Avon Introduction

Brief History
Brief Company Overview
Organizational
Structure
Operations
Mission, Vision & Slogan
Existing
Why change?
Proposed

Internal Assessment

Financial Ratio Analysis

Net Sales by Product Category

Revenue by Product Segment

Revenue by Geographic Segment
Market Positioning Map
Map Locating the Firms
Strengths and Weakness
IFE Matrix

External Assessment

List of Competitors
Major Closest Competitors

SPACE Matrix
BCG Matrix

Competitors Analysis
Sales Pie Chart of
Competitors Competitors
Financial Analysis
Opportunities
and Threats
EFE
Matrix
Competitive Profile
Matrix (CPM) Porter's Five
Forces Model

Strategy
Analysis
SWOT
Matrix

Outline

The IE matrix
Grand Strategy Matrix
Decision Stage

By Product Division
By Geographic Division

QSPM
Possible Alternative Strategies

Balance Score Card

Conclusion
References
Q&A

Founded

In 1886
By David H. McConnell

Product Divisions

Beauty
Fashion
Home

Sales/Distribution

Direct Selling
Sales Leadership
Limited Retail Store Sales
E- Sales

First Offices
Global Divisions

Head Office at New York

Montreal, First Overseas Office
Japan, First Asian Office in 1969

North America
Latin America
Europe and West Asia
Asia Pacific

Introduction

David H. McConnell
Travelling Book Seller
California Perfume Company (CPC) in 1886
CPCs first office outside United State was opened in 1914 in
Montreal, Canada

Name Change and Advertising

The Companys name was change to Avon Products Inc. after the
British town Stratford-upon-Avon in 1938.
In 1946 the company become Public and started advertising
campaign such as Avon Calling

International Expansion
During 1950s Avon expanded overseas to countries such as Puerto
Rico, Cuba and Venezuela
In the 1970s U.S sales top $750 million and the first Avon Asian
business was opened in Japan

Brief History

 Avon is a leading global beauty company, with over $10

billion in annual revenue in 2008
World's largest direct seller
Operating in 143 countries worldwide through 6.4 million
independent Avon Sales Representatives
It is the largest micro lender to women
Avon is among the world top global brands
Increased Investments by $ 120 m in 2007 to develop a
new Sales Leadership
Changed marketing approach from a homey image and
started celebrity promotions

Brief Overview

 Avons largest manufacturing plants, Brazil, China and

Poland received the ISO14001 certifications in 2008
The Clean Industry Certificate to the manufacturing plant
in Mexico
During the same period Avons revenues increased 7.5
percent
Avon implemented reconstructing programs in 2009
There is heavy investment in online search engines and
internet carrier sites
Andrea Jung is the Chief Executive Office who is
leading the management team of thirteen

Brief Overview . . . . . . . Contd

CEO & Chairperson

Andrea Jung

SVP Latin
America

SVP North
America

President and
Chief Operating
Officer

SVP Retail

EVP Finance

SVP Asia
Pacific

SVP Europe and

East Asia

SVP Global
Marketing

VP Global
Marketing

SVP Global IT

SVP HR

SVP Corporate
Communication

Organizational Structure

Avon: The Company for Women

Avon Slogan (Actual)

Actual

Avon: The
Company for
Women

Avon Slogan

Proposed

Avon: The
Company for
Everyone

Actual
To be the company
that best understands
and satisfies the
product, service, and
self-fulfillment needs
of women globally

AVON Vision

Proposed

To be the leading beauty

and cosmetics company
that best understands and
satisfies the selffulfillment needs of our
customers globally.

Proposed Vision

Analysis

To be the leading beauty

and cosmetics company
that best understands and
satisfies the selffulfillment needs of our
customers globally.

Word Women is
replaced with
Customers

AVON Vision

To identify the industry

words beauty and
cosmetics are
included.

The Global Beauty Leader We will build a unique portfolio of Beauty and related brands,
striving to surpass our competitors in quality, innovation and value, and elevating our image
to become the Beauty company most women turn to worldwide.

The Womens Choice for Buying we will become the destination store for women,
offering the convenience of multiple brands and channels, and providing a personal high
touch shopping experience that helps create lifelong customer relationships.

The Premier Direct Seller We will expand our presence in direct selling and lead the
reinvention of the channel, offering an entrepreneurial opportunity that delivers superior
earnings, recognition, service and support, making it easy and rewarding to be affiliated with
Avon and elevating the image of our industry.

The Best Place to Work we will be known for our leadership edge, through our passion
for high standards, our respect for diversity and our commitment to create exceptional
opportunities for professional growth so that associates can fulfill their highest potential.

The Largest Womens Foundation we will be a committed global champion for the
health and well-being of women through philanthropic efforts that eliminate breast cancer
from the face of the earth, and that empower women to achieve economic independence.

The Most Admired Company We will deliver superior returns to our shareholders by
tirelessly pursuing new growth opportunities while continually improving our profitability, a
socially responsible, ethical company that is watched and emulated as a model of success.

AVON Mission (Actual)

Proposed Mission

Characteristics

Avon is committed to be the

leading global provider of
home, fashion and beauty
products that will enhance the
beauty and satisfaction of
our customers. We will utilize
latest technology and will
pursue new growth
opportunities that will bring
about wealth for all our
stakeholders. At Avon, we
firmly care for the people and
environment.

Broad in Scope
Less than 250 words
Identify the Utility of
Products
Social Responsibility
Includes Nine Components:
Customers, Product, Market,
Technology, Growth,
Philosophy, Self Concept,
Concern for public and
employees

AVON Mission (Proposed)

Financial
Ratio
Analysis

INTERNAL ASSESSMENT

Net Sales by
Product
Category

INTERNAL ASSESSMENT

Net Sales by Produc

Sales
Beauty
Fashion
Home
10%

18%
72%

INTERNAL ASSESSMENT

Revenue by
Product
Segments
($ million)

INTERNAL ASSESSMENT

Growth
Graph
By
Product
Division

INTERNAL ASSESSMENT

Revenue by
Geographic
Segments

INTERNAL ASSESSMENT

Sales

R
e
v
e
n
u
e

G
e
o
g
r
Latin America
a
North America
p
h
EU Africa & East b i
Asia
y c
Asia Pacific &
China

INTERNAL ASSESSMENT

S
e
g
m
e
n
t
s

Market
Positioning
Map

INTERNAL ASSESSMENT

Map
locating the
firms
Operations

INTERNAL ASSESSMENT

Strengths

Weaknesses

1.
2.

1.

3.

4.
5.
6.
7.

8.

Avon is a Global Market Leader

Committed and dedicated workforce - 6.4 million
Avon representative in over 100 countries making
Avon the largest sales force
Worlds Largest Micro lender for women
-extending some $1 billion in product and
credit each year to help women start their own
entrepreneurial businesses
Channel of distribution worlds largest direct
seller
Manufacturing operations match ISO 14001
standards
Avon owns its major manufacturing and distribution
centers
Increased in revenue in most geographic area. Due
to increase in internet presence. (Revenues
increased 7.5% from year 2007 to 2008)
Avon is one of the worlds top global brands.
Avon has major brand names such as Anew, skinso-soft, Avon Color etc. with 90% recognition
worldwide.

2.
3.

4.
5.
6.
7.

Decrease in North American Sales

Revenue by 129.4 million
Weak Brand Image
High advertising costs Companies
advertising spending went from
$136millions in 2005 to $249 million
in 2006 to $368 million in 2007 and
14%higher in 2008
Poor brand loyalty
Does not target urban trendsetters
Beauty Sales in the first quarter 2009
were 12% lower compared to sales
revenue in previous year 2008
Avon lagged behind seven of their
cosmetic companies in customer
loyalty

INTERNAL ASSESSMENT

9.

First cosmetic to permanently end to animal testing

Internal
Factor
Evaluation
Matrix
(IFE)

INTERNAL ASSESSMENT

List of
Competitors

1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.

Procter & Gamble

LOreal S.A.
Unilever PLC
Johnson & Johnson
Kimberly-Clark Corporation
Colgate-Palmolive Company
Kao Corporation
Estee Lauder Companies In
Mary Kay
Revlon
The Body Shop

EXTERNAL ASSESSMENT

Major
Competitors

EXTERNAL ASSESSMENT

Revlon

Mary Kay

Revlon was founded in 1932,

by Charles Revson
Revlon Sales to Wal-Mart
accounts for 23% of the
company's total sales
The company earned $1.3
billion in sales and $950K in
net income in 2009
Revlon attributes the loss to
the weak global economy and
Sales fell by 3.8%
Revlon is the second largest
color cosmetics company in
the United States

In 1963 Mary Kay Cosmetics was

founded in Dallas, Texas
In 2009 sales of Mary Kay products
reached $2.6 billion
There are more than 37,000 women
across the world who has become
Independent Sales Directors
Mary Kay products are expensive
versus Avon
Mary Kay seems to be targeting older
women
90% of the companys revenue is now
generated through online orders
It entered in Pakistan in 1984 while in
India in 2007

EXTERNAL ASSESSMENT

AVONs
Comparison with
Closest Competitors

Avon is seven and half times larger

than Mary Kay and approximately
eight times larger than Revlon
Its Competitors distribute their
products to resellers but Avon sells
its products solely through its directselling channel
Avon brand products are now
recognized all over the world due to
the success of their international
campaign
Avon also has a Representative
development program that focuses
on the professional training of
Representatives

EXTERNAL ASSESSMENT

Pie Chart of Revenues 2008

EXTERNAL ASSESSMENT

Competitors
Financial Strength
2008

EXTERNAL ASSESSMENT

Opportunities

Threats

1.

1.

2.
3.
4.

