Read the case study and please answer the follow questions Outline the major strengths, weaknesses, opportunities, and threats (SWOT) that Mistine should place emphasis on in a bid to achieve a competitive advantage and command a large share of the Thai market (Provide an in depth explanation with reference to the case) Face what you fear Given that you're the CEO of Mistine, what specific marketing strategies would you recommend for entry into the international market as you seek expansion and growth (Elaborate on at least five key strategies with in depth explanations Core to Minstine's success is its market segmentation and targeting strategies Outline the components of Mistine's market segmentation Discuss the strategies for continuous dominance in serving each segment of the market for Mistine CASE STUDY Mistine Direct Selling in the Thai Cosmetics Market Synopsis This case summarizes the growth of Better Way (Thailand) and its highly successful Mistine brand of cosmetics From its meager beginnings in 1991, Mistine has risen to become the dominant brand in Thailand's direct selling cosmetics market The brand's value based positioning (high quality at affordable prices), along with successful target marketing and a tightly integrated marketing program, has kept the company at the top of the market despite strong competition Mistine's success has allowed Better Way to expand its efforts into other countries, most notably in Asia, Europe, the Middle East, and Africa Better Way is now looking to further expand its operations, perhaps into Western countries and China Themes Direct selling, global marketing, branding strategy, value, positioning, distribution strategy, integrated marketing communication, marketing implementation Under the principle to make better way of life for Thai people, Dr Amornthep Deerojanawong, Thailand's king of direct selling, in partnership with Boonyakiat Chokwatana, founded Better Way (Thailand) in 1988 In 1991, the company launched its Mistine brand and began its rapid ascent as a key player in Thailand's direct selling cosmetics industry Mistine started with fewer than 10 employees and less than 100 products at a time when the Thai people were not familiar with the direct selling model for cosmetics Direct selling is the marketing of products to consumers through face to face sales presentations at home or in the workplace Based on Mistine's success, direct selling now accounts for over 60 percent of the market and is the preferred method of selling and distributing cosmetics in Thailand Mistine and Better Way quickly became the leader in the Thai direct selling cosmetics market a position it has held since 1997 The company's distribution warehouses, among the largest in Asia, handle nearly 10,000 products under the Mistine umbrella These warehouses distribute products to 900,000 Mistine sales representatives around the globe and more than 1 million members of Mistine's membership program The company generates more than $400 million in net sales MISTINE'S MARKETING PROGRAM Mistine spends approximately 10 percent of its revenue on marketing and plans to increase its marketing budget as the company continues to grow Company executives believe that Mistine's double digit growth will continue over the next few years, although weaker purchasing power in Thailand has resulted in less than anticipated sales growth in its domestic market Their main concerns are primarily related to political situations in the countries where it does business, to the worldwide volatility of oil prices (oil is a key ingredient in many cosmetics), and to natural disasters such as flooding To attain its status as a leading direct seller in the cosmetics industry, the company had to select the right mix of products, price, distribution, and promotion Mistine must regularly evaluate each of these components in order to maintain its competitive positioning Product Cosmetics under the Mistine brand are divided into five categories and target markets Body Care, Personal Care, Makeup, Fragrance, and Skin Care An experienced production team develops hundreds of new and unique products each year At least two to three new products are launched each month Customers can be sure that they will receive only the highest quality, value for money products All of Mistine's cosmetics are produced by manufacturers who are certified by ISO 9001, 9002, and Good Manufacturing Practices espoused by the U S Food and Drug Administration These international standards ensure the quality of Mistine's products Every Mistine product is thoroughly inspected and tested before being delivered to the warehouse In addition, every Mistine product comes with a satisfaction guarantee that if for any reason a customer is unsatisfied with his or her purchase, Mistine will replace the product or offer a full refund without condition To combat its key competitors, Mistine positions itself as an Asian company that produces products that are developed and formulated especially for Asian women Mistine products are made to blend well with Asian complexions and skin tones They are also made to suit the warmer and more humid climate of the Asian region, so that the product stays on longer and looks fresher throughout the day Mistine's products are popular among Thai housewives, factory workers, teenagers, and consumers with a monthly household income of $200 or less Yet as Mistine has gained prominence, it has also begun to reach out to higher income professionals with new product offerings In 2010, the organization introduced Blemish Balm (BB) cosmetics through a partnership with Korean firm Klomar Korea Co , Ltd Since its introduction, the BB line has become a popular cosmetics line for Mistine The cosmetics industry in Thailand has exhibited a growing trend toward Korean cosmetics, particularly among teenagers Thai men and women view Korean actresses and movie stars as being among the most beautiful women in Asia, and teenagers and younger people view Korean models and actresses as the ultimate Asian beauties Mistine is therefore collaborating with Korean firms to develop more Korean type cosmetics for the Thai market Mistine's parent company Better Way also decided to introduce an entirely new line of products under its own name, Faris by Naris Faris by Naris products are imported from Japan, another country highly admired for its quality cosmetics Unlike the Mistine brand, Faris by Naris products are sold using a premium pricing strategy This shift toward more prestigious products implies that Mistine is looking to expand its target market to women in the middle to upper classes Pricing Mistine's core market, which accounts for 70 to 80 percent of sales, includes housewives with a high school diploma, an occupational certificate level or high occupational certificate level of education, and a monthly household income of about U S $125 to $200 The company also targets professional women who earn U S $200 to $300 per month While Mistine has traditionally priced its cosmetics to focus more upon the middle to lower income market, the company is expanding its emphasis to women making above average incomes at more than U S $480 per month Mistine hopes to increase its number of sales to middle and upper class markets from 25 to 50 percent of sales Furthermore, Mistine wants to fully leverage its product quality, popularity, and market leading position As a result, the company has started to increase prices Historically, 80 percent of Mistine's sales were for products that cost an average of U S $3 each By boosting the average price to U S $6, Mistine estimated the average order would increase from U S $27 to U S $45 Wage increases mandated by Thai law will also significantly impact Mistine's pricing strategy Since 20 percent of production costs go toward wages, wage increases increase Mistine's prices even further by approximately 6 to 10 percent Distribution Mistine was the first domestic cosmetics company to use the direct selling model in Thailand The company continues to sell the majority of products through direct sales but has also expanded into retail and e commerce Although the company does not own its own stores, Mistine products can be found in Tesco Lotus, Boots, Lotus Express, and 7 11 convenience stores Consumers can also purchase Mistine products through the company's Internet site or through its Mistine catalogue An advanced computer system tracks sales, and Mistine's fleet of trucks can deliver the product within 1 week of ordering Mistine has also built a distribution center, which will make it easier to export to other countries Parent company Better Way wants to use the distribution center to reposition itself as a business solutions provider for the ASEAN market Not only does the center provide logistics services for Mistine, but it is also being used to provide logistics services to Thai and international firms Mistine is also extending its reach globally Although international markets comprise only 2 to 3 percent of Mistine's sales revenue, the potential for increased global sales is enormous In addition to Thailand, Mistine products are sold in many Asian, European, Middle Eastern, and African markets, including countries such as Ghana, Iran, South Africa, and the Democratic Republic of the Congo A trade agreement called the Association of Southeast Asian Nations (ASEAN) will help to increase Mistine's global reach into other Southeast Asian countries ASEAN is a trade agreement between Thailand, Cambodia, Myanmar, the Philippines, Malaysia, Singapore, Indonesia, Brunei, Laos, and Vietnam As part of the agreement, tariffs between member states have been reduced or eliminated This increases the opportunities for companies such as Mistine to expand their distribution Additionally, in 2010 ASEAN members developed an agreement with China called ACFTA (ASEAN China Free Trade Area) for free trade between the nations This makes a lucrative opportunity for Mistine to tap into the world's largest market of consumers In anticipation of these increased growth opportunities, Mistine plans to build a new plant in Vietnam Promotion Direct selling companies normally depend on word of mouth to develop brand awareness, recruit salespeople, and encourage product purchases Better Way decided to do things differently by being the first direct selling company in the world to use mass media advertising The company's continuous advertising campaigns build its brand image and position Mistine in customers' minds In addition, Better Way also developed many advertising campaigns to recruit salespeople When the company first started, Dr Deerojanawong used his credibility to advertise Mistine during interviews with the media and at seminars with educational institutions People applied as district managers with the company mainly because of his reputation He was certain that the district managers would be able to establish a large network of salespeople To increase knowledge about the company, however, Mistine wanted to reach greater audiences This eventually led it to move into television advertising Mistine is here was launched as the company's first television campaign with the objectives to communicate to the public that Mistine is a direct selling cosmetics business and to create a brand character of beauty for Mistine's products Using the message Mistine is here was an effective way for the public to envision a salesperson coming to visit them with Mistine products After only 2 months, the campaign generated an incredible buzz as it increased brand awareness from 10 percent to roughly 70 percent As Mistine continues to globalize, Mistine is here has been translated into Burmese with plans to translate the slogan into Bahasa Indonesia and Tagalog The company also markets itself as The Asian brand for Asian women as a way to promote the fact that its products are made to complement Asian skin tones Mistine's second advertising campaign was designed to assist district managers in their efforts to recruit new salespeople This campaign consisted of two advertisements The message of the first ad was that it was possible to buy a car by becoming a Mistine salesperson Within 3 months, a total of 30,000 people applied to be salespeople, and sales rose by 100 percent The message of the second ad was that it was possible to buy a house by becoming a Mistine salesperson Again, the company succeeded in creating stronger brand awareness through this campaign Based on this success, the company decided that the next step was to increase its customers' confidence in Mistine products, as well as generate more product trial As such, If you're not satisfied, we will give you your money back was the concept for the third campaign This campaign was not only successful in stimulating product trial, but it also created a great deal of brand switching from competitors' products to Mistine products In the end, there were few cases of product dissatisfaction or customers requesting their money back Mistine has remained a first mover in the direct selling market by launching advertising campaigns featuring popular actresses, actors, and bands as Mistine brand ambassadors Many of these celebrities have been featured on Channel 7 or RS Entertainment, Thai television channels with soap operas popular among Mistine's core market For instance, Mistine used Urassaya Yaya Sperbund and Chalida Mint Vijitvongthongboth popular Thai actressesto represent their Mistine I Am collection Mistine has become an expert at choosing celebrities that resonate with these target markets To take advantage of the favorable impressions of Korean cosmetics (especially among teenagers), Mistine used a famous Korean band to promote its BB Powder The company has also created its own Facebook page to extend its worldwide reach Due to its extensive marketing campaigns, the Mistine brand is one of the bestknown brands in Thailand In 2011, the brand won a Superbrands award as the brand most accepted by Thai consumers This high level of brand awareness has helped propel Mistine to a market leadership position in the Thai cosmetics industry KEY COMPETITORS Cosmetics are the number one product sold through direct selling channels in Thailand According to the World Federation of Direct Selling Associations, global retail sales for the direct selling industry are estimated at more than U S $178 billion Of that amount, the cosmetics market accounts for roughly 60 percent of all products sold via direct selling channels In terms of direct selling market share, the top four cosmetics companies are Mistine, Avon, Giffarine, and Amway However, domestic brands and Asian competitors have begun to challenge the top four for dominancy Price, quality, and attractive packages are the three most important criteria for Thai consumers when buying cosmetics Mistine has four main competitors Avon Founded in 1978, AVON Cosmetics (Thailand) Co , Ltd , is the 22 nd branch of AVON Products, Inc , USA It was the first company in Thailand to use a single level marketing direct selling approach for Thai consumers With the company's motto The Company for Women Avon targets teenagers and working women Avon cosmetics are truly high quality products for which the brand is recognized throughout the world As such, it is not difficult for Avon Thailand to sell its products and gain the confidence of consumers The company has a team of representatives known as Avon Members who are headquartered in Bangkok and visit all the customers in their areas of responsibility Not only do they sell products, but these Avon Members also provide beauty tips, customer service, and ensure that customers are satisfied with the products Giffarine Giffarine Skyline Unity Co , Ltd , was founded in 1966 by a team of Thai doctors and pharmacists The company's medical roots translate into its positioning today Giffarine's products are developed and tested with the highest standards of quality However, like Mistine, the company also focuses on affordable pricing Giffarine's portfolio includes a wide range of cosmetics, body treatments, household items, diet supplements, and health food products Giffarine's success can be attributed to several factors In addition to product quality, the company places a great deal of emphasis on social responsibility and ethics in the treatment of both customers and employees Giffarine is also a master of multilevel marketing, which extends to how it structures its sales force Giffarine also announced it would launch a direct selling channel to better target the Thai population Amway Established in May 1988, Amway (Thailand) Co , Ltd , sells various consumer products in addition to cosmetics, using a multilevel marketing approach The company's most popular products include health products, herbal products, air purifiers, and water purifiers Amway offers nutritional supplements under the Nutrilite brand and cosmetics products under the Artistry brand, both of which have high brand awareness among Thai consumers The company has received ISO 14001 certification for environmental management systems and ISO 9001 certification for quality service standards The company has also received awards for promoting social and environmental causes along with outstanding industrial relations and employee welfare Unlike Mistine, Amway owns shops in Thailand These shops exist to provide inventory for salespeople to sell to consumers Although Amway products are more expensive, they are also perceived to be of high quality Others As the cosmetic industry within Thailand grows, domestic competitors are challenging Mistine's market dominancy U Star is a cosmetic firm established in 2002 through a collaboration between a cosmetics firm and the entertainment company GMM Grammy Music Records The company is certified by ISO 9001 and Good Manufacturing Practices Its distribution channels include direct selling and company owned retail stores The SSUP Company owns the cosmetic brands Cute Press and Oriental Princess Established in 1976, Cute Press is sold in more than 250 retail stores Oriental Press is sold mainly through retail channels and targets upper class consumers Consumer products company Aim Star also sells cosmetics as one of its product lines It is the first Thai direct selling company to become successful in America Mistine also faces competition from other Asian brands Korean brands are perceived as more prestigious than domestic brands and are growing throughout the region This is based on the fact that Korean movie stars and models are viewed as among the most beautiful Asian women MISTINE'S DIRECT SELLING OPERATIONS Mistine's single level marketing approach to its direct sales operations is simple and efficient It is also suitable to the Thai culture and lifestyle The company recruits district managers who in turn recruit as many salespeople as he she can handle Each day the salespeople make their rounds to meet customers and prospective customers Once a sale is confirmed, the salesperson submits a purchase order Each salesperson earns a full 25 to 30 percent commission without having to share his or her earnings with others The more sales a salesperson makes, the more income he or she receives Each district manager earns a fixed salary plus commission based on sales generated by the salespersons under his or her responsibility In addition, to increase morale, mobility, and efficiency, the company provides a car to each of its district managers and pays for their gas In the direct selling business, the length of a selling period is critical and shapes the operation of the business A selling period starts when the product catalog is sent to the sales force The selling period ends when the sales force submits purchase orders to the company Normally, direct selling companies use a 3 week selling period, totaling 18 periods within a year Although Mistine used this approach, the company found that most salespeople did not begin selling products to customers until the last week of the selling period As such, most of the customers' purchase orders were generated from sales during the third week of the selling period Accordingly, Mistine's management decided to reduce the selling period to 2 weeks, resulting in 26 selling periods per year The change was a challenge for Mistine's operations Because as many as 20,000 purchase orders are submitted to the company each day, the company was forced to implement an efficient mail traffic management plan to control and balance the workload Within a 2 week selling period, personnel had only 10 days to work If order processing was not completed each day, sales personnel would not be able to deliver the products as promised After some time, the new operating plan worked smoothly and was a resounding success Sales increased, and salespeople became more active in selling products The impressive sales were not only a result of reducing the distribution cycle but were also due to the positive attitude created throughout the company The company's pledge We will make Mistine No 1 was successful in motivating salespeople and office personnel to adapt to the changes and cooperate with the company's direction Mistine welcomes anyone, male or female, with free time, who would like to earn money, make new friends, and develop self confidence Salespeople can plan their own schedule and movement in order to reach target sales and obtain rewards Mistine's turnover rate for salespeople once averaged 200 percent per year because most salespeople sell Mistine products as a second job However, the company wasable to reduce turnover by 30 percent through simple improvements in order processing and fulfillment that streamlined many of the mundane, time consuming tasks for salespeople One example is the Mistine Corporate Solution, a strategic alliance with DTAC, a major Thai telecommunications provider The system greatly increases efficiency and productivity by enabling salespeople to call the 24 hour Mistine Call Center for free when using the DTAC network This innovative alliance not only made Mistine sales reps happier, it also cut Better Way's phone expenses by U S $25,000 per month With the belief that the salespeople can live without Mistine, but Mistine cannot live without its salespeople, Mistine has launched several programs to maximize employee loyalty The company provides life insurance with coverage of U S $50,000 to each salesperson Nonmonetary rewards and recognition incentives for salespeople include crystal trophies, photos in the Hall of Fame, and prizes such as a gold necklace for achieving target objectives Salespeople also have a chance to earn extra for surpassing sales goals SWOT Analysis In less than 30 years, Mistine cosmetics have grown to be the market leader in the Thai cosmetic industry Its then revolutionary idea to market its products through direct selling channels was a hit with Thai consumers, spurring competitors to adopt similar channels of distribution Mistine's influence has caused the direct selling industry in Thailand to flourish The company has succeeded in forming strengths that are hard for rivals to replicate and has become adept at seizing upon marketing opportunities On the other hand, the increase in competition, both domestically and internationally, means that Mistine must not remain idle Rather, the company must constantly adapt to ensure that it retains its competitive advantages and market leadership position Doing so requires Mistine to identify its internal weaknesses and external threats Occasionally, what could be an opportunity for Mistine could also hold threats if the company does not seize upon it Case Exhibit 7 1 provides a SWOT analysis of Mistine's competitive position Table1CASE EXHIBIT 7 1 Mistine SWOT Analysis Strengths Weaknesses Wide variety of products Low quality image High brand awareness High employee turnover rate Highest market share in domestic market Large dependence on direct selling channel Short selling period Failure to capitalize on ecommerce channels Affordable price Multiple channels of distribution might potentially alienate sales force CSR program Certifications for quality and environmental standards Expertise at recruiting effective ambassadors Different channels make products more accessible to consumers Strong partnerships with foreign companies Opportunities Threats High growth rate in the cosmetics industry and direct selling market Growing competition from domestic brands Popularity of Korean and Japanese cosmetic trends Potential for increased competition from new foreign entrants Removal of tariffs through ACFTA Flooding and other natural disasters Expanding purchasing power in developing countries Economic or political uncertainty New minimum wage law Rising commodity costs Strengths As mentioned earlier, Mistine has high brand awareness and a loyal following among Thai consumers The company is skilled at being able to meet its customer needs while leveraging ways to be more efficient For instance, its expertise at recruiting celebrities to be brand ambassadors and its recognition of emerging trends (i e , the growing popularity of Japanese and Korean cosmetics) are effective ways to spread awareness of Mistine among its target markets The short selling period and the quick time it takes to deliver the products to customers enables Mistine to create more efficient direct selling operations and increase customer satisfaction Mistine has also created strong partnerships with other countries, which could expand its global reach and perhaps decrease its production costs For instance, Mistine is working with a dealer in Ghana to sell its products in the country and has created a joint venture with a firm in Burma to build a second factory there A joint venture in Laos will open inroads for expansion into the country Mistine is also eyeing Indonesia as a potential prospect and has been in talks with a domestic business to sell cosmetics However, Mistine will likely not not use the Mistine name in Indonesia, as Indonesian consumers are unfamiliar with the brand name Building a production base in