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Presented to:

5
Agenda of the Presentation

1. Introduction and History


2. Mission and Vision Statements

3. AVON Products and Brands

4. SWOT Analysis

5. Marketing Objectives

6. Target Market, market Demand


Marketing Mix
7. Financial Analysis And Ratio Analysis

8. Competitor Analysis

9. The Changing Marketing Strategies

10. Takeaways (Conclusion)


Introduction and
History
Brief Overview
 More beauty products carry the Avon
brand name than any other in the world.
 Sells more bottles of fragrance
 More women wear Avon nail enamel.
 600 million catalogues in 25 languages
offering a range of 7,500 products.
 6 million women see an Avon catalogue
every 3 weeks.
 According to independent market
researchers, Avon sells more Products than
any other manufacturer in the UK.
Women’s Empowerment Bracelet
 I’m very excited to introduce the Women’s
Empowerment Bracelet,” said Reese Witherspoon,
Avon’s Global Ambassador. “Wearing this bracelet is
a way to support efforts to save and improve
women’s lives worldwide;
 This bracelet is a symbol of hope and unity

 The bracelet initiative was created to raise


awareness about the need to speak out against the
violence that affects women around the globe.
THE EARLY YEARS
 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.
Introduction and History

 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


 The first product produced was called the Little
Dot Perfume Set and included five fragrances:
Violet, White Rose, Heliotrope, Lily-of-the-Valley,
and Hyacinth

 In October 1939, the name was changed to


Avon Products
 Stock Symbol: AVP
 CEO: Andrea Jung
 Total Directors: 10    Women
Directors:  5     Percentage
Women Directors:  50%
 Employees: 42,000
 Type: Public
 listed on the New York Stock
Exchange in 1964.
 Headquarters: 1345 Avenue of the
Americans
New York, NY 10105
LUCIEN ALZIARI
ANDREA JUNG CHARLES CRAMB SENIOR VICE PRESIDENT
VICE CHAIRMAN, HUMAN RESOURCES AND
CHAIRMAN AND CHIEF
CHIEF FINANCE & CORPORATE
EXECUTIVE OFFICER
AVON PRODUCTS, INC. STRATEGY OFFICER, RESPONSIBILITY,
AVON PRODUCTS, INC. AVON PRODUCTS, INC.

GERALYN R. BREIG JERI B. FINARD BENNETT R. GALLINA


SENIOR VICE SENIOR VICE PRESIDENT,
SENIOR VICE PRESIDENT &
PRESIDENT, GLOBAL CHINA, WESTERN EUROPE,
PRESIDENT, NORTH AMERICA
AVON PRODUCTS, INC. BRAND PRESIDENT THE MIDDLE EAST AND
AVON PRODUCTS, INC. AFRICA, AVON PRODUCTS, INC.
CHARLES M. HERINGTON
NANCY GLASER DONAGH HERLIHY
EXECUTIVE VICE
SENIOR VICE SENIOR VICE PRESIDENT,
PRESIDENT, LATIN AMERICA
PRESIDENT, GLOBAL CHIEF INFORMATION
& CENTRAL AND EASTERN
COMMUNICATIONS, OFFICER,
EUROPE,
AVON PRODUCT, INC. AVON PRODUCTS, INC.
AVON PRODUCTS, INC.

JOHN HIGSON Susan J. Kropf is


JOHN F. OWEN
SENIOR VICE PRESIDENT, president and chief
SENIOR VICE
GLOBAL DIRECT SELLING PRESIDENT, GLOBAL operating officer, Avon
& BUSINESS INNOVATION, SUPPLY CHAIN Products Inc.
AVON PRODUCT, INC. AVON PRODUCTS, INC.
 Employee growth: 4.2%
 Website:
http://www.avoncompany.com
 Competitors:

Revlon
L'Oreal
Mary Kay
A PERIOD OF GROWTH
 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.
 productlines include lipsticks, foundations,
bath and skin lotions, anti-aging cream,
perfumes, as well as jewelry and clothing

 Targeted growing markets (China and


Russia)
 Internationally, the company’s product line was
marketed primarily at moderate price points. The
marketing strategy emphasized department store
quality at discount store prices.
 Avon was the world’s largest manufacturer and
distributor of fashion jewelry, and marketed an
extensive line of gifts and collectibles. A separate
division, Giorgio Beverly Hills, manufactured and
sold prestige fragrances.

