Janela Clavecillas

Mart Deraja
Case- Avon
Strategic Management
2:00pm- 5:00 pm

1. EXECUTIVE SUMMARY
While working as a traveling book salesman David H. McConell
discovered that women were much more interested in the free perfume
samples he offered than the books he sought to sell to them. This prompted
him to create The California Perfume Company in 1886, later to be renamed
as AVON PRODUCTS, INC. which is one of the worlds largest direct selling
company based in the United States. Avons main focus is on cosmetics but it
also has products which includes skin care, fragrance, personal care, hair
care, jewelries, home products, beauty must haves and accessories for
women. Avons vision is to be the company that best understands and
satisfies the product, service and self-fulfillment needs of women globally.
Avons mission statement has a six point list of aspiration that the company
strives to achieve: 1. Leader in global beauty 2. Womens choice for
buying 3. Premier direct selling company 4. Most-admired company 5.
Best place to work 6. To have the largest foundation dedicated to
womens causes
New Avon LLC is the leading social selling beauty company in North
America. The company generated over $1 billion in revenues during 2015,
and has nearly 400,000 independent sales Representatives in the United
States, Puerto Rico and Canada. New Avons product portfolio includes
award-winning skincare, color cosmetics, fragrance and personal care
products, featuring iconic brands such as Anew, Avon Color, Mark, and Skin
So Soft, as well as fashion and accessories. Avon has a 130 year history of
empowering women through economic opportunity, and the company also
proudly supports the Avon Foundation for Women in its efforts to end breast
cancer and domestic violence. This is the company that puts mascara
on lashes and food on tables. That fights wrinkles with one hand and breast
cancer with the other. That knows the value of a perfect lip, but still opens its
mouth and speaks out against domestic violence and for women's financial
independence. This is the company that not only brings beauty to doors, but
also opens them. This is Avon. The company that for 130 years has stood for
beauty, innovation, optimism and, above all, for women.
Everyday, Avon brings beauty to the lives of women. At Avon, beauty
means more than finding the right lipstick shade for a customer. It means
providing an earnings opportunity so a woman can support her family; and
championing causes that matter to many women eradicating breast cancer
and ending domestic violence.

2. SITUATION ANALYSIS
CURRENT COMPANY STATUS
Worlds largest direct seller
Markets beauty, fashion and home products in more than 100
countries
Approximately has 6.4 million active independent sales
representatives
Avons share price had dropped by more than 50% between
2009-2011
Facing bribery charges in some of its overseas operations
SEC investigation
INDUSTRY ANALYSIS
2008 financial crisis greatly affected the global economy
Highly competitive because of the high number of Cosmetics
companies and products worldwide
Cultural impacts are highly considered in the industry as it is a
Global company that needs to adapt accordingly
Marketing , Research and Development are key factors of
success in the industry
COMPETITOR ANALYSIS
 Companies based in direct selling strategies (varies from country
to country)
Internet based companies
Mass market channels of retail
Mary Kay
Created on Sept. 13, 1963 by Mary Kay Ash in Dallas, Texas
Motto: One Woman Can
Goal: Make Everyone Important
Vision: Empower Women
Based on a Direct Selling Model
1969: awarded Pink Cadillacs to Top Five Independent Sales
Director
Generates more than 2.5 billion in sales
Sales force of more than 2 million people
6th Top Selliing Direct Firm worldwide
Almost 5% market share of the 53.7 billion dollar beauty
and skin care industry

Arbonne
Founded in 1975 by Petter Morck in Switzerland
Sells products through independent consultants
Products are available in the USA, Canada, Australia, and
the UK
Privately owned company
Its parent company, Natural Product Group, filed
bankruptcy in January 2010
LOreal
Founded in 1909 by Eugene Schueller in Paris, France
Leader in the beauty and cosmetics industry
Started by selling hair dyes to hairdressers
 Currently holds 39% of the total market share in the beauty
industry
Operates in more than 130 countries and produces more
than 35 brands of products in four segments
Earned 22.5 Billion in revenue
Sells products through the traditional retail vendors
Procter & Gamble Co.
Founded in 1837 by William Procter and James Gamble in
Cincinnati, United States
Operates in more than 180 countries and serves its product
to about 4.6 billion people
In 2012, its gross revenue totaled to $83 billion, with nearly
$13 billion in net income
Beauty segment generated $20.3 billion in revenue in
2012, placing it 2nd to Loreal with a market share of 37.8
%