Indonesia could reduce costs for Mistine by 10 percent and provide a major supply of raw materials The company has already made lucrative partnerships with firms in Japan and Korea to collaborate on projects and import cosmetic products Mistine has become adept at using the marketing mix to create competitive advantages Affordable prices and multiple distribution channels make Mistine products accessible to a wide variety of stakeholders Consumers can trust that Mistine products adhere to high quality standards Mistine has also created a corporate social responsibility (CSR) program The company founded the Dr Amornthep Deerojanawong Foundation to give back to the community and provide relief for victims of natural disasters These CSR initiatives serve to create stronger relationships with Thai consumers as well as to enhance the reputation of the Mistine brand Weaknesses Like all major companies, Mistine also has several weaknesses it must address to compete in the cosmetics market Some of these weaknesses involve the very elements that Mistine has used to gain a competitive advantage For instance, its low prices have made Mistine products accessible to a wide variety of stakeholders, but they have also added to the perception that Mistine products might be of lower quality Mistine's emphasis on the lower and middle classes has contributed to the idea that Mistine is a brand for those with lower incomes This is becoming a challenge as Mistine tries to extend its reach to consumers with higher incomes Better Way is trying to counter this perception of lower quality by raising prices (partially to offset the increase in labor wages) and investing I products with a more favorable perception, such as BB Powder and the brand Faris by Naris However, price increases could backfire if they alienate the company's core market of lower income consumers Mistine's target market is more price sensitive and may decide to switch brands if prices are raised too high The high salesperson turnover rate is also a problem for Mistine, although its initiatives have successfully reduced the turnover rate by 30 percent Many distributors work at Mistine as a second job and are thus less committed to staying with the company Higher turnover rates increase costs for Mistine because it must spend more resources to train new salespeople The company's dependence on its sales force to sell products further increases this risk Perhaps to mitigate this risk and compete against its established rivals, Mistine has adopted other distribution channels, including retail outlets and web sales While this may turn out to be a significant strength for Mistine, it could also alienate its sales force Salespeople may feel that by adopting other distribution channels, Mistine is taking sales away from them Mistine must work hard to balance the benefits that come with adopting multiple distribution channels with the needs and morale of its sales force As social networking and digital communication become more important channels for direct selling, Mistine recognizes that it must use digital communication to keep up with these changing technological trends The company created its own Facebook page and allows consumers to order products through its website However, consumers have pointed out that the Mistine website is not satisfactorily equipped to handle orders For instance, the main website,http www mistine co this, does not immediately allow consumers to order products Instead, it has a section entitled How to Order Users who click on Online Purchase will be redirected to the Better Way website, http www bworder com, to make their purchases The use of two different sites could be confusing for customers Because the professional class tends to rely more upon the Internet, Mistine should work to make its website more user friendly as it expands into higher income markets Opportunities Mistine has significant opportunities for growth in both the domestic and international markets Direct selling is growing rapidly in other countries the industry grew 23 percent in China in 1 year The purchasing power of consumers in countries such as China is increasing as well This will likely increase the demand for cosmetics and other fashion items The trend toward Korean and Japanese cosmetics provides Mistine with an opportunity to enhance its brand image of quality Perhaps one of Mistine's most notable advantages is its ability to profit from the ASEAN and ACFTA trade agreements This gives domestic companies a significant advantage over foreign brands such as Amway and Avon As a Southeast Asian company, Mistine can take advantage of reduced trade barriers to export its products to other countries in the region By leveraging its inclusion in ASEAN and its partnerships in other countries, Mistine has the chance to gain a profound competitive edge over its foreign rivals Threats In spite of its strengths and opportunities, Mistine faces many threats in the future The growing competition from domestic cosmetic brands will force Mistine to watch its rivals SSUP, Aim Star, and U Star closely, particularly as they too will be able to benefit from the ACFTA trade agreement Additionally, while these trade agreements provide Mistine with an opportunity to enter foreign Asian markets more easily, it also provides foreign brands with greater ease of entry into the Thai market Hence, Mistine may have more foreign competitors with which to contend Korean and Japanese cosmetics brands could become a major threat due to the growing popularity of these brands among Thai consumers As Mistine expands internationally, it will also likely run into barriers of trade Some of the countries in which it wants to expand have obstacles that Mistine will need to overcome if it wants to succeed For instance, many African countries have poor infrastructure, which may hinder distribution Iran, another country in which Mistine wants to expand, has a high inflation rate Mistine also faces barriers in its own home country with political uncertainty, the threat of natural disasters such as flooding, and higher production costs The government mandated wage increases will force Mistine to increase how it compensates its work force, which will likely translate into increased prices for Mistine products that could dissuade price sensitive customers Additionally, weaker purchasing power in Thailand has caused sales to grow slower than expected, giving Mistine an incentive to increase its international reach Mistine must make the decision on whether to pass these increases onto consumers through higher priced products or find alternative ways to reduce its production costs Looking Ahead Mistine successfully conquered Thailand's direct selling cosmetics market within a very short period of time The company's success is based on Dr Deerojanawong's clear vision and determination Since his death in 2000, his son Danai has been at the helm of Better Way Danai's contribution to the Better Way vision has been to take the Mistine brand into the modern era via an aggressive strategy of expansion into foreign markets Considering the relationship of Thailand to its neighboring countries, its geographic proximity, and Thailand's position in Asia, foreign markets are an extremely interesting prospect for Mistine The company opened manufacturing sites in the Philippines and Vietnam, and has successfully offered products for sale in Cambodia, Laos, Myanmar, and several Middle Eastern and African countries These successes are due to Mistine's affordable prices that match the income of the people in these countries Moreover, Mistine's advertising campaigns use popular actresses who are also well known to people in these countries However, Mistine faces many challenges as it continues to grow For instance, the firm has missed its growth targets during some years because of natural disasters or decreased consumer purchasing power Mistine must keep this in mind when setting growth targets and sales goals Danai knows that there will be many bumps on the road ahead, with strong competitors at Mistine's doorstep In looking ahead to the next 10 years, Danai is considering the best ways to take Mistine farther into the global arena How can Mistine leverage its current strengths to take advantage of global opportunities How can the company maintain its number one position in Thailand while it simultaneously looks outside its borders, particularly in China, Russia, and even Western nations Should Mistine invest in more technological innovations such as mobile apps to target the more technologically savvy professional market As Danai considers these issues, his father's words Face what you fear echo in his mind

