Case 7 Mistine Direct Selling in The Thai Cosmetics Market

CASE Mistine: Direct Selling
7 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 create a 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 sell-
ing 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 Mis-
tine’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 com-
pany 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 execu-
tives 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 antic-
ipated 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 vola-
tility of oil prices (oil is a key ingredient in many cosmetics), and to natural disasters
such as flooding.
*
This case has been compiled and developed by Jennifer Sawayda based on information supplied by
Ekachai Wangprapa, Nuntiya Ittiwattanakorn, Rawadee Mekwichai, and Supishsha Sajjamanochai
(Thammasat University, Thailand) with additional information from a project conducted in MIM XXI,
Thammasat University, 2012. The case was developed under the direction of O. C. Ferrell and Linda
Ferrell (University of New Mexico) for classroom discussion rather than to illustrate effective or inef-
fective handling of an administrative situation.
384
Copyright 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203
Case 7 • Mistine: Direct Selling in the Thai Cosmetics Market 385
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 mar-
kets: 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 created 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 pro-
fessionals 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 house-
wives with a high school diploma, an occupational certificate level or high occupa-
tional 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.
386 Case 7 • Mistine: Direct Selling in the Thai Cosmetics Market
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 com-
prise 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 agree-
ment between Thailand, Cambodia, Myanmar, the Philippines, Malaysia, Singapore,
Indonesia, Brunei, Laos, and Vietnam. As part of the agreement, tariffs between mem-
ber states have been reduced or eliminated. This increases the opportunities for com-
panies 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 creates 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 cam-
paigns 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 televi-
sion 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 salesper-
son 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 advertise-
ments. 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 sales-
people, 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 suc-
ceeded 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” Vijitvongthong—both popular Thai actresses—to 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 best-
known 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 22nd
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 com-
pany has a team of representatives known as Avon Members who are headquar-
tered 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 afford-
able pricing. Giffarine’s portfolio includes a wide range of cosmetics, body treat-
ments, 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 supple-
ments 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 expen-
sive, 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 estab-
lished in 2002 through a collaboration between a cosmetics firm and the enter-
tainment 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 competi-
tion 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 beau-
tiful 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 commis-
sion 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. Accord-
ingly, Mistine’s management decided to reduce the selling period to 2 weeks, result-
ing 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 reduc-
ing the distribution cycle but were also due to the positive attitude created through-
out 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 was
able to reduce turnover by 30 percent through simple improvements in order proces-
sing 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 interna-
tionally, means that Mistine must not remain idle. Rather, the company must con-
stantly 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.
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
CASE 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
• CSR program alienate sales force
• 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 • Growing competition from domestic brands
selling market • Potential for increased competition from new foreign
• Popularity of Korean and Japanese cosmetic trends 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
venture in Laos will open inroads for expansion into the country. Mistine is also eye-
ing Indonesia as a potential prospect and has been in talks with a domestic business
to sell cosmetics. However, Mistine will likely not use the “Mistine” name in Indone-
sia, as Indonesian consumers are unfamiliar with the brand name. Building a produc-
tion 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 partner-
ships 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 pro-
ducts 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 Deerojana-
wong 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 ele-
ments 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 qual-
ity. 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 in products with a more favorable percep-
tion, 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 consu-
mers. 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 distribu-
tors 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 chan-
nels, 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 chan-
nels 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. How-
ever, consumers have pointed out that the Mistine website is not satisfactorily
equipped to handle orders. For instance, the main website, http://www.mistine.co.
th, 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 interna-
tional 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 cos-
metics 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 com-
pany, 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 partner-
ships 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 inter-
national 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 coun-
tries, 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 com-
petitors at Mistine’s doorstep. In looking ahead to the next 10 years, Danai is consid-
ering 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.
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QUESTIONS
1. What are the major SWOT considerations in Mistine’s attempt to continue its
growth and dominance in the Thai market?
2. How can Better Way stay on top in Thailand while it looks to expand
internationally?
3. What specific marketing initiatives would you recommend over the next 5 years?

Case 7 Mistine Direct Selling in The Thai Cosmetics Market

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Case 7 Mistine Direct Selling in The Thai Cosmetics Market

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CASE Mistine: Direct Selling

7 in the Thai Cosmetics Market*

MISTINE’S MARKETING PROGRAM

As a result, the company has started to increase prices. Historically, 80 percent of

MISTINE’S DIRECT SELLING OPERATIONS

CASE EXHIBIT 7.1 Mistine SWOT Analysis

an extremely interesting prospect for Mistine. The company opened manufacturing

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