AVON Calls on Foreign Markets Avon Believed

AVON Calls on Foreign Markets Avon believed that having regionalized new product development centers, supply chain operations, marketing and sales divisions would make them more competitive in foreign markets. Ironically the exact opposite happened, as the case illustrates. Avon's performance was drastically reduced and the duplication of effort crippled the organization. Unfortunately the highly decentralized, market-driven organizational structure that Avon had such high expectations for failure to deliver the results needed to keep the company growing.

The net outcome of the highly decentralized organizational structure was a massive duplication of effort and cost overruns; the organizational structure turned into more of a liability than strategic asset. The goal of this case analysis is to explain and recommend how Avon can regain profitability while also attaining a higher level of internal new product development, production and selling efficiency.

Another objective of this analysis is to evaluate how Avon can attain a higher level of performance and profits through better alignment of their research & development (R&D), new product development, marketing and global supply chain operations into a unified strategic marketing platform for growth. Marketing Strategy and Segment Definitions Need Greater Accuracy Like many consumer packaged goods (CPG) companies who are multinational (MNC) in scope, Avon faces the daunting task of meeting the diverse cultural expectations and requirements of each country and region they operate in.

There are very wide variations in the cultural, religious and national aspects of each of these cultures that Avon competes in. Attempting to meet all expectations across all cultures will lead to none being met as focus and consistent effort will be lost. Exacerbating the lack of focus is the conflicting demographic segments the company sells to as well. Avon's core target market of Gen X and Baby Boomer women are the most potentially profitable given the preoccupation with looking younger.

Of these two segments, the Baby Boomer age group is of particularly of interest on a global scale, as demographic and psychographics studies suggest they are the most focused on the appearance of being younger than they chronologically are. Avon must also confront and overcome the dilemma of their Millennial and Gen Y women customers wanting to appear older and mature.

Psychographic studies completed by the company highlight the fact that Millennial and Gen Y women have an urgent need to appear older and more mature, as they see themselves competing for more prestigious, higher-paying jobs. These insights into customer behavior and preferences are just one of the many facets of the challenges Avon is facing in the context of this study.

The orchestration of new product development, strategic sourcing and supply chain management (SCM), and the development of procurement and local marketing practices further complicate the strategic direction of the company. As is evident in the first sections of the case, Avon lacks a galvanizing strategy that can unify the entire organization to a common strategic marketing plan. Fragmentation of the new product development process, market planning, market strategy, sales and distribution are evident in the first sections of the case.

It is also clearly a chaotic situation and one, if left unchecked, will proliferate and lead to a complete lack of governance. With no governance in place, Avon will find creating even the most simplistic process a challenge. The warning signs of what Avon will be like in an increasingly deteriorating level of governance are evident in the case. The core areas of new product development, procurement, supply chain management are out of synchronization with one another and quickly lead to high cost overruns on production runs.

There's also a very high level of duplicated effort across the company as well, leading to unnecessary costs and confusion over accounting, finance, gross margin and pricing strategies. A preliminary governance framework would have alleviated these major drains on the financial resources of Avon. A governance framework would have also allowed for greater levels of branding and messaging consistency on a global level. Inherent in an effective governance framework is consistency of brand values, messaging and segment-based definitions of key differentiators.

Avon didn't have this, which further fueled the massive duplication of effort and wasted resources. As is the case with.