Mac Cosmetics
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MAC (Makeup Art Cosmetics) is originally a Canadian company that have been operating for more than 20 years and it has already penetrate to many countries all around the world, in the North and South America at most. It sells brand cosmetics of high quality that is intended for professional as well as everyday usage. The brand is sought-after also by many celebrities, fashion models, and photographers because of its delicate texture, huge choice of colors, and durability. The products are usually very well tolerated on every skin type and MAC make-up items are also suitable for women with sensitive eyes (MAC, 2007, p. 1). The prices of the MAC cosmetics are comparable with other high quality world brands, i.e. those which cannot be bought in drugstores, but in the specialized cosmetic stores or international perfumeries that the company has a contract with. That hinders the company from further expansion into other countries, mainly in Central and Eastern Europe, because of the limited ways of sale.
Problem definition
In the recent years, MAC has slowed down its spreading out around Europe and does not intend any sale strategy changes or new retail sale contracts. Since there is no online sale through Internet outside the United States, Central and East Europeans have no possibility to buy the MAC cosmetics except traveling for it abroad. Additionally, weak promotion causes awareness decline and lower sales for the last fiscal year. The company uses celebrities (actress, singers) as representatives or models for MAX cosmetics. However, there is lack of advertisements and promotional campaigns that would attract ordinary women to try the brand make-up.
Justification for the problem’s causes
Recent slow expansion of the company is caused mainly by the limited ways of sale and by the worries about the loss of control in the case of penetrating new markets. The company does not think about any other practices than retail contract sales and refuse the offers from abroad to get MAC products in there. “The demand for MAC Cosmetics is there, but the supply is not. While MAC is one the cosmetic lines highest in demand, finding discounted products is actually not that easy” (Vasen, 2007, p. 1 ) Moreover, there are no media advertisement outside the United States and people often do not even know about the products and their advantages. The statistics show that the leading way to get information about MAC products is via referrals (Bates, 2006, p. 2). Since there is a lack of promotional campaigns with no free samples, the company can only rely on the existing customers to spread the information about MAC products.
Alternative solutions
There are several alternatives how MAC can penetrate new markets, mainly Central and East Europe and also how to make people more aware of its high-quality cosmetics. It is good to consider different ways of the sale strategy, such as exporting, franchising, or retail sale via contracted distributors.
First alternative that can help the company to get its products further abroad is exporting. Exporting can be performed by the company itself or it is sometimes good to use export agents that work as intermediaries between the company’s home country and the foreign country (or even more foreign countries) to which the company wants to export its products. The following SWOT analysis shows the advantages and disadvantages that have to be considered while choosing the best way to penetrate new markets.
SWOT Analysis for Exporting
Strengths
Weaknesses
reaching new markets
high initial and administrative expenses
low fixed costs
adjustments
higher revenues
formalities
corporate growth
distributor contracts
Opportunities
Threats
innovation
tough competition
global expansion
political and economical impediments
international awareness of the brand
MAC can benefit from exporting because of getting its products everywhere at relatively low costs. The products can be distributed by external intermediaries and sell at the worldwide markets without any direct involvement of the company. However, it requires several adjustments of the products to be made by the company itself, such as packaging, and some other modifications that would suit to different nations. Also, there can be some administrative obstacles that the company has to solve in order to make good