Marketing Term Paper Topic: Sales Strategy of AVON

Course: Sales Management (MKT 401)

Prepared for:
Mujahid Mohiuudin Department of Business Administration East West University, Dhaka

Prepared by:
Name Afrida Tasnim Shagoti Khondokar Kamran Bin Khaled Dinuka Sinhabahu Syaba Tarannum Quader Shohan Akon Sunny ID 2008-1-10-112 2008-1-10-152 2008-3-10-071 2008-1-10-063 2008-2-13-011

Date of submission: 28th July, 2010

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Table of Contents
Topic Executive Summary 1.0 Welcome 1.1 History 1.2 About Avon 1.3 Major Brands and Product Lines 1.4 Major Market and Operations 1.5.1 Mission Statement 1.5.2 Vision Statement 1.6 Values and Principles 1.6.1 The Avon Values 1.6.2 The Principles 2.1 Components of Marketing Mix 2.1.1 Product Mix 2.1.2 Pricing Strategy 2.1.3 Other Marketing Tools 3.1 Goals and Objectives 3.2 Target Market and Market Demand 3.3 Avon’s Product Mix 3.4 Competitor and Market Trends 3.4.1 Competitors 3.4.2 List of other Competitors 3.4.3 Competitor Analysis Page No. 5 6 6 7 7 8 9 9 9 9 10 10 10 11 11 11 12 13 18 19 19 20

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3.4.4 Handling Competitors 3.5 Distribution Process 3.5.1 Other Routes to Market 3.6 Supply Chain 3.6.1 Goals of Supply Chain 3.6.2 Supplier Codes of Conduct 3.6.3 Supplier Diversity 3.7 Sales Process 3.8 Sales Skill and capability 3.9 Development Plan 3.10 Design of Sales Department 3.10.1 Sales Managers 3.10.2 Sales Representatives 3.11 Design of Territorial Structure 3.12 Sales Force Management 3.12.1 Motivation 4.1 SWOT Analysis 4.2 Changing Marketing Strategy 5.1 Corporate Social Responsibility 5.1.1 Economical Empowerment 5.1.2 Avon’s Walk for Breast Cancer 5.1.3 Speak out against Domestic Violence 5.1.4 Emergency and Disaster Relief 5.1.5 Hello Tomorrow Fund Conclusion

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Executive Summary
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Avon has been committed to being the company for women since 1886, and for over 120 years they have taken very seriously their responsibility to improve the lives of women. Their core values—trust, respect, belief, humility and integrity—guide the company every day and are fundamental to how they conduct their business and meet the evolving needs of women and all of their stakeholders. This report concerns the sales strategies adapted by Avon. In this report firstly the history of Avon and its company profile is presented. Then we have explained how sales strategy can be used to help in the development of other marketing mixes. Here we have showed how sales strategy can be used in the development of product mix and how it can recommend pricing theories. This is because sales representatives of Avon stay close to the customers and so are aware of these factors and can help in the development of such factors. We have also shown how sales strategy works well in promotional campaigns. Next, the main sales strategy steps are explained. First to this comes goals and object set up. We have shown how Avon does not have a single goal like most other companies but has unique specified, measurable, realistic and quantifiable goals and objects for each of its five sectors. Then we have shown how Avon targets the women population mainly and what they consider in doing so. Furthermore, third to this sales strategy is the competitors analysis where we have put out best effort in proving what tools Avon uses against its competitors. Fourthly, Avon’s distribution channels are explained in details. Avon mainly uses direct marketing, online websites and few department stores and kiosks to make their products available. Moreover, the fifth stage of sales strategy is supply chain and Avon’s supply chain goals, codes of ethics, supply chain diversity are thoroughly revised and presented. Sixth of this elaborative process is sales process development and we have showed how the existing sales process of Avon works well from prospecting to implementation stage. Next, we have presented in the report the sales people’s skills like Diversity, Leadership, and Excellent communications skill, Hard Working, Dynamic and Teamwork etc are important. Then subsequently these skill development processes are explained in details. In the ninth step we showed how the sales department of Avon is segments and into how many layers and the significant facts around designing it in such way. In addition, in the tenth stage we have shown the territorial structure of Avon using a world map to show where it reaches. Finally, the last and eleventh stage of sales strategy development is management of sales force which is explain in details and special emphasis is given on motivational strategies. Apart from the 11 sales strategy development stages, we have also given CSR activities, changes in marketing strategies, detailed product mix, SWOT analysis to help understand Avon in a better way!

1.0 Welcome
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Avon has been committed to being the company for women since 1886, and for over 120 years they have taken very seriously their responsibility to improve the lives of women. Their core values—trust, respect, belief, humility and integrity—guide the company every day and are fundamental to how they conduct their business and meet the evolving needs of women and all of their stakeholders. In today’s increasingly complex, globalized world, an unwavering commitment to corporate responsibility is more important than ever and represents the hallmark of success in any industry. As a leading global provider of cosmetics, personal care and related products, people at Avon continue to strengthen their commitment to such critical areas as economic empowerment, environmental stewardship and product responsibility as thee work to create a brighter tomorrow.

1.1 History
 In the late 1800s, David McConnell, a door-to-door book salesman, had an idea
he believed would encourage women to buy his books. Following a common trade practice of the period, he gave prospective customers a gift of perfume to arouse their interest. Before long, he discovered that the perfume was more popular than the books. He formed a new firm, which he called the California Perfume Company. “I started in a space scarcely larger than an ordinary kitchen pantry,” David McConnell noted in 1900. “My ambition was to manufacture a line of goods superior to any other and take those goods through canvassing agents directly from the laboratory to the consumer.” McConnell based his business upon: 1) consumable products sold directly to the consumer, 2) an image of the company that captured the beauty and excitement of the state of California, and 3) a national network of sales agents he had organized during his years as a bookseller. AVP is a US cosmetics, perfume and toy seller founded in 1886 as the California Perfume Company founded by then 28-year-old David H. McConnell markets in over 140 countries across the world

   

As the firm grew, so did the product line. In 1920, the company introduced a line of products called Avon that consisted of a toothbrush, cleanser, and vanity set. The Avon name was inspired by the area about the company’s laboratory at Suffern, New York, which Mr. McConnell thought resembled the countryside of William Shakespeare’s home, Stratford-on-Avon, England. The name of the line became so popular that in 1929, the company officially became Avon. By 1929, the company was selling low-cost home care and beauty products, door-to-door and through catalogues in all 48 states.

