Avon Products, Incorporation. (Avon) relies in New york city. The firm engages in the manufacture and marketing of beauty and complimentary products primarily in North America, Latina America, The european union, and Asia Pacific.
Avon’s products are categorized into 3 product classes: Beauty, Beauty Plus, and Beyond Splendor. The Beauty category consists of makeup products, fragrances, skincare, and toiletries, Beauty Plus includes trend jewelry, watches, apparel, and accessories, and Beyond Splendor comprises house products, present and ornamental products, candles, and toys and games.
The company provides and market segments its products through a combination of immediate selling, marketing by impartial Avon associates, and via its client Web site, avon. com. Avon was one of many prominent direct selling companies in the beauty products industry.
Started in the late 1800s by David McConnell, the company sold lots of beauty-related items to homemakers through their direct sales providers. However , by the 1980s, the organization had shed its shine and performance started to falter. A failed diversification approach made it the point of a lot of takeover endeavors.
Turnaround work were started in the nineties under in that case CEO Adam Preston and continued by his successor Charles Perrin, however , they will failed to generate a significant impact. Performance started to improve only after Andrea Jung became the CEO of the business in 1999. Andrea Jung became president and CEO of Avon it happened in 1999 and has totally revamped the company. Under her leadership, the company features updated its product line, launched fresh advertising, and created a fresh image. Avon’s sales have got increased simply by 30 %, revenue 40%, plus the stock selling price has drastically improved.
Jung’s has been in a position to align the firm’s core capabilities with its strategic targets which has bring about phenomenal effects. It appears that Jung has been capable of establishing a clear perspective for the firm that is incorporated in every single aspect of the firm’s main system.
This perspective is shared by most employees and representatives of Avon priming the company to get continued success. Other tricks of Jung contain cost slicing by minimizing number of uncooked material suppliers, shifting production from smaller sized plants to larger kinds, moving making from expensive cost nations like Great Britain to reduce cost countries such as Especially.
As mentioned inside the Avon example, the e-representative initiative has helped Avon cut costs. The direct retailers are asked to fill out the purchase online. Avon’s brand features definitely resonated for women as time passes.
During the eighties, the company started to diversify by purchasing retirement properties and health-related products, and launching catalogs for men and children. Throughout the initial phases of this technique, Avon begun to remove itself from its primary market of selling to females. The outcome was downward revenue trends and slow expansion throughout the 1990’s which ended in several takeover bids.
Sadly, Sears Roebuck and JC Penny tend not to really resonate well with being a transporter of could beauty materials. The term “Sears have been associated with appliance and not beauty items. The push of aiming with this kind of companies and trying to sell more advanced beauty products will simply push Avon in the opposite direction it should be proceeding, which is to approach back towards tailoring to women locally and worldwide. Over the years, Avon has knowledgeable several problems leveraging their brand in numerous of its product lines.
Therefore, positive net sales and earnings growth for the past five years have been around in single digits and progressively declining every year. Specific troublesome areas are stagnated sales, slow earnings progress, limited circulation capabilities and shift in personal proper care preferences and spending behaviors.
Andrea Jung’s proposal to expand into certain retail markets will simply perpetuate Avon’s trend of declining net sales. The proposed program will certainly create an extra distribution wall plug and focus on this market section. However , the question to examine is at what expense or expense will Avon endure making this decision?
Avon has faced tremendous stumbling blocks marketing the product lines to effectively increase brand dedication and reputation. Examples of this kind of include the hair-care product line. Avon did not successfully develop items for cultural hair types. Additionally , Avon would not have a hair colour product line. Therefore, Avon experienced in building brand understanding and loyalty with the young generation and also the older generation that also required this product. Avon has shed loyalty and brand reputation as a result of the decision to diversify in to different sectors and different products.
This has triggered a loss in market share significantly affecting total annual profit margins. To measure the previous problem of what cost is going to Avon endure deciding to increase the retail markets? It is clear and evident, the price will be a additional extension from the existing inside problems that Avon faces. Determining to move into the retail market to create a store inside a store is definitely not in Avon’s best interest. This push would be a further more expansion of Avon’s prior decisions to diversify in to markets that do not have synergy and thus can hurt the overall branding in the company.