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Sep 28, 2024

Read the case study and please answer the follow questions- Outline the major strengths, weaknesses, opportunities, and threats (SWOT) that Mistine should place emphasis on

Read the case study and please answer the follow questions-

Outline the major strengths, weaknesses, opportunities, and threats (SWOT) that Mistine should place emphasis on in a bid to achieve a competitive advantage and command a large share of the Thai market (Provide an in-depth explanation with reference to the case).
Face what you fear. Given that you're the CEO of Mistine, what specific marketing strategies would you recommend for entry into the international market as you seek expansion and growth? (Elaborate on at least five key strategies with in-depth explanations.
Core to Minstine's success is its market segmentation and targeting strategies.
1. Outline the components of Mistine's market segmentation.
2. Discuss the strategies for continuous dominance in serving each segment of the market for Mistine.

CASE-STUDY

Mistine: Direct Selling in the Thai Cosmetics Market*

Synopsis: This case summarizes the growth of Better Way (Thailand) and its highly successful Mistine brand of cosmetics. From its meager beginnings in 1991, Mistine has risen to become the dominant brand in Thailand's direct selling cosmetics market. The brand's value-based positioning (high quality at affordable prices), along with successful target marketing and a tightly integrated marketing program, has kept the company at the top of the market despite strong competition. Mistine's success has allowed Better Way to expand its efforts into other countries, most notably in Asia, Europe, the Middle East, and Africa. Better Way is now looking to further expand its operations, perhaps into Western countries and China.

Themes: Direct selling, global marketing, branding strategy, value, positioning, distribution strategy, integrated marketing communication, marketing implementation

Under the principle "to make better way of life" for Thai people, Dr. Amornthep Deerojanawong, Thailand's king of direct selling, in partnership with Boonyakiat Chokwatana, founded Better Way (Thailand) in 1988. In 1991, the company launched its Mistine brand and began its rapid ascent as a key player in Thailand's direct selling cosmetics industry. Mistine started with fewer than 10 employees and less than 100 products at a time when the Thai people were not familiar with the direct selling model for cosmetics. Direct selling is the marketing of products to consumers through face-to-face sales presentations at home or in the workplace. Based on Mistine's success, direct selling now accounts for over 60 percent of the market and is the preferred method of selling and distributing cosmetics in Thailand. Mistine and Better Way quickly became the leader in the Thai direct selling cosmetics market a position it has held since 1997. The company's distribution warehouses, among the largest in Asia, handle nearly 10,000 products under the Mistine umbrella. These warehouses distribute products to 900,000 Mistine sales representatives around the globe and more than 1 million members of Mistine's membership program. The company generates more than $400 million in net sales.

MISTINE'S MARKETING PROGRAM

Mistine spends approximately 10 percent of its revenue on marketing and plans to increase its marketing budget as the company continues to grow. Company executives believe that Mistine's double-digit growth will continue over the next few years, although weaker purchasing power in Thailand has resulted in less than anticipated sales growth in its domestic market. Their main concerns are primarily related to political situations in the countries where it does business, to the worldwide volatility of oil prices (oil is a key ingredient in many cosmetics), and to natural disasters such as flooding.

To attain its status as a leading direct seller in the cosmetics industry, the company had to select the right mix of products, price, distribution, and promotion. Mistine must regularly evaluate each of these components in order to maintain its competitive positioning.

Product

Cosmetics under the Mistine brand are divided into five categories and target markets: Body Care, Personal Care, Makeup, Fragrance, and Skin Care. An experienced production team develops hundreds of new and unique products each year. At least two to three new products are launched each month. Customers can be sure that they will receive only the highest quality, "value-for-money" products. All of Mistine's cosmetics are produced by manufacturers who are certified by ISO 9001, 9002, and Good Manufacturing Practices espoused by the U.S. Food and Drug Administration. These international standards ensure the quality of Mistine's products. Every Mistine product is thoroughly inspected and tested before being delivered to the warehouse. In addition, every Mistine product comes with a satisfaction guaranteethat if for any reason a customer is unsatisfied with his or her purchase, Mistine will replace the product or offer a full refund without condition.

To combat its key competitors, Mistine positions itself as an Asian company that produces products that are developed and formulated especially for Asian women. Mistine products are made to blend well with Asian complexions and skin tones. They are also made to suit the warmer and more humid climate of the Asian region, so that the product stays on longer and looks fresher throughout the day.

Mistine's products are popular among Thai housewives, factory workers, teenagers, and consumers with a monthly household income of $200 or less. Yet as Mistine has gained prominence, it has also begun to reach out to higher-income professionals with new product offerings. In 2010, the organization introduced Blemish Balm (BB) cosmetics through a partnership with Korean firm Klomar Korea Co., Ltd. Since its introduction, the BB line has become a popular cosmetics line for Mistine. The cosmetics industry in Thailand has exhibited a growing trend toward Korean cosmetics, particularly among teenagers. Thai men and women view Korean actresses and movie stars as being among the most beautiful women in Asia, and teenagers and younger people view Korean models and actresses as the ultimate Asian beauties. Mistine is therefore collaborating with Korean firms to develop more Korean-type cosmetics for the Thai market.

Mistine's parent company Better Way also decided to introduce an entirely new line of products under its own name, Faris by Naris. Faris by Naris products are imported from Japan, another country highly admired for its quality cosmetics. Unlike the Mistine brand, Faris by Naris products are sold using a premium pricing strategy. This shift toward more prestigious products implies that Mistine is looking to expand its target market to women in the middle to upper classes.

Pricing

Mistine's core market, which accounts for 70 to 80 percent of sales, includes housewives with a high school diploma, an occupational certificate level or high occupational certificate level of education, and a monthly household income of about U.S. $125 to $200. The company also targets professional women who earn U.S.$200 to $300 per month. While Mistine has traditionally priced its cosmetics to focus more upon the middle- to lower-income market, the company is expanding its emphasis to women making above average incomes at more than U.S.$480 per month. Mistine hopes to increase its number of sales to middle- and upper-class markets from 25 to 50 percent of sales. Furthermore, Mistine wants to fully leverage its product quality, popularity, and market-leading position.

As a result, the company has started to increase prices. Historically, 80 percent of Mistine's sales were for products that cost an average of U.S.$3 each. By boosting the average price to U.S.$6, Mistine estimated the average order would increase from U.S.$27 to U.S.$45. Wage increases mandated by Thai law will also significantly impact Mistine's pricing strategy. Since 20 percent of production costs go toward wages, wage increases increase Mistine's prices even further by approximately 6 to 10 percent.

Distribution

Mistine was the first domestic cosmetics company to use the direct selling model in Thailand. The company continues to sell the majority of products through direct sales but has also expanded into retail and e-commerce. Although the company does not own its own stores, Mistine products can be found in Tesco Lotus, Boots,

Lotus Express, and 7-11 convenience stores. Consumers can also purchase Mistine products through the company's Internet site or through its Mistine catalogue. An advanced computer system tracks sales, and Mistine's fleet of trucks can deliver the product within 1 week of ordering.

