Avon Calls on Foreign Markets



Case Study: Avon Calls on Foreign Markets Name: Roll. No.: Date:AVON:Avon, founded in 1886, is one of the world's oldest and largest manufacturers and marketers of beauty and related products. AVON has adopted ‘The direct-selling model’ to penetrate the markets. According to Avon’s chairwoman and chief executive Andrea Jung independent sales representatives do not work directly for Avon, it makes it easier for Avon to break into new markets. About 5.5 million sales representatives now sell Avon products, be it lip gloss in Shanghai or face powder in Rio de Janeiro (Tarquinio , 2008).Applicability of global marketing operations: Avon does multiple marketing operations in order to achieve organizational success and the competitive advantage over its competitors. It shows the variety of marketing orientation such as marketing, social, customer centric, promotional, production and strategic marketing. Avon generates its major revenue from the direct selling of cosmetics and beauty products through several sales representatives all over the world’s marketing operations are mainly based on direct selling of the product. The company utilizes its orientation with help of various universities in order to meet the need of the customers and offer them the world class products to achieve customer satisfaction. It cut back on the manufacturing, advertising, distribution and marketing costs through utilizing direct sales in order to provide the low price quality items to its consumers. Avon in involved in social marketing operations too as it supports women globally in various issues such as domestic violence and breast cancer (Daniels, Radebaugh, & Sullivan, 2010).Dependency on foreign operations than on its home (U.S.) operations: Avon is mostly dependent on its foreign operations than its home operations; it is because of two reasons 1. High growth opportunities and less competition in foreign market 2. Saturation, tough competition, low growth potential and changing trends of beauty and cosmetic products in the U.S. (Daniels, Radebaugh, & Sullivan, 2010). Direct selling is the backbone of Avon business but door to door selling is no longer lucrative in the current business scenario. Another reason is that Avon realized that only less than 5% of the world women population lived in the U.S therefore the U.S cosmetic population is shrinking. Global market platform provide wider chances for it to improve and enter into the worlds market of cosmetics and beauty products. Raising prices and selling more products in Latin America, its largest market, helped the cosmetics seller Avon Products more than triple its first-quarter profit. More than 80 percent of Avon’s quarterly revenue came from outside the United States and Canada. Avon, based in New York, makes more than 40 percent of its revenue in Latin America, where a 16 percent sales increase helped the company’s total revenue rise 7 percent to $2.63 billion, beating analysts’ average expectation for $2.59 billion ("Latin American market," 2011). Effect of socioeconomic and demographic changes:The role of women is changing in the society. More and more U. S. women were entering the workforce full time. There are many women who are willing to work for par time and spending their time at work. Rising middle class populations in developing countries of boosting economies like china is also providing a huge customer base to Avon. These changing trends of world market are influencing the Avon’s worldwide operations and business in the global economy. Impact of 2008 recession on Avon’s operations:Recession can badly affect the economy of the country so the industries. The global recession such as the one in 2008 might affect Avon's operations in various ways. Avon has number of products such as skin creams which are considered as essential for women. Recession would not affect sale of these essential products even in recession time as these products have become the necessities of the women’s lives. Even in times of declining economy people are going and buying the products. But products which are not considered as essentials will lose sale during the bad economy. In this case sale would be decreased and will affect the revenue of the company (Daniels, Radebaugh, & Sullivan, 2010). Competitive advantages: Avon has many competitive advantages that which contribute in its success worldwide. Some of the competitive advantages include the well-recognized brands with a global visibility, its unique distribution strategies, quality and value products, wide range of product line, unique marketing campaigns and promotions strategies where it uses various celebrities to endorse the products in different countries. Other companies might face difficulty to imitate the competitive advantages of Avon as its strategies are backed up by strong customer loyalty that is the strength of the Avon (Klepacki). Avon’s main competitive advantage is its direct selling approach as the statistics in the cosmetics and personal care market, Avon dominates with more than 5.8 million representatives worldwide and face-to-face sales still account for over 76 percent of all direct sales (Sweeney, 2010).Avon’s way of doing business: Pros and Cons.Avon has many advantages of selling its products directly to the market such as it reduces various overheads costs like operation cost, store maintenance cost, employee management, advertisement costs, promotion costs etc. Direct selling has many of its advantages such as word of mouth acts as a promotion of Avon and because of this customers tend to be quite loyal to the Avon ladies they befriend. It has few disadvantages too like unavailability of the product most of time, products are returned by the customers due to difficulty of matching colors in the catalog with real product etc. Its products are still not available to a large portion of the world's women (Bixler).Criteria of selection of new suppliers:The major criteria for selection of supplier for Avon would be the image and the credibility of the supplier, cost structure of the supplier, conveyance, proximity to the market for easy and fast delivery, quality of the services etc. Avon is a globally recognized brand so the supplier should also have good image in the market so that it can match the quality expectations of the Avon products and can complement its global image. The criteria for where to manufacture the products would be the labor cost, operation cost, potential for market growth, low taxes, easy transportation and low cost structures, good infrastructure etc.Challenges in in today's competitive environment:Globalization and technology advancements have changed the way of today’s businesses. Direct selling is has become a bit obsolete nowadays as most of the companies are moving towards online selling and e-commerce businesses. I believe on this point Avon is lacking. The changing demographics show that people are not entertaining to the direct sellers because of the lack of time and busy schedules. Customers of this modern era want the product whenever and wherever they require or need. Therefore the major challenges that Avon is not to keep up with its competitors’ modern way of doing businesses i.e. e-commerce and online businesses (Daniels, Radebaugh, & Sullivan, 2010).References:Daniels, John, Radebaugh, Lee, & Sullivan, D.P (2011). International business, environment & operations (13th ed). Upper Saddle River, NJ: Prentice Hall.Latin american market lifts profit at avon. (2011, 05 03). The New York Times. Retrieved from , C. (2010). Direct approach works for avon. The New York Times. Retrieved from . J. (2008).Selling Beauty on a Global Scale. The New York Times. Retrieved from , Hartline. Marketing Strategy. Retrieved from .(n.d.). Direct sales company, Avon cosmetics- worldwide recognition.Retrieved from , Duane. Strategic Management: Competitiveness & Globalization, Concepts. Retrieved from Products Inc.: The globalization of the company for women. Retrieved from .. Avon: Building the World's Premier Company for Women. Retrieved from . ................
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