 These brand name products were sold through


major retail department stores, in boutiques, by
mail order catalog and by other means.
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 well-being of society and the
environment in which its functions; and
 7. To maintain and cherish the friendly spirit of Avon.
INTERNATIONAL MARKETING AND EXPANSION
 Avon divided the world into four geographical divisions: (1) The
United States, (2) Europe, (3) The Pacific, and (4) The Americas. In
most cases, the primary operating arrangement in each of these
divisions was direct ownership by Avon of the foreign country
subsidiary. Joint ventures with foreign firms were used when the
culture and the ways of doing business were significantly unfamiliar
to Avon management.
 By 1991, Avon management felt that it was time to re-evaluate and
map out the long-term future of the firm’s beauty businesses on a
global level. Senior management knew that the traditional Avon
system of door-to-door house calls worked “wonderfully” in
developing nations. “We entered new markets, we added new
products, and we saw developing nations grow to 27 percent of our
sales volume,” noted Chairman Preston.
 From a global perspective, three avenues of growth were identified
by Avon management: (1) geographic growth, (2) leveraging
distribution channels in emerging and developing markets, and (3)
marketing in developed industrial areas.
MISSION AND VISION
STATEMENTS
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.”
VISION STATEMENT:
“To be the company that
best understands and
satisfies the product,
service and self-fulfillment
needs of women—
globally”
AVON Products and Brands
PRODUCTS:
 Product may refer to a
single item or unit produced
by labor or effort
 Anything that can offer to a
market for attention,
acquisition
BRANDS:

 A brand is a collection of experiences and


associations connected with a service, a person or
any other entity
 A name, sign or symbol used to identify items or
services of the sellers and to differentiate them
from goods of competitors.
AVON’S PRODUCTS

 Avon's product lines include:


lipsticks, foundations, creams,
perfumes, as well as jewelry and
clothing
 Avon’s products fall into three main
categories:
 Beauty
 Fashion
 Home products
BEAUTY PRODUCTS
 Avon company earns 70% revenue from
beauty products that are offered in markets
and are very famous all over the world
includes:
 Cosmetics

 Fragrance

 Skincare
Cosmetics products
 Cosmetics products are lip gloss, lip liner, lip
conditioner, lipstick, foundation, face powder,
blusher, cleanser, toner, moisturizer, eye liner,
eye shadow, mascara, shampoo, conditioner,
styling cream, nail polish, cold cream
Avon men & women fragrances
 Avon men fragrances are Avon untamed,
black leather,black suede,driven black
 Avon women fragrances are blue
rush,candid,far away, sweet honesty,
perceive,bond girl
Avon skin care
Avon skin care products are
 facial cleanser

 Moisturizer

 Fairness cream

 Fairness lotion
Fashion products:

Avon company earns 19% revenue from fashion


products that includes:
 Jewelry

 Watches

 Accessories

 Toys
Home products:
AVP earns 11% revenue from home products
that are offered in market includes:
 Gifts

 Other home decorative products


AVON’S BRANDS

Brand diversifications are:


 Avon Color
 Anew
 Skin-So-Soft (SSS)
 Avon Naturals
 "mark." (Targeted to younger,

college-aged women)
 "M" (an Avon catalogue for men)
 These brands have helped the
company reach out into markets
it has not serviced.
AVON’S BRANDS
 Mark proved to be successful in
reaching a new generation of recruits,
primarily young women ages 18-25,
with a monthly “magalog" featuring
award-winning products.
SWOT Analysis and
Internal & External
Environment
SWOT Analysis
 Strength
 Weakness

 Opportunities

 Threats
Strengths
Strengt
h

 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.
Weakness
 Compelling market problem is the erosion of
their core customer
 Poor marketing and advertising strategies
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
 High interest rate
Marketing
Objective
Marketing Objective
In an all out attempt to implement its plans for
growth, profit and customer satisfaction and
customer retention.
Avon’s marketing plans are:
Marketing Objective
 There is a necessity for broader access to its
products, especially in the United States. Avon
considers opening retail stores or
 establish a direct mail catalouge where
consumer can place orders directly with the
company.
Marketing Objective
 Reduce freight and material costs resulting
from foreign exchange problem.
 Opening more manufacturing plants outside
the US in order to take advantage of lower
overhead costs and
 Exchange rate that are more favorable in
other countries.
Marketing Objective
 Review sales initative plans and consider a
non-traditional way of rewarding sales force
 e.g. A mix of salary and commission base and
a benefit program is recommended.
 Establish new measures to advertise and
promote sale.
Target Market &
market Demand
STP
Segmentation
New generation of young women between 16-24
years.
Target Market
17 million young women in US with aggregate
spending capacity of $ 24 billion on cosmetics.

