AVON faces declining market share due to changing consumer trends and inconsistent branding. The company needs to reduce its brand portfolio, strengthen its e-commerce strategy, transform its sales model, and develop innovative sustainable products to regain competitive advantage. Recommendations include a leaner focus on beauty, modernizing the sales force, and restructuring the brand for long-term growth and increased profits.

1. AVON
Ana Inda Joyce Yuli

2. Agenda
• Overview
• Environmental, Market Analysis
• Consumer, Competitor Analysis
• Internal Analysis
• Competitive Advantage
• Value Proposition
• Brand Equity
• Leveraging, Energizing the Business
• Creating New Business
• Conclusion

3. • Global Business in 140 Countries
• 6.4 Millions Representatives
• Declining Market Share
Overview 1886
1939
1957
Avon 100,000
Representatives
1971
1990
2011
2013
USA Cosmetic Market
?
Vanish?

4. External
Analysis
P E
S T
• AgainstAnimalTesting
• Avon In China
• Against Brand Image
• Economic Recession
• Turning Point of Avon
• Sustainability trend
• Go Green
• E-commerceTrend
• Digital Marketing

5. Market
Analysis
Fragrance
10%
Personal Care
23%
Color
Cosmetic
20%
Hair Care
20%
Skin Care
27%
Beauty Industry
Source: Perry. “A Cosmetic Industry Overview for Cosmetic Chemists”
Total Size: $53.70 billion

6. Porter Five Factors
• New Entry Competitors
• Substitute Products
• Competitive Intensity
• Power of Customers
• Power of Suppliers
Profitability
Analysis
High
Medium -High
Medium -High
Medium -High
Very High

7. Competitors
Analysis
Attributes Avon Mary Kay Beauty.com Olay
Products
Service
Channel
Finance
Brand
Manufacturing
Market Share

8. KSF
Analysis
Credible
brand
Strong
Direct
Marketing
Program
Personalized
Sales
Experience
Philanthropy
Activities
Vast product
mix
Global
presence

9. Customer
Analysis
• 45 years old
• Married, Mom
• Graphic designer
• Lives in the suburbs of MA
• Middle class
• Penny wise shopper
• Concerned for her image
• She “doesn’t have enough time”
Meet Jennifer:

10. Financial
Performance
Market Share
• 2013 1st QTR : 4%
• Operating Profit: $172 million
• Operating Margin: 6.9%
31.6%
Source : Avon Official Website
Performance Indicators:
• Leading global beauty company
• World's largest direct seller
• Top of the Customer Satisfaction Survey
• Ranked #2 inTop 50 cosmetics brands
• Oracle Hyperion-based EPM

11. SWOT
Analysis
S W
O T
Direct Selling Leader
Committed Workforce
Self-Own Facilities
Decrease Sales
Low Brand Loyalty
Weak Brand image
Green ProductsTrend
Anti-Aging Products
UrbanTrendsetter
Inflation Rates
Rising Costs of
commodities
Low Internet Selling

12. Competitive
Advantage
Basis of Competition WhereYou Compete
WhatYou Offer WayYou Compete
• Manufacturing
• Avon Lady
• Consumer Data
• Beauty Industry
• Olay, Mary-Kay
• Global
• Customized Products
• Flexible Schedule
• Personal Connection
• Direct Selling
• E - Commerce
• Own facilities

13. AVON is the best at understanding
the modern woman because they
interact with her daily, on a
personal level.
Competitive
Advantage

14. Value
Proposition
TARGET
Mass Market
Woman Age 25-
50
VALUE
Low Price with a
Personal
Connection
OFFER
Beauty, Fashion
and Home
BENEFIT
Understands
Consumer Needs
POD
Customized
Products
PROOF
Direct Selling and
the Avon Lady
Value
Proposition

15. Value
Proposition
FOR the busy, modern, working woman WHO struggles to find time to purchase
make-up, Avon IS a direct seller of beauty products THAT creates a customized
make-up palette for you, on your time.
THE COMPANY FORWOMEN
• Flexible Schedules
• Knowledgeable Avon Ladies
• Established Reputation

16. Brand
Identity
Essence
Understand women's needs more than they do globally.
Core Extended Identity
Direct Selling
6.4 millions representative
in 140 countries
Positive Brand
Image
Walk for Breast Cancer
Close Tie with APF

17. Brand
Equity
High Brand Awareness
- Walk for Breast Cancer
- 125 old Company
High Brand Loyalty
- #41 Best Global Green Brands
- #6 Top 50 Cosmetics Brands
- #20Valuable U.S. Retail Brands
Brand Association
Reliable Eco -Friendly Direct Seller

18. Business
& Brand
Portfolio
BCG GROWTH-SHARE MATRIX
High Low
LowHigh
MarketGrowthRate
Competitive Position

19. Business
& Brand
Portfolio
GE – MCKINSEY MATRIX
High Medium Low
LowMediumHigh
BusinessPosition
MarketAttractiveness

20. Business
Portfolio
Make Up
Skin Care
Bath & Body
Fragrance
Children
Home
Fashion
Jewelry
Hair Care
Men
Lips, eyes, face, nails, beauty tools
Cleanser & toner, eye care, moisturizers, body treatment
Body lotion, body spray, deodorant, depilatories, etc
Perfume, spray, shower gel, powder, etc
Shampoo, conditioners, treatments, hair color, brushes
Bracelets, necklace, pins, rings, watches, earrings, etc
Apparel, handbags, accessories, footwear
Kitchen, home accents, games & gadgets
Bath & body, fashion, room décor, toys
Skincare, fragrance, grooming, apparel, jewelry, etc

21. Business
Portfolio Beauty
73%, +5%
Fashion
18%, -1%
Home
9%, +0%
NET SALES BY CATEGORY:
DIVEST!
INVEST!
Why?
• No
competitive
advantage
• Incompatible
with the
brand image
Why?
• Have loyal customers
• Compatible with
brand image
• More resources &
knowledge in beauty
area
Sources: Avon Financial Report 2012

22. Website:
• Navigation
• Product/ cost comparisons
• Reviews
Energizing,
Leveraging
the Business
Purchase
•At home
•Online
Shipping
•Delivery time
•Quality
Feedback, platforms,
WOM, Advocacy
Touch-points
Ads:
• Media channels
(billboards, email, online)
Direct marketing:
• Sales rep
Experience:
• Sales rep attitude, knowledge
• Try, touch products

23. Energizing
the Business
Need for innovation
• A purely rep-based system is no longer effective
Brand energizers
• The “New Avon Lady”
• Branded social programs
• Branded sponsorships, brand endorsers
• Holistic marketing plan
Increasing existing customers usage
• Frequent use
• Incentives
• Reminder communications

24. Leveraging
the Business
Brand Extensions:
Expanding Scope:
Viable New Markets:
• 4 geographical divisions
• Distribution channels, Age, Gender
Mark Anew Liz Earle
Makeup, perfum
e
Skin care, hair
care products
Jewelry, fashion,
home items

25. Creating
New
Business
Does Avon need to create new business?
WE DON’TTHINK SO…
BRAND RESTRUCTIZATION
AND NEW BUSINESS MODEL ARETHE KEYS

26. Restructure
Brand
Make Up Skin Care Bath & Body Fragrance
Hair Care
Capitalize on Avon’s competitive advantage: BEAUTY PRODUCTS
Key takeaways: leaner, focus and efficient
Make emphasis on organic make up

27. New
Business
Model
TRANSFORMATIONTIME!
ALLOVERTHEWORLD EXCEPT LATINAMERICA
Old, Door-to-DoorStrategy
Modern, Mobile, Paperless Strategy
Answer survey online to diagnose the problem
Talk with Avon ladies for further consultation if
needed
24 hrs online customer service
CostlyCatalogue
YOUR PERSONALIZED BEAUTY EXPERT

28. New
Marketing
Strategy
Social media Brand Ambassadors
Innovative Advertising Event Sponsorship
• Aggressive
advertising
• Editorial
• PR efforts
• Product
placement
• Sampling
in the
event
• Co-ops
• Integrated
social media
campaign
• Blogger reach
out
• New relevant
brand
ambassadors
• Capitalize on
them

29. Summary
Losing
sustainable
competitive
advantage
Change in
consumers’
habits and
trends
Inconsistent
brand
identity
CHALLENGES:
ASSETS & COMPETENCIES:
High brand
recognition
High customer
loyalty
Control over manufacturing
facilities
No synergy in
product
portfolio

30. Summary
Reduce
Brand
Portfolio
Strengthen
the
Ecommerce
Market
Strategy
Transform
Avon
“Ladies”
Innovative, Sust
ainable
Products
New brand
identity for
Avon
Increase in
sales (market
share)
OUR RECOMMENDATIONS:
Increase in
customer
acquisition
Higher stock
price
RESULT: