22.7% 25.3% 21.8% 12.0% 2.87 3 Service jobs (waiter/waitress, etc.) 14.7% 40.4% 28.0% 11.1% 5.8% 2.53 4 Sales jobs (real estate, insurance sales. etc.) 19.1% 36.0% 28.0% 12.9% 4.0% 2.47 5 Retail jobs (department store etc.) 18.2% 41.3% 26.7% 10.7% 3.1% 2.39 6 Direct sales (Amway, Herbalife, Mary Kay, etc.) 52.9% 28.4% 14.2% 3.1% 1.3% 1.72 10 Key Takeaway: The most preferred job was running an online business, while the least preferred job was direct sales. This suggests that Mary Kay should position the IBC job differently. Time Spent on Each Platform Daily, how much time do 1-59 1-2 > 2 Daily, how much time 1-59 1-2 > 2 None Mean None Mean you spend... Min Hours hours do you spend... Min. Hours hours Using your mobile phone 0.4% 5.8% 16.9% 76.9% 3.70 On Snapchat 35.1% 29.8% 20.0% 15.1% 2.15 Using your Shopping on the 4.4% 15.1% 18.7% 61.8% 3.38 32.0% 50.7% 12.0% 5.3% 1.91 computer/tablet/laptop Internet Listening to the radio 30.2% 45.8% 16.4% 7.6% 2.81 On Twitter 54.7% 19.6% 13.3% 12.4% 1.84 Using Video Streaming 15.1% 28.4% 19.6% 36.9% 2.78 Listening to podcasts 63.1% 24.4% 6.7% 5.8% 1.55 Services Using a music streaming 20.0% 21.8% 20.9% 37.3% 2.76 Playing mobile games 63.1% 25.8% 4.9% 6.2% 1.54 service Watching YouTube 22.7% 30.2% 15.6% 31.6% 2.56 Reading Blogs 64.4% 24.4% 6.2% 4.9% 1.52 On Instagram 19.1% 37.3% 22.7% 20.9% 2.45 Reading newspapers 63.6% 25.8% 7.6% 3.1% 1.50 Watching TV 27.6% 25.8% 24.0% 22.7% 2.42 On Pinterest 70.2% 24.4% 2.7% 2.7% 1.38 Using live streaming On Facebook 22.2% 41.3% 21.8% 14.7% 2.33 82.7% 9.3% 3.1% 4.9% 1.30 services Reading the news on the 15.6% 56.0% 19.1% 9.3% 2.22 On LinkedIn 72.9% 24.9% 2.2% 0.0% 1.29 internet

Key Takeaway: From those surveyed, 93.8% spend more than one hour a day on their mobile phone, and 80% spend at least one hour a day on their computer, tablet, or laptop. In addition, our survey shows that a majority of respondents spend at least one hour a day streaming video (56.5%), music (58.2%), watching YouTube (47.2%), on Instagram (43.6%), and watching TV (46.7%). Any new marketing campaign should be implemented on these platforms. Attitudes toward sales jobs Strongly Strongly Please rate your agreement with the following statements Disagree Neutral Agree Mean Rank Disagree Agree Selling careers are not for everyone 0.0% 0.4% 4.4% 38.7% 56.4% 4.51 1 The best part time jobs provide the skills you need in your future 0.0% 4.0% 16.0% 48.4% 31.6% 4.08 2 career path To be successful in sales, you must believe in the product 2.2% 13.8% 16.4% 41.8% 25.8% 3.75 3 Sales jobs have high earning potential 2.7% 8.9% 27.6% 45.8% 15.1% 3.62 4 Key Takeaway: Our results show that selling jobs and careers are not for everyone and that you have to believe in the product to be a successful sales person. Strategy: Target Markets Mary Kay requires that the primary target market be Young millennial (age 18-24) women. To identify other potential target markets, we used a two-step process. First, we identified the age groups with high percentages of heavy beauty product users. Next, we evaluated the likelihood that we could target those age groups with similar messaging and tactics. We are proposing the following primary and secondary target markets: Primary Target Market: Young Millennial (age 18-24) Women - Our primary target market of 18-24- year-old women is ascribed in the case requirements, but is also supported by the MRI data. MRI reports that that 74% of the 18-24 year olds complexion care products. That equates to 11.1 million potential customers. This represents 12.7% of all complexion care users. So this is a substantial market by itself. COMPLEXION CARE Total # of women % of all Young millennials % of all all/heavy users Index All customers 11.1 mil 74% 12.8% 107 Heavy users 4.5 mil 30% 13.4% 112 Secondary Target Market: Older Millennial (age 25-34) Women - Based on the MRI data, we selected 25-34 year olds as a secondary target market. This age group has one of the highest percentages of heavy users of complexion care products. There are 5.9 million older millennial women that are classified as heavy user of complexion care. In total, 14.9 million 25-34-year-old women use complexion care products. This group constitutes 17.1% of all female complexion purchasers. COMPLEXION CARE Total # of women % of all Older millennials % of all all/heavy users Index All customers 14.9 mil 69% 17.1 99 Heavy Users 5.9 mil 27% 17.7 103 Furthermore, according to our survey data, these 25-34 year olds are very closely related to the younger Millennials as far as attitudes towards beauty products and use of social media go. Choosing this group as our secondary target market allows us to use many of the same media vehicles and marketing activities; thus creating synergy between our strategies. If we only targeted younger millennials, our target market would be 11.1 million or 12.8% of all women, complexion care users. By adding older millennials to the target market we add 14.9 million complexion care users and bring our total target market to 26 million young women or 29.9% of the total women complexion care users. Complexion Care Segmentation and Personas We took a data-driven approach to identify segments and personas using our survey data to further investigate the target markets. With 907 total skin care and cosmetic survey results, we were able to focus on those specific customers that were in the target market of millennials ages 18-24. After considering, our strategic direction and Mary Kay’s current situation, we decided to focus on four segments. They constitute the largest segments and match Mary Kay’s strengths. We decided not to pursue the Sensory and Price sensitive segments. See appendix . Eco-Friendly - Organic Olivia (22%): Organic Olivia prefers to use products that are labeled cruelty- free, vegan, and are made from fresh and natural ingredients. She seeks organic and hypoallergenic products to protect her sensitive skin. She is also concerned with the image of the brands that she frequently uses including social responsibility and community outreach and environmental friendliness. Mary Kay needs communicate their high quality natural products, along with their social responsibility and philanthropic activities along with their commitment to the elimination of animal testing.