Positioning
Celebrates young women making
their Mark in World. Fun, fresh,
modern and affordable price
Target Market & market Demand
 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

 Avon also looks at extending market growth to


include countries like
 Poland

 Vietnam

 Cambodia
Product
 Avon will reduce product by 30% by reviewing and
eliminate poor performing products and combining
near duplicate products.
 Lunched new brand extension of the Skin-So-Soft
product
 Avon new products is directed towards teenage
college students and younger women
Pricing
Price
 Avon market most of its product at moderate
price in relation to the industry.
 Discount and price reduction will be offered
periodically.
 New brand extension product will be priced
at approximately the same price as the
original brand.
Place

 Direct selling channel by US active SRs as well


as separate Mark sales force
 No credit to Mark sales reps. Encourage to
solicit advance from friends, place their order
via internet using their personal credit card.
Promotion
 On-line sales training program to Avon sales
representatives.
 Distribution of 16 million “magalogs” in both
English & Spanish every 6-8 weeks to
prospective Mark customer
 Hired ad agency to launch through TV & print ad
with slogan “Meet Mark”
 Door-to-Door sales method, Avon the world's
number one direct seller.
Financial Statements And Ratios
Analysis
Income Statement
Income Statement

Income Data 2008 2007 2006

Total revenue $10,690.1 $9,938.7 $8,763.9

Operating profit 1,339.3 872.7 761.4

Net income 875.3 530.7 477.6

Diluted earning $ 2.04 $ 1.21 $ 1.06


per share

Cash dividend per $ 0.80 $ 0.74 $ 0.70


share
Balance sheet
Balance sheet
2008 2007 2006

Total assets $ 6,074.0 $5,716.2 $5,238.2

Debt maturing 1,031.4 929.5 615.6


within 1 year

Long term debt 1,456.2 1,167.9 1,170.7

Total debt 2,487.6 2,097.4 1,786.3

Shareholder’s 674.9 711.6 790.4


equity
Cash Flow:

Income Data 2008 2007 2006

Net cash provided by $ 748.1 $ 589.8 $ 796.1


operating activities

Net cash used by investing (403.4) (287.2) (207.9)


Activities

Net cash used by financing (141.5) (597.1) (490.4)


activities

Effect of exchange rate (61.9) 59.0 42.4


changes on cash and
equivalents
COMPETITOR ANALYSIS
COMPETITOR ANALYSIS

AVP REV INDUSTRY

Market Cap: 6.85B 131.01M 32.20M

Employees: 42,000 5,600 1640

Rev. Growth -8.70% -10.50% 8.90%

Revenue 10.69B 1.35B 121.46M

Gross Margin 64.80% 63.55% 56.62%


COMPETITOR ANALYSIS
AVP REV INDUSTRY

EBIT 1.59B 172.70M 11.45M

Operating Margins 13.10% 10.89% 8.23%

Net Income 875.30M 13.10M N/A

EPS 2.038 1.128 0.15

PE 7.88 2.26 9.24


Ratio Analysis
 Profitability Ratio

 Liquidity Ratio

 Activity Ratio

 Debt Ratio
Profitability
Profitability

Gross Profit Margin 64.8%

Operating Margin 13.10%

Profit Margin 11.6%


Profitability
ROE from Total Operations 129.7%

Return on Assets 14.4%

Return on Invested Capital 38.1%


Liquidity Ratio

Current Ratio 1.2 :1

Quick Ratio 0.6 :1

Interest Coverage 13.3


Activity Ratio

Inventory turnover 3.7 times

Account receivable turnover 14.0 times

Total asset turnover 1.8 times

Return on Assets 14.4%

Days sales in Inventory 98 Days


Debt Ratio
Long-Term Debt to Total 0.71
Capital

Total Debt/ Equity 80:20

Debt Ratio 40%


Book Value per Share
$1.58

Price/Earnings 7.88
Changing Marketing Strategy
Changing Marketing
Strategy
 Change #1:
 Refocus product lines to core businesses
 Price Cuts
 “Leadership” bonuses for salespeople based
on sales of people they recruit
 Change #2:
 Avon Select
 Catalogue with toll-free number, designed

for median age 38, held income > $45,000,


extensive advertising, *less commissions
and incentives, and executive layoffs
Changing Marketing Strategy
 Change #3:
 In Canada, introduced magazine
“Confidante”, and new interactive
kiosks
 Change #4:

 Switched to distribution through retail


stores, *original strength was to avoid
retail stores
 Cut product line by 30%
 Created global brands and standardized
Marketing

Strategy
TWO Type of Strategies

 Domestic Marketing Strategy

 International Marketing
Strategy
Domestic Marketing
Strategy
 Recommendations:
 Consistency in Marketing Strategy
 Better Positioning
 Distinctive Product Line
 Better Sales Force Incentives
 Better Coordination of Distribution
Channels to Minimize Conflict
International Marketing Strategy
 Recommendations:
 Stick with selling to Retailers in China  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
Takeaways
(Conclusion)
 Find a strategy and stick with it
Important to position a company (re: a
target market) and have a focused
strategy that flows from positioning
 Always keep in mind the broader
environment when formulating Marketing
Strategy (anticipate changes)
 Capitalize on opportunities in developing
markets
May be a better fit with a company’s
strengths
 Keep in mind Sales force Availability
 Economic, Political, and Cultural factors
ANY
QUESTION?

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