MAC Cosmetics

History
MAC Cosmetics is American based cosmetics company stylized as M.A.C. It is founded in
Toronto in 1984. Frank Toskan and Frank Angelo are the founders of MAC Cosmetics. Its
headquarter is situated in New York City. MAC is an acronym for Make-Up Art Cosmetics. It
belongs to fashion industry. The cosmetics of this company were originally fascinated for
makeup professionals, but sold directly to consumers. First makeup was manufactured for
models, but models wanted this makeup for their sisters and friends.

In the 1990s, MAC Cosmetics had more than a hundred stores around the world, earning 200
million francs. In 1994, the Estee Launder Companies took control of 51% shares of MAC
Cosmetics and began managing the business. But the two founders retained the control of the
company.

In the 1997, co-founder Frank Angelo died due to cardiac arrest at the age of 49 during surgery.
The other founder Frank Toskan decided to sell the remaining shares of company at the end of
same year.

Around, the top three global makeup brands in the world MAC Cosmetics is one of them. It has
an annual turnover of I billion dollars in the world. It has 500 independent stores, with over
thirty stores in France. Theirs stores are run by professional makeup artists. Due to official
makeup brand, used to create makeup for Hollywood actors. If we talk about the famous
products of this brand then Studio Fix Fluid and Ruby Woo Lipstick is one of them.

In September 2012, MAC Cosmetics launched its first brand in India by the name “MAC Selena”
which became very famous in Mumbai. In May 2017, MAC Cosmetics became available
throughout the world for online purchase at Ultra Beauty. In May 2018, it was announced that
MAC Cosmetics will be available in stores of Canada. In March 2022, spring wild cherry
collection released by MAC Cosmetics for the Japanese consumers.

In 1994, company established MAC AIDS Fund to support men, children and women affected by
HIV/AIDS globally. It was great initiative taken by the company. According to MAC Company 400
million dollars fund raised through the sale of their products and donated to fight HIV/AIDS. The
models and actors buy their products to help the peoples suffer from disease.
MAC Cosmetics always manufactured product that was good for their consumers. Because MAC
known for their quality and for the name. From start to till now MAC never compromise to
anything related to their products.

That’s why today this company is one of the top brands for cosmetics in the world. Without
MAC founder core value and joyful approach to beauty, MAC would not be influential company
it is today. “We have never taken makeup too seriously.” Toskan told the New York Times, “It is
something to have fun with.” Due to independent approach of their founders MAC Cosmetics is
very famous today. MAC always works to enhance the beauty of their cosmetics products.
That’s why it is famous today

Incorporation
MAC Cosmetics was incorporated by Frank Toskan and Frank Angelo in Toronto, Canada in
1984. The company is headquartered in New York City, USA. M.A.C. COSMETICS INC. is a
business incorporated with Washington State Secretary of State. The Unified Business Identifier
(UBI) is #602118599.

Directors
In New York
Drew Elliott and Balliet Parisa are global creative directors of M.A.C Cosmetics joining the
company from paper magazines.

In Pakistan
Alishba Nadeem Khan is a director of M.A.C Cosmetics in Pakistan.

Market Share
Estee Lauders MAC Cosmetics is the biggest cosmetics brand with 5.1% market share and lip
products at 13% shares.
Company Assets
Net current assets of MAC Cosmetics from 2017 to 2021

Year Net Current Assets

2017 3,541,121$

2018 3,997,354$

2019 4,558,723$

2020 5,115,649$

2021 5,712,509$

Non-current assets of MAC Cosmetics from 2017 to 2021

Note: Non-current assets involves Property, plant, equipment, intangible assets, long term
loans and long term security deposits.