Engaged – Social Stephanie (21%) Skin care is important for Social Stephanie. She enjoys using a wide range of complexion products and likes experimenting with new products and creating new looks for herself. She appreciates brands that have extensive color palettes and skin tone selections. When she finds brands with diverse color options she tells her friends, family, and social media followers. She is willing to spend more money on a product that is high quality and matches her skin tone flawlessly. Results Oriented - Beauty Guru Bianka (20%) Beauty Guru Bianka identifies herself as an expert in skin care and cosmetics. She is focused on finding and using products work. For her, it is all about product quality and she is willing to pay more for products that work. She buys products that make her like the way she looks. Convenience - Niche Nicole (18%) Niche Nicole is a woman that seeks fresh products with extended expiration dates to guarantee that her products will last for a long time. She is interested in product variety and product availability. This is a challenge for Mary Kay since their products can only be purchased through the IBCs. Part-Time Job Segments and Personas We took the same data driven approach for the IBC segments. The analysis resulted in four segments. The results from the part-time job survey were gathered from millennials aged 18-to-24. The following four personas are for the part-time employment segment of the job market: Skill Development – Career Courtney (32%) Career Courtney is seeking a part-time job that will enhance her future career skills. She looks for jobs that provide proper training and valuable work experience that she can leverage in the future. Mary Kay can recruit these individuals by marketing the IBC job as part-time employment that has extensive training and opportunity for growth and advancement within the company. Money Focused – Earnings Erica (24%) Whether Earnings Erica is just supporting herself or her family, there is a high need or desire for regular income. Her primary concern is current compensation and income potential. The Opportunist – Independent Kaitlyn (24%) Independent Kaitlyn is seeking part-time employment that will allow her the flexibility to be her own boss and the freedom to do things her way. She is likely to self-starter and have an entrepreneurial spirit. Mary Kay can recruit these individuals by marketing the IBC job as part-time employment where you run your own branch of the company. The “I” in IBC stands for independent, which emphasize the leadership required to take on the role. Job Prestige (20%) Status Samantha is impressed with prestigious jobs and employers. She is willing to accept lower pay and flexibility to get that job. Mary Kay can recruit these individuals by marketing the IBC job as part-time employment with a company that values community, women’s rights, and helping the environment. There are many accomplishments that an IBC can earn that will result in bragging rights for these individuals. Strategy Overview The primary and secondary data presented above provides us with the background information needed to propose a data-driven strategic marketing plan to attract more millennial customers and IBCs. The case challenge was to “reimagine, reinvent, and revolutionize the Mary Kay personal beauty experience and beauty party and develop an integrated marketing plan that will increase the number of Mary Kay IBCs and also sales among next generation” complexion care customers. Our proposed strategy is based on the following key findings: 1. Premium beauty brands are growing faster than lower priced brands (Mintel, 2017) 2. The beauty industry has embraced social media for disseminating information and building brands 3. 67% of millennial beauty shoppers begin their purchase online 4. Mary Kay parties tend be around three hours long and lack focus 5. Millennials prefer individualized attention when buying beauty products 6. Mary Kay has very strict social media policies that limit what IBCs can do with social media 7. Mary Kay is not considered a millennial brand (survey), and is seen as more serious than fun, older rather than younger, more traditional than innovative, more classic than modern, and more conservative than trendy 8. Millennials are interested in jobs that provide schedule flexibility and teach new skills that can be used in the future (survey) 9. Mary Kay IBCs feel that they are not well-trained, and as a result, many are not successful. Our data indicates that the beauty industry has gone digital in terms of disseminating information and building brands, primarily for targeting to millennials. In order to remain competitive, beauty firms will need to become experts in integrating the Internet and social media into their communication strategies. While Mary Kay has taken some steps to improve their online presence, their strict policies on

13 social media usage for their IBCs has resulted in a weak social media presence. We appreciate Mary Kay’s desire to protect their brand image and propose a social media management system. The system is designed to make it easy for IBCs to post social media content, but also it provides a way for Mary Kay to maintain control of the content. The IBCs will need training in order to effectively use social media to build their businesses (see MK Social Hub). After participating in multiple Mary Kay beauty parties, conducting focus groups, and surveying millennial women, we observed that Mary Kay’s approach to conducting their parties is a turnoff for many 18-24 year olds. The parties are too long, lack focus, and lack engaging interaction. They also put too much pressure on attendees to buy products, provide contact information of friends and family, and to become IBCs. This often results in a negative experience which hinders the probability of guests attending future events. While we firmly believe that group parties can be an effective way to promote selling Mary Kay products as a potential part-time job, the current approach needs to be adapted to the needs and desires of the younger millennial audience. Based on our survey and focus group data, we propose to redesign the basic party into a more personal and engaging experience. For more details, reference the Redesigning the Party section. Our survey data indicates that Mary Kay has high brand awareness. However, millennial women perceive Mary Kay as a mature brand that is appropriate for older women. This tends to be reinforced by all the products that Mary Kay markets like, TimeWise Repair® Volu-Fill® Deep Wrinkle Filler. With all the new brands targeting millennials, Mary Kay is an unlikely choice for most millennials. To address the millennial perception of the Mary Kay brand we reviewed the perceptual maps and survey data. Our interviews indicated that Mary Kay is not considered by most millennials, therefore, we recommend Mary Kay introduce a brand extension rather than a completely new brand: MYNE by Mary Kay. This course of action takes advantage of Mary Kay’s high brand awareness but will also us to define the extension as a millennial brand. Secondly, our focus groups and survey data provided us with information pertaining to what millennials are looking for in part-time, “side hustle” jobs. Our data shows that straight direct selling jobs are not very desirable, with only 4% of respondents being very or extremely interested in direct selling jobs. But many aspects of the IBC job are important to millennials: being your own boss, schedule flexibility, and future career building skills. Repositioning the IBC job as an online business offers schedule flexibility and the skill training that will help in future career endeavors. An important element of this strategic approach is that it is synergetic. The movement to a more digitally-based direct selling marketing platform is necessary. This will incorporate database marketing, social media, and social selling, along with our proposed changes to the parties. This will require that IBCs receive training in social media/selling, and beauty skills. Goals Our objectives were developed in accordance with the goals stated within the case challenge: 1. Define the personal beauty experience and party of the future 2. Increase the number of Mary Kay IBCs ages 18-24 by 10% 3. Increase sales among female nonusers ages 18-24 by 20% We have developed additional objectives in alignment with improving IBC and customer experiences: 1. Improve social media experience through customer engagement, which will be identified through a 25% increase in organic customer content and responses 2. Utilize a database-driven plan in order to redefine the personal beauty experience for customers 3. Restructure the Mary Kay website to increase the ranking of IBCs personal websites on Google from the fourth page to the first page using search engine optimization (SEO) strategies 4. Create a social selling model/platform on social media to strengthen relationships between IBCs and customers, which will lead to a 10% increase in sales based on social selling Consumer Decision Journey Model We relied on our primary and secondary data to gain a better understanding of the beauty purchase decision process by taking a data-driven approach. Our research indicated that the key elements necessary to move consumers through the AIDTA model process are: brand recognition, influences, product benefits, occasions, lifestyles, situations, and product availability. The consumer decision journey model is pictured below:

Build Brand Awareness –Data from our consumer usage survey showed that 82.6% of respondents believe there’s a wide range of quality products, and 80.5% of respondents repurchase the same beauty products. This indicates that the beauty market is competitive with brand loyal customers. The 2016 TABS Beauty Report, states millennial women purchase an average of 5-8 beauty brands, it is essential to build awareness and interest in the brand in order to be included in consumers’ consideration set. Data from our consumer survey suggests that 62.4% of millennial women are aware of the Mary Kay brand, but they have a neutral attitude towards the brand (45.83%). This suggests that Mary Kay, following our strategic plan, could easily sway consumers towards a more positive attitude. Data from our focus groups and Mintel suggests that occasions are a primary reason to become aware of beauty products. Focus group participants mentioned that they become more aware of brands when looking for products for their day- to-day beauty routines. Data from the Mintel database suggests that consumers become more involved in looking for beauty products when preparing for a special occasion, with 54% of millennial women claiming it is their reason for following a complex beauty routine. Lastly, the data suggests that older millennials become more aware of beauty products when seeing the effects of aging, with 27% claiming to fear looking older. Most individuals will not consider a brand at the point-of-purchase. It is important for Mary Kay to associate their brand to the occasions mentioned. As part of our strategy we suggest that part of the content Mary Kay post on the different social media platforms are occasion related, such as wedding, prom, night out, and everyday natural look videos. Build Interest in the Brand – The two elements that build interest in a brand are influencers and primary product benefits. Data from our survey suggests the following considerations are influential when making beauty purchases: 96.4% recommendations from friends, 93.8% reputation of the brand, 91.2% self-trials, 89.7% social media reviews, 82.8% online tutorials, and 77.2% beauty gurus. The primary product benefits and features that build interest on a brand, are effectiveness, how the product makes them look, quality, skin sensitivity, and availability of products. It is essential that Mary Kay is present in these influence channels. In our strategy, we suggest that Mary Kay allows for self-trials through subscription boxes, that the new customer app promotes and facilitates product reviews, that the online tutorials feature the products in an engaging way, and that they push the beauty guru training for their IBCs. We also suggest launching a brand extension of products that have the attributes that build interest in millennial women. Create a Desire to Try the Brand – There are two elements that create a desire to try a brand: lifestyles and secondary product features/benefits. Based on our survey data the main lifestyle aspects of millennial women are: 71.9% share their positive beauty product experiences, 53.6% agreed that it’s worth it to pay more when it comes to beauty products, 66.7% are open to test new product, and as previously mentioned they believe there is a wide range of options and tend to be product loyal. The secondary beauty product benefit and features that create a desire to try a brand are: cruelty-free, organic, and vegan. These features aid differentiating products. It is crucial that Mary Kay exploits their openness to try new products through subscription boxes and more experiential beauty parties, and encourage customers to share their experiences. The new products suggested in our strategy will have the product features needed to incite desire to try the brand.

Trial – The elements that move customers to trying the product are product availability and the situations. 93.1% of our beauty survey respondents claim that availability is important when purchasing a product. Therefore, it is critical to have stock on hand for every party. Our secondary research from Mintel regarding millennial women (2017) suggests: 55% claim that trying a sample of a product drives them to purchase a product, 59% research products while shopping in a store, 66% prefer interactive beauty experiences, and 44% prefer personalized consultations. This emphasizes the importance of shipping sample boxes and developing an interactive shopping experience through a strong digital platform and application. These options personalize the decision-making process and allow consumers to virtually interact with products. Our strategy emphasizes increasing the accessibility and engagement. Adoption – Once the product is purchased, it must deliver on its promise. Our survey data shows that 97.6% of millennial women said that a product being effective is important, and secondary data from the Mintel database suggests that 34% claimed that they stick with a product that is effective. Therefore, successful trials will result in sales. We took this consumer decision-making research into account when we designed the marketing plan for increasing sales among 18-24-year old non-users, suggesting that Mary Kay uses trials as an opportunity to ensure product effectiveness and facilitates the purchasing process. The Mary Kay IBC Journey During our research, we found that Mary Kay’s current IBC recruitment process is not effective among millennials. Driven by our primary and secondary research we propose to millennialize the IBC journey along the AIDA model pictured below: Step 1: Awareness – We propose that Mary Kay raise awareness along two lines: a) Social Media Outlet - Our surveys showed that 40-60% of millennials spend at least one-to-two hours per day on various social media platforms such as Facebook, Instagram, YouTube, LinkedIn, and Snapchat. We recommend Mary Kay produces short videos that highlight millennial IBC success stories on these social media platforms. b) Real Life Experience - We also recommend having a college ambassador “Con- Tour” bus with the Mary Kay and “Become and IBC today!” logo to start raising awareness to everyone that sees it, especially on college campuses. The students can enter for a free makeover and product trials. The main purpose of the “Con-Tour” bus is to generate awareness, which will educate and inform potential IBCs about this great job opportunity. Our goal is to emphasize the fun and positive social experience at these events and not to immediately push the idea of becoming an IBC. Step 2: Interest – Our medium and heavy user focus groups both agreed that they would consider being an IBC if a digital support system and platform were provided. In order to raise interest for millennials, we propose to change the recruitment message from becoming a successful IBC through direct selling to a “Great Way to Become an Online Marketer.” Instead of having to attend the weekly IBC success events or beauty parties to learn about this opportunity, potential IBCs should be able to look into becoming an IBC through the Mary Kay website. They can also find out more about this opportunity through our Mary Kay “Con-Tour” bus. Step 3: Desire – According to our data, 36.3% of millennial women find beauty gurus very influential. As mentioned in the awareness stage we want to capitalize on millennial’s high engagement on various social media platforms. In partnership with some of the top beauty vloggers and gurus, we propose that Mary Kay produces short videos featuring successful millennial IBCs to promote their success and the benefits of becoming an IBC. Step 4 Action – (Become an IBC today!!) Our data revealed that 45.4% of millennial women would never engage in a direct sales job but, 39% were interested in running their own online business. As a part of our strategy in embracing digital, we propose to change the job description from Direct Selling to Independent Online Marketer. With this comes an independent website offering through Mary Kay Social Hub, social media training, and help in driving pre-approved content. This will provide the IBCs all the digital support they would need to help increase their sales and better connect with their millennial clients. The My Mary Kay Experience: Positioning Applying a data-driven approach based on our primary and secondary research, Mary Kay’s value proposition, and our target markets, we advocate the following overall positioning statement: “The My Mary Kay Experience is an opportunity through which IBCs and Customers can shape their own experience into meaningful connections with each other and with the brand.”

