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Group 8 - Jeffin Shaji Anna Mary Scaria Mathew Febin Charles Sandra Joshy Mohammed Wishah

Avon is a leading social selling beauty company that was founded in the UK. [1] It sells skincare, cosmetics, fragrance and personal care products through a network of over 2.8 million independent sales representatives worldwide. [2] Brazilian beauty company Natura recently acquired Avon for more than $2 billion. [3] Avon targets women customers and segments its market based on age groups such as youngsters, middle aged women, and older women. [4] It focuses on selling directly to consumers through relationships between sales representatives and their customers.

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Febin Charles
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79 views14 pages

Group 8 - Jeffin Shaji Anna Mary Scaria Mathew Febin Charles Sandra Joshy Mohammed Wishah

Avon is a leading social selling beauty company that was founded in the UK. [1] It sells skincare, cosmetics, fragrance and personal care products through a network of over 2.8 million independent sales representatives worldwide. [2] Brazilian beauty company Natura recently acquired Avon for more than $2 billion. [3] Avon targets women customers and segments its market based on age groups such as youngsters, middle aged women, and older women. [4] It focuses on selling directly to consumers through relationships between sales representatives and their customers.

Uploaded by

Febin Charles
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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GROUP 8 –

JEFFIN SHAJI
ANNA MARY SCARIA
MATHEW FEBIN CHARLES
SANDRA JOSHY
MOHAMMED WISHAH
ABOUT THE COMPANY (SNAPSHOT)

• Avon Company is the leading social selling beauty company


• The company was founded by David H. McConnell, Headquartered in London, United Kingdom
• Avon’s product portfolio includes skincare, color cosmetics, fragrance and personal care products,
featuring iconic brands such as ANEW, Avon Color, mark
• Avon was the world’s largest direct seller of beauty products and fifth largest beauty company.
• Avon’s products were sold through a network about 2.8 million sales representatives world wide.
• Company also proudly supports efforts to end breast cancer , domestic violence and also stands for
women empowerment.
• Brazilian beauty company Natura agreed to buy Avon Products for more than $2bn via a share swap
• Natura will hold 76% of the combined business with over $10 billion in annual revenue
MARKET SNAPSHOT

• The global cosmetics market is segmented based on category of cosmetics, mode of sale, gender
and geography. The category segment includes skin & sun care products, hair care products,
deodorants, makeup & color cosmetics etc.

• Global cosmetics market is expected to garner $429.8 billion by 2022, registering a CAGR of 4.3%

• Skincare was the leading category, accounting for about 39 percent of the global market. Hair
care products made up a further 21 percent, while make-up accounted for 19 percent

• A shift of preference towards natural and organic beauty products, particularly in U.S. and
European countries, fosters the growth of natural, herbal and organic beauty products

• Some of the top companies in the market are L'Oréal ,Unilever ,P&G , Estée Lauder , Avon
Financial Ratios compared with peers.

AVON ESTEE LAUDER L’OREAL


Current ratio 1.20 1.71 1.28
Debt/equity ratio 1.13 1.54 0.098
Gross margin 57.8 75.15 73.00
Operating margin 6.56 4.23 18.56
Net profit margin 9.00 4.78 12.55
Asset turnover 0.39 0.80 0.68
Inventory turnover ratio 0.92 1.72 2.76
ROE 0 17.56 12.76
ROA 0 3.91 8.57
ROI 0 7.84 12.08
Q1. Who is Avon’s target market? How can it be
segmented?

Avon has segmented its market in the following Age groups.


• Youngsters: From age of 16 to 24
• Middle aged women: From age of 25 to 35
• Old women: 35 above.
• The company is totally engaged to focus the teens because of large growing teen
market through internet, direct selling, and catalogues.
• Promoting and selling Avon product to the youngsters is Avon’s new plan of action
to expand the business into new product class and paths to distribution.
CONTD.

• Company is finding the young sales representatives with the age lesser and equal to
thirty five, to market their brand to attract the youngsters.

• Avon is focusing on the women possessing high passion and love for beautifying their
body. 
Q2. Should Avon sell direct to the consumer? Why or why not?

Yes, Avon should sell direct to the consumer for the following reasons –

• It provides a great earning opportunity for individuals who are looking to empower themselves financially.

• The advantage of direct selling is that it helps to develop a personal bond between Representative and
client. The process thus becomes about building relationships.

• The Avon method of direct selling helps in nurturing and growing its independent Sales Representatives.

• Direct selling will help the sales representatives to have a flexible schedule as opposed to a fixed working
hours.

• Consumers benefit from direct selling because of the convenience and service it provides, including
personal demonstration and explanation of products, home delivery, and generous satisfaction guarantees.
Q3. What does “selling” mean here? Can the Web do this for Avon?

• “Selling” is giving the customer one-on-one attention and advice to each and every customer who
is a neighbour, friend, or a colleague. So “selling” means the personal connection that sales
representatives have with their customers.

• Often, the customers initially buy from the sales representatives because of this friendly
connection and then continue to buy because of the product quality that they receive from their
friend. Therefore, the Web cannot do this for Avon because that personal connection does not
exist in order to make the sale.

• However, the Web could facilitate the sales process and the customer retention process providing
the one-on-one attention, advice, and question answering a salesperson could do
CONTD.
• The most common way for an Avon representative to find a new customer was through her existing customers.

• Direct selling by women sales representative

• The leadership program allowed a rep to earn additional money by encouraging other woman to become Avon

sales rep

• The beauty advisor program

• Avon ran 26 week selling campaigns

• Full colour brochure featuring the products available for sale

• On an average each customer on a representatives list ordered $20 worth of products per campaign

• Avon provided 100% satisfaction guarantee

• Adoption of eve.com strategy or i-Village model by Avon


Q4. What is the potential for channel conflict here? How might
Avon avoid it?

• Potential for channel conflict is huge in these direct selling businesses, since a lot of other direct
selling companies are there.
• Avon approached a different techniques for direct selling of their products.
• Avon don’t focus on network marketing
• They are organized into single level which frees up their time for selling versus recruitment effort.
• They don’t utilize party plan also.
• Their focus is at selling one on one meeting either at work , over coffee after work, or at home
where the benefits of avon products can explained properly
• Other Direct Selling companies were organized on a multilevel structure, Because they earn from
the sales of their recruiters than from their own sales.
• About 50% Direct Selling companies uses party plan approach.
CONTD.

• Avon representatives works like independent contractors. Avon representative were free to do their own
selling approach that best matched their style.
•  Avon representatives only, have the end customer list rather than company data has.
• Avon representatives had leadership program to earn additional money and another program beauty advisor
programme for advising the customer of selecting and applying the right personnel care products.
• Campaigns conducted by avon of different colour brousures distributed to customers
• Avon representatives also prefer references to other customers
• Avon assigned territories to some representatives who sell free to their friends, relatives and colleages.
• Avon provided 100% satisfaction guarantee to representative and customers. If the customer was
dissatisfied with a product , the representative was responsible for returning the product to Avlon for refund.
Q8. What is the future for these kind of products.
• Advances in nanotech and material sciences will result in a range of materials that are stronger, lighter,
heat and impact resistant, shapeshifting, among other exotic properties. These new materials will
enable significantly novel design and engineering possibilities that will impact the manufacture of future
household products.

• Artificial intelligence systems will discover new thousands of new compounds faster than humans that
can, compounds that can be applied to everything from creating new makeup to more effective kitchen
cleaning soaps.

• The booming population and wealth of developing nations in Africa and Asia will represent the largest
growth opportunities for household product sector companies.
THANK YOU

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