Year Net non- current Assets

2017 40.71%

2018 48.13%

2019 53.46%

2020 58.33%

2021 65.38%
Product
M.A.C VIVA GLAM LIPSTICK

Viva Glam is one of the most gorgeous red shakes lipstick ever. MAC Company describes the
lipstick as intense brownish blue-red in a matte finish. Viva Glam Lipstick is a medium deep red
with warm and slightly brown undertones. Every single skin tone flaunt this shade

M.A.C VIVA GLAM SHADES

1. MAC VIVA GLAM I

2. MAC VIVA GLAM II

3. MAC VIVA GLAM III

Production Cost for M.A.C VIVA GLAM LIPSTICK
Direct Cost

Direct Material 80000$

Direct labor cost 30000$

Manufacturing supplies 11000$

Wages cost 1500$

Fuel or power consumed 14000$

Net Direct Cost 136500$

Indirect Cost

Office Staff Salary 45000$

Operating Cost 15000$

Packaging cost 20000$

Net Indirect Cost 80000$

Total Cost = Net Direct Cost + Net Indirect Cost

Total Cost = 136500$+80000$

Total Cost = 216500$

 C.G.S and Income Statement
M.A.C Cosmetics Company submits the following information on December 31. Calculate Cost
of Good Statement and Income statement for the year ended in December 31.

Sales for the year 630,000

Raw material inventory, Jan 1 23,000

Work in process inventory, Jan 1 22,000

Finished goods inventory, Jan 1 104,000

Purchases 180,000

Purchase returns and allowances 4,000

Direct labor 70,000

Power, heat and light 4,300

Indirect material consumed 6,800

Depreciation of plant 5,900

Depreciation of machinery 12,000

Total expenses 6,000

Indirect labor 1,000

Fire insurance 600

Miscellaneous manufacturing cost 900

Raw material inventory, Dec 31 34,000

Work in process inventory, Dec 31 29,000

Finished goods inventory, Dec 31 97,700

Other expenses:

Selling expenses 10% of sales

Administrative expenses 5% of sales

Opening Raw material 23000

Add; purchases 180,000

Purchase return and allowance 4,000

Net purchase 184,000

Material available for use 207,000

Less ending raw material 34,000

Raw material used 173,000

Direct labor cost 70,000

Prime Cost 243,000

Add FOH

Power, heat and light 4,300

Indirect material consumed 6,800

Depreciation of plant 5,900

Depreciation of machinery 12,000

Total expenses 6,000

Indirect labor 1,000

Fire insurance 600

Miscellaneous manufacturing cost 900

Total FOH 37,500

Total manufacturing cost 280,500

Add W.I.P opening inventory 22,000

Cost of good available for manufacturing 302,500

Less W.I.P ending inventory 29,000

Cost of goods manufactured 273,500

Add finish good opening inventory 104,000

Cost of good available for use 377,500

Less finish good ending inventory 97,700

Cost of Goods Sold 279,800

Sales 630,000

Selling expenses 10% of sales 63,000

Administrative expenses 5% of sale 31,500

Sales 630,000

Less Cost of Goods Sold 279,800

Gross profit 350,200

Less admin & selling expenses 94,500

Net Profit 255,700

 Expected Cash Flow (Five Years)
In Dollars 2017 2018 2019 2020 2021

Net cash operating activities 734,112 810,322 721,297 861,441 956,117

Net cash investing activities 553,264 901,151 366,872 48,752 215,127

Net cash financing activities 673,382 776,481 608,215 646,745 307,934

Net cash flow in a year 613,994 934,992 479,954 263,448 863,310

Target Market for MAC Cosmetics

Targeting is when any company chooses a market segment to focus on and serve the
community. Companies usually evaluate the market segments attractiveness to select the best
way to target this market successfully. This thing happens when you beautify your products and
work for specific need of people. By working according to customer need, you can determine
the segment that will sustain your sales for a long time. You can quickly scan the MAC
Cosmetics target audience with the help of their commercials based on this it is clear that the
brand targets women especially even though cosmetics available for all genders.

At start it was introduced to promote among actors and models. Millennials even though they
have cosmetic products available for all age groups.

Millennials fall between the age of 23 and 38 and are interested in fashion and different
trends. An interesting example of commercial that showcases this targeting is the
“Chardonnays” commercial. Makeup artist have always been the main target of MAC
Cosmetics, and they are still one of their top targets. The brand also focuses on consumers who
value quality over the price of makeup products.

That’s why MAC Cosmetics is one of the top brand in the world due to their quality and
understanding the demand of the customers.
 Value Added
Define:

Value added is the incremental change in the value given by the company to the product

It is basically the difference between the price of product or service and cost of producing it.

