AVON

the company for women

Case Analysis
MGT439
04/12/2011

Kelly Massey

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 Avon’s Vision
To be the company that best understands and satisfies the product, service and self-fulfillment needs of
women—globally.

Avon’s Mission
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 world’s most trusted beauty
company.

The Women’s Choice for Buying

We will become the shopping destination for women, providing a personal, high-touch experience that
helps create lifelong customer relationships.

The Premier Direct Seller

We will expand our presence in direct selling, empowering women to achieve economic independence
by offering them a superior earnings opportunity as well as recognition, service and support, making it
easy and rewarding to be affiliated with Avon.

The Best Place to Work

We will be known for our leadership edge, including 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 Women’s Foundation

We will be a committed global champion for the health and well-being of women through philanthropic
efforts, with a special focus on breast cancer, domestic violence and women’s empowerment.

The Most Admired Company

We will deliver superior returns to our shareholders by tirelessly pursuing new growth opportunities
while maintaining our commitment to be a socially responsible, ethical company that is watched and
emulated as a model of success.

The vision and mission statements do answer the questions, “What do we want to become?” and “What
is our business?” But, they do not paint a clear picture of what their products are.

Proposed Vision
To be the leading company in fulfilling customers wants and needs through beauty, fashion and home
products.

Avon has become a company that serves not only women, but men and children, too. Therefore the
proposed vision statement speaks to all customers.

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 Proposed Mission
The Global Beauty Leader
We will build a unique portfolio of beauty home and fashion products, striving to surpass our
competitors in quality, innovation, and value, and elevating our image to become the world’s most
trusted beauty company.

The Women’s Choice for Buying

We will become the shopping destination for women, providing a personal, high-touch experience that
helps create lifelong customer relationships.

The Premier Direct Seller

We will expand our presence in direct selling, empowering women to achieve economic independence
by offering them a superior earnings opportunity as well as recognition, service and support, making it
easy and rewarding to be affiliated with Avon.
The Best Place to Work

We will be known for our leadership edge, including 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 Women’s Foundation

We will be a committed global champion for the health and well-being of women through philanthropic
efforts, with a special focus on breast cancer, domestic violence and women’s empowerment.

The Most Admired Company

We will deliver superior returns to our shareholders by tirelessly pursuing new growth opportunities
while maintaining our commitment to be a socially responsible, ethical company that is watched and
emulated as a model of success.

The mission statement answered all nine essential components of a mission statement except for clearly
stating their products. In the proposed mission statement, the Global Beauty Leader section clearly states
the company’s products.

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 Financial Position

2006 2007 2008

Current Ratio 0.75 1.15 1.22

Quick Ratio 1.10 0.93 0.88
Operating Profit
0.09 0.09 1.25
Margin
Net Profit Margin 0.05 0.05 0.08
Debt-to-Equity 5.62% 7.03% 7.99%
ROE 0.60 0.75 1.29
ROA 0.09 0.09 0.14
EPS 2.60 2.87 4.72

Avon’s Current ratio shows an increase from 2006 to 2008. This shows that Avon has the ability to meet
maturing short –term obligations. The profit ratios show an incline from 2006 – 2008. The Total Asset
Turnover ratio also shows a steady increase. Debt/equity ratio has increased in 2008 compared to 2006
and 2007. The above ratios point to the fact that Avon is in good financial standing.

Market Position

2008 Revenue Comparison

Avon - $10.37
Mary Kay - $2.40
Revlon - $1.35

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 Internal Factor Evaluation Matrix

Key Internal Factors Weight Rating Weighted

Score
Strengths
Global Market Leader 0.09 4 0.36
Committed and dedicated workforce - 0.08 3 0.24
5.4 million Avon representatives in over
100 countries
Revenue increased 7.5% from 2007 to 0.06 4 0.24
2008
World’s largest direct seller 0.05 4 0.20
Excellent promotional strategies 0.08 4 0.32
ISO 140001 Certification 0.08 3 0.24
No animal testing 0.07 4 0.28
Award winning company world wide 0.05 3 .015
World’s top global brand 0.06 3 0.18
World’s largest micro lender to women 0.06 3 0.18
Weaknesses
Brand image 0.06 1 0.06
High advertising cost 0.05 2 0.10
Misleads representatives 0.03 2 0.06
Avon is referred to as a commodity 0.05 2 0.10
Avon lagged behind in customer loyalty 0.09 2 0.18
Revenues decreased in North America 0.04 2 0.08
by 129.4 million

Total 1.00 2.97

Market Position Map

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 Customer Service (High)

*Avon

*Revlon

*Mary Kay

Quality (Low)
Quality (High)

Customer Service (Low)

I used the Market Position map to show two important variables, customer service and quality of
products. The competitors Revlon and Mary Kay are well-established firms. Revlon was plotted with
higher quality products. Avon was plotted to show their lead in customer service. However, when
compared to cosmetics quality Revlon and Mary Kay are the leaders.

