Avon Products Inc.

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Avon Products Inc.

  1. 1. Presented by:  Rizwan Qamar
  2. 2. 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.
  3. 3. 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.
  4. 4. 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
  5. 5. 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.
  6. 6. 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.
  7. 7. 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
  8. 8. Financial Highlights Avon Products Inc.1991-2000 (in Millions except per share and employees data) 199 1992 1993 1994 1995 1996 1997 1998 1999 2000 1T 344 3660 3844 4266 4492 4814 5079 5247 5327 5714R 1 .5 .1 .5 .1 .2 .4 .7 .9 .6O 430 339. 427. 489. 500. 538 537. 473. 549. 788.P .9 9 4 5 8 8 2 4 7I 71. 38.4 39.4 44.7 34.6 33.2 35.5 34.7 43.2 84.7E 5N 135 175 132. 195. 256. 317. 338. 270 302. 478.I .7 1 8 5 9 8 4 4NI 0.4 0.61 0.46 0.69 0.94 1.19 1.28 1.03 1.18 2.01o 1nPS
  9. 9. Balance sheet data (in millions except employees data)Total assts 2826 25228. 2433. 2272. 2222. 2052. 1978. 1918. 1692.6 1693.3 .4 6 5 9 4 8 3 7Long term 208.1 177.7 123.7 116.5 114.2 104.5 102.2 201 701.4 1108.2debtsTotal 351.9 215 194.1 177.7 161.5 201.6 234.3 256.3 1007.4 1213.6debtsShareholders 251.6 310.5 314 185.6 192.7 241.7 285 285.1 (406.1 (215.8 ) )(Deficit)EquityNumberof 30100 29400 29500 30400 31800 33700 35000 33900 40500 43000Employees
  10. 10. SWOT Analysis Strengths Weakness Internal Opportunities Threats External
  11. 11. Strengths  Largest direct seller in global CFT industry. Strong Management E-Business E-Representatives Strong R&D Leadership Programs Strong Financial Position
  12. 12. 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.
  13. 13. 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
  14. 14. 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
  15. 15. ETOPInternal Factors External FactorsAccounts and Finance + Customers +Marketing + Supplies 0R&D + Competitors _Human Resource + Technology _Production + Govt./Economy/Politics +Total + Total 0
  16. 16. Ranking the companiesRank Co. Revenue Sales1 L’Oreal $10.6 $10.32 P&G $40.1 $7.33 EsteeLauder $4.4 $4.44 Avon $5.7 $3.55 Intimate Brds. $5.1 $2.46 Alberto Culver $2.3 $2.27 LVHM $9.7 $1.18 Cotyl $1.8 $1.89 J&J $29.1 $1.510 Revlon $1.5 $1.511 Marykay $1.2 $1.2
  17. 17. SAP(Strategic Advantages Profile) Brand image Global new business line New packaging New channel strategies New promotion “Lets talk”
  18. 18. Fast order replacement New approach supply chain E-retailing Easy purchasing Reduce the cost by cutting low value added activities R&D techniques
  19. 19. Strategy Formulation Vision “Our vision to be the company the best understand and satisfies the product, services and self-fulfillment needs of women globally.”
  20. 20. Objectives High sales growth Rebuild brand image Quality products Entering new business lines Value chain Attractive catalogs Proper ordering E-Business
  21. 21. Strategies Implementation Supply chain Management Supplier management – sourcing saving Strong links b/w marketing and supply chain operations Centralized inventory distribution Supply chain planning to reduce cost
  22. 22. Marketing High quality timely market intelligence Brand focused marketing strategies Integrated category, brand and campaign planning High style glamorous catalogs
  23. 23. Sales leadership Improved representative earning opportunities Faster growth through expanded coverage Full implementation of E-representatives
  24. 24. International Sales leadership and training Geographic expansion New market entrance New outlets globally
  25. 25. 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
  26. 26. 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
  27. 27. Cont’d… Record Sales of $100 Million by “Anti-aging Skin Cream” New Products were Developed “Incandessence” “Little Black Dress”
  28. 28. 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
  29. 29. Thank Your Very Much

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