1.2 About Avon
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Avon and its approximately 42,000 associates now serve valued customers in more than 100 countries worldwide Founded in 1886, Avon Products, Inc. (Avon) is the world’s largest direct seller of beauty and beauty-related products. With $10.7 billion in annual revenues in 2008 (up 8% from 2007), Avon and its approximately 42,000 associates now serve valued customers in more than 100 countries worldwide. Their primary distribution channel is direct selling by our more than 5.8 million Avon Sales Representatives. Together, these “Avon ladies,” as they are affectionately known, help them to reach millions of customers around the world and handle upwards of one billion transactions annually. Avon is a publicly traded global company listed on the New York Stock Exchange (symbol: AVP).

1.3 Major Brands and Product Lines
Their support of women encompasses all aspects of personal care, including beauty, wellness, health and fitness, as well as economic empowerment and financial independence. To remain at the forefront of the highly competitive beauty industry, they constantly develop quality, effective and affordable breakthrough products that cater to the needs of our customers. Their current product offerings fall into three categories: Beauty Cosmetics Fragrances Skincare Toiletries Fashion Fashion Jewelry Watches Apparel Accessories Home Home Products Gifts and Decorative Products

Avon’s Beauty category includes leading brand names like: Avon Color™, Anew™, Skin-So-Soft™, Advance Techniques™, Avon Naturals™ and mark™.

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1.4 Major Markets and Operations
Headquartered in New York City, Avon markets its products to women throughout six regions—Asia Pacific; Central and Eastern Europe; China; Latin America; North America; and Western Europe, Middle East and Africa. They have maintained direct sales operations in 65 countries since 2004, and now have four additional new operations in Finland, Albania, Macedonia and Egypt. In addition to these direct operations, Avon also does business through distributorships and licensees to drive continuing growth throughout emerging and developed markets. They distribute products in an additional 48 countries through these secondary sales channels. Region Asia Pacific Central and Eastern Europe China Latin America North America Western Europe, Middle East and Africa Total Revenues (millions) 2007 2008 $850.8 $891.2 $1,577.8 $1,719.5 $280.5 $350.9 $3,298.9 $3,884.1 $2,622.1 $2,492.7 $1,308.6 $1,351.7 $9,938.7 $10,690.1

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1.5.1 Mission Statement
“We will build a unique portfolio of beauty and related brands to become the world’s most trusted beauty company and also expand our presence in direct selling, empowering women to achieve economic independence by offering them a superior earning opportunities and deliver superior returns to our shareholder, providing them growth opportunities while maintaining or commitment to be a socially responsible, ethical company that is watched as a model.”

1.5.2 Vision Statement
“To be the company that best understands and satisfies the product, service and selffulfillment needs of women—globally”

1.6 Values and Principles
These five values, and their guiding principles, outlined below, have served as a continuing source of strength within our organization. They remain at the heart of who they are and who they strive to be.

1.6.1 The Avon Values
Trust means they want to live and work in an environment where communications are open—where people feel free to take risks, to share their points of view and to speak the truth as they see it. Trust people to do the right thing—and help them to understand our underlying reasoning and philosophy—and they won’t disappoint. Respect helps them to value differences, to appreciate each person for her or his unique qualities. Through respect, they help bring out the full potential of each person. Belief is the cornerstone of empowering associates to assume responsibilities and be the very best they can be. Believe in someone—and show it—and that person will move mountains to prove you’re right. Humility simply means they’re not always right—they don’t have all the answers—and they know it. They’re no less human than the people who work for them, and they’re not afraid to ask for help. Integrity should be the hallmark of every Avon associate. In setting and observing the highest ethical standards and doing the right thing, they fulfill a duty of care, not only to their representatives and customers in the communities they serve, but to their colleagues and themselves.

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1.6.2 The Principles That Guide Avon
1. To provide individuals an opportunity to earn in support of their well-being and happiness; 2. To serve families throughout the world with products of the highest quality backed by a guarantee of satisfaction; 3. To render a service to customers that is outstanding in its helpfulness and courtesy; 4. To give full recognition to employees and Representatives, on whose contributions Avon depends; 5. To share with others the rewards of growth and success; 6. To meet fully the obligations of corporate citizenship by contributing to the wellbeing of society and the environment in which its functions; and 7. To maintain and cherish the friendly spirit of Avon.

2.1 Components of Marketing Mix
Sales strategies are fantastic tool at contributing for the development of different marketing tactics. Following are three great aspects of marketing which is aided by sales strategy:

2.1.1 Product Mix
Following is a simple diagram showing Avon’s product mix:

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The main point around this aspect is that because sales representatives maintain a close relationship with the customers all the time; during sales process as well as after sales, they know about the dormant needs of the customers, about the wants they are keeping within themselves and about the problems they face. Thus it is very easy for these representatives to go up to their superior and make product mix suggestions. They can advice on what type of colors to put into their lipsticks and eye shadows or what type of skincare products to develop.

2.1.2 Pricing Strategies
The same reason applies here, that is because the sales representatives stay close and work with customers directly, they are well aware of the price customers are willing to sacrifice for an Avon product. Thus they can recommend different prices for defferent products which might result in more sales.

2.1.3 Other Marketing tools
Sales representatives of Avon are so prominent that they are even used as advertisement concepts to boost sales. Such advertisements are smash hits. Not only this, but sales representatives are also shown in movies. Some of such examples are given below:

3.1 Goals and Objectives
Selections of their existing goals are outlined in the table below. They are continuously setting additional goals around key areas of risk and opportunity for our business. Area Environment Goal Reduce GHG emissions per unit produced by an additional 10 percent by 2012 from already reduced 2008 baseline levels.

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Reduce energy consumption per unit produced by 10 percent by 2012 from already reduced 2008 baseline levels. Reduce water consumption per thousand units produced by 7 percent by the end of 2012, from already reduced 2008 baseline levels. Zero environmental noncompliance incidents and fines Governance Report the recipients and portion of Avon payments used for political contributions and expenditures by such trade associations that receive in excess of $100,000 from Avon beginning in 2009 (for the calendar year 2008) Philanthropy Exceed $1 billion in funds distributed by 2012 Supply Chain Ensure consistent oversight of their entire global supply chain, including monitoring of suppliers’ compliance with their Supplier Code of Conduct, by December of 2009. Increase spends with diverse suppliers year after year. Workplace Safety Achieve a total recordable case (TRC) rate of 1.0 across all Avon and Health facilities Introduce a comprehensive safety audit program in 2009

3.2 Target Market & Market Demand
Avon’s tag line says “the company for women”, thus is it utterly crystal clear that they mainly focus on the well being of women. They cut deep into the dormant and open needs of women and initialize products to suit their needs and wants. Though Avon now has range of products like watches and perfumes for men yet even today their positioning remains strong towards the women. Avon focuses on capturing the market younger women, college student, men with disposable income in its effort to promote the sale of the sink-so-soft brand extension products. Young women and college going students are dynamic and beauty conscious. Thus targeting them is what Avon doing mainly. Then again, new generation of young women between 16-35 years falls under Avon’s potential customer list. As we know Avon headquarters in New York and USA is where it all started. Thus it is rather important to specify the target market in USA that Avon aims at. 17 million young women in US with aggregate spending capacity of $ 24 billion on cosmetics are attractive market for this leading cosmetics company. For young women who wants to make their mark in World and wants product that reflects the concepts of: Fun, fresh, modern and affordable price, are utterly Avon’s target market.

3.3 AVON’S Product Mix

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Avon Color is Avon’s flagship global color cosmetics brand which offers a variety of color cosmetics products, including foundations, powders, lip, eye and nail products. Avon Color’s palettes contain shades that suit the skin tones of women of all ethnicities. Avon Color provides superior innovation and high-technology in its products to deliver beauty and treatment-related benefits that make women look and feel their best. Avon Color has over the decades brought scientific advances to the beauty market with the launch of hit products such as Glimmersticks eyeliners and lipliners, slim-line mechanical color pencils that allow for a smoother application, and Glazewear Liquid Lip Color, which contains patented Thixotropic Gellant System that moisturizes lips with Vitamins A, C, and E. Avon Color's product portfolio includes: Mistake Proof Mascara is the first-ever mascara with a built-in “mistake” eraser. This multi-benefit mascara provides volume, length and lift on one end and a gel “eraser” on the other end to undo mascara mishaps. Pro-To-Go Lipstick with its breakthrough design allows opening, applying and closing the lipstick all with one hand. With one slide of a button, Pro-To-Go Lipstick gives luscious color and hydrating lip care. Jillian Dempsey for AVON Professional Collection, a new line of makeup that will leave women looking like they go to a professional make-up artist. The collection includes:
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Kohl Eyeliner with Smudger, a creamy eye pencil that can be used as a liner or a shadow to create smoky eyes. Available in Black, Plum, Navy and Dark Brown. Eyeshadow Trio, a palette containing two powder shadows to add dimension to the eyes and one cream formula to apply over the lids as a highlighter/base. Available in Ice Shimmer, Lavender Mist, Antique Bronze and Pebble Wash. Lash Professional Mascara, dual-ended mascara featuring the Extreme Volume formula and Perfect Wear waterproof formula. Available in Black, Brown, Brown Black and Burgundy.

SuperSHOCK Mascara, Avon’s biggest-ever, flexible bristle brush gives the maximum amount of mascara in just one dip. Each formula contains unique microfibers that expand and plump lashes, creating bold, dramatic lashes. Avon SuperSHOCK Mascara is currently available in Black, Brown Black, Brown and Navy.

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Anew is the world’s leading mass market anti-aging skin care brand offering breakthrough products infused with innovative technology at affordable prices. Avon revolutionized skin care in 1992, when it was the first company to launch an antiaging product containing Alpha Hydroxy Acids, which was Anew Perfecting Complex for Face. The Anew brand boasts an assortment of skin care products that fight all stages of the aging process, whether their customer is preventing the early signs of aging in her 20s, or restoring the youthful texture of her complexion in her 50s. Anew is also well-known for pioneering products that serve as at-home alternatives to professional cosmetic treatments. Anew‘s product portfolio includes:

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ANEW Clinical Derma-Full X3 Facial Filling Serum, an ultra-concentrated, lightweight serum with a unique helix formation that contains the injectable-grade Hyaluronic Acid to provide visible volume restoration, and contouring and deep wrinkle filling benefits. ANEW Rejuvenate 24 Hour Eye Cream is a dual eye system with SPF 25 to fight aging throughout the day. Two creams, a day revitalizing cream and a night restoration cream, are packaged in a dual-chamber jar and exclusively engineered to continuously repair and protect skin against age damage in the delicate eye area. ANEW Rejuvenate Night Revitalizing Cream is a lightweight gel-cream that delivers the rejuvenating results of a professional anti-aging facial. ANEW Rejuvenate Flash Facial Revitalizing Concentrate is a concentrated serum treatment with three times the level of the exclusive Revita Fresh technology which helps increase cell-to-cell cohesion to help strengthen the skin’s surface layers. ANEW Clinical Advanced Dermabrasion System utilizes aluminum oxide crystals and special polishing beads that resurface and refresh skin to reveal a radiant and more youthful appearance. Polyethylene polishing beads refine and refinish, while advanced polymers conditions skin. ANEW Ultimate Contouring Eye System, a dual-formula eye treatment designed to recontour, repair and rebuild skin’s cellular structure for dramatic, refining results and younger-looking eyes. Anew Clinical ThermaFirm Face Lifting Cream, a treatment with Triple Sonic Technology to firm, tightens and rejuvenates skin to look smoother and revitalized—the at-home alternative to thermal facelifts. Anew Clinical Advanced Retexturizing Peel, a ready-to-use retexturing treatment that peels away dullness and visible age damage to restore skin’s radiance and youth. Anew Clinical Eye Lift, the first-ever dual eye treatment that “lifts” both the lower and upper eye areas for dramatically younger-looking skin. Anew Clinical Deep Crease Concentrate with Bo-Hylurox™ a powerful serum with a blend of natural, active ingredients. Formulated with portulaca, Avon’s patented extract to make hard-to-treat creases (or ‘expression lines’) look more relaxed.

