Executive Summary – Avon Products
Avon Products is one of the major players in the cosmetics and toiletries industry with a sale of about 10 billion US dollars in 2007 (Exhibits 1, 2 & 3). It has been globally competitive by creating global brands and nurturing its powerful sales channel of Single-level Marketing (Direct Selling).
Globally, Avon competes with large cosmetics majors like P&G, Revlon and Shiseido to sell its products. At the same time, it also competes with other major direct sellers like Amway, Mary Kay and Tupperware to attract its sales force. Avon has primarily grown by accessing new geographies and emerging economies such as Poland, Hungary, Yugoslavia and China where disposable incomes are rising and women seek an opportunity to earn extra income.
In the 1990s, Avon was the first direct seller to enter China. Other cosmetics players in the Chinese market faced problems with an under-developed infrastructure and had to rely on Government owned distribution systems to retail their products. However, Avon could leverage its direct selling model to penetrate remote areas and provide customized service to customers.
It also partnered with a local company to develop localized products suitable to the Chinese market. Avon’s strong culture and focus on training helped them to drive their global best practices amongst new franchisees and lower the overhead costs.
In China, Government imposed a ban on direct selling in 1998. In this time of crisis, Avon received support from its Chinese partner and other international direct sellers operating in China to lobby with the Government to allow them to operate. Avon responded by temporarily adopting the retails sales model. This case analysis enumerates Avon’s capabilities and strategies engrai ...