Cosmetics Case Study - MAC: The Business
Since its founding in 1984, MAC Cosmetics has grown to be one of the most popular cosmetic suppliers in the world. They have used this platform to encourage inclusion and social progress. Below, we have provided information on the companies business strategy, marketing strategy, drivers of success, current ownership structure and current company issues.
MAC Cosmetics was founded in Toronto in 1984 and opened its first US store in 1991. Frank Angelo and Frank Toskan started MAC. They made four promises to their customers that are still focused on today: a guarantee that the brand will be distinctive, valued, consistently delivered, and kept over time.
From the beginning, MAC products have only been sold in department stores and on the web. The focus of MAC Cosmetics has always been to cater to the customer only and not worry about what other brands are doing. MAC's business strategy is to ensure that everyone feels welcome to use their products. This is proven by their mission statement, which is "All Races, All Sexes, All Ages."
MAC chooses to market their products only through word of mouth. Another unique strategy is to send a special package to customers who sign up for their mailing list, which includes a note and QR code that can be scanned to unlock videos with tips on how to use MAC's products.
Numerous celebrities have endorsed MAC's products in recent years as well. The celebrities they have collaborated with include Madonna, Lady Gaga, Pamela Anderson, Nicki Minaj, Rihanna, Lorde, Prabal Gurung, and Proenza Schouler. MAC's makeup was also used by Natalie Portman in the 2010 movie Black Swan. Other recent projects by MAC include Star Trek and Disney themed collections.
On Instagram, MAC Cosmetics has more followers than any other makeup brand, with 17.8 million. Top competitor Anastasia Beverly Hills has just 16.4 million followers. In a report that compared cosmetics brands based on how and where they interact with customers on social media and online, MAC was considered better than other popular cosmetics brands such as L'Oreal Chanel, and Maybelline. This shows that MAC has become a very respected and popular company in the cosmetics industry.
Drivers of success
The main product that has helped drive success is the Viva Glam products. Viva Glam lipstick was created in 1994. All the money made from this product goes toward the MAC AIDS Fund. In the nearly 24 years that Viva Glam has been available, over $400 million has been raised to help fight AIDS. Many celebrities have helped to promote this cause, including the ones previously listed along with Elton John, Ricky Martin, Miley Cyrus, and Sia. Along with donating profits, the Viva Glam fund also provides services such as counseling for HIV+ women, safer sex kits, diabetically sound meals, and school shoes for children orphaned by AIDS.
Another driver of success is the global popularity MAC has achieved. Throughout Canada, the US, and Europe, there are 108 locations where MAC products are sold as of 2010. 53 of these stores were in the UK, and 8 were MAC's flagship stores. This number has most likely gone up since then, but the exact number of recent stores was not found. Regardless, the international success of MAC Cosmetics has propelled it to the top of the beauty industry.
The current CEO is John Demsey. Demsey began working at MAC in 1998, when Estee Lauder acquired full ownership of the company. He has been key in getting many celebrities to endorse Viva Glam and the entire MAC brand. Outside of the Lauder family, Lal Family Corp, Fidelity Management and Research Company, and Vanguard Group Inc. are three of the top shareholders. These three groups are the only ones outside of the Lauder family to hold at least 4% ownership.
In China, MAC products have been tested on animals in recent years. Once this news came to light, MAC made sure that customers knew that this was not their idea or intention. They even partnered with the Institute For In Vitro Sciences to find better ways to test products. MAC also made it known that they will not stop offering their products in China because of this, since their mission statement advocates for the inclusion of all people.
In conclusion, MAC Cosmetics has grown to be a top company in the beauty industry due to their unique and inclusive marketing and business strategies. They have helped those in need through their Viva Glam products since 1994. While the product has run into controversy in recent years after testing products on animals in China, they have ended this practice and continue to offer products globally.