Types:

If we talk about types of value added then they have four types

1. Support services
2. Consulting services
3. Personal services
4. Promotional services

SWOT Analysis
Define:

SWOT Analysis is defined as the strategic planning and strategic management technique used
to help a person or organization identify strength, weakness, opportunity, and threats related
to business competition and project planning.

SWOT stands for

 Strength
 Weakness
 Opportunity
 Threats
 SWOT Analysis of MAC Cosmetics
Brand Strength:

MAC Cosmetics is a world best cosmetic company that provides makeup for all races, ages and
sexes. The company main strength is its beauty products that attract actors and models. MAC
Cosmetics prides itself in creating high quality, fashion forward products. MAC Cosmetics has a
program set-up called the “MAC Program” that rewards the company’s loyal customers. The
quality of its product makes MAC one of the popular brand among peoples which is its strength.
World best makeup professionals used MAC Cosmetics products for their work due to its name
and quality.

Brand Weakness:

MAC Cosmetics does not have a large amount of weaknesses, which shows how well this
company is operating and famous among peoples. One weakness that company is facing is the
prices of its products which is very high than other cosmetics brands. General public is unable
to buy their products due to high pricing especially lipsticks. Due to this MAC could potentially
losing its customers who are searching for better grade and long lasting makeup. That’s only
one of the weaknesses of MAC Cosmetics.

Brand Opportunities:

MAC Cosmetics has a few marketing opportunities available to them that will ultimately help to
generate more sales. Firstly MAC has opportunity to create more stores of their brand within
worldwide. Today consumers have become more health conscious related to their skin and
health. Thus MAC has opportunity to produce cosmetics that is good in the quality. Finally,
existing programs like the MAC return program and the MAC Aids Fund present additional
marketing opportunity for different peoples. If MAC wants to increase its popularity in people
then they produce products that has not too high in prices. In other words prices of their
cosmetics should be adequate.
Threats:

Threats that MAC Cosmetics is currently facing are mainly competitors. If we talk about
competitive threats, competing department store cosmetic companies include Lancôme, L
OREAL. These brands are similarly priced, easily accessible, and rival the quality of MAC
Cosmetics. On the other hand cosmetics companies like Revlon and Maybelline, though lesser
quality offer very competitive pricing and are much more widely available than MAC Cosmetics.
Thus pricing is one of the main threats for MAC Cosmetics.

SWOT Analysis for VIVA GLAM Lipstick

Strength:

If we talk about strength of VIVA GLAM Lipstick is its variety of shades in it is available. This
lipstick offers many shades that make it unique than other brand lipstick. Secondly, its packing
is very attractive among others. The revenue generated from this product used in MAC FUND
donated to lower class people.

Weakness:

If we talk about weakness then pricing is one of main weakness for MAC VIVA GLAM Lipstick.
This lipstick is only offered by elite class. Middle and lower class cannot afford to buy this
product.

Opportunity:

MAC VIVA GLAM LIPSTICK has many opportunities due to this it is famous in Upper class. If we
talk about marketing opportunity then similar product could be produce for middle class with
reasonable pricing. Other opportunity is that similar lipstick could produce for lip conscious
people with minimum changes.

Threats:

The main Threats for MAC VIVA GLAM Lipstick is the competitors that produce similar product
in low pricing. Moreover, this product is not widely available than other brands lipstick. Thus
this is one of the main threats for MAC VIVA GLAM Lipstick.
 PEST Analysis
Define:

It is defined as the tool of measurement which is used to assess markets for a particular product
or a business at a given time frame. Once PEST Analysis has done organizations can take better
business decisions.

PEST stands for

 Political factor
 Economic factor
 Social factor
 Technological factor

PEST Analysis of MAC Cosmetics

Political Factors:

 Tax policy
 Trade & tariff restrictions
 Environmental regulations
 Political stability
 Employment laws
 Strong legal system

Economic Factors:

 Enough attention must be put to economic stability

 Weather conditions might cause less customers
 Economic growth
 Exchange rates
 Condition of competitors
 Possible conditions needed to gain profit in market
Social Factors:

 Population growth rate

 Age distribution
 Customer behavior
 Customer satisfaction
 Investing for future
 Customer orientation

Technical Factors:

 PPC advertising
 Barriers to entry
 Production level
 Retailers are increasing using online video content

Corporate Social Responsibilities

M.A.C Kids Helping Kids:

It started in 1994 where kids living with HIV/AIDS create images that are reproduced as greeting
cards. 100% of selling price goes back to participating organizations.