5.
6.

7.

8.

9.

A growing trend in the cosmetics industry is

the introduction of green products. More
than sixteen percent of beauty products
launched in 2008 were certified organic,
ethical, or all natural.
Eye makeup market
The cosmetics industry tends to be
countercyclical..
Aveda cosmetics found that sixty eight
percent of consumers will remain loyal to a
company that has a social and
environmental commitment.
Urban Trendsetters markets
Geographic growth enormous growth
opportunities existed in countries
populations such as China, Indonesia and
India and other Asian countries.
Demand for cosmetic products normally
remains constant and unaffected by
economic distress.
The baby boomers are aging and they are
more conscious on their appearance, beauty
and also improving their looks.
Emphasize direct selling in emerging and
markets.
developing

2.
3.
4.

5.
6.
7.

8.
9.
10.

Competition such as Mary Kay and Revlon

and many others
Rejection of internet selling by sales
representative
Global economic climate stifled new product
development, innovation and sustainability
programs in 2009.
In terms of color cosmetics, environmental
International Inc. predicted that many of
these markets will see slowdown in volume
demand.
Inflation rate
Rising cost of commodities
Direct-selling becoming more popular
-Amid the financial crisis Aussie mums are
increasingly turning to direct selling and athome product parties to supplement their
household income.
They are a multilevel based company that
sells inferior quality with a higher price tag
than what it is worth.
Avon products outpaced by jazzier
products to women who favored more
exciting product lines
Decreased earning opportunities

EXTERNAL ASSESSMENT

External Factor
Evaluation Matrix
(EFE)

EXTERNAL ASSESSMENT

COMPETITI
VE PROFILE
MATRIX
CPM

EXTERNAL ASSESSMENT

Porters Five
Forces Model

EXTERNAL ASSESSMENT

I o ER
n r x &
t
t D
e
e
r
r
n
n
a
a
l
l

STRATEGY ANALYSIS

SWOT
Matrix

STRATEGY ANALYSIS

STRATEGY ANALYSIS

Y axis=FS (4) +ES (-3.2) = .08

X axis=CA (-2.8) +IS (3.6) =1.2

SPACE Matrix

STRATEGY ANALYSIS

BCG
Matrix

Beauty
AVON

Fashion

STRATEG

By
Product
Division

Hom
e

ANALYSIS

BCG
Matrix
By
Geographic
Division

STRATEGY ANALYSIS

Matrix
IE

STRATEGY ANALYSIS

Grand
Strategy
Matrix

STRATEGY ANALYSIS

Matrix Analysis
STRATEGY ANALYSIS

QSPM

Decision Stage

Balanced
Score Card

STRATEGY AN

Balanced
Score Card
Contd

STRATEGY ANALYSIS

Extension in the main products:

The sales of the personal care products are increasing in the main
sectors because of the following reasons.
To become attractive in working area.
Becoming more Health Conscious
Due to change in fashion & Trends.

Expand In Asia and Africa:

Asian countries like Pakistan, Bangladesh, Malaysia, Taiwan & Russia
are a huge market because of the two reasons:
1. Stability in economies
2. Population growth

Build a brand image in North American and Generation Y in

existing markets by promotions and innovation of new product
which are tailored to their specific needs:
The Generation Y is the second largest population segment which is not
focused by Avon and due to the lack of a proportion Avon has not a
image
good in North America. But Avon has a competitive advantage to expand in
these markets.

Possible Alternative Strategies

Expand the Market to South Asia, Central Asia and Africa

Acquire the small competitors to gain more Advantage
Invest more in R & D to develop more Green products
Invest in departmental and online selling
Expand the product line and also focus on men and
children
Repositioning the brand image through attractive
packaging, new brand logo and distinguishing its
products
Enhance Brand Loyalty

Decision

 David, Fred, R Strategic Management Concepts and Cases 10th and 13th
Edition. Prentice Hall International 2009.
Avon Products Inc. Retrieved May 5, 2012 www.avoncompany.com
Avon USA. Retrieved May 5, 2012 www.avon.com
Avon Products UK. Retrieved May 5, 2012
http://www.avon.uk.com/PRSuite/home_page.page
Avon Products Retrieved May 5, 2012
http://en.wikipedia.org/wiki/Avon_Products
Retrieved May 5, 2012 www.wikinvest.com
Avon Calling for Help Business Month April, 2010.
Avon Calls At 50 Times Earnings, Business Month November, 2006 -2009.
Avon Products, Inc., Annual Report, New York, N.Y., 2010
Avon Products, Inc., Annual Report, New York, N.Y., 2009
How Avon Rings Their Chimes, Sales and Marketing Management, November,
2009
Avon Products, Inc.: DEVELOPING A GLOBAL PERSPECTIVE
Retrieved May 5, 2012 www.yahoo.com/images
Retrieved May 5, 2012 http://www.google.com.pk/imghp?hl=en&tab=wi

References