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Free «Avon Case Study» Essay Sample

Avon Products Inc. is a leading company in the sale of cosmetics that operates in more than 140 countries and is a recognized expert in the field of beauty. The product range includes cosmetics, jewelry, accessories, clothing and household goods. The most famous cosmetics brands are Avon Color, Anew, Skin-So-Soft, Advance Techniques, Avon Naturals, and Mark. Therefore, the company operates in order to take care of female beauty and provide opportunities for self-realization and financial independence in partnership with AVON.

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When Andrea became a president of Avon, she wanted to totally renew the company and its strategy. She managed to create a new image, update the product line and make grandiose advertising campaign for products. She started her activity with a new strategy, mission and goals. Andrea created the attractive new products of the Avon's product line. She made progress and additional opportunities in the e-commerce for Avon and its sales representatives.  Andrea managed to achieve the improvement in supply chain and leadership in sales. She reached the growth of business in the new market and achieved a lot of goals. A grade for her activity would be an "A" because she had developed a great strategy for Avon. It helped to increase sales by 30 % and profits by 40 %. In addition, she had one of the most recognized successes of all times, because Jung became CEO and she was in the list of 50 the most powerful women in American Business.

The strategic vision of Jung for a new Avon implied a company that was going to start the activity of selling not only cosmetics, but also provide any type of goods and services that women needed. By that, the company wanted to become the most trusted source for women of the whole world. Its aim has been to be a company that understands and satisfies the product, service and self-fulfillment needs of women globally.

New strategic direction was a great idea for the company. Because Andrea was able to take into account changes in customers’ needs and how to outrun competitors, she knew what product category needed the investing and what kind of business was more profitable.

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For many years, the company was selling a wide variety of beauty-related products to homemakers through agents of direct sales. However, the company’ strategy was successful not for a long time, so its performance began to falter. David McConnell conducted a diversification strategy, but he failed this attempt as well. Company needed a clever CEO who could make a full transformation of its activity. Therefore, Andrea Jung became a CEO to improve their activity.

Andrea has established the main strategic objective of the company that means the transformations of the market, the improvement of the supply chain, the leadership in sales and in the international e-commerce. These objectives are complex, systemic, attainable, specific, flexible, clear, measurable and motivated. Therefore, they are doomed to success.

The main financial objective was cost cutting. The tools for its achieving were as follows: reducing number of raw material suppliers, shifting production from smaller plants to larger ones, moving manufacturing from high cost nations to lower cost countries.

A great help in the cost cutting was direct selling by making orders online. It made the expenses of Avon Incorporation lower. The strategy was a little bit stretched in time, because Andrea did not fully define time to achieve goals, because her vision to be the “ultimate relationship marketer of products and services for women” seemed inaccessible at first.

Andrea’s activities in strategic direction have been the most successful of all CEOs in the company. With previous CEO, there were such strategies as the advertising, marketing and promotional strategy, developing new product and improving the company’s image, and drafting the program of leadership.

 
 
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A previous CEO started to base Avon’s business on the traditional marketing model of door-to-door selling. It means that company has sold the products directly to consumers.

Under Andrea Jung’s leadership, the information technology and use of the Internet, a Representative sales concept, good advertising and a concept of sales leadership received a wide circulation.

A new strategy was successful in global area and included the innovation in sales, diversification of the production, reducing of the expenses and possibility to purchase products online. The innovation in sales has implied creating the distribution channels beyond direct selling. Product diversification means providing any type of goods and services that women need. The next factor has entailed reducing of the expenses that mean good market segmentation. It could include the segmentation by consumer demography and geography, and then it would be successful. However, different countries have different specifications and types of customers. A new strategy was able to fix this problem.

The last one is online purchasing that includes different discount stores, supermarkets and retail stores on the Internet. People could order a needed product without leaving a computer screen at home, and even received it sitting at home. This innovation has got a great support among the consumers of Avon production, and has given opportunities for better realization of the strategy. The implementation of Avon’s strategy considers business process reengineering. Its reorganization should help in solving problems of eliminating non-value adding costs from its price chain, saving the expenses for transportation and product delivery. Avon’s new strategy raised the brand to a new level that is a very positive moment in its activity. However, there were some problems with the increasing of costs, for example, on the advertising. Because, a new brand needed great promotions and advertising to become one of the most recognized in the world. There are also some problems like reputation of a brand name. Besides, the company had only one sales model and many important processes, and a big dependence on the selling via the Internet. By this strategy, Avon held the title of world’s largest direct seller of beauty related products, and its shares incredibly grew like its sales and profit.

   

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