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Anew Clinical Line and Wrinkle Corrector, a skin care treatment that renews, rebuilds and regenerates skin from within. Quadruple-Patented Technology Derma-3X Technology™ stimulates production of the three key dimensions of age-vulnerable skin.

Skin So Soft is one of Avon’s best-loved brands offering a line of bath and body products for all skin types. Since the launch of the brand’s famous bath oil in 1961, Skin So Soft has evolved over the years to an extended line of brands that include Daily Moisture, Renew & Refresh, Soft & Glow, Fresh & Smooth and Soft & Firm that provide skin smoothing and skin caring benefits. Skin So Soft has also expanded beyond bath and body care with the launch of products that help protect against insects. This led to the development of the Skin So Soft Bug Guard PLUS line of products that use IR 3535 in 8 DEET-free formulations that are easy to use for the whole family. In February 2007, Avon launched Skin So Soft Fusions Dual Softening Body Wash, the first body wash that fuses an exfoliating formula with an ultra-conditioning cleanser. Recent Skin So Soft products include:

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Avon Skin So Soft Fusions Dual Softening Body Moisturizer is dually formulated to help skin maintain optimal hydration from above and deep within skin’s surface. One formula softens and smoothes the surface of the skin while the other works to fortify deep within skin’s surface to create a special hydrating cushion. Available in Soft & Sensual, Soft & Nourish, and Soft & Replenish. Skin So Soft Bug Guard IR 3535 Expedition and Skin So Soft Bug Guard Plus Picaridin, deliver long-lasting insect repellency and are available as pump and aerosol sprays. Skin So Soft Bug Guard Plus IR3535 Unscented SPF 15 Sunscreen Spray, an EPA-registered DEET-free SPF 15 aerosol. Skin So Soft Satin Glow, a daily body moisturizer that gradually develops a natural, healthy summer glow. Skin So Soft Fresh & Smooth, a line of hair removal products such as shaving gel and waxing kits to effectively remove hair, leaving skin silky and smooth.

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Advance Techniques salon-quality products serve the needs of every hair type, age group and ethnic background. As a recognized hair care brand among Avon customers, Advance Techniques delivers a wide range of shampoos, conditioners and styling products. Advance Techniques launched in 2000, offering a broad selection of high performance hair care products to accommodate a diverse consumer base. Since then, Advance Techniques products have been reformulated to include Creatine, an essential skin care ingredient that strengthens and repairs hair from root to tip. Creatine also protects hair against damage caused by heat styling and chemical processes. Advance Techniques offers shampoos, conditioners and styling products in the following four hair care categories to meet the needs of every woman. Volume and Texture, formulated with Creatine Plus Amino Peptides to plump fine, lifeless hair. Straight and Sleek, formulated with Creatine Plus Silicone Smoothers to tame and illuminate out of control hair for a smooth polished look. Color Protection, formulated with Creatine Plus an Anti-Oxidant & UV Filter Complex to protect the brilliance and health of color-treated hair. Daily Results, formulated with Creatine plus-Pro-Vitamin B5 to help improve the condition and manageability of hair. Intense Repair, formulated with Creatine plus Hyaluronic Moisture System to treat and repair dry, damaged hair.

Avon Wellness provides rejuvenating health and fitness products that promote a well-balanced lifestyle. Launched in 2000, Avon Wellness embraces the philosophy of inner as well as outer beauty and the well-being of mind, body and spirit. Avon Wellness products are available in all of Avon’s markets across the world. In 2005, Avon expanded its Wellness line when it partnered with the popular fitness franchise Curves. Through the Avon brochure, customers will find a host of Curves-

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branded fitness apparel, accessories and comfortable footwear that support a physically active lifestyle and healthy eating.

As the world’s largest manufacturer of mass market perfumes, Avon offers affordable scents with upscale packaging so that all women can enjoy the Avon fragrance experience. Originally known as The California Perfume Company, Avon began its fragrance legacy in 1886 when it introduced Little Dot Perfumes. Since then, blockbuster icons like Little Black Dress, Far Away, Sweet Honesty, Rare Gold and Imari have been legendary among their customers. In 2004, Avon launched its first prestige fragrance trilogy Today,Tomorrow, Always, supported by Avon spokeswoman Salma Hayek. Avon’s prestige fragrance collection is well-suited for the customer who is willing to spend more on her fragrance. Avon also manufactures fragrances for men. In 2006, Avon launched Derek Jeter Driven its new fragrance by baseball star Derek Jeter. Other popular fragrances for men include Blue Rush, Black Suede and Wild Country. Several of Avon fragrances for both men and women extend to a line of ancillary products such as body creams and lotions. Avon fragrance portfolio includes:

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Christian LaCroix Absynthe, a new Oriental Green scent exclusively designed by Christian Lacroix for Avon. Its top notes include absinthe extract, golden freesia and green anise with midnotes of orchid, saffron, and narcissus nectar. Antique wood, ebony musk, myrrh and amber create this fragrance’s smoky drydown. U by Ungaro for Her and U by Ungaro for Him was designed exclusively for Avon by haute couture designer Emanuel Ungaro. U by Ungaro for Her carries an alluring scent made up of fresh blossoming florals surrounded by sensual blonde woods and is packaged in the shape of a soft pink hourglass. U by Ungaro for Him blends an airy crispness that leads to a sophisticated blend of rich, textural woods and is packaged in a sleek rectangular shape paired with translucent glass. Christian Lacroix Rouge was exclusively created for Avon by haute couture designer Christian Lacroix is a bold floral chypre based on natural Patchouli Heart, contrasted with an exhilarating introduction of Spanish carnation and energizing white pepper. Derek Jeter Driven, the new fragrance for men Extraordinary which combines the richness of chocolate truffles and the sparkling effervescence of champagne Today, Tomorrow, Always, Avon’s first prestige fragrance trilogy promoted by Avon spokesperson Salma Hayek.

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3.4 Competitors & Market trend
Avon has many established companies as its competitors. There are wway many cosmetics companies all over the world, winning millions of women’s hearts. Yet all of them are unique and always striving to be the best. If they do not point out their differences ten soon other rivals will bash them. Now, why Avon is a threat to other cosmetics companies is interesting. They are a threat because they offered shares to the public in 1946. Since then, their annual revenue has risen from less than $20 million to over $8 billion and yet to increase more. This shows that if this continues then a large portion of market share will go to Avon’s pocket each year. Also, they are effectively holding their market position and market share. Cosmetics and personal care brands are highly competitive and yet the overall market is expanding geographically and strategically. Avon is always aiming at going anywhere and everywhere around the world. Today it has its market touch corners of more than 100 countries yet they know there are so many untouched corners to explore. Avon also looks at extending market growth to include countries like  Poland  Vietnam  Cambodia

3.4.1Competitors

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3.4.2 List of Other Competitors
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• LANCÔME CHANEL ESTÉE LAUDER MAX FACTOR BOURJOIS LANCASTER GIORGIO ARMANI THE BODY SHOP CLINIQUE L´OREAL RIMMEL MAYBELLINE LAKME

• • • • • • • • • •

3.4.3 Competitor’s Analysis

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3.4.4 Handling Competitors
In this competitive world to handle competitors or to say to survive and capture market share, companies must provide superior value to their customers. That’s absolutely what Avon is doing. The following diagram is usually used to show levels of product but here it is used to explain the competitive advantages Avon has over its competing brands. Avon’s competitive advantages are: it has world class scientists and technicians who are working hard at Avon global research and development center at New York to develop new products now and then. In doing so they are offering customers solution for very problems of their. This is preemptive and very hard for competitor’s to copy; giving Avon absolute defense. Then there is the 5.4 million sales representative all around the world working to delight customers. This stunning number is absolutely hard to copy and gives Avon again an absolute defense.

This is Avon Global Research and Development Center.

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Avon global research and development center full of world class scientists and technicians Avon color

Avon bath and body Avon hair care

Quality cosmetics and personal care products

Avon skincare

Avon wellness

Avon fragrance

5.4 million sales representatives

3.5 Distribution Process
It is claimed that Avon has reached to the summit of success because of their distinctive method of distribution. They don’t go for traditional distribution process through the wholesaler & retailer rather they emphasize on direct sales to the consumers. They create the environment such that customers get the product the moment they think about it! They try to reach to each and every actual and potential customer through perfectly managed and executed strategies for direct sales, channels, and internet. Everyday over five million of their sales representatives will provide innovative and appealing beauty products to millions of satisfied customers. Avon proudly emphasizes more on direct sales strategies to generate billions of customer transactions. Under direct sales strategies it is best that they adapt direct home visit, field based sales or mail orders. AVON’S Weapon over Competitors is their Direct Selling Magic! A simple phone call or meeting by their local sales representatives can be the friendliest yet strong way to create an ambiance and perfectly flourished personal relationship with customers. You may also benefit from the special expertise of one of their qualified Beauty Advisors. They understand the

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importance of providing their Representatives with the entrepreneurial skills, knowledge, and promotional support they need to make their businesses thrive. Best of all they will give free, no-hassle delivery and the great, personalized service across the world. Sometimes they even send highly qualified Beauty Advisors so that customers can benefit from the special expertise.

3.5.1 Other route to market
• Buy Avon Online:  With
their new website YourAvon.com busy customers can enjoy free delivery

 United States customers will be able buy direct from Avon's online store, at
www.avon.com  A new customer can find an eRepresentative

• 

Buy Avon through channels:

They will try to constantly develop new channels to deliver the best of Avon products and services  Customers will find Avon in kiosks, beauty centers and beauty boutiques, and in outlets and department stores

3.6 Supply chain
As a leading global manufacturer and marketer of consumer products, Avon recognizes that responsible supplier conduct is critical to their business. It impacts their ability to attract and retain a loyal customer base, dedicated employees and enthusiastic Sales Representatives, and helps them to maintain the reputation and trust that they have earned for the past 123 years. As standards evolve and as monitoring becomes more effective and efficient, Avon will continue to focus on its performance in this critical area. For their beauty and beauty-related products, Avon utilizes both company-owned manufacturing facilities and third-party suppliers to source its products for consumers around the world. In all, Avon’s suppliers currently number approximately 16,000 and hail from 50 countries. Their cosmetics, fragrances, and toiletries products—also known as beauty products—are the core of their business and comprise approximately 70 percent of our net sales. Eightynine percent of their beauty products are manufactured in Avon-owned facilities. Thirdparty manufacturers supply the remaining 11 percent of their beauty products.

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All of their non-beauty products are sourced through third-party manufacturers in 25 countries across five continents.

3.6.1 Goal of Supply Chain
Ensure consistent oversight of their entire global supply chain, including monitoring of suppliers’ compliance with their Supplier Code of Conduct, by December of 2009. Increase spending with diverse suppliers year after year.

3.6.2 Supplier Code of Conduct
Through their Supplier Code of Conduct, vendor audits and product compliance testing, they seek to hold their suppliers accountable for compliance with all applicable local and national laws and regulations regarding product safety and quality, environmental performance and human rights. Through monitoring, ongoing engagement and, if necessary, termination, they seek to ensure that all suppliers of Avon non-beauty products sold in the United States comply with their Supplier Code of Conduct. They have engaged several third-party auditing firms to monitor their suppliers’ compliance with the Supplier Code of Conduct. They are currently reviewing the effectiveness of their supplier monitoring program, in particular as it applies to suppliers of products sold in countries outside the United States. They know that they need to constantly improve the consistency of their oversight and the overall effectiveness of their program; to that end, they have set a goal to ensure consistent oversight of their entire global supply chain, including monitoring of suppliers’ compliance with their Supplier Code of Conduct, by December 2009.

