What Should Avon Do to Be More Competitive?

AVON -- Foreign Markets

The marketing strategies that the reading assignment offers include Avon's style of selling -- which is direct sales door-to-door -- and the women who sell door-to-door actually go back to the home where they sold and deliver the products. Another strategy is to sell using the Internet (personal web pages), and selling to friends, colleagues and family (Chapter 16, p. 622). Also, using universities in China, Japan, Australia and Thailand to be part of the development of new products is highly relevant to Avon's global initiatives. Keeping original product names is a wise move for Avon; though they bought Justine in South Africa, they kept "Justine" as the brand (623). Running short campaigns is also smart marketing, because prices can be quickly adjusted based on how inflation is eating into consumers' pocketbooks (623). Using billboards and media advertising is what many companies do, is a wise move in foreign markets. Even going to the lengths of sponsoring global summits, showing they really care about the lives of women worldwide by aiding in the fight to defeat breast cancer and domestic violence is brilliant (624).

Question Two: Avon is dependent on foreign markets because, according to Chapter 16, the potential for growth in the United States was not seen as viable. Why? Because the competition with other beauty-related companies was considered unwise; the Chapter 16 narrative says that Avon preferred to go overseas because there was far less competition there and yet huge markets -- with millions of potential customers -- available.

Question Three: As to how socioeconomic changes could affect Avon, first of all Avon is reported to have a "shaky foundation" because the company has resisted using digital media, and that is hurting Avon (Shayon, 2012). While door-to-door operations are still viable, especially in foreign markets, those door-to-door Avon ladies are competing against "a growing online channel" of Internet-related companies, Shayon writes. Working women are often not at home to receive a personal call from an Avon lady, so these women in this socioeconomic group find it convenient to buy products online from Beauty.com, Drugstore.com (Walgreen's companies), and Sephora.com (Shayon). The demographics show that women over 65 still prefer Avon products, and they relate to the person-to-person sales strategies of Avon. But millions of younger women prefer to buy online. As Forbes' journalist Richard Levick writes, Avon's "…delivery system is outmoded" (Levick, 2012). "If Avon is to join the 21st century, it's got a big task on its hands," Levick writes.

Question Four: A global recession (like the one that began in 2008) can be disastrous for Avon. Recently Avon's earnings "…plunged 70%" because of exchange rates on its foreign investments and because in 2012 the world was just beginning to pull out of the recession (Forbes YCharts, 2012). Also, "…fewer women bought its makeup from its army of discontented door-to-door saleswomen" (Forbes, 2012). Also, Avon has been involved in a bribery scandal overseas, and that has hurt its reputation (Forbes, 2012).

Question Five: There is a serious question today as to whether or not Avon really has competitive advantages. All the recent journalism research shows that Avon is not in a situation giving them competitive advantage; this is also based on the fact that "…the company does not have much must-have products that generate buzz…and shareholders might be losing patience" (Ho, 2011). However, there are good opportunities for competitive advantages (growth) in Asia, and Avon has also done well in Romania. In 1997, Avon opened up a company to produce Avon products, and enjoyed sales in the neighborhood of "5 million products between 1997 and 2012," to "over 6 million customers" (Racolta-Paina, 2014). And in spite of a drop of 25% in sales between 2010 and 2011, the company has rebounded to "Ten million Euros" in 2014.

It should be explained that Avon in Romania (and Bulgaria, Albania, Moldova and Macedonia, all countries served by the production of the products in Romania) doesn't just use door-to-door Avon lady sales strategies; it uses an integrated marketing campaign. Since there is very little competition in these European countries, Avon also uses: a) print and broadcast ads, using national celebrities; b) brochures (each salesperson buys brochures to hand to customers; each campaign is about 3 weeks, and new brochures come out with each new campaign); c) point-of-purchase displays (located in shopping areas / malls, these displays let customers know how to get in touch with sales representatives, and how to become a sales representative); d) promotional activities (gifts, samples, coupons, rebates); and e) sponsored events (concerts, TV shows, causes like breast cancer awareness) (Racolta-Paina, pp. 191-192).

Question Six: The strategy of selling outside of retail businesses is looking more and more like a failure for Avon. There are advantages, especially when selling door to older women who are no longer in the workforce (research suggests that women over 65 prefer a face-to-face relationship with a sales person). But there are many disadvantages to distributing outside of retail stories, and it has been mentioned in this paper that most cosmetic companies have a strong presence online, which Avon does not. Today's working woman would rather buy her cosmetics either during weekend shopping excursions to Macy's, Target, etc., or online. Digital sales are huge, and by falling behind in this aspect of sales Avon has taken a hit in terms of sales.