about AVON the first country to start direct selling....about their entry into chinese market

1. AVON
•Beetha Joy
•Ashwini Singh
•Harshil Madan
•B Chuman Patro
•Ranjit Nayak
NDIM 2014-16
Presented By:

2. CONTENTS
Company
brief
Business
portfolio
Organization’s
principles
Business
model
Competitive
advantages
& SWOT
analysis
Case brief Q & A
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3. • World’s No. 1 direct seller of beauty products ,offers a wide assortment of cosmetic
products, jewellery, home decoration items, accessories and wellness products.
• Founded in 1886 by a 28-year-old David H. McConnell who sold books door-to-door and
gave out perfume to entice women to buy his books.
• It started as a California Perfume Company (CPC) in New York. In October, 1939, the
company was changed officially to Avon Products Inc.
• Avon markets to women in more than 100 countries through over 6 million active
independent Avon Sales Representatives.
• Avon has been responsible for breaking the conventional mould and bringing the
cosmetics counter to our doorsteps.
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4. • Global Business in 140 Countries
• 6 Millions+ Representatives
• Production Facilities in 45 countries
Overview 1886
1939
1957
Avon 100,000
Representatives
1971
1990
2011
AVON Cosmetic Market
1998
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5. Vision Statement (Actual)
To be the company that best understands and satisfies the product, service, and self-
fulfilment needs of women globally.
(Proposed)
To be the leading provider of home, fashion and beauty products that will satisfy
customers while preserving the environment.
Slogan
Avon is the company for women
(Proposed)
Avon: the company for everyone committed to the enrichment of lives
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6. Make Up
Skin Care
Bath & Body
Fragrance
Hair Care
Jewelry
Fashion
Business Portfolio
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7. AVON Products
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8. The Principles That Guide Avon
• To provide individuals an opportunity to earn in support of their well-being and
happiness;
• To serve families throughout the world with products of the highest quality backed by a
guarantee of satisfaction.
• To give full recognition to employees and Representatives,
• To share with others the rewards of growth and success
• To meet fully the obligations of corporate citizenship by contributing to the well-being
of society and the environment.
• To maintain and cherish the friendly spirit of Avon.
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9. The Principles That Guide Avon
• Since its core element is its focus on women worldwide so who else can
understand the needs of women better than another women.
• Hence in order to retain customers and garner a good customer relationship
they hire women representatives widely known as AVON LADIES. It gave
them a competitive advantage over their competitors.
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10. Avon Beauty Bucks
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11. Direct Marketing
• Direct marketing is the use of consumer-direct channels to reach and deliver
goods and services to customers without using market middlemen, wholesalers,
advertisers and retailers.
• Direct selling can be conducted one-on-one, in a group or party format, or
online.
• According to the World Federation of Direct Selling Associations (WFDSA), 87
million people, are part of the global, direct-selling sales force.
• Direct sellers around the world have $132 billion in sales annually
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12. Multi Level Marketing
• It is a marketing strategy in which the sales
force is compensated not only for sales they
personally generate, but also for the sales of the
other sales-people that they recruit.
• Other terms for MLM include pyramid selling,
network marketing and referral marketing
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13. Value Proposition
• Attractive Product Design
• High Product Quality
• Reasonable Prices
• Company & product Images
• Innovative Product
• Personalised Service
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14. Business Environment
Basis of
Competition
Manufacturing
AVON Lady
Consumer
Data
Where You
compete
Beauty
Industry
Olay,Mary-
Kay
Global
What You
Offer
Customised
Product
Flexible
Schedule
Personal
connection
Way of
Compete
Direct Selling
E-Commerce
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15. S
Direct selling
Leader
Committed
Workforce
Self-own
Facilities
W
Decrease
sales
Low brand
loyalty
Weak brand
image
O
Green
product
Trend
Anti-Aging
Product
Urban
trendsetter
T
Inflattion
rates
Rising cost
Low internet
Selling
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16. Porter Five forces model
• New entry Competitors
• Substitute Products
• Competitive Intensity
• Power of Customers
• Power of Suppliers
High
Medium -High
Very High
Medium -High
Medium -High
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17. Competitive Advantages
• Superior Customer Service
• Wider Geographic Coverage
• Quicker Design-to-Market Times
• More Attractive Product Line
• Improved E-Commerce and Internet Sales Capabilities
• Stronger Brand Name than Rivals
• Stronger Global Distribution and Sales Capabilities

18. About the CASE
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19. AVON Products
• AVON Products Inc. Based at US
• Global Expansion starts from 1954
• 1990 onward focuses on “Global Product Line”
• 1990-98 present in most of the Asian Countries.
• China prove to be an attractive market.
• By 1998 AVON had 150,000 sales representative with sales reaching
to 75 million USD.
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20. 1998 crisis & Its Background
• 1998 Direct Selling get Banned in China.
• 1995 china ordered all local Direct Seller to get Registered
• Cases of deceiving the public by unscrupulous companies.
• Cases of Riots in some areas.
• Pyramid Method of Employing people poses a threat to the
government.
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21. Challenges Faced in China
Source only 10% of its suppliers and bears the high
import tariff
Extensive Training Required
Underdeveloped and unreliable transportation
and postal system
Limited Supply of Qualified
managers
Fast turnover of
managers
Problem faced by
Bureaucracy
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22. AVON PRODUCT 22

23. 1. In what way does Avon follow a global strategy? Does this
experience indicate that it should pursue a different strategy?
• Looking for the most efficient ways to grow and conduct its business. Avon
pursues economies of scale and scope in manufacturing, logistics and marketing.
• By selecting the most cost-effective facility locations and scales of operation on a
worldwide basis.
• They stick to what they are good at and only change their products if they see
there is a demand from their consumers.
• Found a way to mass produce “global product” lines.
• Avon goes through a strict routine before entering any of their products into the
global marketplace.
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24. 2. What options did Avon have in responding to China’s ban
on direct selling?
• Avon’s entire business revolves around direct selling. Therefore they had no way
of continuing in China without first pulling out and researching potential new
options to re-enter that market.
• AVON can use its manufacturing facilities in china to export the products to other
Asian Countries.
• E-Commerce would have been answer to the problem which required traditional
Retail arrangement by law.
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25. 3. What effects will the use of traditional retailing in
China have on Avon’s overall marketing strategy?
• China’s ban on direct selling and its demand for the use of traditional retailing will
definitely cause Avon’s share of the Chinese market to drop significantly.
• Overall Marketing strategies of AVON Products was solely based upon Direct
Marketing going through Traditional Retailing way company wont be able to hold on
their sustainable competitive advantage.
• Since Direct Selling is based upon incentive upon sales model which itself is a
motivational factor for representative while in case of Retailing AVON would have to
spend more upon offers, Discounts to retain the Market Share.
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26. New
Marketing
Strategy
Social media Brand Ambassadors
Innovative Advertising Event Sponsorship
• Aggressive
advertising
• Editorial
• PR efforts
• Product
placement
• Sampling in the
event
• Co-ops
• Integrated social
media campaign
• Blogger reach
out
• New relevant brand
ambassadors
• Capitalize on them
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27. 4.What cultural dimension of the Chinese people would affect
the future success of AVON in China?
China appeared to be a promising opportunity for direct selling for
several reasons:
• Low or NO control by Government initially.
• Abundant supply of labour
• Direct Marketing relies heavily on personal contacts for promotion
• Financially flexible nature of job.
• Large no of Higher Aged population
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28. 5.What actions & organizational changes are required
by Avon’s new marketing strategy in China?
• Set up exclusive retail stores.
• Should extend its network through retail and e-commerce too.
• Should Give jobs to unemployed or basically undergraduate students.
• Diversify their promotion Strategy.
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29. 6.What are some other tactics and strategies that
Avon could pursue in china?
• Educate people about Direct Selling and its advantages.
• Should Do CSR activity to gain the favor of Government.
• Should give more benefits and perquisites to its employees.
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30. AVON PRODUCT 30