M.A.C AIDS Fund:

This Fund supports community organizations providing direct services to people living with aids.
Foundation has raised $240,000,000 since it started in 1994 which is a great initiative to help
the community suffer with AIDS.

M.A.C Recycling:

Back to M.A.C recycling offers free lip glass, lipstick and eye shadow to people at any location
with the return of six empty M.A.C containers.
M.A.C VIVA GLAM LIPSTICK:

This initiative was taken at the start when it is decided that 100% of purchase price of any VIVA
GLAM Lipstick goes to the MAC Aids Fund. Multiple celebrities have endorsed the MAC VIVA
GLAM Products. Such celebrities include Lady Gaga, Elton John, Nicki Minaj and More.
Recommendation:
M.A.C is an innovative company, the brand loves to make people feel and look good on the
inside and the outside, and it has experienced great success by evolving to stay relevant. It is
easy for M.A.C to stay close to its customers and never lose touch with them, mainly through
their advertisement online, on many websites and their own official website. The brand has
used effective brand management planning to reclaim the brand and to turn around. M.A.C’s
vision and values all revolve around the notion of individuality, equality and originality.
M.A.C needs a fashion film to have improved and more exciting advertisement and marketing,
the customers are always involved when the company brings something new and unique to the
brand, film advertisement will bring new customers and give a new meaning and message to
people who don’t believe in advertisement through graphics, this is a unconventional and
innovative marketing, breaking away from the safe and obvious.

The brand rarely uses film advertisement to show off their products, there are just few short
films on M.A.C’s website that show new collections with different celebrities. The fact that
M.A.C used basic and easy way to promote the company doesn’t necessary meant that they
have to stay with this technique continually.

It’s always better to improve the strategy if there are possibilities, film advertisement might
help to spread the products more around the world, more audience will be intrigued by the
film. The fact that M.A.C is for everyone means that there should be also diverse type of
advertisement aimed at different type of customers, public want to have realistic
understanding of the products and some believe that graphics and photography might be
professionally Photo shopped to make the products visually more exciting.

MAC becomes choice for everyone due to its popularity and high quality. That’s why actors and
models prefer MAC Cosmetics over other brands. But on the other hands its pricing is very high
so that everyone cannot afford it to buy due to rise in prices. MAC should take initiative to
produce cosmetics product so that everyone can buy it.

MAC Cosmetics should produce cosmetics for skin conscious community. So that every other
product could not harm their skin. This thing makes brand more attractive and more peoples
come to believe on MAC Cosmetics. MAC Cosmetics needs to work more in their marketing
especially if we talk about Asia Region. Otherwise MAC is very famous and one of the top
makeup brand in the world.

Conclusion:

As the conclusion, it is necessary to say that branding is an important tool of business, while
packaging is a fundamental element of brand. Nowadays, it is not enough just to develop a
beautiful package and to brand the product. It is important to give an idea to the package that
customers are ready to pay more for this package. It was demonstrated in the practical part of
this thesis work, how important a role the packaging plays in MAC brand’s formation and how it
helps to attract customers, which kinds of idea the company puts in its packaging and how it
helps to promote its brand.

Packaging plays a strategic role for any brand, and it can be called as a fundamental marketing
component. Unlike advertising affecting only during the actual promotional campaign and
sometime after it, packaging has a permanent affect, being all the time in customers’ eyeshot
during a product usage. The objective of the package is to attract customers and instil
confidence for products. There is no sense of talking about packaging design without other
components of brand.

Building a successful brand today assumes a strong idea, conception of product, creative
approach for package’s design and high quality polygraph performance. Only a smart mix of
these factors together with systematic promotion of the product at the market will contribute
into trademark evolution into a unique brand.

The MAC cosmetics brand has experienced great success by evolving to stay significant,
developing effective positioning in terms of core values, brand personality, advertisement and
customer relationships as well as constantly delivering the brand promise over time.