Case Analysis Avon

The case Avon.
com is all about a company name Avon which is Formed by David McConnell in 1886 as the California Perfume Company and its Name changed to Avon in 1939 company deals with 100 products including perfumes, low-cost home and beauty products and personal care items like toothbrushes they also Ventured into new less related business but had disastrous results Avon is the Worlds largest seller of beauty products & 5th largest beauty company overall with annual sales of $5 billion And it have 2.8 million sales representatives worldwide and .5 million in US Avon Promoted representatives with other jobs to sell the products at work. By 1988, these at work sales accounted for 25%-30% of all Avons sales. Avon Experimented with direct mail in mid 1990s and Failed because the order sizes tended to be too small to meet Avons required profit margins. Key Persons: Andrea Jung -First female CEO Banchak Crowell-Director of channel integration Edward- President and general manager of avon.com
Challenges for Andrea Jung There are certain challenges in front of CEO Andrew Jung they are: Strengthening and enhancing Avons beauty image around the world Leveraging the equity of the Avon brand into new markets Building new products and new channels Accelerating top-line growth Enhancing the experience of the Avon representatives.
Situational Analysis: Avon Products in 1999 was Designed to appeal to women aged 25-50 with average to below average household incomes, & Positioned to deliver high quality and highly innovative products at and outstanding value The products was Lipsticks, cosmetics, nail care, hair and skin care. Throwing light on Sales force then 0.5 million sales representatives was in US & All Avon representatives were independent contractors there was an Extensive sales management hierarchy to recruit, train and advise the representatives. The representatives tend to sell in one-on-one meetings either at work or at home, The selling process adopted by the Avon was:-
1. Direct selling by women sales representatives 2. The leadership program allowed a rep to earn additional money by encouraging other women to become Avon Sales rep 3. The Beauty Advisor Program 4. Avon ran 26 two week selling campaigns
5. Full color brochure featuring the products available for sale 6. On an avg. each customer on a representatives list ordered $20 worth of products per campaign 7. Avon provided 100% satisfaction guarantee
Thronging light on Marketing then:-
1. Mission of the company was to provide exciting and lucrative career opportunities for women 2. Avon Worldwide Fund for Womens health 3. Annual Avon Breast Cancer 3-Day Walk 4. Spent very little on traditional advertising 5. According to a survey, 70% consumers buy Avon through a rep
Avon.com under Edwards The issue was to make a choice between becoming Eve.com or iVillage.com i.e. to build a commerce only site or an appealing one, which Started with data collection and then Edward also invited experts in e-commerce for opinions he also hired a well-known e-commerce consulting firm and Held a series of focus groups with representatives in order to get their feedback.
Main issue in this case:
Solution: For B2C Use Avon.com as a content or community site they have to decide: Commissions Marketing Product Shipping If we analyzed the B2B strategy then It make easy for the representatives to place their orders online Fully functional online ordering would cost in excess of $60 million over 3 to 5 years Cost of about $3 million to $5 million to update the 1997 version of Avon.com to make it a state of the art online store
Analysis of B2B option Projected Cost: Cost of updating the 1997 version of Avon.com= $5 million Cost of fully functional online ordering system=$60 million over three to five years Total Cost= $65 million for 5 years Present cost of processing orders Cost of order processing= $1 per for each customers order No. of Avon sales reps= 0.5 million Each rep participated in 12 of Avon campaigns per year Each rep had 15 customers on her list Hence, total customers orders in an year =0.5*12*15 million = 90 million Cost of processing 90 million orders=90 million*$1 = $ 90 yearly For the next 5 years, total processing cost = $90*5 million = $450 million
Conclusion: Hence, if the company goes ahead with the plan of making the fully functional ordering system Cost cutting for the company over 5 years = $450-$65 million = $ 385 million.
Recommendation Since over 70% of the total sales of Avon were through its sales reps, the company should use the B2B path and ease the ordering style for the representatives by eliminating the filling of the archaic purchase orders The company should also use the B2C path because a significant 18% target customers would buy independently The website should be more attractive and there can be a forum so that the sales representative as well as the customers can discuss about the Avon products .

Case Analysis Avon

Uploaded by

Copyright:

Case Analysis Avon

Uploaded by

Document Information

Original Description:

Copyright

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Case Analysis Avon

Uploaded by

Copyright:

What were the challenges faced by CEO Andrea Jung?

What were the issues with Avon.com under Edwards?

The case Avon.

Main issue in this case:

You might also like