This case study attempts to examine Avon Products, Inc. Company. Avon is the US company with its headquarter in the city of New York. Its mission is to provide high quality, innovative beauty and health products and it is realized through sales representatives who are scattered across the world. It is significant to note that Avon’s global outreach is geared towards satisfying its clientele demands by giving them improved products that are enjoyable (AVON, 2010). The company concentrates on the marketing and manufacturing of beauty products in parts of North and Latin America, Europe, and Asia. Avon promotes its corporate strategy by harmonizing the organizational structure within its company operations in a bid to sustain growth.
Description of the Company
The Avon successful activity failed in 2005, when it suddenly began to lose clients across the world. Central Europe and Russia markets which were directly concerned with the company boom began to stumble as well. Avon dates back to the early 1800s, when it was started by David McConnell, who sold some products to homemakers with the help of direct sales agents (Creswell, 2003). However, it was subjected to several attempts of take over as a result of its failed diversification strategy. Some hopes appeared in the company, when a new CEO James Preston took over in the 1990s. More changes took place with Charles Perrin. Despite their efforts to promote the company to greater heights, little results were achieved (Klepacki, 2006). The company underwent great transformation, when Andrea Jung took over the position of CEO in 1999. The product line has been updated under the leadership of Jung and since he initiated new dynamics into advertising and public image of the company.
Innovation Policies and Strategies at the Company
Avon sales a wide range of products that can be divided into three categories that includes Beyond Beauty, Beauty Plus, and Beauty (AVON, 2010). The third category, which is known as beauty, comprises of fragrances, skin care, cosmetics, and toiletries. On the other hand, Beauty Plus is constituted of fashion jewelry, apparel, watches, as well as accessories (Ferrell, 2010). The other category popularly known as Beyond Beauty is made up of home products, gift and decorative products, toys and candles.
Avon faced a dramatic turn of events in 2005 in which its sales went down by a big margin. During this period, shareholders, who were not satisfied with the management’s actions during the crisis, started walking out. In terms of cosmetics products, Avon is considered the world`s largest direct seller. Selling and marketing strategy of its products involves a combination of marketing by independent representatives from the company, using the internet through avon.com and website by using direct selling (Ferrell & Hatline. 2010).
Avon intends to sustain its growth by achieving its mission and vision through a set of outcomes and targets that the company aims to reach. Its corporate objectives are composed of the financial and strategic goals. Revenues within the company recorded significant growth by 5% from $5,682 million in 2000 to $5,958 million in 2001. It was as the result of 9% increase in units due to the success of the programs, which had been implemented (AVON, 2010). In order to ensure the growth of sales annually, Avon undertakes an initiative to recruit leadership representatives across the globe as well as using the internet effectively to market its products (Goddard et.al, 2004).
The company delivers the cosmetics, accessories, and home products through direct selling and independent representatives assigned by the company carry out marketing process (Creswell, 2003). Previously, it was popular by implementing a door-to-door sale through a network of women fulfilling the activities. Some of the products that have been added to the previous menu include wearing apparel, home d?cor items and jewelry (AVON, 2010). Avon has also extended its operations across the globe and now functions in Latin America, Europe, the Middle East, Africa, Peoples Republic of China and Asia Pacific.
The economic factors can greatly influence the rate, at which consumers purchase products. Developing markets, like Russia and Central Europe, recorded declining amounts of sales in 2005, hence affecting the productivity of Avon in Europe. The great recession that was experienced by several countries in 2008, was another factor that influenced the performance of Avon (AVON, 2010). The spending power of consumers during this time of recession was quite low, hence, few products were being dispatched into the market. Governments in the countries, where Avon operates, have been involved in substantial reduction of the interest rates. It took a lot of time to minimize the rising rate of unemployment (Cadle, Paul. & Turner, 2010).
Financial uncertainty which is connected with the rise of world currency is another threat to the objective of the company. This is an indication that consumers will be alert to spend moneyon premium products. This state of things is going to influence the outcome of sales value and margins. Since the world economy faces difficulties, as incase with the recent recessions, consumers will try to cut out on luxuries, such as cosmetics, which are likely to affect the company. Unlike Tesco, that concentrate its activity on food production and whosecustomers might not do with, Avon products are likely to be affected by the customers cutting down on what they purchase (Klepacki, 2006). Extraordinary growth rates were, however, recorded in central and Eastern Europe markets. The growth of Avon market in Europe was propelled by the Central and Eastern markets where sale revenues were an increased in twenty seven percent in the region.Z