Avon Company Product Analysis

Avon is a cosmetic company created to conduct business on enhancing women’s beauty. This brand is now a global leader with massive growth and high revenues. Being the world’s largest direct seller, Avon has captured a large market in more than hundred countries with millions of the sales representatives across the globe. The product line of Avon is quite large in spatial extent; it includes beauty products, fashion jewellery, clothing etc. This brand is giving the grounds for expectation and is achieving the solid status in the market.

Avon is transacting with many countries and selling their brands in the regions such as North America, Latin America, Europe and Asia Pacific (Avon Company, 2010)

map-marketFigure 1.

COMPANY BACKGROUND

Avon was established in America in 1886 with distinctive approach of selling womens cosmetics with the name of Avon calling.This idea of business was initiated by David McConnell from newyork.The main merchandise of business was not perfume and creams but at the age of sixteen mcconnell started to sell books through door to door selling.He found out he was not able to entice the consumers to buy the books so he initiated the campaign by offering free gifts as perfumes which he produced with the collaboration of the pharmacist.Subsequently this turned out to be an incentive that became a mainline product for avon and the books were abolished, paving the way for Avon cosmetics’ existence. The door to door selling was made specifically to specification and later by 1887 Mcconnell hired around 13 women representatives. Moreover with the passage of time the company began to grow and the name was changed from california cosmetic company to Avon Products, Inc. Presently it ranks first across the nation in cosmetic industry with high revenues.

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MACRO ENVIRONMENT

PEST ANALYSIS

POLITICAL

As avon is based in U.S we have to focus on the realtionship between both UK and US which is uniquely close and they share enormous trade and economic relations. Both are top trading partners of each other hence the business relations of both the countries are strong and have wielding power. Also the trade bonds and affiliations are strengthened (U.S foreign policy, 2010)

Avon uses its websites to market its products worldwide they have to follow the copyright policy of the United Kingdom. UK Government recently came up with the Consumer Protection (Distance Selling) conditions in order to protect consumers which are buying online and have no direct control with the seller. These Regulations are only applied to the consumers that purchase goods or services from a business and not if it is business-to-business purchases, land sales, vending machine purchases, and purchases made via auctions. Whereas to give distinguishing characteristics to the company such as trademark, one needs to get legal documents which gives permission to do something.

(IPO, 2010).

Avon completely defends and shields its trade mark so the consumers can shop without difficulty and with safety. (Avon products, 2002)

No one is treated in a different manner on the basis of their genders, age and religion. Every Employee may it be a male or female engaged in business if does not get their rights and employers fail to equally balance them can be fired and dismissed

(Employment law, 2010)

ECONOMIC: The economic ups and downs such as state of the economy declines called recession does change the demand for product which is coherent over the years because in that time women go through the hard times and get stressed. In that mental strain period their skin gets affected due to burden and pressure hence they spend money on buying make up to look good and fresh. Recent report also indicates the figures for the demand of makeup and cosmetic in U.K has gone up from 4.7% to £15.6bn. This clearly shows that in recession the demand of the product increases (Cosmetics business, 2008).

In the start of 2000 the inflation climbed up but in the beginning of twenty first century and end of twentieth century; it slumped down.

The u.k economy grew by a faster-than-expected 0.5% in the first quarter of the year, according to the official data shown below in figure 2. It was the quickest increase and expansion since 2006 (ONS, 2010).

Untitled.pngFigure 2.

Some consumer goods companies posted more than expected comments for the United Kingdom’s economy because of large consumer spending. Hence this country has all components critically compulsory to carry the business operations successfully. When the cosmetics and toiletries market will become the UK’s quickly growing rapid tempo retail sector it will throw away the recession storm and stabilize the economy of United Kingdom which concurrently will have a great Impact on Avon`s larger and rapid market growth.

SOCIAL

The important category and class of economy is the fashion industry of u.k because it has an increasing and growing consumer’s interest. In order to increase more customer awareness about the brands and products introduced by the company Avon should understand about the expansion of the brands existence. Avon marketing practices are undergoing a change to become progressively focused on a bond and connection with the customer; because Participants felt the image of Avon is not positively reflected by its advertisements and Avon representatives. Although the cosmetics industry is boosting sales by bringing the products that cater to the needs and desires of people with particular ethnic backgrounds, skin and hair types, and genetic characteristics, many customers are not aware of the brand promotions and its existence in the market. Avon has to market through outlets to represent them so that consumer can get knowledge of such flexible brand with extensive product line. The market for cosmetics is very profitable because women in UK never trade down in beauty. They are crazy about fashion and the cosmetics sector is moved by mass market brands. A large number of marketing types are applied to the retail industry according to the change in consumers fashion and lifestyle.

TECHNOLOGY: The new advanced and modern methods are being used these days in order to pace up the existing share of the cosmetic company in the market. Hence technology is used fully to align and compete in the market of toiletries and cosmetics. For instance, the virtual make up options available online on the websites of the company gives an actual effect which has also helped Avon to take over the region with the help of e-commerce; accelerating in this field to get the maximum attainable share (Kumar, 2004).

Cosmetic industry is remunerative and money making business where the key to achieve and succeed is innovation and new creativity because the product life cycle is for a limited time and keeps changing but Avon is covering every aspect in the best possible manner. Avon unexpectedly has taken this area of electronic marketing over companies whose selling techniques deals in face to face consultation.

MICRO-ENVIRONMENT ANALYSIS

FIRM

The company is selling the product on a large scale and are now the global leaders of marketing technique called Direct Selling. The company has large workforces who are normally not the employees of the business but the agents and contractors hired. The whole team is working on fulfilling the needs and demands of the customer. They give extra weight to the new product offering and opportunities and also new markets that have emerged. To achieve this company is investing a higher amount in research and development domain to hold it and to gain a competitive edge in health and beauty care. The representatives of the company market the product through brochures, advertising strategies and also by contributing to the progress and advancing their global visual representation to be famous and known. Avon is one of the largest merchandiser in the CFT industry in many of its foreign markets.

COMPETITORS: Every company in the cosmetic industry is actively engaged in being a market leader by fulfilling the needs and peremptory request of the customer related to health and beauty products.

Companies such as Estee lauder, max factor and Revlon have many competitors such as Channel, Lancôme, Maybelline, L’Oreal, Lakme but the main competitors of Avon is Mary Kay across united kingdom as it is similar to Avon and is dependent upon the independent sales and direct selling method. Hence both these are the rivals of each other in the same business market (Kumar, Massie and Dumonceaux, 2006).

Marketing mix

AVON PRODUCT LINE

The company has a broad and panoptic product line which fulfils the consumers’ desires of purchasing the commanded goods.

Avon Product line is described as follows:

MAKE UP

It consists of the products applied to alter and modify the appearance without having an effect upon the functions with the purpose of enhancing beauty and attractiveness for e.g. lipstick, nail polish, eye shadow, foundation, powder, etc.

SKIN CARE

Skin is a part of the body which gives shape to the beauty of a person and for a company like Avon, which emphasises on the aspect of beauty with glamour; it can’t ignore the skin care product line. Major products that Avon provide within this area are: cleansers & toners, eye care, moisturizers, problem solvers, anti-aging, skincare

BATH & BODY: Avon look after the bath and body products with extensive care as it soften and lightens the skin and give a glow to it with beautiful fragrance which gives a pleasant feeling. It includes (body lotion, hand cream, bath & shower, body sprays, foot care, sun care, depilatories, bath & body)

C09_category_bathbody_01

HAIR CARE: A wide range of products which are Perfect for all hair types(shampoo & conditioner, treatments, brushes)

AVON WELLNESS(home environment, fitness, Wellness Specials)

FRAGRANCE:

1

GIFTS & FASHION (Gifts, jewellery, apparel, accessories, inspirational treasures etc.

apparel jewelry accessories

OUT DOOR PROTECTION: These products prevent the skin from the exposures in the sun (self-tanners’, suntan lotions, insect repellents, children’s)

outdoor protection-

PRODUCT DEVELOPMENT:

Lisa midyett, director of world marketing project for Avon spoke about Avon new product development process that has put an effect on process of forming ideas to the execution process. The company entered into a new project four years back when Avon had clearly separate process of development for each country they were carrying their business operation. They planned to work on globally-aligned process which would work in the same manner for everyone but later implemented a process which had some drawback too and required a lot of administrative and management work which company found ineffective and wanted to focus on innovation rather than spending time in management. Hence they implemented a new systems solution called horizon. Furthermore company have ideas to implement regarding the upgradation of this software which would contribute more towards developing new products, providing the data customers needs and also in having a single access point (Consumer Goods, 2008)

BRANDING STRATEGY: Avon basically uses a discreet branding strategy. It has several brands to offer and all those brands are for distinct segments. As a result of this, Avon has developed a unique image for each of its brand so as to cater to the preferences and buying behavior of the customers in each segment.

PRICE

Although many respondents were not serious about the Avon price issues and as a matter of fact, many of the girls thought that the price of the product are mutually and logically connected to the quality. Since their faces are something that represents them, hence they wanted the perfect cosmetic for adding value to their face beauty because it represents them how they want to see themselves (Beasley, 2007)

Below is the Price range for Avon Products according to their categories.

MAKE-UP

4.0~16.0

PERSONALCARE

99¢~8.0

PRICE

SKIN CARE

12.5~54.0

FRAGRANCE

22.5~34.0

Avon follows a competitive pricing strategy; they keep a check on their competitor’s pricing and then focus on lowering the product costs and increasing the value propositioning for the users.

PLACE

RETAIL CHANNELS: Company hires the independent sales representatives to market their products which are not the workers of the company but neutral dealers. As soon as they receive orders from the clients they send on the request to the nearest distribution centre of Avon and are then delivered to the representative by local delivery system.

ONLINE: Consumers can buy the products online from Avon website www. Avon.uk.com

PROMOTION

SPECIAL PROMOTION EVENTS:

Brochures: It is the main important marketing instrument used by Avon (Kumar, Massie and Dumonceaux, 2006).

TVs, magazines and Radio announcements

Product sampling: They give product samples sometimes so that consumer may use them and try before making a purchasing decision.

Bulletin boards: Representatives leaves their telephone numbers on the board to contact them with a few words written on it to attract customers.

Discount coupons: Company gives discount coupons sometimes on the purchase of Avon products.

Gifts: To please customers and attract them, the company offers small gifts to them.

coupon packs

(Avon products, 2002)

ONLINE ADVERTISING:

Avon. Com gives consumers the knowledge about the company’s product promotions that tempts and attracts a consumer to purchase products at discounted prices.

myavon.co.uk/earn with: This is for the person who wants to work for Avon.

www.AvonShop.co.uk: Free delivery if a person shop more than 20 pounds (Avon, 2010)

Social Networking websites: They try to promote their product using social communities such as facebook, twitter and my space

SLOGAN AND JINGLES

Avon Calling

The Company for Women

Avon is made with you in mind

Avon is For life’s unforgettable moments

UPGRADING THE BRAND IMAGE:

Job fairs: Avon organizes a Job fair for the people who are unemployed and wants to work for Avon and have high interest to serve the company.

Corporate social responsibility- contributes in well being of the society and its environs. Mainly focused on women issues, empowerment and health.

(Eikenberry, 2009)

PROMOTION STRATEGY OF AVON: The Company follows a pull strategy as they don’t put pressures on the retailers and distribution channels to provoke customers to buy their products instead they focus on promoting their company through advertising and through other forums of sales promotion. Advertising this way itself creates an emotional charm that helps the consumer to select the product they are looking for.

SEGMENTATION, TARGETTING AND POSITIONING

SEGMENTATION:

Avon has segmented its market in the following Age groups.

Youngsters: From age of 16 to 24

Middle aged women: From age of 25 to 35

Old women: 35 above.

The company also follows the psychographic segmentation as it divides the buyers into groups of teens and old age women to provide the products according to their demands.

TARGETING: Avon, Company`s most important and primary target market has always been woman between 35 and 54 but now the company is totally engaged to focus the teens because of large growing teen market through internet, direct selling, and catalogues. Promoting and selling Avon product to the youngsters is Avon’s new plan of action to expand the business into new product class and paths to distribution. Company is finding the young sales representatives with the age lesser and equal to thirty five, to market their brand to attract the youngsters (All business, 2001).Avon is focusing on the women who have high passion and love for beautifying their body. It follows Differentiated strategy as they are focusing on two marketing mix for two different target markets.

POSITIONING:

Avon wants to be known as a company producing for ladies.

As quoted by Matt Phillips (2003, p.5) “Avon ladies are a household name in the UK “clearly defines the company`s abstruse thinking related to marketing in the women sector.

Positioning map:

Company is delivering the products with the quality similar to the competitor but at a lower price

Marketing mix positioning of Avon with high quality and low price does not affect its strengths as lower price is never insufficient for Avon to cover the cost of quality. Company

Goes with the conventional approach of having products similar to the competitors and is succeeding advantageously.

RECOMMENDATIONS

In spite of the fact that Avon is carrying out their business really well in the UK market, they should focus and keep some elements into consideration. For e.g. the advertising campaign of this company is limited and restricted to brochures, directory, catalogues. Etc, the company must have a thought over the inclusion of models to market the Avon products. This can be achieved by finding fashion models with different looks because many participants on the focus groups want to see products on someone who has appearance and resemblance similar to theirs.

Concurrently the availability of Avon product in the departmental stores are less, hence the Goods should be available on the stores across the country.

Moreover, The Company should keep a check on their representatives to assure that the brand name is properly symbolized in the market. It is highly recommended for Avon to constitute brand equity in order to increase the brand ‘success with the audience.

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US Foreign Policy, (2010). The Relationship of the United States with the United Kingdom [online] Available at: http://usforeignpolicy.about.com/od/countryprofil2/p/usuk.htm [Accessed 25th November 2010]

Intellectual property office, (2010). Using your Trademark [online] Available at: http://www.ipo.gov.uk/types/tm/t-manage/t-useenforce.htm [Accessed 25th November 2010]

Cosmetics business, (2010). UK – keep calm and carry on [online] Available at: http://www.cosmeticsbusiness.com/technical/article_page/UK_-_keep_calm_and_carry_on/55852 [Accessed 25th November 2010]

Edgar online, (2010). Avon Product Inc [online] Available at: http://sec.edgar-online.com/avon-products-inc/10-k-annual-report/2003/02/26/Section2.aspx [Accessed 24th November 2010]

Kumar, S. Massie, C. Dumonceaux, M.D. (2006) “Comparative innovative business strategies of major players in cosmetic industry”. Industrial Management & Data Systems. 106(3): pp.285 – 306