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Avon Corporation Inc. Marketing Analysis

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Section I

Avon Corporation, Inc. is a multinational company with branches across the globe (see Appendix 1, Fig. 1). Andrea Jung, who was ironically the first female business CEO hired in 1999, is the new CEO. The business is a public corporation which was registered when it was established in 1886 as the California Perfume Company. The corporation has 43,000 staff, has the ticker symbol AVP on the New York Stock Exchange, and the NAIC is 32562 Toilet Preparation Manufacturing and 45439 Other Direct Sale Establishments. The organisation has recently made attempts to revert to its initial business model where a job incentive is offered to sales reps by selling their goods (Reference for Business, 2011).

However, a modern sales leadership paradigm, the emergence of the Direct-Selling Model, has been adopted as the former pyramid model has been a cause for alarm with a reputation for unrealistic targets. In the United States, the organisation now has more than 650,000 sales members, but 70-75 percent of its sales are only from overseas branches. However, there is a low retention rate, so the three-tier leadership paradigm has created a mentorship system where each salesperson hires others and mentors them to the next stage. In the Leadership Model, instead of surviving off the sales of others as done in the pyramid model, each sales individual would sell themselves. (2010 Willet).

According to Avon Company, Inc. (2011), “Avon has a proven history of delivering first-to-market beauty technologies, making the company a perennial game-changer”. Avon divides its primary business under the Avon name into six divisions. The first division is under the title Color Cosmetics, which has brands within it which include the name Avon, Jill Dempsey Professional, Smooth Minerals, Avon Color, ExtraLasting, Healthy Makeup, Ideal Shade, Nail Experts and Anew Beauty. The second division is under Skin Care and includes the brands Anew Skincare, Avon Skinclear, and Avon Solutions. In Bloom by Reese Witherspoon, Outspoken by Fergie, Patrick Dempsey Unscripted, and collaborations with Christian Lacroix, Herve Leger, and Ungaro are listed in the third division under the Fragrance designation. Perfume and fragrance items are a core part of the Avon range as the first commodity sold by the Avon company.

Avon Corporation, Inc. is a multinational company with branches across the globe

Personal Care products are defined by the older, well-respected and popular line Skin-so Soft, as well as newer lines such as Avon Naturals, Liiv Botanicals, Moisture Therapy, and Foot Works. The Haircare lines are an important part of the company as well and are under the brand Advance Techniques, Color Protection, Daily Shine, Damage Repair, Frizz Control, Keep Clear, Volume, Toni Brattin, and Conair. The final division is under the heading Jewelry which has the brand Inspirational Treasures under the general Avon brand. Avon also sells clothing with the brands Curves and Slim Wear as two of the brands underneath the overall basic Avon heading. Avon also sells divisions of goods under the headings home, children, which includes bath and body, fashion, room décor, and toys, men, which highlights a line of skincare and fragrance under the celebrity name Patrick Dempsey (Avon Company, Inc., 2011).

 Avon also sponsors several lines of products that are associated with fundraising and dedicated to the betterment of the world. The products that are purchased through these divisions go towards contributions to individual organizations that have social relevance. Avon Walk Products are dedicated towards breast cancer awareness and research. Pink Ribbon Products are dedicated towards the same goals as the Avon Walk Products. The Empowerment Collection is dedicated towards women’s empowerment issues and supports various causes that are relevant to the advancement of women’s issues. Finally, Hello Green Tomorrow, which currently only includes an aluminum water bottle, is intended to support green issues and the Hello Green Tomorrow Fund has “planted 2 million trees & restored 5,000 acres” (Avon Company, Inc., 2011).

     