SWOT
STRENGTH
Mission & Vision
ERP implementation
Strategic Sourcing Initiatives
WEAKNESSES
Currency fluctuation
Policies of foreign governments
SEC regulations

OPPORTUNITIES
Mergers
 Identifying unique needs for the firms products across cultures,
countries, and regions that could create more value for
customers
THREATS
Local Direct selling companies
Discontent of direct sales representatives
Products are easily imitable
Online retailers

3. ASSUMPTIONS & LIMITATIONS

STATEMENT OF OBJECTIVES
Create strategies that could be used by Avon Products Inc. to
increase profit and market share
Create cost effective and realistic strategies
Meet the needs of women with different cultures around the
world
SCOPE
The scope of this case is not limited to the users of Avon Products
Inc. but also to all its potential clients governed by the different
law and culture.
LIMITATION
No actual representation or survey conducted in this case and
was only based on theories. Analysis , Decision and Strategies
are based on theories, online articles and personal preferences.
BASIS OF ASSUMPTIONS
Assumptions are based on the first hand experiences of the
companys direct selling representatives worldwide and a handful
of convenience questioning
Theories, books and online articles related to the case

4. PROBLEM ANALYSIS & PROBLEM STATEMENT

 What key strategies should Avon Products Inc. adopt to maximize their
competitive advantage and attain sustainable growth vs their rivals in
their industry?

5. ANALYSIS OF DECISION ALTERNATIVES

Acquire the small local competitors to gain local advantage
Focus on how to sell Avon products in the 20th century

FEASIBILITY OF DECISION
Due to high industry competition, Avon needs to step up on how
to sell their products globally, they need to be technologically
competitive when it comes to selling their products by putting
emphasis on its capability to sell its products online, as most of
its market are now engaged in online activities.
IMPACT TO COST OF REVENUE
Avons future success depends on its ability to meet demand in
high-priority markets, such as Brazil and Russia, where profits
started declining in 2010 and 2006. In order to meet those
demands, the opportunity of selling its products online is one of
the most cost effective strategy that could increase the
companies revenue.
LONG TERM BENEFITS
Avon must modernize its direct selling model to enhance its
ability to create more value for customers not only for today ,
but for tomorrow as well.

6. EVALUATION OF CHOSEN DECISION

Focus on how to sell Avon products in the 20th century

As of June 30, 2016 the world has a total population of 7,340,159,492,

and 3,675,824,813 or 50.1% of that population are internet users. Given the
huge number of potential customers that could be reached online, it is highly
advisable to focus its strategy on how to sell those products online. Online
customer service representatives can be available for 24 hours / 7 days a
week to clients worldwide to cater to any questions and needs.

7. IMPLEMENTATION PLAN & FUTURE RISK ANALYSIS

TIMELINE
1. Identifying the goal of the firm
2. Profound understanding of the competitive environment of AVON
worldwide
3. Identification of strategies and resources
4. Effective implementation of the strategy
Predicted timeline could take a year for the implementation of
the said strategies.
ACTION PLAN & ACTION OWNER
Online penetration of Avon can be aided by integrated social
media campaigns, Blogger call outs that has a big online
following.
Online customer service representatives can be available for 24
hours / 7 days a week to
clients worldwide to cater to any questions and needs.
Key persons involved in the process will be the management of
Avon Products Inc..
FUTURE RISK
Changing needs and wants
Rise of competition
Competition has a new innovated product or service

8. CONCLUSION / RECOMMENDATION
It is highly recommended for Avon to use above suggested strategy
while integrating the firms vision and mission for it will greatly increase
the chances of success of the company.
 The strong online presence of Avon will create more brand awareness
to territories that have not been reached thus increasing its potential
customers.

9. APPENDIX & REFERENCES

http://www.slideshare.net/ManasaSai2/detailed-analysis-on-
strategic-failures-of-avon-products
http://www.slideshare.net/mandarghanekar/avon-case-study-11363889
http://www.internetworldstats.com/stats.htm
http://www.slideshare.net/mrrizwanqamar/avon-products-inc-17086043