3.6.3 Supplier Diversity:
More than 30 years ago, Avon instituted a supplier diversity initiative to reinforce the company’s commitment to women and to support those who provide the goods and services that make Avon products extraordinary. They have made an effort in recent years to expand our relationships with women- and minority-owned suppliers in North America. Avon North America’s memberships in the Women’s Business Enterprise National Council (WBENC) and the National Minority Supplier Development Council (NMSDC) have helped to facilitate this process. Avon sourced products and services from more than 284 small and diverse businesses in North America as of 2007, and in that year Avon U.S. awarded $39 million in contracts to

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diverse suppliers, which was approximately 5.6 percent of their total U.S. spend. Avon’s desire is to increase spend with diverse suppliers year after year. They embrace supplier diversity as a business objective, not only to ensure that they recognize capable diverse suppliers but also to continue to drive savings by selecting the most competitive partners. In 2007 and 2008, Avon attended several national trade shows, business fairs and events, including those sponsored by the NMSDC, WBENC and U.S. Pan Asian American Chamber of Commerce. In addition, members of their Supplier Diversity Council continue to represent Avon locally at business expos and outreach events in states as varied as California, Georgia, Illinois, New York, Ohio, Pennsylvania and Washington, D.C. As they continue to adopt a more centralized supply chain process, they will strengthen their capability to accurately assess the services, commodities and regions in which growth and opportunities may exist for more diverse suppliers. While Avon remains committed to supplier diversity, challenges driven by the current global economic environment have impacted supply chain processes around the world. Early in 2010, Avon management will revisit the supplier diversity position in the context of their overall supply chain and business goals, with the objective of addressing both business and corporate citizenship responsibilities. Avon encourages potential suppliers to register their company profiles in their supplier diversity database.

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3.7 Sales Process

Knowing detailed information about the customers Building Rapport and excellent personal relationship

Demonstration of samples and allowing free sample trial Let customers try out the products before they buy it and then see if objections arise

Avon’s existing sales process is a blend of extreme professionalism and realistic approaches. As their values and principals are described above, we can see that they learn from their mistakes and take a modest approach at solving those. Even if their sales process is earning them billions every year yet they believe there is always room for improvement. Their sales process is effective because that carry out each steps properly: During prospecting stage, the sales representatives do a massive target market search, which is they seek out every potential prospect for the company. In the next stage according to many demographic and other variables they cut off few prospects and list down to whom they can approach. We call this qualifying the prospect stage. Obviously, subsequently the need for garnering detailed information comes in the next stage that we call preapproach. Sales representatives then in the next stage approach the customers with warm hearts and good product details. They build wholehearted relationships with them. Even if there is no intention of a purchase, yet they demonstrate the products in details and try to put all the features and benefits to the customers, hoping they will buy in the

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effort. In handling objective stage they use their expertise and knowledge to solve the queries. Finally, they make the deal and close off the sale in such a way that their presence will remain in the hearts of the customers for many years to come!

3.8 Sales skill & capability
They recognize that every associate brings unique skills and experiences to their organization, and they seek to leverage these differences in the most effective ways possible. Just as they unite their associates through their similarities, they also recognize and appreciate their differences and seek to create an environment conducive to individual and collective excellence. They are committed to maintaining a work environment that affords all associates opportunities for development and advancement. Their vision is for all associates to feel comfortable enough to contribute their thoughts and ideas for the mutual benefit of all associates and the organization. They are also committed to maintaining a culture that supports associates as they balance their many and sometimes competing, professional and personal responsibilities. Because they seek to leverage the diversity of all of their associates, diversity and inclusion are fully embedded in their corporate culture. Andrea Jung, now in her ninth year as their chairman and CEO, is consistently recognized not only for the vision and perspective she brings to the company, but also as one of the foremost executives and one of the most powerful women in business. Her leadership and example are an inspiration to all Avon employees as they strive for own personal excellence. The basic characteristics AVON looks into the sales representatives before the leverages & the training are Diversity, Leadership, and Excellent communications skill, Hard Working, Dynamic and Teamwork.

3.9 Development Plan
World-class Training: The Avon universal training program provides consistent training for all Representatives around the world. The program enables Representatives to develop skills and pursue personal goals and encourages them to build their own businesses. In addition, the Leadership Representatives can build their businesses by prospecting, appointing, training and developing (PATD) other Representatives in their community. The PATD program involves a series of thorough training modules that, when combined with the support of up line Representatives and their District Sales Managers, provide Leadership Representatives with the best opportunity to succeed in the marketplace. Leveraging Technology: More and more Representatives around the world are choosing to operate their businesses online, including approximately 150,000 Representatives in the United States. As part of their Representative Value Proposition (RVP), they offer Representatives new web-enablement tools and other cutting-edge online training opportunities to help them expand their businesses online. These features make Avon

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more accessible and allow customers to buy Avon products from the Representatives they trust the most, regardless of their location. Local Support: They have management associates on the ground in nearly every zip code around the United States and around the world. Called District and Division Managers in the United States, and Zone Managers elsewhere in the world, they encourage and support our Representatives in any way they can. In addition, they protect the Avon brand by ensuring that Representatives conduct themselves with the utmost integrity, do not damage other Representatives or the company in general, and comply with all company policies.

3.10 Design of the Sales Department
Avon knows no boundaries. Their associates worldwide support a global network of nearly five million independent sales representatives. Wherever people work for Avon in the world, they are assured of outstanding career opportunities and the chance to prove them in a fast-paced and challenging working environment. Their colleagues – from research scientists and IT specialists to marketing experts and field operations veterans – will be among of the best professionals in their field. The sales department is mainly includes the Sales Managers & the Sales representatives which are again subdivided into different parts.

3.10.1 Sales manager
The sales managers are responsible for collaborating and controlling the acts of the sales Representatives of their defined area or region. There are mainly 3 types of sales managers: 1. District: Their responsibility is framed within the activities of the district they are appointed. They look upon the activities of the sales representatives and monitor and also help the representatives when they are in doubt or need. 2. Divisional: They are appointed at the divisional (State) level of every country. They coordinate the activities of the district managers & also the sales representatives. 3. Zone: Zone managers are appointed for each continent to monitor and coordinate the activities of the Sales representatives, district managers and the divisional mangers.

3.10.2 Sales Representative
Representatives are the heart of their business. They provide AVON with unparalleled grassroots market penetration into the communities in which AVON operates. AVON help their Representatives meet the demands they face by remaining flexible, accessible and responsive. Their unique business model empowers each of their more than 5.5 million Representatives as an independent business. Through this arrangement, they

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provide training and access to local management to allow each Representative the opportunity to grow and succeed. Representatives can earn income in two ways: by selling Avon products as a traditional Representative, or by selling and also recruiting others to do the same. Representatives with a “downline” of others, called Leadership Representatives, must continue to maintain their own customer base while managing, mentoring and training the Representatives under their guidance. 1. Leadership Representatives Comprise one third of all Avon Sales Representatives, as part of our Leadership Opportunity Program 2. Earn by selling Avon products and recruiting and mentoring others in the downline stream of Representatives 3. Can receive certification in the Avon PATD Program: Prospect, Appoint, Train and Develop. 2. Career-Minded Representatives • Comprise one third of Representatives • Serve a large and loyal customer base who regularly purchase product • Earn significant income from their Avon business • Often work full-time as Representatives
1.