List of Figures
  • Fig. 1 Avon Markets (Avon Company, Inc., 2011)
  • Fig. 2 Market Share for Cosmetics Industry (Saxena, 2009, p. 762)
  • Fig. 3 Revenue by Product Category for 2010 (Avon Company Inc., 2011 Fact sheet)
  • Fig. 4 Revenue by Region for 2010 (Avon Company Inc., 2011 Fact sheet)
  • Fig. 5 Price and Consensus (Zacks, 2011)
  • Fig. 6 EPS (Zacks, 2011)
  • Fig.7 Revenue Growth (Zacks, 2011)
References
  • Acker, D. A.  (2009). Brand portfolio strategy: Creating relevance, differentiation energy, leverage, and clarity. New York: Free Press.
  • Alam, M., & Pongprutthipan, M. (2010). Body rejuvenation. New York: Springer.
  • Avon Company, Inc. (2011). Avon. Avon Company, Inc. Accessed at http://www.avoncompany.com
  • Avon Company, Inc. (2011). Avon corporate fact sheet. Avon Company, Inc. PDF.
  • Barrow, C. (2011). Starting a business from home. London: Kogan Page.
  • Betton, C. I., Lintner, K., & ScienceDirect. (2007). Global regulatory issues for the cosmetic industry. Norwich, N.Y: William Andrew.
  • Buchanan, L. (1 July 2009). Start-ups 2009: How to build your dream company: How to start a beauty company. Inc Accessed at http://www.inc.com/magazine/20090701/how-to-start-a-beauty-company.html.
  • Cerazy, J., & Cottingham, S. (2009). Leadbabies: How heavy metals are causing our children’s  autism, ADHD, learning disabilities, low IQ and behavior problems. New York: iUniverse, Inc.
  • Cheng, A. (28 October 2010). Avon profit, sales fall short of estimates. Marketwatch. Accessed at http://www.marketwatch.com/story/avon-profit-misses-expectations-shares-   drop-2010-10-28
  • Dayan, N. & L. Kromidas. (2011). Formulating, packaging, and marketing of natural cosmetic products. New York: Taylor and Francis, Inc.  
  • Dunning, J. H, & S. M. Lundan. (2008). Multinational Enterprises and the Global Economy. Cheltenham, UK: Edward Elgar.
  • Easey, M. (2009). Fashion marketing. Oxford: Wiley-Blackwell.
  • Forbes.com. (8 November 2010). Private Equity picks up Avon lady in Japan. Forbes.com.    Accessed at http://www.forbes.com/2010/11/08/cosmetics-news-avon-sells-japan-stake-       estee-lauder-upgraded-marketnewsvideo.html
  • Hill, C. W. L., & Jones, G. R. (2010). Strategic management theory: An integrated approach.
  • Mason, OH: South-Western/Cengage Learning.
  • Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2011). Strategic management: Competitiveness & globalization. Mason, OH: South-Western Cengage Learning.
  • Jones, K. A. (2011). Amway forever: The amazing story of a global business phenomenon. New York: Wiley & Sons, Inc.
  • Pittman, S. (23 February 2009). Avon restructuring could mean 3,000 fewer employees.
  • Cosmetics Design.com. Accessed at http://www.cosmeticsdesign.com/Business-Financial/Avon-restructuring-could-mean-3-000-fewer-employees
  • Reference for Business.  (2011). Avon Products, Inc. – Company profile, information, business          description, history, background information on Avon Products, Inc. Advameg Inc. Accessed at http://www.referenceforbusiness.com/history2/23/Avon-Products-        Inc.html
  • Saxena, R. (2009). Marketing management. New Delhi: Tata McGraw-Hill.
  • Sephora. (2011). Tarte. Accessed at http://www.sephora.com/browse/brand_hierarchy.jhtml?brandId=5648&categoryId=C106
  • Slatter, John. (2005). The 100 Best Stocks You Can Buy 2006. Avon, Mass: Adams Media.
  • Wikinvest. (8 August 2011). Avon Products (AVP). Wikinvest. Accessed at             http://www.wikinvest.com/stock/Avon_Products_%28AVP%29
  • Willett, J. A. (2010). The American beauty industry encyclopedia. Santa Barbara, Calif:   Greenwood.
  • Wit, B. ., & Meyer, R. (2005). Strategy synthesis: Resolving strategy paradoxes to create competitive advantage. London: Thomson Learning.
  • Wohl, J. (24 February 2011). Update 3 – Avon shakes up structure, looks for Latam leader.Reuters. Accessed at http://www.reuters.com/article/2011/02/24/avon-idUSN2424394420110224
  • Zacks Investment Research. (2011). Avon Products, Inc. Zacks Investment Research. Accessed at http://www.zacks.com/stock/quote/AVP
Appendix 1

Markets and Revenue

Avon Corporation, Inc Marketing Analysis

Fig.1 Avon Markets (Avon Company, Inc., 2011)

Avon Corporation, Inc Marketing Analysis

Fig.2 Market Share for Cosmetics Industry (Saxena, 2009, p. 762)

Avon Corporation, Inc Marketing Analysis

Fig.3 Revenue by Product Category for 2010 (Avon Company Inc., 2011 Fact sheet)

Avon Corporation, Inc Marketing Analysis

Fig.4 Revenue by Region for 2010 (Avon Company Inc., 2011 Fact sheet)

 

Appendix 2

Financials

Fig.5 Price and Consensus (Zacks, 2011)

Fig.6 EPS (Zacks, 2011)

Appendix 3

Avon Company, Inc. Stock Market Evaluation

Appendix 4

Industry comparison

Appendix 5

Fig. 7 Revenue Growth (Zacks, 2011)

Appendix 6

Porter’s Five Forces Analysis

Porter’s Five Forces Analysis

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