Running head: ASSIGNMENT 1: PART A: YOUR MARKET PLAN 1

Assignment 1: Part A: Your Market Plan

Bethany Brennan

MKT/500

May 3, 2015

Strayer University

Avon Products, Inc.

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Introduction:

Avon is the largest direct selling organization in the world, with approximately 3.5 million

independent sales representatives that span over 100 countries. Avon is headquartered in New

York City, NY and 36, 700 employees. Avon started out as company called California Perfume

Company in 1886 selling only perfume. Avon now has sales operations in 65 countries and

territories, including the United States and distributes their products in 43 other countries. Their

business is divided up geographical: Latin America, Europe, Middle East and Africa, North

America and Asia.

Avon’s products span three categories: beauty, fashion and home. The beauty line offers

cosmetics, fragrances, and skin care. The fashion line includes jewelry, apparel, footwear and

children’s products.

Environmental Analysis:

Avon has a longstanding commitment to managing their environmental footprint. Avon

addresses key impacts across their business enterprise and focus on continuous improvement,

with emphasis on areas that are most important to the company, society and the planet. Avon has

made efforts to reduce the environmental impacts and they support sustainable building

practices. Through Avon’s Green Building Promise, they are committed to designing and

building new facilities, as well as making renovations to existing facilities, in accordance with

the U.S. Green Building Councils Leadership in Energy and Environmental Design certification

standards (Environmental Sustainability, n.d.)

In 1990 was the first to eliminated from its product’s composition the CFC gasses

(chlorofluorocarbons) gases which are harmful for the ozone blanket and almost all of their

packaging is recyclable (Palade, 2011).

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Competitive Forces:

Mary Kay is one of Avon’s biggest competitors and looks a lot like Avon. Mary Kay is a broad

company with many product lines but with a younger age segment. Revlon has a much stronger

brand and also has a broader age range then Mary Kay. Revlon has more specific product base

focused only on cosmetics. Finally, there is L’Oreal which is the strongest brand and it targets

the mid 20’s, 30’s and 40’s woman. L’Oreal’s cosmetics are more colorful, trendier and younger.

L’Oreal and Revlon sell their products through mass retailing and they rely heavily on third party

sellers.

Economic Forces:

Avon is a global player in the cosmetic industry. The company operates in 65 countries and

territories worldwide through direct-sales channels. Avon’s products are distributed in 43 other

countries through distributorships. Avon has developed diverse revenue streams such as the

geographical variation helps the company against adverse economic development unique to one

market area. For instance, in FY2013, the company’s largest geographical market, Latin

America, accounted for 48.% of the total revenues, followed by Europe, the Middle East, and

Africa contributing 29.1%, North America accounting for 14.6% and Asia Pacific contributed the

remaining 7.6% (Avon Products, Inc. SWOT Analysis, 2014) For example European markets are

suffering from weak consumer spending. The European debt crisis added more downward

pressure to the growth prospects within this industry (Avon Products Inc. , 2014). Because of

Avon’s diversification it enhances scale of operations and mitigates local market risks and

therefore they are not solely relying on revenues generated in Europe. This diversification has

given Avon the ability to shift their production base to cheaper and more lucrative locations.

This shift to closer end-markets has resulted in lower cost of production giving them an edge
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over their competitors. The shift has also provided an opportunity to Avon to penetrate a large

consumer base and cater to the growing local consumer to raise their sales volumes.

Technological:

Avon representatives have been able to expand their customer base by offering the service of

delivering products to customers that have ordered online to local business such as book stores,

coffee shops, and restaurants. Avon took advantage of the growing trend for online retail and

have been offering their customers free shipping to these local shops. Avon has put in place an

incentive for the local shops that allow these shipments to be made their shops by offering them

part of the commission.

However, according to the Wall Street Journal, Avon is losing traction in the US as more

consumers are purchasing their beauty products online (Avon Products Inc. , 2014). Due to rise

in online retail shopping the need for personal representatives is declining. Avon is competing

against a growing online distribution channel such as Sephora.com. The internet is having a

huge impact in many countries, especially in online retail shopping. With this being said Avon

needs to make their products available online and establish a position within this distribution

channel. Avon has said it will invest $200 million to update its information systems and embrace

digital and social media as selling tools (Avon Products Inc. , 2014).

Legal:

One of the areas that is a great concern to Avon is product counterfeiting because it can cause

damage to a brands image. Counterfeiting goods has spread globally and some factors that lead

to increase counterfeit trade is the growing internet usage and the global economic downturn that

led customers to cheaper prices.

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Another area Avon needs to concentrate on is increasing labor wagers and healthcare costs. The

labor costs for companies in the US have been rising as the healthcare costs and wages increased

in recent times. Due to the tight labor markets, increased overtime, and government mandated

increase in minimum wages are all causing increase in labor costs. Also, healthcare costs for

employers in the US are increasing. According to industry estimates, healthcare costs for US

employers are estimated to grow by 7% in 2014 compared to 2013 (Avon Products, Inc. SWOT

Analysis, 2014). Since Avon employees roughly 36,700 employees and about 4300 work in the

US then rising labor costs can bring down its profit margins.

Primary and Secondary Target Markets

Avon usually targets women between their mid-30’s and up. It targets every type of women

including mothers and a new market for men. But Avon wants to add a new market that is

focused on teenagers because of the growing teen market through the internet, direct selling and

catalogues. Promoting and selling Avon products to teenagers is Avon’s new plan of action to

expand their business into a new product class and paths to distribution. Avon is hiring young

sales representatives to market their brand to attract the younger generation. Avon wants to

portray the image of a positive role models in society.

Avon has segmented it market in the following age groups. Teenagers 16 – 24 years, Middle Age

25 – 35 years old, Older women 35 and above.

Product

Avon has been the leader in first-to-market beauty technologies and have given consumers

breakthrough products that combine beauty and innovation. Avon is known to offer women

around the world products that make them look and feel their best. Avon is divided up between

three lines of product categories:

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 Beauty line – which includes all cosmetic products from make-up to nail polish, hair and

skin care cosmetic products.

 Fashion line – which includes jewelry, watches, accessories, clothing, intimate apparel

 Home line – includes housewares and children’s products

Promotions:

The promotion mix is a combination of the basic tools used to accomplish an organization’s

communication objectives. It includes advertising, sales promotion, direct marketing,

internet/interactive, marketing personal selling and publicity/public relations (Alxandra

Vallarino, 2012).

Advertising is very important for Avon because it has a massive consumer market. The channels

for the ad campaigns would be in magazines such as Glamor, Marie Claire, Seventeen and TV

commercials on stations like Bravo, E! Entertainment because these are the channels that focus

on the younger generation.

Sales Promotion is another very important aspect to the promotional mix. The thought of

providing samples to hand out in stores where Avon is sold would be a great opportunity to reach

new and current consumers. Reaching out to new stores to sale Avon products is also a good

strategy focusing on the stores that the younger generation frequent more.

Internet Interactive – redesigning the current website is crucial step because the younger

generation tends to go to online before stepping into a store. The consumer needs to be able to

navigate the website easily and there needs to be interaction with the consumer on the site.

Price

The company Avon Cosmetics approaches three aspects: the price level, the degree of the price

diversification and the price of mobility (Palade, 2011). Avon bases their pricing for each
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product on their characteristics, targeted consumer category so the prices can vary depending on

the criteria that was based. Overall Avon is medium price for their products and it justified by

the quality of their product.

Placement

Avon distributes most of their product through retail stores and online. A lot of consumers feel

like Avon has lost that appeal of the door-to-door sales approach and Avon is working to get this

image back.

Main Goals

One of the main goals I would like to achieve within the year (short term) is opening the channel

to the younger generation. Get that generation accustomed to and inform them about Avon and

all of the products that they offer. Show this generation the benefits and the cost savings that

they can obtain. I would also like to roll out a more interactive and user friendly website that

peaks the younger generation interest.

I would measure by the reviewing the market shares, customer engagement and the market

margin. With the website I would measure that by the number hits the website receives and the

number of comments that are received about the website.

My five year plan would be to figure out a way to keep the younger generation but also not lose

the generations that made Avon what it is today. I would like to go back to the door-to-door

selling and make Avon more personable and customer interactions. I also would like to develop

a software where kids can on the website and upload a picture of themselves and play with the

makeup on their face so they can see what it would like before purchasing the item.

SWOT Analysis

Strengths Weaknesses
Diverse geographic presence enhances scale Chinese operations marred with controversy
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of operations and mitigates local market risks. and poor performance

Unique business model Dependence on third party suppliers for raw
Portfolio of strong, award winning brands materials
makes the company a preferred choice for
customers
Opportunities Threats
Growing male grooming market Increase in counterfeit products may hurt the
Increasing demand for natural ingredients company’s brand image
New opportunities in the fast growing Increasing labor wages and healthcare
Cosmeceuticals market
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References

Alxandra Vallarino, A. V. (2012, March). Avon.

Avon Products Inc. . (2014, April).

Avon Products, Inc. SWOT Analysis. (2014, November).

Palade, A. (2011, December 15). Analysis of Marketing Mix on Cosmetics Products.