3. Part-Time Representatives
• • •

Comprise one third of Representatives Often seeking flexibility and supplementary income around holiday and family schedules Contribute to the continued success of our business model and the realization of their personal goals

The Avon Leadership Program is a multitiered compensation program that gives topselling Representatives, known as Leadership Representatives, an enhanced career path. The program allows Representatives to obtain earnings from commissions based on sales made by the Representatives that they have recruited and trained, as well as profits derived from their own sales of Avon's products. The program limits the number of levels on which commissions can be earned to three and continues to focus on individual product sales and service to customers by Leadership Representatives. The development of the Avon Leadership Program throughout the world is one component of thwir longterm growth strategy.

3.11 Design of Territorial Structure
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Avon Products, Inc. markets its products to women in well over 100 countries through over 5 million independent Avon Sales Representatives.

From research and development and manufacturing to sales management, marketing, customer service and their many other operations, our 42,000 Avon associates worldwide play an integral role in their success. They attract passionate and dedicated individuals from every market, and they seek to help them to reach their highest potential as part of their team. They recognize that every associate brings unique skills and experiences to their organization, and they seek to leverage these differences in the most effective ways possible. Just as they unite their associates through their similarities, they also recognize and appreciate their differences and seek to create an environment conducive to individual and collective excellence. They are committed to maintaining a work environment that affords all associates opportunities for development and advancement. Their vision is for all associates to feel comfortable enough to contribute their thoughts and ideas for the mutual benefit of all associates and the organization. They are also committed to maintaining a culture that supports associates as they balance their many and sometimes competing, professional and personal responsibilities. Because they seek to leverage the diversity of all of their associates, diversity and inclusion are fully embedded in their corporate culture. Andrea Jung, now in her ninth year as their chairman and CEO, is consistently recognized not only for the vision and

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perspective she brings to the company, but also as one of the foremost executives and one of the most powerful women in business. Her leadership and example are an inspiration to all Avon employees as they strive for own personal excellence.

3.12 Sales force management
It is utterly important to manage the sales force around which Avon’s entire business depends. Sales representatives are the heart and soul of Avon and thus it is necessary to make them understand their goals and targets, motivate them, review their performance-all after choosing the right person through recruitment facilities: • • • • Setting targets : Individuals and teams are specifically given sales goals and increasing the number of new accounts Measures : Sales managers measure performance standards of each sales representatives by looking at whether she could sell the given set of each product category Sales Reviews : Performance will be reviewed every twice a month by our external auditing firm and with the compliance of respective regional sales manager Recruitment: Their Best Customer Could Be Their Best Recruit! Or Career council or Job Advertisement

3.12.1 Motivation
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The heart of Avon’s entire business is the sales representatives. They look for customers, make the closing sale and put their hearts into the whole process. Thus it is absolutely important that these people who represent AVON around the globe be motivated to work and put their best and think out of the box. Here are some ways how Avon motivates their employees: 1. Representatives can earn income in two ways: by selling Avon products as a traditional Representative, or by selling and also recruiting others to do the same. 2. Avon's commitment to its employees is fourfold. They set themselves high standards in:  Compensation – Competitive programs that reward associates for individual performance and their contribution to business objectives.  Benefits – Flexible packages that let associates select coverage that meets their individual needs and those of their families.  Professional development – A wide range of on-the-job development programs to help associates reach their full potential.  Workplace environment – At the heart of Avon are management practices that further our values of respect for the individual. 3. Sales Representative Success Stories 4. Retirement Plan: Although Representatives are independent contractors, not employees of Avon Products, Inc., a few years ago they made the decision to provide Representatives with the opportunity to participate in a retirement savings plan, which is the first of its kind in the direct sales industry. Participation in the Plan is completely voluntary and is available to Representatives who are in good standing with Avon and meet certain other criteria. In developing and managing the Savings Plan, Avon entered into an arrangement with FN Benefits Service Corp., a subsidiary of First Niagara Financial Group. The Savings Plan is designed to provide a convenient method for Representatives to save for retirement and is intended to meet the Internal Revenue Code requirements as a tax-qualified, profit-sharing plan. 5. Micro Enterprise: Avon has been a driver in microenterprise for more than a century. Today, Avon Representatives collectively earn approximately $6 billion each year and serve 300 million women in more than 100 countries. For as little as $10 down, a new Representative receives information and materials to begin a successful business selling Avon’s products, including the first shipment of products on credit. Representatives do not pay Avon until they are paid by their customers. To this end, they entrust over $1 billion in products and credit to Representatives at any given time during the year. This process enables many women, who otherwise might not have access to credit, to pursue their personal financial goals. Their business model, built upon unwavering confidence in their Representatives, makes Avon a leader in the direct selling market. They strive to foster strong, trusting

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relationships with the Representatives to ensure that the business remains profitable and the customers remain satisfied.

4.1 SWOT analysis
 STRENGTHS  Design to meet the unique demand and culture of each geographic region  Strong financial position on the international market  Established customers and those in developing market offer the greatest potential for increasing their customer base.  Opportunities  Target key market such as Poland, Vietnam, Cambodia, Czech Republic and Hungary where there is high potential for growth in the near future  Other Domestic Distribution Channels  More Distribution Partnerships with companies like Mattel  Threats  Government implemented exchange control and fixed exchange rate  WEAKNESS  Poor marketing and advertising strategies  Compelling market problem is the erosion of their core customer

 Rapidly increasing interest rates  World Inflation is causing a great threat for operating in the worldwide market

4.2 Changing Marketing Strategy
As AVON has been dealing with a worldwide market segments they have to be dynamic and must have the ability to adapt and change their market strategies every now and then. Some of the strategies they are trying to undertake are: Change # 1:  Refocus product lines to relate more with the core businesses activities.

