Overview of this case Avon products, Inc was the world largest direct seller of the beauty related products. Color cosmetics, hair care products,fragrances,bath products, skincare products, or jewelry. Supermarkets, drugstores discount stores, specialty retailers, and departmental stores Accounted for approximately 93% pf the industry’s $140 billion global sales.
Company History 1886 California Perfume Company by book sales man David H.McConnell. Door-to-door sales Albee as its first sales agent 10,000 sales representatives Sales offices New York to San Francisco, California,Luzerne,Pennsylvania and Davenport,Lowa.
Cont’d… In 1914 starts in Canada and sales milestone of 5 million units. Sales grown to $2 million by 1928. Avon as tribute to beauty of Stratford- upon-Avon in England. Avon Products,Inc. In 1939 David McConnell Jr. became the President of the company
Cont’d… In 1946 Avon Products Inc. went to public.its sales grow at annual rats of 25% and more during 1950. Company rapidly expanded its products line and launched in dozen International markets. “Avon Calling” advertising campaign Avon’s direct sales model was almost tailor made to the economic conditions and societal norms of the 1950s and 1960s. Small % of women professionals and Avon offered opportunity to earn extra income.
Cont’d… Avon sales forces helped increase the company’s U.S. sales to $ 250 millions and make it World largest cosmetics company. In 1980s its annual sales averaged more than $3 billion. Sing of trouble began to appear during recession of the mid 1970s as middle class homemakers began to enter the workforce by 1980. Avon’s sales had begun to decline due to little appeal with teens and lower-income women found Avon’s products too expensive.
Cont’d… With stalled sales growth in its core cosmetics business. Avon pursued business diversification to boost its revenues. It acquired the prestigious jeweler Tiffany & Company in 1979, fragrance retailers Giorgio Beverly Hills and Parfums Stern in 1987. Varity of unrelated business such as magazines, retirement properties, health care products,children’s toys and menswear
Strengths Largest direct seller in global CFT industry. Strong Management E-Business E-Representatives Strong R&D Leadership Programs Strong Financial Position
Weakness Mishandling of orders Out of date catalogs Unattractive packaging Lack of innovative products Confusing promotion Late entry in menswear Distribution network Lack of relationship with customers, suppliers and representatives.
Opportunities Entering new business line Development of innovative products New packaging New channel strategies Menswear market New approach of supply chain New sales models New approach to image building
Threats Busy life style of women Strong competitors Bad image on new generation “Grandmother brand not for us” Retailing stores, shopping malls for cosmetics products
Marketing High quality timely market intelligence Brand focused marketing strategies Integrated category, brand and campaign planning High style glamorous catalogs
Sales leadership Improved representative earning opportunities Faster growth through expanded coverage Full implementation of E-representatives
International Sales leadership and training Geographic expansion New market entrance New outlets globally
E-Commerce and Internet Create global web site style guide Utilization of internet in manufacturing, sourcing Electronic ordering, product information and order status E-representative
Strategy Evaluation Business Processs Redesign saved $150million Saved $400 Million in 1998-2000 Reduced Order Processing Cost by 30-90% Internet Strategy Improved Sales by 30% New Catalog Model brought them at number 3 in UK market
Cont’d… Record Sales of $100 Million by “Anti-aging Skin Cream” New Products were Developed “Incandessence” “Little Black Dress”
Recommendations Focus on niche market E-market should be expand Improvement in beauty products Improvement of Distribution channels Focus on Local sales growth Improve product innovation for fastest growing CFT