Avon Competitive Strategy
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Avon Competitive Strategy

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Competitive Strategy of Avon

Competitive Strategy of Avon

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  • Employing about 52,512U.S Total Revenue - 53.70 billion
  • Geographic/ Demographic:45 years old Married, Mom of three kidsHigh Price SensitivityMiddle class Penny wise shopperApplications/ benefits:Concerned for her imagePrevent/ reduce wrinkles (skin care), look prettier (makeup), moisture therapyUser experience/ Complains about “not having enough time”Before she used the sales rep access but now she would rather do it online since she has no time
  • Losing Market Share Inconsistent Brand IdentityInability to Adopt New Market TrendsWeak R&D EffortsUnmet needs:ConvenienceDouble- Benefit ProductsMineral Rich Anti-Aging Skincare ProductsUncertainty:Investigations in ChinaWorldwide Declining SalesHarnessing Social Media as Sales ToolsThe New "Avon Lady"
  • Branded differentiators: a purely rep-based system is no longer effective
  • Losing Market Share Inconsistent Brand IdentityInability to Adopt New Market TrendsWeak R&D EffortsUnmet needs:ConvenienceDouble- Benefit ProductsMineral Rich Anti-Aging Skincare ProductsUncertainty:Investigations in ChinaWorldwide Declining SalesHarnessing Social Media as Sales ToolsThe New "Avon Lady"
  • Losing Market Share Inconsistent Brand IdentityInability to Adopt New Market TrendsWeak R&D EffortsUnmet needs:ConvenienceDouble- Benefit ProductsMineral Rich Anti-Aging Skincare ProductsUncertainty:Investigations in ChinaWorldwide Declining SalesHarnessing Social Media as Sales ToolsThe New "Avon Lady"

