Avon Products, Inc. (NYSE: AVP) is a US cosmetics, perfume and toy seller with markets in over 140 countries across the world and sales of $10.9 Billion worldwide as of 2010 with net income of $609 Billion and employing a workforce of 44000 personnel. Avon Product is a multi-level marketing company. The company's chairman and CEO is Andrea Jung, who was promoted to the position in 1999. She has completed a decade as CEO and is the longest tenured female CEO among Fortune 500 companies. Organizational Mission
Avon wants to provide everyone with high quality and innovative health and beauty products as well as financial opportunities through sales representatives that are easily obtainable, in many ways, in every part of the world. Avon hopes by bringing these products to everyone everywhere through global markets the company can improve the quality of life for anyone around the world.
Avon uses both door-to-door sales people ("Avon ladies," primarily and a growing number of men) and brochures to advertise its products. The California Perfume Company, Inc. of New York, NY filed their first trademark application for Avon on June 3, 1932 with the USPTO. Part of the description for goods and services provided to the USPTO included "perfumes, toilet waters, powder and rouge compacts, lipsticks," and other toiletry products. First use and commercial use for Avon by the California Perfume Company was on September 1, 1929. Registration was granted on August 30, 1932. The trademark is owned by Avon Products, Inc. of New York, NY. The status of the original stylized word mark for Avon is expired.
Avon core competence has mainly been through direct selling, knowing this Jung and the management team implemented a Sales Leadership program in its ten largest markets and provided these markets with incentives to acquire, train, motivate, and retain the number of active Sales Representatives it needs to sustain significant growth. Avon also has a Avon also keeps its superior customer service in other ways of distribution such as the Internet and in the department store sales by having a timely and correct order delivery, one on one information exchange and sincere professional advice and service in department sales.
Avon management team decided to achieve growth in revenue by expanding its customer base into international markets, while continuing to compete based on their reputation as the leading direct seller of beauty products.
[...] The company paid out dividend per share of 0.88 i.e. CAGR of 6% (2006-2010). ➢ Society: Majority of companies post scientific management has reduced emphasis on in-house and outside human capital as machines (Smith, 2003). The knowledge era emphasized the human capital importance for improving cutting edge technologies to enhance competitive advantage (Smith, 2003). In past ten years, the company has raised and donated approximately US$21.1 million for natural disasters and other emergencies worldwide (Hurricane Katrina, China and Haiti earthquake etc). [...]
[...] The core strategic developments in past twelve months are (GlobalData, 2011): |Period |Key Developments | |Dec 2011 |Change management with separation of Chief Executive | | |Officer and Chairman responsibilities. | |Oct 2011 |Fernando Acosta elected as President for Latin American | | |operations. | |Sep 2011 |Raise breast cancer centric donation worth US$4.6 million| | |in domestic market. | |Sep 2011 |Launched new skin care brand with YouthGen™ technology. | |Sep 2011 |Global launch of Supershock MAX Mascara | |Aug 2011 |Incepted research & development in China primarily | | |focusing on product development, safety and quality | | |testing, microbiology and consumer research. [...]
[...] US$2.75 billion. ➢ Threats: A) There has been sharp increase of pure play ecommerce based retailers worldwide including emerging markets such as China and India in past 18-24 months. Majority of ecommerce based retailers offer promotional campaigns such as buy one get one free etc hampering long-term profitability of direct sellers such as Avon Products, Amway Enterprise etc. B) In the UK, the government increased the minimum wage rate from £5.73 per hour in October 2008 to £5.93 an hour in October 2010. [...]
[...] Avon Products has been aggressively enhancing indirect sales representative's markups i.e. higher discounts to enhance brand awareness and positioning in emerging and core markets. In 2010, Latin America and Eastern European indirect sales representatives base increased by 8% and 4% respectively. B) In next 2-3 year, the company plans to launch approximately 650 new product developments (NPD's) across emerging markets (especially India). Horizontally diversified product portfolio is enhancing customer segmentation and retention rates for the enterprise (Datamonitor, 2011). ➢ Weaknesses: A) In 2010, the net debt stood at US$3.1 billion, with year-on-year growth of 27% (Datamonitor, 2011). [...]
[...] Majority marketing and promotional initiatives of Avon Products has been primarily concentrated towards improving indirect sales representatives in emerging markets i.e. non Americas. In 2010, the company increased indirect sales representatives in Eastern Europe and Africa on an average of 6-10% annually. On the other hand, marketing and brand positioning is vital for direct seller distributor such as Avon Products, Amway Enterprises etc. ➢ Product: Historically, Avon Products has relied on beauty & personal care product portfolio to improve its regional and local competitive advantage. [...]
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