When positioning the Mary Kay brand, we considered the target market, millennial interests, the benefits of using Mary Kay products, and the circumstances that prompt such product usage. Mary Kay Benefits: Our survey results indicate that most millennials feel that parties lack personalization. The Mary Kay experience is not well suited to millennials because parties last too long and attendees feel pressure to become IBCs, fill parties, and to purchase items. As such, Mary Kay will benefit from the implementation of a millennial-focused, socially engaged premium brand extension in conjunction with more personalized parties and focus on the customer’s needs. The My Mary Kay Experience will focus on customer engagement through social selling online to build relationships by informing customers about their products in addition to selling them. Target Market: Our primary target market of 18-24-year-old women is described in the case requirements, but is also supported by the MRI data. We selected 25-34 year olds as a secondary target market. Both groups display high purchase and usage rates of complexion care and cosmetic products. We chose these target markets because they are similar enough that we can use the same media and messaging strategies to reach both groups. Messaging We brainstormed several ways to focus on individual IBCs and customers, and we came up with the campaign My Mary Kay Experience. My Mary Kay Experience: A more personalized, hands-on, fun Mary Kay experience for both millennial customers and the IBCS to focus on their individual needs. From our survey and focus group data, we discovered that millennials preferred more tailored, personalized attention. The My Mary Kay campaign focuses on putting the individual first and making IBCs as successful as possible. Based off our findings, we believe that the My Mary Kay campaign will create a strong experiential value proposition. So why My Mary Kay Experience? 1. The My Mary Kay Experience campaign focuses on providing a personalized, engaging, and fun social experience not only for individual customers but also for the IBCs. 2. It focuses on the individual IBC by allowing them to customize their business and meet individual customer needs. 3. The campaign also allows the individual customers to arrange the content of parties to their desire in order to create a more personalized experience. 4. The campaign will strengthen the relationship between IBCS and their current customers while increasing the opportunity to build new client relationships. 5. This message will resonate with millennial women who want experiences and services that is customized to meet their needs. New Product Introduction – As part of our strategy to appeal to millennial demographic, we propose a brand extension called MYNE by Mary Kay. MYNE by Mary Kay will include premium products that are organic, effective, and include diversity in color availability. Product packaging must emphasize sustainability and cruelty-free processes. The name MYNE by Mary Kay conveys Mary Kay’s focus on the individual woman, based on her need to find products tailored to her skin and needs. According to our survey data 44% of respondents prefer personalized attention from skin care and cosmetic consultants. 89.4% of respondents claimed that personalized skin care advice was influential when making beauty purchases. This data shows us that there is high potential for success in a brand that is tailored to individuals. Justification – Mintel research shows that trending brands capitalize through extensions because they allow the opportunity to reach new users by boosting brand reputation. Our survey data shows that although 62.4% of millennial women are aware of Mary Kay, but they do not see the brand representing them (59.3%). Our data shows that 93.8% of millennial women consider brand reputation an important factor when making a beauty purchase. The purpose of the brand extension will include developing a brand image around product and brand attributes that millennials will find more appealing and relatable. The following recommendations are based on primary and secondary data. This includes the results from our beauty consumer survey and data collected from Mintel. Brand Attributes – MYNE by Mary Kay will include a selection of effective, organic, and premium- quality products made from natural ingredients. Through these product attributes MYNE by Mary Kay will help shape Mary Kay’s positioning as a young, honest, innovative, and trendy brand. Our survey results show that 92.3% of respondents considered a product’s effectiveness to be a very important attribute when buying beauty products, and 87% consider quality to be a very important factor. MYNE will emphasize organic and natural ingredients, as 58% of survey respondents consider products being organic as a deciding factor, and data from the Mintel database suggests that 26% of millennial women consider natural ingredients as an important product attribute. Millennials are primarily results-driven

17 when making beauty purchases, but ethical claims and natural positioning can help set products apart. MYNE by Mary Kay will follow Mary Kay’s stance against animal testing, as 81% of respondents classified cruelty-free products as an important factor. The formula of these products will be safe to apply on sensitive skin, which 91.3% of survey respondents classified as an important attribute. The goal of MYNE by Mary Kay will be to make millennial women look confident, powerful, and beautiful. The mission of MYNE by Mary Kay is to make a product that makes each woman like the way she looks (90% of survey respondents considered this a very important attribute). These attributes will allow MYNE by Mary Kay products to standout in the crowded market of beauty products, especially to the female millennial consumer. MYNE by Mary Kay will contain a wider range of colors and shades to accommodate a wider need based on skin variety. The millennial generation is 21.3% Black/Asian compared to the only 16.3% Black/Asian baby boomer generation (MINTEL). The millennial population demands that brands represent their diversity, as 33% of millennial women appreciate diverse spokespeople when choosing a beauty brand (MINTEL). Packaging – Our survey data showed that 78.9% of consumers find packaging influential when purchasing beauty products. The MYNE by Mary Kay packaging will consist of clear, biodegradable recipients that will allow millennial customers to observe the contents of the product and determine the quality first-hand and feel part of the movement that cares for the environment. 75% of millennials are willing to pay extra for sustainable offerings, and that millennials rank 10% higher than other age cohorts in regard to paying more for “greener” products (Nielsen). Our data support the claim that company’s sustainability levels were influential when making purchase decisions (80.7% agreed). Social Responsibility – MYNE by Mary Kay will follow Mary Kay’s footsteps in being a brand with a cause. 80.6% of our respondents claimed that a brand supporting causes they believe in is an influential factor when making beauty purchases. We propose that 10% of MYNE by Mary Kay product sales will go towards the Mary Kay Foundation’s efforts to end domestic violence. The Millennialized Party Parties are an important aspect of building relationships between IBCs and their customers. These parties also allow customers to try products before they make a purchase. According to our survey data, only 4% of millennial women strongly agree to attending virtual parties rather than in-person parties. Therefore, we do not recommend the use of digital parties. Instead, we focus on improving the current parties in order address the millennial customers and their needs. Our proposed millennialized party will be shorter, more personalized, and more hands-on. For more information regarding the changes between the current and millennialized parties, please reference Appendix . Social Selling Social Selling Description Steps Generate Mary Kay and MARY KAY IBCs can generate leads by advertising and posting content on Instagram, Leads Facebook, YouTube, Pinterest, and Twitter. These sites allow Mary Kay to stay connected with consumers through conversations, likes, and sharing content to engage with consumers. Qualify leads To qualify needs, Mary Kay will need to find valuable leads by mining online information to match their products with customers’ interests. Consumer’s social likes, group belonging can offer further insight into their match with Mary Kay. Converting Mary Kay IBCs need to take the prospective customers they find from the mining process and engage with them through social media. IBC can answer questions, review comments, and handle objections through social media. This will allow Mary Kay IBCs to better understand the needs the customers. Using the data and information gathered through Mary Kay’s social media, can understand customer profiles. This information will increase rates of conversion. Through content and brand engagement Mary Kay will establish meaningful relationships. Further, Mary Kay can enhance the relationship by maintaining conversations with customers, offering genuine and helpful responses, and solidify the bond with the customer. Follow up Lastly, Mary Kay should use their social media platforms to allow customer co-creation, product improvement, and new idea development. In addition, it can improve consumer experience by incorporating there. Following up shows that their opinion matters and makes them feel loved. Mary Kay Philanthropy Involvement The Mary Kay Pink Changing Lives app currently has fewer than 10,000 downloads (compared to over five million for the virtual makeover, both on Android). The app encourages IBCs to get involved in the Mary Kay Foundation by giving makeovers to deserving women (for more information see appendix ). Additionally, Mary Kay has joined the U.S. Forest Service and Arbor Day Foundation to plant over a million trees within their Pink Doing GreenSM Campaign. The only way for customers and IBCs to participate is by returning product containers to be recycled. Currently there is no way for the customers to get involved using an app. We propose the new Mary Kay app to have volunteering opportunities for

18 customers and IBCs. Both apps will enhance current efforts to raise awareness so that IBCs and customers will be encouraged to volunteer through local events promoted via email database. Event volunteers will not only “level up” within the app, they will also receive product samples. Relationship Marketing – E-mail The goal of relationship marketing is to create a lasting connection by utilizing financial, social, and structural bonds. Mary Kay can utilize their existing database to help IBCs build relationships with their customers. Financial bonds can be created by using discounts, offers, and sample boxes. To increase the social bond between customers and IBCs, Mary Kay should grant access to customer beauty profiles and purchase data to allow customized communication (see Customized Communications). After these initial bonds are formed, customers have been primed to maintain a relationship, with not only IBCs, but also the brand. Mary Kay then provide a method for customers to offer suggestions, express opinions, and provide feedback. This, along with offering technical support, will help build strong structural bonds. Mary Kay Tutorial Videos Mary Kay has produced tutorials through their 11 year YouTube history. 96% of consumers surveyed found videos helpful for making online purchase decisions and 73% of all consumers are more likely to make a purchase after watching videos explaining a product or service. Successful videos include dialog throughout the video, are long, and have a “personality.” For example, the Hooded Eye Application featuring Global Makeup Artist Luis Casco has over 110,000 views. In comparison, tutorial videos that featured the Project Runway makeup artist, but did not include his name in the title only gained 4,000 to 7,000 views. Mary Kay should implement more tutorial videos with beauty gurus that millennials can identify with and feature their names in video titles for search optimization. Subscription Boxes Physically trying on a product before purchasing it allows women to assess the product’s attributes (Mintel). In addition to secondary data, we found that self-trials are an important factor when purchasing beauty products (91.2% agreement). This data supports our plan to millennialize the customer experience through personalized subscription boxes. To subscribe, the customer would enter information regarding skin type, undertones, and beauty needs into their profile on the website or the app. Their (already selected) IBC would then send them a personalized subscription box. The box will include sample-size versions of the products that are individually tailored to them. The subscription boxes allow customers to try products that are best-suited to their needs within their preferred time and location. In addition, customer will benefit from purchasing the product how they desire, without the pressure of a social setting, as our data suggests (77.2% of respondents like to make beauty decisions on their own). Scholarship The existing Mary Kay affiliated scholarship program with Junior League of Dallas, Mary Kay offers $40,000 in scholarships for females through the Women LEAD (Learn • Excel • Achieve • Dream) Scholarship Program. To attract more millennials, the Mary Kay Scholarship will accept applications from any four-year university accredited college student across the United States, and award $75,000 annually. We recommend Mary Kay award $5,000 scholarships to 15 winners. The scholarship will be awarded every year during the summer to four winners, each receiving $1,000. Personalized Beauty Consultation and Experience Using the database IBCs will be able to provide a personalized beauty experience by incorporating customers’ preferences and purchase history. Instead of generic correspondence IBCs will reach out to their customers offering products catering to individual needs. At parties, consultants can connect with customers by focusing on fewer products. This will allow IBCs to provide in-depth information about products that customers are interested in. Mary Kay “Con-Tour” Bus – According to our data only 2.2% of women millennials think Mary Kay is a fun brand. Based on this data we propose a Campus Ambassador program through our Mary Kay “Con- Tour” bus. The Mary Kay logo, “Give Your Career A Make-Over,” and “#MyMaryKayExperience” will be prominently featured on the bus. This bus will visit college campuses across the United States and promote Mary Kay by featuring make-up application and product sales and giveaways. To align with the new social media strategy, customers will be asked to take a selfie with the bus or products and post it on Instagram in order to receive perks. Tools: Social Media Management Engaging in social media selling can seem daunting to IBCs who have not taken their business digital. The MK Social Hub will provide support to IBCs and offset any concerns IBCs might have. This tool will be a platform for IBCs to easily manage their business across various social media accounts. The platform will sync with Facebook, Instagram, Pinterest, Twitter, LinkedIn, and YouTube. Once the IBCs connect

19 their accounts, they will be able to access Training (see Training) and Metrics (see Metrics) to create and schedule posts and find new content. MK Social Hub

Goals Mary Kay Benefits Method IBC Benefits Establish online brand and Engaged online brand Provide pre-approved, high- Increase professional network culture community quality content Connect with customers Increased loyal customer base Provide the opportunity for Build lasting relationships with Approved shared content IBCs to interact with customers like-minded individuals outside of the traditional party Enable IBCs to maximize their Empowered IBCs who are able Provide training and continued Gain marketable skills social selling potential to dominate the online market education on social selling and Revitalize business by social selling social media management Succeed in digital age Feeling valued by company Involve IBCs in social media Engage IBCs to become a part Accept entries of new media Become a part of a greater marketing of the brand content ideas cause IBC lasting loyalty Reward creative campaigns Make an impact Win prizes Data shows that 67% of millennials who are heavy-users of beauty products begin their purchase journey online (Poshly and Pixability). According to our primary data social media reviews are one of the top four most influential sources for skin care and cosmetic purchases. Therefore, we recommend that Mary Kay offers a social media management tool to their IBCs. The MK Social Hub will ensure that the Mary Kay brand and culture are appropriately represented. Offering IBCs a social media management platform would encourage social media use by IBCs and increase Mary Kay’s popularity on social media. Mary Kay Generated Content A Mary Kay Corporate team, including a social media marketing strategist, copywriter, graphic designer, photographer, and videographer, can work to create shareable content. This content will include: templates, photos, photo overlays, video, captions, and hashtags. Millennials are 67% more likely to purchase makeup if it is accompanied by a how-to video tutorial, therefore we recommend content to focus on educating their consumers such as: Why-to-Use and How- to-Use videos. IBC Generated Content Mary Kay should include IBCs in content creation by holding monthly contests to create new content. This would give IBCs a feeling of involvement and draw more people to use this platform. Some rewards for winning the contests could be: Mary Kay product gift cards, Mary Kay limited edition or personalized gifts, and featuring winners in Mary Kay makeup tutorial videos. Database Access A vital resource for Mary Kay’s promotion will be a direct form of marketing using a database of potential leads and customers to generate personalized individual level communication. Currently, information of a prospective customer is captured when the individual buys products on the Mary Kay website and a local IBC received the sales commission. The in-house database will send the information to the customer’s local IBC through the Mary Kay IBC mobile application. Once the IBC receives the individual’s information, the IBC will utilize the tools and resources from the mobile application such as e-mail distribution, sales management, and a virtual-chatroom to help with the clients applying the specific product they have bought. Website The current website structure does not need to be drastically altered. Database information containing customer purchase data is already being collected and can be used to improve the customer journey in the previously proposed application and social media management platform: MK Social Hub. Based on our data from in-depth interviews, there is no creation of relationship during or after the moment when a customer buys the product and the IBC receives the sales commission. With a database already in place, IBCs can easily build a relationship with the prospective customer and send personalized messages and gifts through the website and mobile application. (See Appendix ). Mobile Application Mary Kay Inc. has currently over five official mobile application spread out and segmented by purpose, including: Virtual Makeover, MK eCatalog, myCustomers+, Pink Changing Lives, etc. According to our in-depth interview with an IBC, both the sellers and the customers complained that there were too many apps and that they should be combined to offer a better and more personalized experience. We will take the concepts of all the Mary Kay applications and split them into two integrated mobile applications: one for customer and one for IBCs. The customer app (Mary Kay) user-interface will be catered to fit the needs of the customers such as product reviews, e-catalog, local IBC ratings, and parties near you. The

IBC app (MK IBC) will be a business user-interface that will focus on inventory, sales management, email distribution, and setup of the IBC client database. Mary Kay (Customer) MK IBC Product review Sales management E-catalog Email distribution Virtual makeover Client database MK events Virtual-chat room with your clients Online tutorials Volunteering Virtual-chat room with your IBC Local IBC around your area review Party near you Volunteering The customer application will not only integrate the Virtual Makeover, MK eCatalog and MK Events, but give the users the capability to review their local IBC around their location for credibility. This new app will also feature a video tutorial section on the customer side so that customers can learn how to use the product they are purchase effectively. According to our primary data, online tutorials are considered one of the top six most important in terms of influence on skin care and cosmetic purchases. Online video tutorials displaying different types of products and looks will be a deciding factor of prospective customers. The new MK IBC mobile application will be a hub for IBCs to manage their business portfolio. The IBC mobile app will be geared towards a business management user-interface that will contain sales management, email distribution, client database and virtual-chat room with clients. According to our primary data, getting personalized skin care advice is one of the top five most influential in skin care and cosmetic purchases. Being able to connect via virtual-chatroom with their clients for a more personalized experience will be a crucial factor for the customer experience. Training MK Hub will offer social media training to IBCs. Our primary data shows that online marketing skills (69.3%) and social media marketing skills (67.1%) are considered important. Offering training would appeal to millennials because they are gaining marketable skills. It will also benefit long-time IBCs by revitalizing their business and ensuring their success in the digital age. This training will include: introduction to social media marketing, social media strategy, and platform-specific training. Social Selling Training – Mary Kay IBCs need to use social media to sell their products online, but also need to have personal interactions with customers on social media to build meaningful relationships. According to Forbes, 79% of salespeople who use social media marketing outsell their peers. However, 90% of decision makers say they never respond to cold call outreach (Harvard Business Research). The social selling training will inform IBCs how to utilize social media marketing tools and skills to build their reputation and credibility. Weekly online training workshops will teach the importance of social selling, looking professional online, engaging with customers, building credibility, and boosting reputation. Each workshop will involve five activities consisting of step by step tutorials, descriptive videos, and a post-workshop quiz. In order to advance to the next workshop, each IBC must pass the quiz with a score of at least 85%. Once the workshops are completed, each IBC will receive a certificate in social selling. For IBCs interested in submitting their own content, the MK Social Hub will provide optional training on content creation. Beauty Guru Certifications – Our beauty survey shows that 77% of customers are influenced by Beauty Gurus and 78% are influenced by in-store beauty consultants. Millennials are putting their trust in knowledgeable professionals for skin care and cosmetic advice. Even though Mary Kay already provides a certification process this will be geared more towards millennial interest. We recommend providing eight required fields of expertise that will help the IBCs sell their products. These fields will be split into two categories: skin care and cosmetics. The skin care segment will consist of acne, anti-aging, skin types, and damaged skin repair while the cosmetics segment will consist of color matching, eyes, face, and lips. Each certification will focus on qualifications that cover theory, chemistry, practical skills, and hands-on practice. To earn a certification IBCs will participate in a workshop consisting of six segments of descriptive videos and online tutorials. A mini quiz will follow each section that the IBCs must pass with a perfect score to advance to the next section. After all six sections are completed, IBCs will be given a cumulative test and must earn a score of 85% or above to receive the Beauty Guru certification. Sales Forecast We used the historical data to create sales projections for Mary Kay US sales and we based our assumption on a clear understanding of consumer perceptions, and the data showing differential growth rates for cosmetics and skin care product markets.

2017 Sales Projections: The current year’s information is unavailable; therefore, we have extrapolated the sales for the year 2016 for the two big product markets, skin care and cosmetics. Data shows that the entire beauty industry grows at around 3.3% rate of increase. See Appendix (Connect back to industry table) for more detail. The reasoning for our estimation is based on the competition analysis, as follows: a) The estimated rate of growth of the industry is ranging from 3% to 3.4%, which is very narrow; therefore, we estimate and average projected industry growth rate, at 3.3%. b) Based on industry analysis data we estimated that the US cosmetics industry increases 4.4%, on avg. c) Based on industry analysis data we estimated that the US skin care industry increases is relatively flat, with a .01% percent increase annually, on average d) Research shows the effect of a change in image is not fully reflected in customer perceptions of quality until after about six years. In the first year after an improvement, only about 20% of the total effect over time is realized (Mitra and Golder, 2006); therefore, due to neutral perceptions, Mary Kay will continue to appropriate a lower amount of new industry sales, at a rate of 2%. 2018- beyond (five year forecast Sales): Following a quick turnaround, based on brand power, Mary Kay’s total sales are expected to grow by a total of 16% in the following 5 years. We present two other scenarios, pessimistic (2% rate increase/per year, reflecting upon Mary Kay’ struggle to turnaround the Millennial sentiment) and optimistic (5% rate increase/per year, following a quick market turnaround reward). For information regarding timeline and budget see Appendices and .

Metrics We will measure the effectiveness of our proposed strategy and tactics by employing a variety of metrics to create a comprehensive 360° evaluation. The goals of our campaign are to increase sales among millennial female non-users of Mary Kay and to increase the number of millennial IBCs. To evaluate the successfulness of our campaign we used a variety of third party sources that provide internal metrics on Mary Kay. For more details concerning metrics (see Appendix ). The metrics that will measure increase in sales goal are ● Volume of Sales in the US market (20% increase) ● The number of new IBCs in the US (10% increase) The metrics that will measure the increase in millennial IBCs goal are: ● The number of new IBCs in the US (10% increase) ● The number of millennial IBCs in the US Additional Metrics In addition to the metrics above, we are employing a number of metrics to evaluate the effectiveness of each specific tactic. More details can be found in Appendix . Campaign Goals KPI Current Estimated Increase sales among millennial (18- Sales (US) 1,678,000,000 2,013,600,000 (20% Increase) 24) female non-users by 20% # of all IBCs (US) 325,000 357,500 (10% Increase) Increase # of millennial (18-24) IBCs # of all IBCs (US) 325,000 357,500 (10% Increase) # of millennial IBCs 32,500 35,750 (10% Increase) Personal Beauty Experience and # of new app downloads New App (0) 30,000 Party of the Future # of new content uploads New App (0) N/A # of invites New App (0) N/A # of shares New App (0) N/A

References http://academic.mintel.com/display/748144/ http://academic.mintel.com/display/793999/ http://content2.marykayintouch.com/public/PWS_US/PDFs/presskit/CPK_All.pdf http://directsellinhgtntpe:w//dsi.rceocmts/ienldlinegx.npehwps/v.cieowm/d/isnnd_eaxn.pnhopu/vniceews/ _dtshne_a2n0n1o7_ugnlcoebsa_lt_h1e0_02#0.W17f_Ygt5lo0byaZlP_-1Y00#.WfYt50yZP-Y http://jackiehuba.com/2005/05/7_secrets_to_wo.html http://losangeles.cbslocal.com/2017/10/03/millennials-recycling-green/ http://time.com/4748357/milennials-values-census-report/ http://web.archive.org/web/*/http://facebook.com/marykay http://web.archive.org/web/*/https://www.pinterest.com/marykayus http://www.cosmopolitan.com/style-beauty/beauty/how-to/a16610/beauty-vloggers/ http://www.dsa.org/docs/default-source/research/growth-outlook/dsa_2016gandofactsheet.pdf?sfvrsn=6 http://www.gcimagazine.com/business/manufacturing/packaging/Leading-Luxury-221358161.html http://www.gcimagazine.com/marketstrends/segments/cosmetics/The-Future-of-Beauty-is-Personal- 456517063.html?utm_source=Most+Read&utm_medium=website&utm_campaign=Most+Read http://www.gcimagazine.com/marketstrends/segments/natural/Market-Report-Natural-Beauty-Care- 421885713.html http://www.gcimagazine.com/marketstrends/segments/skincare/5-Things-to-Know- About-the-Future-of-AR-Beauty--440935133.html http://www.gcimagazine.com/marketstrends/segments/skincare/Luxy-Skin-Care-Has-to-Push-the- Boundaries-to-Remain-Relevant--450651993.html http://www.gcimagazine.com/networking/coverage/CEW-Looks-at-the-Luxury-Landscape- 233010411.html http://www.nielsen.com/us/en/insights/news/2015/green-generation-millennials-say- sustainability-is-a-shopping-priority.html http://www.retail-merchandiser.com/index.php/reports/retail-reports/94-lush-2 http://www.sequenceinc.com/fraudfiles/2008/05/mary-kay-cosmetics-destroying-half-a-million-women-a- year/ https://etailwest.wbresearch.com/how-sephora-integrates-retail--online-marketing https://explorer.perfect365.com/how-millennial-buy-makeup-report/ https://generationopportunity.org/press-release/millennial-unemployment-rate-stagnant-at-12-8-percent/ https://Likealyzer.com https://mintel.com https://mri.com https://newsroom.marykay.com/en/releases/iconic-beauty-companys-independent-sales-force-growing- younger-and-more-diverse https://newsroom.marykay.com/en/releases/mary-kay-celebrates-50th-anniversary https://socialblade.com/instagram/user/marykayus https://socialblade.com/youtube/user/marykay https://sotrender.com https://web.archive.org/web/20170404183717/ https://web.archive.org/web/20170404183717/ https://www.beautypackaging.com/contents/view_experts-opinion/2017-01-26/organic-beauty-market- expected-to-rise-10 https://www.bls.gov/news.release/pdf/empsit.pdf https://www.bls.gov/news.release/youth.nr0.htm https://www.dallasnews.com/business/business/2010/07/22/sales-force-grows-younger-for-mary-kay https://www.forbes.com/sites/larryalton/2016/12/22/millennials-are-struggling-to-get-jobs-heres-why- and-what-to-do-about-it/#5d72ea8e4bb0 https://www.forbes.com/sites/walterloeb/2017/04/07/lush- beauty-taking-the-industry-by-storm-thanks-to-young-love/#3f2773df11c5 https://www.facebook.com/MaryKay https://www.grandviewresearch.com/press-release/global-organic-personal-care-market https://www.jwtintelligence.com/2016/07/high-tech-beauty/ https://www.npd.com/wps/portal/npd/us/news/press-releases/2017/us-prestige-beauty-industry-adds-1- billion-in-sales-grows-6-percent-in-2016/ https://www.pcrm.org/research/animaltestalt/cosmetics/americans-oppose-testing-cosmetics-on-animals https://www.portal.euromonitor.com/ https://www.retailtouchpoints.com/features/retail-success-stories/lush-merely-scratching-the-surface-of- multi-billion-dollar-cosmetics-market https://www.socialmediatoday.com/content/cmo-week-sheryl- adkins-green-mary-kay-and-their-three-million-spokeswomen