Finally, implementing Hazel Jung’s proposal to enter the retail market will be detrimental to the already fragile state of Avon’s brand awareness, acknowledgement and devotion. Another element for the underperformance of Avon in the late 1990s is definitely its inability to develop the online business. For the fear of alienating its labor force, Avon downplayed the value of expanding the e-business. A company cannot ignore the environment and be prepared to be successful over time.
Due to its interior struggle with the net strategy, Avon fell lurking behind other much less established firms in using the forceful growth of the net Avon’s way should build on original course and implementations however increasing as necessary to slip current developments and environmental assessments.
The focus should be in existing interior structures to generate, create and advance current product lines. Avon’s focus must also exist in the field of technology to enhance online offering opportunities, upgrade internet technology and to re-brand themselves to become leader of online provides.
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To accomplish this, strategy should focus on expanding kiosks globally and domestically. The expansion will certainly leverage Avon by appealing to the market portion requesting extra distribution stations. This strategy enables trained magnificence consultants to provide advice, education and samples thus raising brand consciousness and commitment.
Kiosks may have minimal start-up cost and lower overheads. Focusing on product lines and catering towards the needs and wants of every demographic group will prevent the previous pitfalls of lack of the usage and lowered brand recognition and dedication.
Keeping Avon’s product providing separate and distinct can help existing issues of marketing. Focusing on technology improvements and online sales, Avon will have an opportunity to come up as a leader in this area, as a result adding further channels of distribution and appealing to the overwhelming want.
Under Donna Jung’s management, Avon has faced many challenges. Some of these challenges had been addressed successfully and others were not. In the early on part of 2000, the managing team got the overwhelming task of choosing an appropriate method for the immediate and long-term upcoming for the business.
One problem was a reduction in the firm’s growth level to solitary digits and stagnated earnings. Avon’s CEO, Andrea Jung, was offered a multitude of options that went from distributing through other departments stores, developing kiosks, to overhauling the firm’s elektronische geschäftsabwicklung. Jung was right in acknowledging that Avon’s main competency is usually direct advertising and its key strength is its manufacturer. By refocusing on the primary competency, bettering efficiencies, and adapting for the environment with new initiatives, Avon can overcome the hurdles from the past and be the company inside the new way.
This case reviewed the revival of Avon under Hazel Jung.
1) What is your assessment of Hazel Jung’s overall performance as primary strategist for Avon Products? What provides she performed well? What overall level would you provide Andrea Jung for the position she has carried out as CEO? Answer:
My personal assessment of Andrea Jung’s performance because chief strategists at Avon products is that she has carried out excellent job. Her 1st task was to hit the streets of her community, ringing doorbells, to better be familiar with desires of shoppers and needs of sales agents. She pushed intended for the addition of appealing new products to Avon and its particular sales associates.
Andrea paid attention to the customers and grew global beauty category sales by new product creation, sampling plus more up-to-date advertising. The company was at serious problems with annual sale regarding less than 1 . 5 percent and a a crash stock selling price during the basic economic advantage in history. Jung took the role of Avon lady to better determine what customers seriously considered company’s merchandise and inside field of direct sales style.. Avon’s grand strategy under the leadership of Andrea Jung has their merits which is the grand strategy is definitely properly targeted and aimed.
Andrea Jung has evidently directed the successful modification of Avon Products Incorporation. by determining its eyesight as the corporation for women. With grand approaches in-place the girl with revitalizing Avon’s reputation because the planet’s foremost direct seller of beauty products whilst leading the business into thrilling new lines of businesses, introducing a series of striking and picture enhancing projects, and broadening career chances for people around the globe. The tactical plan in position has it is merits and the grand strategy is correctly focused and directed. Presently, Avon is the world’s leading direct seller of natural beauty and related products, with $7. six billion in annual revenues.
Avon marketplaces to girls around the world through 4. on the lookout for million self-employed sales representatives. The evidence demonstrates Jung’s grand strategies had been sound. The argument which the grand approaches were not optimal and would have to be refocused was weak due to the overall improvement of company performance and increase in aktionär wealth. Donna Jung’s charismatic communication skills and supervision direction features catapulted Avon as a head in the global beauty and cosmetic marketplace. I would like to provide Andrea Jung an “A for the position as this lady has done her job well as CEO.
She developed great technique for Avon that helped to enhance in product sales. Andrea Jung outlined fresh vision and strategic cover Avon that call for extremely innovative new goods, build fresh line of business, essential link while internet in direct advertising model and update its direct selling model to better fit 21st century. At age forty five Jung become CEO in addition to 2001, at 42 your woman listed last on Fortune’s ranking with the 50 most powerful Women in American Business.
2) Precisely what is Andre Jung’s strategic eyesight for Avon? Do you approve of the company’s fresh strategic path? Why was it coming back Avon to fundamentally alter direction? Solution:
Andrea Jung’s strategic eyesight for Avon was for them to be the business that knows and fulfills the product, services and personal fulfillment requirements for girl globally. I do think their fresh strategic direction made sense. She knew products had to be made to complete the demands of different age group and races. It was time for Avon to be more modern and up-to-date. Jung’s view of recent Avon was that of a organization beyond offering cosmetics while trusted merchandise which is needed by any kind of women. The lady was in consumer convenient strategy in splendor and financial services.
She was adamant that supporting women touches not only beauty, but overall health, fitness, home empowerment and a lot important economical independence. Yes, Avon’s new strategic course would start an entirely new line of business, the development of innovative items, new packaging, new channels to the syndication, a new approach to supply sequence management, fresh sales types and new approaches to photo building. Once Andrea Jung became Avon’s new CEO in November 1999, you can actually annual product sales growth had slowed to less than 1 ) 5 percent as well as stock value had fallen from an increased of $55 to a three year low $25.
The strategies started by Charles Perrin experienced resulted in some improvement over 10 years ago with humble sales expansion, but in late 1999 Avon was in will need of striking direction. The moment Perrin retired because of his lack in direct sales limit, Andrea Jung need a critical change in direction. Jung realized the wants of customers and needs of phone sales agents. She read the customer holds over item colors, mishandled orders, less attractive packaging, lack of innovative companies confusing promotions.
Ultimately she discovered the structural obstructions to achieve in success. Plans for inserting orders manufactured difficult to get sales agents to improve sales volume level and commissions. When Andrea Jung walked in as CEO of Avon, she brought with her innovative, fresh ideas that helped make Avon what it is today. Her technique didn’t accept what consultants thought, but she willingly took hazards to put in force what the girl believed to be the best strategy for Avon. We believe that her approach was good, solid foundation that could continue to keep Avon at the top while America’s number 1 selling Beauty and Magnificence Company.
3) What is your examination to the monetary and strategic objectives Jung has established for Avon? Do that they contain an excessive amount of stretch? Inadequate stretch? Response:
Several things happened once Andrea Jung was named CEO of Avon. First, the lady decided to reverse the current trend of losing sales. The girl did this by making a strategy that might turn the organization around. Jung’s suggested technique to partner with Sears and JC Penney department shops was a concept that would assist to promote the strategy the lady had develop. It would expose a new, high end product line, thus increasing revenue, sales and nationwide contact with the baby boomer segment. Retail selling increased with in-store customer visitors and predicted growth of spending power to 16 percent inside five years.
Face-to-face providing comprised seventy nine. 7 percent of direct selling, recommended among senior citizens. The marketing budget can be increased to focus on customer visitors at Target and JC Penney. Investment costs reserved for only $15 ” 20 mil to release retail products, with a almost all expenses staying absorbed by department store. Avon’s strengths will help increase global recognition of brand name and image. Jung suggested promoting certified Splendor Advisors in department stores and increased bonuses for product sales representatives.
In addition , having department stores sell using the web would increase the channels of distribution, hence increasing customer loyalty. Reduce inventory level while increasing service to reps which improve the forecasting accuracy and reliability and purchase fill charge in source chain supervision. Strategy delivers opportunity for product sales representatives to enhance their profits and greater career possibilities through sales leadership. Develop E- business opportunity for Avon and sales representatives, bettering operating margins 50-100 basis points nevertheless business method redesign.
One more strategy is growing global beauty category revenue through in new product creation, advertising and sampling. All of these factors would affect Avon’s long-term goals by making Jung to look for new, innovative ways to stay fresh on the market. Jung got created a tactical plan that met the vision of Avon, she had made goals that had been measurable and geared toward foreseeable future company expansion. The desired goals seemed to be available in the current organization market. Additionally , Jung’s proven fact that technology could be the answer was in response to a changing business environment including movement toward e-business.
This ideal can be synergistic and create upon their very own present success. It is too little stretch as the objectives weren’t set boldly and strongly high. These types of goals weren’t impossible objectives.
4) What have been the main element elements of Avon’s strategy been under earlier CEOs? What new and various strategy components have been started by Andrea Jung? How well truly does Andrea Jung’s new strategy seem to match features of the global cosmetics market and Avon’s resource durability, competitive capabilities, and lifestyle? Answer:
Key elements to Avon’s strategy beneath previous CEO were going sell right to consumers via independent product sales representatives focusing on commission. Avon catered to mostly uppr middle income females and focused almost exclusively on US beauty market.
Hazel Jung started expansion in markets exterior US producing Avon items available online, and began selling Avon products through price tag channels. In addition, she instituted a far more upscale presentation to match the feel of prestige aesthetic brands. The girl focused on a low cost/ affordable strategy and focus to sale to low and middle income families.
Andrea’s new strategy was very likely to improve Avon’s financial functionality and help make a competitive advantage. Her approach is sensible in light of what competitors are doing and the location they maintain in the market place.
Avon is extremely backward bundled, self-manufacturing lots of the items that that they sell. This causes the competitive pressures of suppliers to become weak. Avon can get supplies from various parts of the world because they may have entered international markets and produce products in different countries. A lot of Avon’s items such as product packaging, may be quickly substituted if a supplier increased prices.
Below Andrea Jung’s direction, Avon is centering on developing countries especially Chinese suppliers. Many expanding countries will be more receptive to direct selling by girls since jobs with Avon are possibilities for women who want to be impartial in the men dominated nationalities. Avon has additionally recognized the fact that demographics has evolved and recruiting younger girls to sell to the younger consumer bottom. Competitive challenges stemming coming from customer obtaining power is moderate mainly because switching costs are low and buyers have the ability to fulfill their needs by simply switching brands.
Buyers are likely to be well informed about Avon’s product prices and costs largely as a result of Internet which put clients at a situation of higher negotiating power. Customers do not create a menace of adding backwards, as it would not become easy for girls to develop their particular make-up, perfume or skincare. Due to the immediate selling business model, there is an extremely large number of customers. Another Avon objective that aims to relieve pressures received from competing vendors includes consists of reinventing their very own antiquated picture.
Realizing this kind of, Jung supported the Williams sisters. Venus and Serena Williams were popular teen icons that portrayed the where Jung hoped to accomplish for Avon, young, strong, and committed.
5) Just how well features Avon’s fresh strategy been implemented so far? What are Avon’s strategy successes so far? What problems or perhaps missteps do you really see? How important has Leslie Kropf gone to Avon’s execution efforts? Was she a good solution as key operating expert? Why or perhaps why not? Answer:
Andrea Jung’s highly good career will not be conceivable without powerful and useful management.
Throughout Jung’s driven expansion, her management design was to focus on open communication, goal alignment, and responses from her sales force. Avon often brings in the best performing sales reps by across the globe to Avon’s head office in Nyc in order to gather first hand feedback from the employees in the field. Ms. Jung herself even attemptedto sale Avon’s products as being a traditional Avon lady. An attempt she appreciates was not one of her more successful endeavors. The attempt yet , showed Ms. Jung’s commitment to understanding all aspect’s of the Avon business. One common theme in Ms.
Jung’s leadership speeches encourage women empowerment and promote a belief more women is going to continue to maintain key business roles. Below Ms. Jung’s leadership, Avon management helps flexible work schedules and stimulates employees to create a healthy balance between job and family members responsibilities.
There are numerous of problems that Avon has taken under Hazel Jung’s command. They incorporate partnering with companies that image will not adequately match Avon’s plus the company’s complications with launching it is online business section. Recently, Avon announced ideas to partner with Sears and JC Penney’s.
One of the potential negative elements for Avon partnering with JC Penny and Pep boys would be the feasible lowering of brand name intended for Avon. The organization ran the risk of feasible further decrease of it is brand name. Since its creation Avon has worked very hard in tailoring the niche market towards women. Ms. Kropf’s most recent responsibilities included certain global staff functions. She stored responsibility for global advertising as well as the companywide Business Procedure Redesign efforts that have liberated up almost $400 million in the past 36 months for reinvestment in client brand building and other growth initiatives.
Certainly, Susan Kropf was a good choice as a primary operating official of Avon Products Inc. with full profit-and-loss responsibility for all of Avon’s worldwide businesses, including global marketing and source chain. Susan has performed a critical part in Avon’s success simply by sharing her insights upon Avon’s rich history and you can actually successful strategies for sustaining brand power for over a century. Leslie Kropf reconfigured the value chain thereby expense reduction of non-value adding areas.
6) Provides Andrea Jung been powerful in analyzing the company’s activities, monitoring new developments, and initiating further adjustments? Will Andrea Jung appear to possess Personal traits well suited to refining and fine-tuning you’re able to send strategy and implementation efforts? Are her strengths better suited to instituting sweeping changes and quickly moving into a new project? Answer:
Andrea Jung signifies a great strength to Avon Products Inc. Regardless of male or female, any CEO who can have a company using a 50 percent drop in reveal price and raise company stock by 164 percent in five short years shows insightful leadership and effective administration. In addition to the economic success, Ms. Jung in addition has played a vital role in Avon’s public relations market.
She shows an amazing capacity to connect with many different shareholders and the auto industry. Her capability to communicate with all levels of an internationally different Avon staff and community contribute to Avon’s ability to efficiently implement strategic changes in direction.
Yes, Donna Jung’s eyesight of what she wanted to accomplish because CEO of Avon included a strategy to, boost brand graphic, introduce new items, increase make use of the internet being a channel of distribution, give greater bonuses and opportunities for the sales force, lessen unnecessary costs in the worth chain, and continue to increase into global markets.
Merchandise innovation was a large a part of Jung’s technique for Avon. Actually in 1999 your woman challenged Avon’s R&D team to develop a fresh product inside two years. In less than one year Avon introduced Again Retroactive, an anti-aging facial cream. It achieved record sales for Avon and triggered the development of different successful lines of organization.
In less than one year Avon launched Anew Retroactive, an anti-aging skin cream. It achieved record sales for Avon and led to the introduction of other effective lines of business. For example , Avon Health and fitness products exceeded sales quotes by 300%.
One problem that Avon faces is the strong competition within domains they are trying to expand in. Avon is definitely marketing a nutritional products called Wellness, which includes vitamins, supplements, bars, etc . This market is competitively strong. Becoming ahead of the market in presenting new products combined with the company’s already strong marketplace position can further increase Avon’s manufacturer equity and so revenues. In particular, Avon should certainly continue to combine sales consultant into all aspects of product sales. This is Avon’s own important success aspect and what sets them apart using their competitors.
Together with the growing demand for the internet since an outlet of commerce, Jung was motivated to put into action internet sales into her strategy, realizing that the “Avon Lady is the distinctive primary competency intended for Avon in new tasks.
7) What additional activities would you advise Andrea Jung take to help the company to attain its long-term strategic and financial targets? Are any kind of changes needed in the company’s vision? Its objectives? The strategy? It is implementation efforts? What challenges might the newest strategy show Avon’s top management team? What dangers do you see? Answer:
Based upon demographic data, China keeps 20% in the world’s populace. This signifies a vast market of which Avon has simply begun to cover. Avon will need to continue to focus on the enlargement of retail outlet sales in China. Also, because the simply sales in China will be generated through retail outlets, Avon should additional develop their particular Beauty Experts training. European countries should also certainly be a continued focus for Avon. Industry leader, L’Oreal’s qualities 50% of their total sales for the European market. Avon had a successful development rate in Europe although only 23% of the total 2003 product sales came from The european union.
There is still room to expand with this market. Based upon one of the industry’s key success factors, item innovation, Avon should concentrate even more resources on R&D especially in the aspects of anti-aging companies teen goods. Because twenty three million young adults have an normal weekly throw-away income of $85, Avon should continue with innovative teen advertising such as the current “mark brand but also work on goods for problem teen epidermis. Avon Items Inc under the leadership of CEO Hazel Jung reaches a point high are options for development for the corporation. However Ms.
Jung is apparently indisposed towards taking procedure for take advantage of Avon’s position. Also her approach is problematic. Let’s take a look at her approach and then also look at practical alternatives. Donna advocates: joining up with Pep boys and JC Penny department stores so as to make a store-within-a-store, Avon products.
Based upon this, the board of directors sensed that Jung’s original choices did not supply the same amount of increased sales and revenues, attraction to increased consumers base, motivation and approval by current sales staff, or boost shareholder riches as the consultant’s alternatives did.
The consultant’s options provided a means to Avon Items, Inc. becoming a household name to those whom weren’t attracted by limited previous distribution programs, and Jung’s choices of re-invigorating the brand, instituting beauty exhortatory training, increasing multilevel product sales programs or perhaps partnering with department stores. Kiosks were of course a risk. At $6, 000 per kiosk and lack of information on kiosk overall performance, Andrea suggested these can be too expensive.
Probably a trial run of a low number of kiosks in the environment would settle this problem. In conclusion, the Avon CEO strategy would not impress while very well planned and it had been a good thing she went to the review table first. Avon should stick with their bread and chausser ” the sales representatives as it is the channel in which they were acknowledged and exactly where they became one of the most significant beauty products in the world. The website should be a complement to the services that Avon presents. Recommendations:
Intended for promoting direct-sales through client and the business, one is to provide incentives to its consumers and second is to stimulate the business to promoting usana products by advertisements, establishing product sales competition for employees, participating in conferences, and by promoting franchise of its products to retail stores.
Marketing Avon’s companies high chance of increasing direct-sales is to present incentives to its customers. Incentives give a positive mindset influence to encourage and excite purchasers to buy the products. Such incentives, appropriate for this situation, are discount codes, rebates, samples and prizes.
Coupons can be attached in postal mail, beauty magazines, papers, and advertisements on mail or perhaps on the net company’s established website. Rebates can be provided also to draw more potential buyers to buy the products.
Rebates can be advertised also on discount coupons through mail or the internet. Another successful way of appealing to consumers is by offering samples of Avon’s cosmetic products, which can be done door-todoor or perhaps attached on an advertisement through mail. Finally, awards through prizes, challenges or contest can offer consumers the chance to get something small or big like cash or free-trips.
Also, prizes can be providing a free gift whenever a customers purchase one of Avon’s items. This last incentive option attracts even more attention coming from consumers than the three other available choices. Motivate the Avon organization to reach it is goals of promoting usana products and increasing sales through advertisements, product sales competition, participating in conventions and endorsing operation. Advertising is the key to getting consumers and the outcome is usually high product sales. Such ad is done through media (television), mail, and also the internet.
The greater awareness in the public from the company prone to attract more buyers plus the outcome is definitely high product sales. The next choice is to encourage Avon’s revenue representatives with awards/prizes that reached all their sales goals within a time frame.
Another is participating in conferences and this is likely to increase product sales through immediate contact with clients. Last is usually to endorse operation of Avon’s products with small and big cosmetic-related stores, such as Macy, JC Penny, etc . This method can be more than likely increase sales and in turn profit which is any company’s ultimate aim.