Mistine has also built a distribution center, which will make it easier to export to other countries. Parent company Better Way wants to use the distribution center to reposition itself as a business solutions provider for the ASEAN market. Not only does the center provide logistics services for Mistine, but it is also being used to provide logistics services to Thai and international firms. Mistine is also extending its reach globally. Although international markets comprise only 2 to 3 percent of Mistine's sales revenue, the potential for increased global sales is enormous. In addition to Thailand, Mistine products are sold in many Asian, European, Middle Eastern, and African markets, including countries such as Ghana, Iran, South Africa, and the Democratic Republic of the Congo. A trade agreement called the Association of Southeast Asian Nations (ASEAN) will help to increase Mistine's global reach into other Southeast Asian countries. ASEAN is a trade agreement between Thailand, Cambodia, Myanmar, the Philippines, Malaysia, Singapore, Indonesia, Brunei, Laos, and Vietnam. As part of the agreement, tariffs between member states have been reduced or eliminated. This increases the opportunities for companies such as Mistine to expand their distribution. Additionally, in 2010 ASEAN members developed an agreement with China called ACFTA (ASEAN-China Free Trade Area) for free trade between the nations. This makes a lucrative opportunity for Mistine to tap into the world's largest market of consumers. In anticipation of these increased growth opportunities, Mistine plans to build a new plant in Vietnam.

Promotion

Direct selling companies normally depend on word of mouth to develop brand awareness, recruit salespeople, and encourage product purchases. Better Way decided to do things differently by being the first direct selling company in the world to use mass media advertising. The company's continuous advertising campaigns build its brand image and position Mistine in customers' minds. In addition, Better Way also developed many advertising campaigns to recruit salespeople.

When the company first started, Dr. Deerojanawong used his credibility to advertise Mistine during interviews with the media and at seminars with educational institutions. People applied as district managers with the company mainly because of his reputation. He was certain that the district managers would be able to establish a large network of salespeople. To increase knowledge about the company, however, Mistine wanted to reach greater audiences. This eventually led it to move into television advertising. "Mistine is here!" was launched as the company's first television campaign with the objectives to communicate to the public that Mistine is a direct selling cosmetics business and to create a brand character of beauty for Mistine's products. Using the message

"Mistine is here!" was an effective way for the public to envision a salesperson coming to visit them with Mistine products. After only 2 months, the campaign generated an incredible buzz as it increased brand awareness from 10 percent to roughly 70 percent. As Mistine continues to globalize, "Mistine is here!" has been translated into Burmese with plans to translate the slogan into Bahasa Indonesia and Tagalog. The company also markets itself as "The Asian brand for Asian women" as a way to promote the fact that its products are made to complement Asian skin tones.

Mistine's second advertising campaign was designed to assist district managers in their efforts to recruit new salespeople. This campaign consisted of two advertisements. The message of the first ad was that it was possible to buy a car by becoming a Mistine salesperson. Within 3 months, a total of 30,000 people applied to be salespeople, and sales rose by 100 percent. The message of the second ad was that it was possible to buy a house by becoming a Mistine salesperson. Again, the company succeeded in creating stronger brand awareness through this campaign.

Based on this success, the company decided that the next step was to increase its customers' confidence in Mistine products, as well as generate more product trial. As such, "If you're not satisfied, we will give you your money back" was the concept for the third campaign. This campaign was not only successful in stimulating product trial, but it also created a great deal of brand switching from competitors' products to Mistine products. In the end, there were few cases of product dissatisfaction or customers requesting their money back.

Mistine has remained a first mover in the direct selling market by launching advertising campaigns featuring popular actresses, actors, and bands as Mistine brand ambassadors. Many of these celebrities have been featured on Channel 7 or RS Entertainment, Thai television channels with soap operas popular among Mistine's core market. For instance, Mistine used Urassaya "Yaya" Sperbund and Chalida "Mint" Vijitvongthongboth popular Thai actressesto represent their Mistine I Am collection. Mistine has become an expert at choosing celebrities that resonate with these target markets. To take advantage of the favorable impressions of Korean cosmetics (especially among teenagers), Mistine used a famous Korean band to promote its BB Powder. The company has also created its own Facebook page to extend its worldwide reach.

Due to its extensive marketing campaigns, the Mistine brand is one of the bestknown brands in Thailand. In 2011, the brand won a Superbrands award as the "brand most accepted by Thai consumers." This high level of brand awareness has helped propel Mistine to a market leadership position in the Thai cosmetics industry.

KEY COMPETITORS

Cosmetics are the number one product sold through direct selling channels in Thailand. According to the World Federation of Direct Selling Associations, global retail sales for the direct selling industry are estimated at more than U.S.$178 billion. Of that amount, the cosmetics market accounts for roughly 60 percent of all products sold via direct selling channels. In terms of direct selling market share, the top four cosmetics companies are Mistine, Avon, Giffarine, and Amway. However, domestic brands and Asian competitors have begun to challenge the top four for dominancy. Price, quality, and attractive packages are the three most important criteria for Thai consumers when buying cosmetics. Mistine has four main competitors:

Avon Founded in 1978, AVON Cosmetics (Thailand) Co., Ltd., is the 22^nd branch of AVON Products, Inc., USA. It was the first company in Thailand to use a single-level marketing direct selling approach for Thai consumers. With the company's mottoThe Company for WomenAvon targets teenagers and working women. Avon cosmetics are truly high-quality products for which the brand is recognized throughout the world. As such, it is not difficult for Avon Thailand to sell its products and gain the confidence of consumers. The company has a team of representatives known as Avon Members who are headquartered in Bangkok and visit all the customers in their areas of responsibility. Not only do they sell products, but these Avon Members also provide beauty tips, customer service, and ensure that customers are satisfied with the products.
GiffarineGiffarine Skyline Unity Co., Ltd., was founded in 1966 by a team of Thai doctors and pharmacists. The company's medical roots translate into its positioning today: Giffarine's products are developed and tested with the highest standards of quality. However, like Mistine, the company also focuses on affordable pricing. Giffarine's portfolio includes a wide range of cosmetics, body treatments, household items, diet supplements, and health food products. Giffarine's success can be attributed to several factors. In addition to product quality, the company places a great deal of emphasis on social responsibility and ethics in the treatment of both customers and employees. Giffarine is also a master of multilevel marketing, which extends to how it structures its sales force. Giffarine also announced it would launch a direct selling channel to better target the Thai population.
Amway Established in May 1988, Amway (Thailand) Co., Ltd., sells various consumer products in addition to cosmetics, using a multilevel marketing approach. The company's most popular products include health products, herbal products, air purifiers, and water purifiers. Amway offers nutritional supplements under the Nutrilite brand and cosmetics products under the Artistry brand, both of which have high brand awareness among Thai consumers. The company has received ISO 14001 certification for environmental management systems and ISO 9001 certification for quality service standards. The company has also received awards for promoting social and environmental causes along with outstanding industrial relations and employee welfare. Unlike Mistine, Amway owns shops in Thailand. These shops exist to provide inventory for salespeople to sell to consumers. Although Amway products are more expensive, they are also perceived to be of high quality.
Others As the cosmetic industry within Thailand grows, domestic competitors are challenging Mistine's market dominancy. U Star is a cosmetic firm established in 2002 through a collaboration between a cosmetics firm and the entertainment company GMM Grammy Music Records. The company is certified by ISO 9001 and Good Manufacturing Practices. Its distribution channels include direct selling and company-owned retail stores. The SSUP Company owns the cosmetic brands Cute Press and Oriental Princess. Established in 1976, Cute Press is sold in more than 250 retail stores. Oriental Press is sold mainly through retail channels and targets upper-class consumers. Consumer products company Aim Star also sells cosmetics as one of its product lines. It is the first Thai direct selling company to become successful in America. Mistine also faces competition from other Asian brands. Korean brands are perceived as more prestigious than domestic brands and are growing throughout the region. This is based on the fact that Korean movie stars and models are viewed as among the most beautiful Asian women.