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 Constant Price Cuts to the minimum level.  “Leadership” bonuses for sales people based on the sales of people they recruit. Change #2: Catalogue with toll-free number, designed for median age 38, held income > $45,000, extensive advertising, and executive layoffs. Change #3:    Switched to distribution through retail stores, whereby their original strength was to avoid retail stores giving more emphasis on the direct sales Cut product line by 30% those who are generating a threatening amount of revenues. Creating both global brands and standardized brands. Marketing Strategy Marketing Strategies can be divided into two ways: 1. Domestic Marketing Strategy :      Consistency in Marketing Strategy Better Positioning Distinctive Product Line Better Sales Force Incentives Better Coordination

2. International Marketing Strategy :  Stick with selling to Retailers in different countries as like the environment. Such as China because it’s less risky.

Expect to sell smaller volumes to many customers due to Economics of this country Different Products to Appeal to this Market Develop more Partnerships with companies like Mattel

5.1 Corporate Social Responsibilities
Avon has been committed to advancing women since the company was founded in 1886, and philanthropy has always been a strong part of our heritage. In 1955 the company formalized philanthropic efforts with the creation of the Avon Foundation, which advances the mission to improve the lives of women and their families.

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The Avon Foundation’s first grant, more than half a century ago, was a single scholarship of $400. The Foundation’s main efforts are today focused on the critical issues of breast cancer and domestic violence, and Avon global philanthropy is advancing these causes in more than 50 countries. As committed global citizens, Avon and the Avon Foundation also support emergency and disaster relief, while a scholarship program for Avon associates and Sales Representatives maintains the tradition of supporting education.

5.1.1 Economic Empowerment

At Avon, people are proud of the longstanding commitment to helping women achieve financial independence. For 123 years, they have demonstrated their message of women’s empowerment at every level and in every market that Avon serves. Beginning with Mrs. P.F.E. Albee, who pioneered their now-famous direct-selling method in 1886, they have given tens of millions of Avon Independent Sales Representatives (Representatives) the opportunity to generate wealth, provide for their families and realize their personal dreams.

5.1.2 Avon’s walk for Breast Cancer

Over two days people will journey 39 miles helping to forever alter the lives of thousands affected by breast cancer worldwide. Together, they will unite with one purpose and one goal - to end this deadly disease. The money they raise will provide women and men the breast cancer screening, support and treatment they need regardless of their ability to pay, and so that leading-edge research teams across the country can be powered by the funds they need to fuel their quest for a cure - all because of women!

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5.1.3 Speak Out Against Domestic Violence and Women's Empowerment Fund

The Avon Foundation launched the Speak out against Domestic Violence program in 2004 to help end the cycle of domestic violence, and since that time the program has expanded globally, helping change the landscape of the domestic violence issue around the world. By 2009, Avon domestic violence and women's empowerment programs have launched in 45 countries worldwide. Through 2008, in the United States more than $11 million has been awarded to nearly 400 U.S. domestic violence organizations for awareness, education, direct services and prevention programs, especially to assist children affected by domestic violence. Domestic violence affects one in three women worldwide. Funds are raised through special events as well as the sale of fundraising products, such as a candle and bracelet, with all proceeds above cost of goods donated to the cause.

5.1.4 Emergency and Disaster Relief
The Avon Foundation and Avon Products, Inc. together respond to national and international emergencies, and since 2001 have committed $17.5 million for women and their families affected by events such as the attacks of September 11, 2001, the 2004 tsunami in Southeast Asia, Hurricanes Katrina and Rita in the United States and the 2008 Chinese earthquake. In addition, the Avon Yellow Ribbon Fund assists the families of military service personnel lost or wounded in Iraq and other conflicts.

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5.1.5 Hello Tomorrow Fund

Taking the Avon commitment to economic empowerment in a new direction, the Hello Tomorrow Fund was launched in early 2007 to provide cash awards to individuals committed to empowering women or girls. Originally created as a one-year program to mark International Women’s Day, the program in the United States was extended for a second year, and Hello Tomorrow Fund programs have also flourished in more than a dozen countries worldwide. At Avon, they believe that given the resources, women can impact their lives, families and communities in meaningful ways…women can change their world. It is in this spirit that we created the Hello Tomorrow Fund. From April 2007 through April 2009, the U.S. Hello Tomorrow Fund will award $5,000 every week to an individual who has submitted a compelling application to help realize a program, project or idea that empowers women and ultimately improves society. More than 8,000 U.S. individuals—women and men—have applied for the 104 weekly awards. Similar programs of varying award frequencies and amounts are empowering women worldwide as well. HELLO GREEN TOMMORROW: Avon Products, Inc. launched Hello Green Tomorrow to empower a global women’s environmental movement to nurture nature, leveraging our unique ability to educate, engage and mobilize worldwide through our women-to-women network of over 6 million Sales Representatives. Every dollar plants a tree. They started with a contribution of $1 million to plant 1 million trees in South America's Atlantic Rainforest. So far they are at 2 million trees and counting, which restores 5,000 acres. They need everyone’s help to plant millions more...for today and for the generations ahead…

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Conclusion
Every great company in this world puts their wholehearted effort into developing the eleven critical steps of their sales strategy because this is vital for the success of their business. Keeping all these in mind Avon has put as much details as they could into their sales strategy. Avon has specific goals for its specific sectors. For example its philanthropy goal is “Exceed $1 billion in funds distributed by 2012”. Such specific goals are measurable and quantifiable. In this case “$1 Billion” shows that this is measurable because if this amount is not achieved then Avon did not succeed in fulfilling its goals. Then again the time frame of 2012 is specified showing exactly how long the effort will be put into and whether if it’s fulfilled within this deadline. Avon has mainly targeted the women just like its tag line says. They have target young dynamic women who are beauty conscious and want to get the best out of everything. And who are curious enough to try the samples at home before buying it because they are not gullible. Avon’s competitors are listed in this report and we have also shown how these competitors are tackled with Avon’s point of differences and competitive advantages. Avon has great route to market. It uses online, department stores. Kiosk etc to make their products available to the customers. Not only this is they have a fantastic direct selling strategy which is number one in the world. Their supply chain is also recommendable. For some of their products they make it themselves and for others they use third party suppliers as explained in the report. Their sales process, sales department, territory are designed in such a way that easy for sales representatives to cover customers, to serve them the best way they can. Avon had been established in 1886 and today in the 21st century even only by putting its maximum effort at direct marketing it is ruling the world with its amazing products and its sales strategy was a pleasure to work to.

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