RUNNING HEAD: Avon Products Inc. Case Analysis
Taking Sides Avon Case Analysis
MGT/578 - Strategy Formulation and Implementation
December 18, 2006
In the spring of 2000, Andrea Jung, president and CEO since November 1999 at Avon Products, Inc., faced the strategic decision of developing a growth strategy for a 115-year-old company (Pearce & Robinson, 2004). Not only was Avon experiencing a shrinking growth rate, but its earnings over the past few years had only risen in the low-single digits. Jung realized that not only had stagnant sales contributed to this but other factors as well to include ...view middle of the document...
Avon spent $30 million to re-launch Avon.com, in order to enable consumers to buy products from sales representatives online or directly through the company. The company was intending to allow each sales representative to customize his or her own website, which also links to the company’s home page.
Another trend in online beauty retailing was the diminishing distinction between prestige and mass market brands. The most successful and visited personal care websites were those that existed for a longer time and had a high level of advertising. Avon’s Websites strategy was to feature not only cosmetics but also health and beauty products as consumers visit these sites more than cosmetic-only websites.
Avon came out the gate with a great sense of energy and urgency by implementing new products beyond cosmetics like the new line of spa services and other non-personal care products. Avon will continue to lead the cosmetic industry with product lines that best fit Avon’s brand image.
Avon Products Inc. is the world’s largest direct seller of beauty and related personal care products, sold to women in 127 countries via three million independent sales representatives who generated approximately $5.1 billion in annual revenues (Pearce & Robinson, 2005). Andrea Jung’s grand strategy is properly focused and directed to increasing sales and revenue for Avon Products Inc. Despite earnings on the rise and the growth rate had shrunk, Jung’s is directed by providing forecast sales and long-term goals, such as the potential growth of each product Avon produces. Jung has covered all product bases used in everyday households from skin care, makeup/color cosmetics, hair care, personal hygiene, perfume/fragrances, spa services, and other non-personal care products. When Jung considered the different future sales, competitors like Mary Kay Inc., L’Oreal, and other retail competitors.
Expected Future Sales Growth 1998-2005:
Jung has also covered the different target markets from age groups, sex, and ethnic origin in order to go after the market that will cause the most impact to Avon and increase sales.
Customer in the Personal Care Industry Segmented by Age:
Overall growth of 2.8 percent from 1995 through 1999 and the personal care products market was expected to increase steadily in the future reaching $197.97 in 2003 (Pearce & Robinson, 2005). A key success factor used by Avon was using strong brand loyalty and strong brand image in order to make viable product claims to boost profits (Pearce & Robinson, 2005). Andrea Jung has ensured that the different areas of being able to sell the product through different selling avenues by direct, retail, and online selling. Also, ensuring that the domestic and international markets are penetrated which will increase sales.
Jung should follow the advice of the outside consultants using a three staged approach of expansion into the retail markets. Avon is...