MISTINE'S DIRECT SELLING OPERATIONS

Mistine's single-level marketing approach to its direct sales operations is simple and efficient. It is also suitable to the Thai culture and lifestyle. The company recruits district managers who in turn recruit as many salespeople as he/she can handle.

Each day the salespeople make their rounds to meet customers and prospective customers. Once a sale is confirmed, the salesperson submits a purchase order. Each salesperson earns a full 25 to 30 percent commission without having to share his or her earnings with others. The more sales a salesperson makes, the more

income he or she receives. Each district manager earns a fixed salary plus commission based on sales generated by the salespersons under his or her responsibility. In addition, to increase morale, mobility, and efficiency, the company provides a car to each of its district managers and pays for their gas.

In the direct selling business, the length of a selling period is critical and shapes the operation of the business. A selling period starts when the product catalog is sent to the sales force. The selling period ends when the sales force submits purchase orders to the company. Normally, direct selling companies use a 3-week selling period, totaling 18 periods within a year. Although Mistine used this approach, the company found that most salespeople did not begin selling products to customers until the last week of the selling period. As such, most of the customers' purchase orders were generated from sales during the third week of the selling period. Accordingly, Mistine's management decided to reduce the selling period to 2 weeks, resulting in 26 selling periods per year.

The change was a challenge for Mistine's operations. Because as many as 20,000 purchase orders are submitted to the company each day, the company was forced to implement an efficient mail traffic management plan to control and balance the workload. Within a 2-week selling period, personnel had only 10 days to work. If order processing was not completed each day, sales personnel would not be able to deliver the products as promised. After some time, the new operating plan worked smoothly and was a resounding success. Sales increased, and salespeople became more active in selling products. The impressive sales were not only a result of reducing the distribution cycle but were also due to the positive attitude created throughout the company. The company's pledge"We will make Mistine No. 1"was successful in motivating salespeople and office personnel to adapt to the changes and cooperate with the company's direction.

Mistine welcomes anyone, male or female, with free time, who would like to earn money, make new friends, and develop self-confidence. Salespeople can plan their own schedule and movement in order to reach target sales and obtain rewards. Mistine's turnover rate for salespeople once averaged 200 percent per year because most salespeople sell Mistine products as a second job. However, the company wasable to reduce turnover by 30 percent through simple improvements in order processing and fulfillment that streamlined many of the mundane, time-consuming tasks for salespeople. One example is the "Mistine Corporate Solution," a strategic alliance with DTAC, a major Thai telecommunications provider. The system greatly increases efficiency and productivity by enabling salespeople to call the 24-hour Mistine Call Center for free when using the DTAC network. This innovative alliance not only made Mistine sales reps happier, it also cut Better Way's phone expenses by U.S.

$25,000 per month.

With the belief that the salespeople can live without Mistine, but Mistine cannot live without its salespeople, Mistine has launched several programs to maximize employee loyalty. The company provides life insurance with coverage of U.S. $50,000 to each salesperson. Nonmonetary rewards and recognition incentives for salespeople include crystal trophies, photos in the Hall of Fame, and prizes such as a gold necklace for achieving target objectives. Salespeople also have a chance to earn extra for surpassing sales goals.

SWOT Analysis

In less than 30 years, Mistine cosmetics have grown to be the market leader in the Thai cosmetic industry. Its then revolutionary idea to market its products through direct selling channels was a hit with Thai consumers, spurring competitors to adopt similar channels of distribution. Mistine's influence has caused the direct selling industry in Thailand to flourish. The company has succeeded in forming strengths that are hard for rivals to replicate and has become adept at seizing upon marketing

opportunities.

On the other hand, the increase in competition, both domestically and internationally, means that Mistine must not remain idle. Rather, the company must constantly adapt to ensure that it retains its competitive advantages and market leadership position. Doing so requires Mistine to identify its internal weaknesses and external threats. Occasionally, what could be an opportunity for Mistine could also hold threats if the company does not seize upon it. Case Exhibit 7.1 provides a SWOT analysis of Mistine's competitive position.

Table1CASE EXHIBIT 7.1 Mistine SWOT Analysis

Strengths	Weaknesses
Wide variety of products	Low-quality image
High brand awareness	High employee turnover rate
Highest market share in domestic market	Large dependence on direct selling channel
Short selling period	Failure to capitalize on ecommerce channels
Affordable price	Multiple channels of distribution might potentially alienate sales force
CSR program
Certifications for quality and environmental standards
Expertise at recruiting effective ambassadors
Different channels make products more accessible to consumers
Strong partnerships with foreign companies
Opportunities	Threats
High growth rate in the cosmetics industry and direct selling market	Growing competition from domestic brands
Popularity of Korean and Japanese cosmetic trends	Potential for increased competition from new foreign entrants
Removal of tariffs through ACFTA	Flooding and other natural disasters
Expanding purchasing power in developing countries	Economic or political uncertainty
	New minimum wage law
	Rising commodity costs

Strengths

As mentioned earlier, Mistine has high brand awareness and a loyal following among Thai consumers. The company is skilled at being able to meet its customer needs while leveraging ways to be more efficient. For instance, its expertise at recruiting celebrities to be brand ambassadors and its recognition of emerging trends (i.e., the growing popularity of Japanese and Korean cosmetics) are effective ways to spread awareness of Mistine among its target markets. The short selling period and the quick time it takes to deliver the products to customers enables Mistine to create more efficient direct selling operations and increase customer satisfaction.

Mistine has also created strong partnerships with other countries, which could expand its global reach and perhaps decrease its production costs. For instance, Mistine is working with a dealer in Ghana to sell its products in the country and has created a joint venture with a firm in Burma to build a second factory there. A joint venture in Laos will open inroads for expansion into the country. Mistine is also eyeing Indonesia as a potential prospect and has been in talks with a domestic business to sell cosmetics. However, Mistine will likely not not use the "Mistine" name in Indonesia, as Indonesian consumers are unfamiliar with the brand name. Building a production base in Indonesia could reduce costs for Mistine by 10 percent and provide a major supply of raw materials. The company has already made lucrative partnerships with firms in Japan and Korea to collaborate on projects and import cosmetic products.