Avon Marketing Strategies

Currently Avon has started a new marketing strategy, to continue growing its universe of celebrity and
designer alliances. . They have gone from concentrating on the “suburban housewife” to “urban
trendsetters.” With this new strategy they have updated the “Avon Lady” by having Reese
Whitherspoon play her role. They used this strategy to show a more glamorous image of Avon. They
have also made a deal with Courtney Cox to be the new face of the brand’s new fragrance.

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 External Factor Evaluation

Critical Success Factors Weights Rating Weighted

Score
Key External Factors      
Opportunities
1. Organic (Green) Products 0.09 4 0.36

2. Eye makeup market 0.07 3 0.21

3. Increase Internet Presence 0.08 4 0.32

 4. Urban trendsetters market 0.09 4 0.36

 5. Cosmetic industry tends to countercyclical 0.07 3 0.21

6. Geographic growth 0.09 4 0.36
6. Demand for cosmetic products normally 0.05 3 0.15
remains constant and unaffected by economic
distress

Threats      
7.Competitors 0.08 2 0.16
8. Rejection of Internet Selling by sales rep. 0.07 3 0.21
9. Economic Downturn 0.09 2 0.18
10. Market Slowdown 0.08 3 0.24
11. Inflation Rate 0.07 3 0.21
12. Rising cost of commodities 0.07 2 0.14
Totals 1   3.14

Competitive
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 Profile Matrix

 
Avon Revlon Mary Kay

Critical Success Factors Weight Ratin Weighte Rating Weighte Ratin Weighted
g d Score d Score g Score
Price competitiveness 0.10 3 0.30 4 0.40 2 0.20
Global Expansion 0.09 3 0.27 4 0.36 2 0.18
Organizational Structure 0.07 2 0.14 4 0.28 3 0.21
Technology 0.10 4 0.40 2 0.20 3 0.30
Product Safety 0.10 4 0.40 3 0.30 2 0.20
Customer Loyalty 0.10 2 0.20 4 0.40 3 0.30
Market Share 0.07 2 0.14 4 0.28 3 0.21
Advertising 0.10 2 0.20 4 0.40 1 0.10
Product Quality 0.10 2 0.20 3 0.30 1 0.10
Product Image 0.08 3 0.24 4 0.32 2 0.16
Financial Position 0.09 4 0.36 3 0.27 2 0.18
Total 1.00 2.85 3.51 2.14

SWOT STRENGTHS WEAKNESSES

- Global market leader
- Largest sales force
-. World’s largest micro lender
to women
- World’s largest direct seller
- ISO 14001 certification for
Largest manufacturing plants.
- Avon owns its major
manufacturing and
Distribution centers.
- First cosmetic manufacturer
To end animal testing.
Opportunities SO Strategies
- Decrease in North American
Sales Revenue.
- Weak brand image
- High advertising/budget
costs
- 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.
WO Strategies

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- Organic (Green)
products
- Eye makeup market
- Urban trendsetters
market
- The cosmetic industry
Tends to countercyclical.
- Demand for cosmetic
products normally remains
constant and unaffected by
Economic distress.
THREATS
- Competitors such as Mary
Kay and Revlon
- Rejection of internet selling
by sales representatives
- Economic downturn
- Rising cost of commodities
- Increase sales by increasing
Internet presence.
- Maximize on revenues in the
makeup market through
advertising and the sales
Force.
- Manufacture and distribute
More products that are eco-
friendly.
ST Strategies
- Educate employees on the
benefits of increasing
Internet presence.
- Improve marketing strategies
to new and existing
customers by repositioning
the brand, coupons,
Billboards, new packaging.
- Increase awareness of
efforts to protect the
Environment.
- Increase market share by
positioning products to
Attract urban trendsetters.
WT Strategies
- Discount products that are
not earning substantial
revenue and then faze them
Off the market in a timely
manner.

Quantitative Strategic Planning Matrix

Weigh AS TAS AS TAS

Key External Factors t
Opportunities          
1. Organic (Green) products 0.16 1 0.16 4 0.64

2. Growth in eye makeup market 0.09 4 0.36 3 0.27

3. Urban trendsetters market 0.05 3 0.15 3 0.15

4. The cosmetic industry tends to countercyclical 0.20 3 0.60 3 0.60

5. Demand for cosmetic products normally remains 0.11 3 0.33 2 0.22

constant and unaffected by economic distress
Threats        

1. Competitors 0.20 3 0.30 3 0.60

2. Economic downturn 0.10 2 0.20 1 0.10

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3. Rising cost of commodities 0.09 ― ― ― ―

Subtotal 1 2.10 2.58

Recommendations for Avon

- Improve marketing strategies by:

- Product placement
- Sales Promotions
- Improve internet Preseence
- Bill boards

- To further develop the “green” product line by:

-Research
New Product Development

- To improve brand image and brand loyalty by:

-New Packaging
-New Labeling

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