Avon

MARKETING

Case Assignment:

AVON

Actors in microenvironment and forces in the macroenvironment that have been important in shaping Avon's marketing strategies

Microenvironment

The company consist top management, finance, R&D, purchasing, operations, and accounting.

Top management sets the company's mission, objectives, broad strategies, and politics.

E. Preston serves as chair and chief executive of the Avon Company. He changed marketing strategy of the Avon. First, he sold unrelated business and concentrated on- selling cosmetics, fragrances, and toiletries. Second, he cut prices on Avon products. Finally, he tried new compensation program, which was cancelled because of the cultural incompatibility.

Preston developed program called "Avon Select" which featured catalog and toll-free telephone number that allowed direct-mail selling. It supported program by advertising campaign.

In 1997 Preston decided the Company selling products through retail stores. He argued that many customers won't buy Avon products from Avon ladies in a one-on-one situation.

Preston announced the creation of global brands out of its several products and standardize its promotion efforts.

Avon (president of global marketing) partnered with Mattel in 1997 in selling Barbie dolls.

Suppliers- during the 1970s and 1980s the environment changed. Many Avon ladies decided that they needed more than part-time jobs, meaning that labor force supply decreased during these years.

Marketing intermediaries- include physical distribution firms, marketing services agencies and financial intermediaries.

During 1970s and 1980s more women found that they needed to work outside the home. Avon was direct selling company. They met with customers in their homes, showed products, took and deliver orders. As the result of the environmental changes Avon ladies couldn't connect with customers as they were not at home.

Also, Avon ladies decided that they needed more than part-time jobs, as result annual sales force turnover rates soared to more that 200%. Because of the sales force turnover a lot of potential customers who wanted to buy Avon products did not know how to find salesperson or order products. So there was developed "Leadership" program which allowed sales representatives to earn up 21% in bonuses based on the sales of the new representatives they recruited. But the program was abolished in 1991. Another program called "Avon Select" was developed in order to easer customers finding, ordering Avon products.

Customers- consist of consumer markets, reseller markets, government markets, international markets.

The most fraction of the Avon's market consists of consumer markets which are individuals and households that buy goods and services for personal consumption.

Many former and potential customers were stranded as they couldn't find salesperson or order products. 14% of American women accounted for 1/3 of Avon's sales, 62% were fringe customers (they didn't buy Avon products regularly), 15% were potentially receptive to Avon, but were not necessarily interested in dealing with a traditional Avon sales representatives. So there was developed program that offered catalog and toll-free telephone number that allowed direct-mail selling. But median customers was 45 years old and had an average household income of under $30 000. The catalog would reach younger, higher -income customers. So catalog program was supported.

To keep customers, "change we did, change we must, and change we will" Preston asserted. He launched a $30 million ad campaign in 1994 with the theme, "just Another Avon Lady."

Unlike in US Avon's sales in international markets were through retail stores. As many customers won't buy Avon products from Avon ladies in a one-on-one situation Company decided to sell its products in retail stores.

In international markets actually in China market in 1998 Avon's 1.5% of the sales was accounted. Chinese consumers have little money, no credit cards, no telephones, so common means of distribution are the China Post Office, hand delivered door drops, and on-street distribution. Chinese population had huge potential, they like American-made products, especially if they are associated with celebrities.

Competitors-