Avon Products Inc. under the leadership of CEO Andrea Jung is at a point where there are opportunities for growth for the organization. However Ms. Jung appears to be indisposed towards taking steps to take advantage of Avon's position. Also her approach is flawed. Let's take a look at her approach and then also look at viable alternatives.
Andrea advocates:
? Partnering with Sears and JC Penny department stores so as to create a store-within-a-store
? Downsize direct selling
The review board criticized Andrea's approach and pointed out that :
? Brand name erosion and sending mixed messages to consumers is a risk when going into partnership with low-end department stores. If Avon goes retail then one might assume that retail products sold in stores being exclusive, then brochure products were of inferior quality.
? Sears and JC Penny stores have a low end image and are recognized as being on the weakest end of the retail market. These stores also lack cosmetic customers.
? The direct sales personnel would resent being transferred to retail sales positions and also would feel their job security threatened if Andrea's plan were implemented.
After the review, Andrea hired an outside consulting group to get up a strategic plan for Avon. These were their recommendations :
? Three-step retail approach
o Distribution of high end spa products in specialty stores.
o Sell a more affordable product line in discount stores
o Extend unique kiosks in the domestic market
This strategy said the consultants would benefit Avon by:
? Specialty stores are growing 4% per year and are attracting affluent baby-boomers which are ever growing segment of the population
? Full line discount stores have high customer traffic, ...