Mistine has become adept at using the marketing mix to create competitive advantages. Affordable prices and multiple distribution channels make Mistine products accessible to a wide variety of stakeholders. Consumers can trust that Mistine products adhere to high quality standards. Mistine has also created a corporate social responsibility (CSR) program. The company founded the Dr. Amornthep Deerojanawong Foundation to give back to the community and provide relief for victims of natural disasters. These CSR initiatives serve to create stronger relationships with Thai consumers as well as to enhance the reputation of the Mistine brand.

Weaknesses

Like all major companies, Mistine also has several weaknesses it must address to compete in the cosmetics market. Some of these weaknesses involve the very elements that Mistine has used to gain a competitive advantage. For instance, its low prices have made Mistine products accessible to a wide variety of stakeholders, but they have also added to the perception that Mistine products might be of lower quality. Mistine's emphasis on the lower and middle classes has contributed to the idea that Mistine is a brand for those with lower incomes. This is becoming a challenge as Mistine tries to extend its reach to consumers with higher incomes. Better Way is trying to counter this perception of lower quality by raising prices (partially to offset the increase in labor wages) and investing I products with a more favorable perception, such as BB Powder and the brand Faris by Naris. However, price increases could backfire if they alienate the company's core market of lower-income consumers. Mistine's target market is more price-sensitive and may decide to switch brands if prices are raised too high.

The high salesperson turnover rate is also a problem for Mistine, although its initiatives have successfully reduced the turnover rate by 30 percent. Many distributors work at Mistine as a second job and are thus less committed to staying with the company. Higher turnover rates increase costs for Mistine because it must spend more resources to train new salespeople. The company's dependence on its sales force to sell products further increases this risk. Perhaps to mitigate this risk and compete against its established rivals, Mistine has adopted other distribution channels, including retail outlets and web sales. While this may turn out to be a significant strength for Mistine, it could also alienate its sales force. Salespeople may feel that by adopting other distribution channels, Mistine is taking sales away from them. Mistine must work hard to balance the benefits that come with adopting multiple distribution channels with the needs and morale of its sales force.

As social networking and digital communication become more important channels for direct selling, Mistine recognizes that it must use digital communication to keep up with these changing technological trends. The company created its own Facebook page and allows consumers to order products through its website. However, consumers have pointed out that the Mistine website is not satisfactorily equipped to handle orders. For instance, the main website,http://www.mistine.co. this, does not immediately allow consumers to order products. Instead, it has a section entitled "How to Order." Users who click on "Online Purchase" will be redirected to the Better Way website, http://www.bworder.com, to make their purchases. The use of two different sites could be confusing for customers. Because the professional class tends to rely more upon the Internet, Mistine should work to make its website more user-friendly as it expands into higher-income markets.

Opportunities

Mistine has significant opportunities for growth in both the domestic and international markets. Direct selling is growing rapidly in other countries; the industry grew 23 percent in China in 1 year. The purchasing power of consumers in countries such as China is increasing as well. This will likely increase the demand for cosmetics and other fashion items. The trend toward Korean and Japanese cosmetics provides Mistine with an opportunity to enhance its brand image of quality.

Perhaps one of Mistine's most notable advantages is its ability to profit from the ASEAN and ACFTA trade agreements. This gives domestic companies a significant advantage over foreign brands such as Amway and Avon. As a Southeast Asian company, Mistine can take advantage of reduced trade barriers to export its products to other countries in the region. By leveraging its inclusion in ASEAN and its partnerships in other countries, Mistine has the chance to gain a profound competitive edge over its foreign rivals.

Threats

In spite of its strengths and opportunities, Mistine faces many threats in the future. The growing competition from domestic cosmetic brands will force Mistine to watch its rivals SSUP, Aim Star, and U Star closely, particularly as they too will be able to benefit from the ACFTA trade agreement. Additionally, while these trade agreements provide Mistine with an opportunity to enter foreign Asian markets more easily, it also provides foreign brands with greater ease of entry into the Thai market. Hence, Mistine may have more foreign competitors with which to contend. Korean and Japanese cosmetics brands could become a major threat due to the growing popularity of these brands among Thai consumers.

As Mistine expands internationally, it will also likely run into barriers of trade. Some of the countries in which it wants to expand have obstacles that Mistine will need to overcome if it wants to succeed. For instance, many African countries have poor infrastructure, which may hinder distribution. Iran, another country in which Mistine wants to expand, has a high inflation rate. Mistine also faces barriers in its own home country with political uncertainty, the threat of natural disasters such as flooding, and higher production costs. The government-mandated wage increases will force Mistine to increase how it compensates its work force, which will likely translate into increased prices for Mistine products that could dissuade price sensitive customers. Additionally, weaker purchasing power in Thailand has caused sales to grow slower than expected, giving Mistine an incentive to increase its international reach. Mistine must make the decision on whether to pass these increases onto consumers through higher-priced products or find alternative ways to reduce its production costs.

Looking Ahead

Mistine successfully conquered Thailand's direct selling cosmetics market within a very short period of time. The company's success is based on Dr. Deerojanawong's clear vision and determination. Since his death in 2000, his son Danai has been at the helm of Better Way. Danai's contribution to the Better Way vision has been to take the Mistine brand into the modern era via an aggressive strategy of expansion into foreign markets. Considering the relationship of Thailand to its neighboring countries, its geographic proximity, and Thailand's position in Asia, foreign markets are an extremely interesting prospect for Mistine. The company opened manufacturing sites in the Philippines and Vietnam, and has successfully offered products for sale in Cambodia, Laos, Myanmar, and several Middle Eastern and African countries. These successes are due to Mistine's affordable prices that match the income of the people in these countries. Moreover, Mistine's advertising campaigns use popular actresses who are also well known to people in these countries.

However, Mistine faces many challenges as it continues to grow. For instance, the firm has missed its growth targets during some years because of natural disasters or decreased consumer purchasing power. Mistine must keep this in mind when setting growth targets and sales goals.

Danai knows that there will be many bumps on the road ahead, with strong competitors at Mistine's doorstep. In looking ahead to the next 10 years, Danai is considering the best ways to take Mistine farther into the global arena. How can Mistine leverage its current strengths to take advantage of global opportunities? How can the company maintain its number one position in Thailand while it simultaneously looks outside its borders, particularly in China, Russia, and even Western nations? Should Mistine invest in more technological innovations such as mobile apps to target the more technologically savvy professional market? As Danai considers these issues, his father's words"Face what you fear!"echo in his mind.