Avon Competitive Strategy Avon Competitive Strategy Presentation Transcript

  • AVON Ana Inda Joyce Yuli
  • Agenda • Overview • Environmental, Market Analysis • Consumer, Competitor Analysis • Internal Analysis • Competitive Advantage • Value Proposition • Brand Equity • Leveraging, Energizing the Business • Creating New Business • Conclusion
  • • Global Business in 140 Countries • 6.4 Millions Representatives • Declining Market Share Overview 1886 1939 1957 Avon 100,000 Representatives 1971 1990 2011 2013 USA Cosmetic Market ? Vanish?
  • External Analysis P E S T • AgainstAnimalTesting • Avon In China • Against Brand Image • Economic Recession • Turning Point of Avon • Sustainability trend • Go Green • E-commerceTrend • Digital Marketing
  • Market Analysis Fragrance 10% Personal Care 23% Color Cosmetic 20% Hair Care 20% Skin Care 27% Beauty Industry Source: Perry. “A Cosmetic Industry Overview for Cosmetic Chemists” Total Size: $53.70 billion
  • Porter Five Factors • New Entry Competitors • Substitute Products • Competitive Intensity • Power of Customers • Power of Suppliers Profitability Analysis High Medium -High Medium -High Medium -High Very High
  • Competitors Analysis Attributes Avon Mary Kay Beauty.com Olay Products Service Channel Finance Brand Manufacturing Market Share
  • KSF Analysis Credible brand Strong Direct Marketing Program Personalized Sales Experience Philanthropy Activities Vast product mix Global presence
  • Customer Analysis • 45 years old • Married, Mom • Graphic designer • Lives in the suburbs of MA • Middle class • Penny wise shopper • Concerned for her image • She “doesn’t have enough time” Meet Jennifer:
  • Financial Performance Market Share • 2013 1st QTR : 4% • Operating Profit: $172 million • Operating Margin: 6.9% 31.6% Source : Avon Official Website Performance Indicators: • Leading global beauty company • World's largest direct seller • Top of the Customer Satisfaction Survey • Ranked #2 inTop 50 cosmetics brands • Oracle Hyperion-based EPM
  • SWOT Analysis S W O T Direct Selling Leader Committed Workforce Self-Own Facilities Decrease Sales Low Brand Loyalty Weak Brand image Green ProductsTrend Anti-Aging Products UrbanTrendsetter Inflation Rates Rising Costs of commodities Low Internet Selling
  • Competitive Advantage Basis of Competition WhereYou Compete WhatYou Offer WayYou Compete • Manufacturing • Avon Lady • Consumer Data • Beauty Industry • Olay, Mary-Kay • Global • Customized Products • Flexible Schedule • Personal Connection • Direct Selling • E - Commerce • Own facilities
  • AVON is the best at understanding the modern woman because they interact with her daily, on a personal level. Competitive Advantage
  • Value Proposition TARGET Mass Market Woman Age 25- 50 VALUE Low Price with a Personal Connection OFFER Beauty, Fashion and Home BENEFIT Understands Consumer Needs POD Customized Products PROOF Direct Selling and the Avon Lady Value Proposition
  • Value Proposition FOR the busy, modern, working woman WHO struggles to find time to purchase make-up, Avon IS a direct seller of beauty products THAT creates a customized make-up palette for you, on your time. THE COMPANY FORWOMEN • Flexible Schedules • Knowledgeable Avon Ladies • Established Reputation
  • Brand Identity Essence Understand women's needs more than they do globally. Core Extended Identity Direct Selling 6.4 millions representative in 140 countries Positive Brand Image Walk for Breast Cancer Close Tie with APF
  • Brand Equity High Brand Awareness - Walk for Breast Cancer - 125 old Company High Brand Loyalty - #41 Best Global Green Brands - #6 Top 50 Cosmetics Brands - #20Valuable U.S. Retail Brands Brand Association Reliable Eco -Friendly Direct Seller
  • Business & Brand Portfolio BCG GROWTH-SHARE MATRIX High Low LowHigh MarketGrowthRate Competitive Position
  • Business & Brand Portfolio GE – MCKINSEY MATRIX High Medium Low LowMediumHigh BusinessPosition MarketAttractiveness
  • Business Portfolio Make Up Skin Care Bath & Body Fragrance Children Home Fashion Jewelry Hair Care Men Lips, eyes, face, nails, beauty tools Cleanser & toner, eye care, moisturizers, body treatment Body lotion, body spray, deodorant, depilatories, etc Perfume, spray, shower gel, powder, etc Shampoo, conditioners, treatments, hair color, brushes Bracelets, necklace, pins, rings, watches, earrings, etc Apparel, handbags, accessories, footwear Kitchen, home accents, games & gadgets Bath & body, fashion, room décor, toys Skincare, fragrance, grooming, apparel, jewelry, etc
  • Business Portfolio Beauty 73%, +5% Fashion 18%, -1% Home 9%, +0% NET SALES BY CATEGORY: DIVEST! INVEST! Why? • No competitive advantage • Incompatible with the brand image Why? • Have loyal customers • Compatible with brand image • More resources & knowledge in beauty area Sources: Avon Financial Report 2012
  • Website: • Navigation • Product/ cost comparisons • Reviews Energizing, Leveraging the Business Purchase •At home •Online Shipping •Delivery time •Quality Feedback, platforms, WOM, Advocacy Touch-points Ads: • Media channels (billboards, email, online) Direct marketing: • Sales rep Experience: • Sales rep attitude, knowledge • Try, touch products
  • Energizing the Business Need for innovation • A purely rep-based system is no longer effective Brand energizers • The “New Avon Lady” • Branded social programs • Branded sponsorships, brand endorsers • Holistic marketing plan Increasing existing customers usage • Frequent use • Incentives • Reminder communications
  • Leveraging the Business Brand Extensions: Expanding Scope: Viable New Markets: • 4 geographical divisions • Distribution channels, Age, Gender Mark Anew Liz Earle Makeup, perfum e Skin care, hair care products Jewelry, fashion, home items
  • Creating New Business Does Avon need to create new business? WE DON’TTHINK SO… BRAND RESTRUCTIZATION AND NEW BUSINESS MODEL ARETHE KEYS
  • Restructure Brand Make Up Skin Care Bath & Body Fragrance Hair Care Capitalize on Avon’s competitive advantage: BEAUTY PRODUCTS Key takeaways: leaner, focus and efficient Make emphasis on organic make up
  • New Business Model TRANSFORMATIONTIME! ALLOVERTHEWORLD EXCEPT LATINAMERICA Old, Door-to-DoorStrategy Modern, Mobile, Paperless Strategy Answer survey online to diagnose the problem Talk with Avon ladies for further consultation if needed 24 hrs online customer service CostlyCatalogue YOUR PERSONALIZED BEAUTY EXPERT
  • 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
  • Summary Losing sustainable competitive advantage Change in consumers’ habits and trends Inconsistent brand identity CHALLENGES: ASSETS & COMPETENCIES: High brand recognition High customer loyalty Control over manufacturing facilities No synergy in product portfolio
  • Summary Reduce Brand Portfolio Strengthen the Ecommerce Market Strategy Transform Avon “Ladies” Innovative, Sust ainable Products New brand identity for Avon Increase in sales (market share) OUR RECOMMENDATIONS: Increase in customer acquisition Higher stock price RESULT: