Presented by:

Rizwan Qamar

Overview of this case Avon products, Inc was the world largest direct

seller of the beauty related products. Color cosmetics, hair care

products,fragrances,bath products, skincare products, or jewelry.

Supermarkets, drugstores discount stores, specialty retailers, and departmental stores

Accounted for approximately 93% pf the industry’s $140 billion global sales.

Company History 1886 California Perfume Company by

book sales man David H.McConnell. Door-to-door sales Albee as its first sales agent 10,000 sales representatives Sales offices New York to San Francisco,

California,Luzerne,Pennsylvania and Davenport,Lowa.

Cont’d… In 1914 starts in Canada and sales

milestone of 5 million units. Sales grown to $2 million by 1928. Avon as tribute to beauty of Stratford-

upon-Avon in England. Avon Products,Inc. In 1939 David McConnell Jr. became the

President of the company

Cont’d… In 1946 Avon Products Inc. went to public.its sales grow

at annual rats of 25% and more during 1950. Company rapidly expanded its products line and launched

in dozen International markets. “Avon Calling” advertising campaign Avon’s direct sales model was almost tailor made to the

economic conditions and societal norms of the 1950s and 1960s.

Small % of women professionals and Avon offered opportunity to earn extra income.

Cont’d… Avon sales forces helped increase the company’s

U.S. sales to $ 250 millions and make it World largest cosmetics company.

In 1980s its annual sales averaged more than $3 billion.

Sing of trouble began to appear during recession of the mid 1970s as middle class homemakers began to enter the workforce by 1980.

Avon’s sales had begun to decline due to little appeal with teens and lower-income women found Avon’s products too expensive.

Cont’d… With stalled sales growth in its core cosmetics

business. Avon pursued business diversification to boost its

revenues. It acquired the prestigious jeweler Tiffany &

Company in 1979, fragrance retailers Giorgio Beverly Hills and Parfums Stern in 1987.

Varity of unrelated business such as magazines, retirement properties, health care products,children’s toys and menswear

Financial Highlights Avon Products Inc.1991-2000(in Millions except per share and employees data)

  1991

1992 1993 1994 1995 1996 1997 1998 1999 2000

TR

3441

3660.5

3844.1

4266.5

4492.1

4814.2

5079.4

5247.7

5327.9

5714.6

OP

430.9

339.9

427.4

489.5

500.8

538 537.8

473.2

549.4

788.7

IE

71.5

38.4 39.4 44.7 34.6 33.2 35.5 34.7 43.2 84.7

NI

135.7

175 132.1

195.8

256.5

317.9

338.8

270 302.4

478.4

NI on PS

 0.41

 0.61

 0.46

 0.69

 0.94

 1.19

 1.28

 1.03

 1.18

 2.01

 

Balance sheet data(in millions except employees data)

Total assts 2826.4

25228.6

2433.5

2272.9

2222.4

2052.8

1978.3

1918.7

1692.6 1693.3

Long term debts

208.1 177.7 123.7 116.5 114.2 104.5 102.2 201 701.4 1108.2

Total debts

351.9 215 194.1 177.7 161.5 201.6 234.3 256.3 1007.4 1213.6

Shareholders(Deficit) Equity

 251.6

 310.5

 314

 185.6

 192.7

 241.7

 285

 285.1

 (406.1)

 (215.8)

Number of Employees

 30100

 29400

 29500

 30400

 31800

 33700

 35000

 33900

 40500

 43000

SWOT Analysis

Strengths

Weakness Internal

Opportunities

Threats External

Strengths

Largest direct seller in global CFT industry. Strong Management E-Business E-Representatives Strong R&D Leadership Programs Strong Financial Position

Weakness Mishandling of orders Out of date catalogs Unattractive packaging Lack of innovative products Confusing promotion Late entry in menswear Distribution network Lack of relationship with customers, suppliers

and representatives.

Opportunities Entering new business line Development of innovative products New packaging New channel strategies Menswear market New approach of supply chain New sales models New approach to image building

Threats Busy life style of women Strong competitors Bad image on new generation

“Grandmother brand not for us” Retailing stores, shopping malls for

cosmetics products

ETOPInternal Factors External Factors

Accounts and Finance + Customers +

Marketing + Supplies 0

R & D + Competitors _

Human Resource + Technology _

Production + Govt./Economy/Politics +

Total + Total 0

Ranking the companiesRank Co. Revenue Sales1 L’Oreal $10.6 $10.32 P&G $40.1 $7.33 EsteeLauder $4.4 $4.44 Avon $5.7 $3.55 Intimate Brds. $5.1 $2.46 Alberto Culver $2.3 $2.27 LVHM $9.7 $1.18 Cotyl $1.8 $1.89 J & J $29.1 $1.510 Revlon $1.5 $1.511 Marykay $1.2 $1.2

SAP(Strategic Advantages Profile)

Brand image Global new business line New packaging New channel strategies New promotion

“Lets talk”

Fast order replacement

New approach supply chain E-retailing Easy purchasing Reduce the cost by cutting low value added

activities R&D techniques

Strategy Formulation

Vision “Our vision to be the company the best

understand and satisfies the product, services and self-fulfillment needs of women globally.”

Objectives High sales growth Rebuild brand image Quality products Entering new business lines Value chain Attractive catalogs Proper ordering E-Business

Strategies Implementation

Supply chain Management

Supplier management – sourcing saving Strong links b/w marketing and supply

chain operations Centralized inventory distribution Supply chain planning to reduce cost

Marketing

High quality timely market intelligence Brand focused marketing strategies Integrated category, brand and campaign

planning High style glamorous catalogs

Sales leadership

Improved representative earning opportunities

Faster growth through expanded coverage Full implementation of E-representatives

International

Sales leadership and training Geographic expansion New market entrance New outlets globally

E-Commerce and Internet

Create global web site style guide Utilization of internet in manufacturing,

sourcing Electronic ordering, product information

and order status E-representative

Strategy Evaluation Business Processs Redesign saved

$150million Saved $400 Million in 1998-2000 Reduced Order Processing Cost by

30-90% Internet Strategy Improved Sales by 30% New Catalog Model brought them at

number 3 in UK market

Cont’d… Record Sales of $100 Million by

“Anti-aging Skin Cream” New Products were Developed

“Incandessence”

“Little Black Dress”

Recommendations Focus on niche market E-market should be expand Improvement in beauty products Improvement of Distribution channels Focus on Local sales growth Improve product innovation for fastest

growing CFT

Thank Your Very Much