Avon Presentation

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Avon Presentation

  1. 1. Group 4, Section A Ajitesh Jaiswal (08P007) Anuj Dharnidharka (08P013) Reeti Bhatia (08P039) Siddharth Singh (08P048) Subhratosh Khan (08P050) Varun Malik (08P053)
  2. 2. Background Formed by David McConnell in 1886 as the California Perfume Company. Name changed to Avon in 1939 100 products including perfumes, low-cost home and beauty products and personal care items like toothbrushes Ventured into new less related business but had disastrous results World’s largest seller of beauty products 5th largest beauty company overall with annual sales of $5 billion 2.8 million sales reps worldwide and .5 million in US
  3. 3. Promoted reps with other jobs to sell the products at work By 1988, these at work sales accounted for 25%-30% of all Avon’s sales. Experimented with direct mail in mid 1990s Failed because the order sizes tended to be too small to meet Avon’s required profit margins
  4. 4. Challenges for Andrea Jung Strengthening and enhancing Avon’s beauty image around the world Leveraging the equity of the Avon brand into new markets Building new products and new channels Accelerating top-line growth Enhancing the experience of the Avon reps
  5. 5. Avon Products in 1999 Designed to appeal to women aged 25-50 with average to below average household incomes Positioned to deliver high quality and highly innovative products at and outstanding value Lipsticks, cosmetics, nail care, hair and skin care
  6. 6. Sales force 0.5 million sales reps in the US All Avon reps were independent contractors Extensive sales management hierarchy to recruit, train and advise the reps The reps tend to sell in one-on-one meetings either at work or at home
  7. 7. Selling Process Direct selling by women sales reps The leadership program allowed a rep to earn additional money by encouraging other women to become Avon Sales rep The Beauty Advisor Program Avon ran 26 two week selling campaigns Full color brochure featuring the products available for sale On an avg. each customer on a representative’s list ordered $20 worth of products per campaign Avon provided 100% satisfaction guarantee
  8. 8. Marketing Mission of the company was to provide exciting and lucrative career opportunities for women Avon Worldwide Fund for Women’s health Annual Avon Breast Cancer 3-Day Walk Spent very little on traditional advertising According to a survey, 70% consumers buy Avon through a rep
  9. 9. Avon.com (1997) LIMITATIONS Commerce only, very little community building Site provided direct to consumer sales only i.e. no role for the representative Sold only beauty products which was only 60% of the company’s revenues
  10. 10. Avon.com under Edwards The major issue was to make a choice between becoming Eve.com or iVillage.com i.e. to build a commerce only site or an appealing one Started with data collection Invited experts in e-commerce for opinions Hired a well known e-commerce consulting firm Held a series of focus groups with reps in order to get their feedback
  11. 11. Issue How Avon would utilize the Web in its B2C and B2B relationships? Avon Avon Rep Customer B2C B2CB2B
  12. 12. B2C Use Avon.com as a content or community site Decide on the following strategies Commissions Marketing Product Shipping
  13. 13. B2B Make easy for the reps to place their orders online Fully functional online ordering would cost in excess of $60 million over 3 to 5 years Cost of about $3 million to $5 million to update the 1997 version of Avon.com to make it a state of the art online store
  14. 14. Analysis of B2B option Projected Cost Cost of updating the 1997 version of Avon.com= $5 million Cost of fully functional online ordering system=$60 million over three to five years Total Cost= $65 million for 5 years
  15. 15. Present cost of processing orders Cost of order processing= $1 per for each customer’s order No. of Avon sales reps= 0.5 million Each rep participated in 12 of Avon campaign’s per year Each rep had 15 customers on her list Hence, total customer’s orders in an year =0.5*12*15 million = 90 million Cost of processing 90 million orders=90 million*$1 = $ 90 yearly For the next 5 years, total processing cost = $90*5 million = $450 million
  16. 16. Conclusion Hence, if the company goes ahead with the plan of making the fully functional ordering system Cost cutting for the company over 5 years = $450-$65 million = $ 385 million
  17. 17. Recommendations Since over 70% of the total sales of Avon were through its sales reps, the company should use the B2B path and ease the ordering style for the representatives by eliminating the filling of the archaic purchase orders The company should also use the B2C path because a significant 18% target customers would buy independently The website should be more attractive and there can be a forum so that the reps as well as the customers can discuss about the Avon products
  18. 18. The present Avon.com There is a provision for customers to shop online as well as contact an Avon rep There is also a user friendly provision to become an Avon rep
  19. 19. THANK YOU

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