Appendix A: Consumer Online Beauty Shopping Survey Results

Appendix B: Additional Customer Online Beauty Shopping Survey Results

Appendix C: Part Time Job Survey Results

Appendix D: Additional Part Time Job Survey Results

Appendix E: Purchasing Crosstabs

Appendix F: Purchasing Crosstabs Continued

Appendix G:

Appendix H:

Appendix J: Word Clouds

Appendix K:

Appendix L:

DIFFERENCES BETWEEN THE CURRENT AND MILLENNIALIZED MARY KAY PARTY CURRENT PARTY MILLENNIALIZED PARTY Time Approximately 2 to 3 hours 90 minutes maximum Raffles Exchange raffle tickets for answering questions and filling out Exchange raffle tickets ONLY for answering questions (keeps personal information millennials engaged, eliminate pressure to share info) Content/Activities Focus on various areas/same party experience for everyone Focus on one area/personalized to customer choices Pressure Feel pressured to purchase Because they are personalized parties millennials want to be there and will not feel pressured Information Regarding One of the main focuses of the party/focused more on the benefits The IBC will strictly focus on the products being demonstrated How to Become An than the actual products IBC Product Trials Products offered for trial are predetermined, minimal chance to try Free samples given, products can be won, and a subscription box option products of interest will be offered Customer Experience Customers spend more time watching/listening than being involved More hands-on and involved through trials and personalization Discounts Alludes to “special deals,” but unclear if any discount is actually 24 hour discount access through the IBC’s personal site after attending a being received party Digital Usage Digital interfaces are lacking/difficult to use. They are inaccessible Customers will be able to order products directly from a more user- and not utilized at parties. Customers are able to order directly off friendly Mary Kay website. In the revised app, customers will be able to of the website, but the website is difficult to navigate find upcoming parties with the “Party Near You” feature. Also, they will be able to look at how-to tutorials and online product demonstrations. Products Too many products incorporated per party, not suited to all New products will be featured at the party, including a new extension individuals brand (with a wider color range) and subscription box offer Product Knowledge Lack product knowledge, present product info without necessary The IBC will have more in-depth product knowledge and will be able to data or evidence, cannot answer questions adequately answer more specific questions IBC Presentation IBCs read off the back of flip charts, lack knowledge and IBCs should be educated on what they are presenting, have good Skills understanding of products, seem ingenuine in their presentations interpersonal and sales skills, speak with confidence Philanthropic Little mention of philanthropic initiatives, focus solely on the Integrate stories and information about Mary Kay’s philanthropic causes, Engagement products/IBC business with almost no discussion of charitable emphasize that product sales support these causes involvement Cruelty-Free Emphasis Products not distinguished as cruelty-free, product attributes like Focus on cruelty-free/eco-friendly product attributes and align extension cruelty-free and eco-friendly are largely ignored brand products with the cruelty-free message SUMMARY The parties are too long and scripted. The participants felt pressured The new party will be shorter, more personalized, and focus on the to provide personal information and felt like they were trying to be customers and their needs. The customer will not feel uncomfortable or “sold” on becoming an IBC rather than buy any products from the pressured to buy products or provide information. Also, the customer company. will be more informed about Mary Kay products and philanthropies.

Appendix M: Website Mockup and New Product Logo

Appendix N:

Appendix O: Mary Kay Ad Campaign

Appendix P: Brand Perception Maps, IBC Journey, and Social Bonding

Appendix Q:

Appendix R: Personas

Skin Care and Cosmetics Personas Eco-Friendly User Engaged User Results Oriented Shopper Convenience Shopper “Organic Olivia” “Social Stephanie” “Beauty Guru Bianka” “Niche Nicole” Age 18-24 & 25-34 18-24 & 25-34 18-24 & 25-34 18-24 & 25-34 Education Finishing/Finished Finishing Bachelor’s Finishing/Finished High School Graduate Bachelor’s Degree Degree Bachelor’s Degree or Below Household High Income High Income High/Middle Income Middle/Lower Income Income Ethnicity White non-Hispanic White non-Hispanic Asian and White All Ethnicities Attitudes -Vegan -Skin care is important -Product works -Product Variety and -Organic -Likes to share positive -Way it makes me look -Expiration Date Interests -Cruelty-free product reviews with -Product quality -Product Availability -Hypoallergenic others -Worth it to pay more -Interested in trying new beauty products -Regularly repurchases same beauty products Est. Share 22% 21% 20% 18%

Part Time Job Personas Skill Development Money Focused Job Prestige Job Opportunist “Career Courtney” “Earnings Erica” “Status Samantha” “Independent Iris” Age 18-24 18-24 & 25-34 18-24 18-24 Education Finishing/Finished High School Graduate Finishing/Finished High School Graduate/ Bachelor’s Degree Bachelor’s Degree Finishing Bachelor’s Degree Household High Income High Income High/Middle Income Middle/Lower Income Income Ethnicity All Ethnicities White and Hispanic All Ethnicities White non-Hispanic Attitudes -Compensation -Gain work experience -Prestige of employer -Being my own boss and -Income potential -Skills -Prestige of job -Schedule flexibility Interests -Guaranteed -Training and -Freedom to do it my compensation Advancement way Est. Share 32% 24% 24% 20%

Appendix S: IMPROVED SOCIAL CONTENT Current Mary Kay Social Media Activity New Social Selling Activity Instagram Instagram -Lacks content variety. Majority of content is creative design - Post consistently and at peak time periods posts for product promotion - Includes wide assortment of product promotion, not just -All models on page are older women design posts -Women names and profile tags are not included - Post variety of content which informs, engages, and entices - Posts do not include a call-to-action. audience Facebook - Tag social media influencers to spread content -Irregular posting pattern limited to Monday through Friday - Create “shoppable” Instagram with curalate.com and put and excluding weekends link in bio. - 11.43% response rate (Likealyzer.com) Facebook - 51-hour response time (Likealyzer.com) - Post consistently and at peak time periods - Mainly product photos - Actively respond to comments and messages to reduce YouTube response rates resulting in better customer service image - Irregular posting pattern YouTube - Video titles lack consistency - Post consistently and at peak time periods - Videos not organized into playlists - Incorporate keywords in titles for search optimization - Vague descriptions - Consistent and informative descriptions Pinterest - Create organized playlists - Content is catered specifically for Pinterest Pinterest - Contains organized boards with various themes - Continue to post tailored content specific Pinterest Twitter - Clean up boards to guide followers to products. - Irregular posting pattern Twitter - Majority of content is product promotion - Post consistently and at peak time periods - Posts do not have call-to-action -Utilize Twitter as median platform to promote other social media channels. - Engage in open conversation to build relationships with customers and IBCs

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