1 Lucia Procivňáková Veronika Sviteková. 2 The Story Line… How It All Began Where Avon Is Now Avon Vision And Mission Financial Data Products Who Are

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Lucia Procivňáková

Veronika Sviteková

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The Story Line…

• How It All Began• Where Avon Is Now• Avon Vision And Mission• Financial Data• Products• Who Are Avon Competitors• What Are Avon Practices• 14 Years In Slovakia

1. About AVON

2. Problem Definition

• Why We Are Here• Perspective/Context• Basic Questions To Be Solved• Criteria For Success• Scope• Constraints• Decision Makers

Avon basics

Avon today

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1. ABOUT

AVON

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How It All Began...

• in 1885, California Perfume Company was founded by David McConnell

• business based on several factors: direct sales image of the company that captured

California's beauty and excitement national network of sales agents

developed earlier

• by 1969, manufacturing plants, distribution centers and sales branches throughout the world

Source: www.avon.com November 2005

Established in 1985 in California

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… Where Avon Is Now

• corporate offices in New York, USA

• primarily: door-to-door or direct-selling basis

• product line: cca 600 items• pricing: moderate

• world's largest direct-selling organization and merchandiser of beauty-related products

• world's largest manufacturer and distributor of fashion jewelry


World’s largest in direct sales and jewelry manufacturing

Direct sales of 600 products

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Avon Vision…

• The Global Beauty Leader• The Women's Choice for Buying• The Premier Direct Seller• The Best Place to Work• The Largest Women's Foundation• The Most Admired Company

…And Mission

To be the company that best understands and satisfies the product, service and self-fulfillment NEEDS OF WOMEN - GLOBALLY


Global beauty leaderoriented on women and the best place to work

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Net Sales (In Million $)

2003 2004Year

+13%

Net Sales Increased By 13%Between Years 2003 And 2004

Financial Data from Annual Report

$6,774$7,656

Source: www.avon.com Financial Annual Report, November 2005

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Net Income (In Million $)

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600

800

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$665

$ 846

+27%

Net Income Increased By 27%Between Years 2003 And 2004


2003 2004Year


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Cash Flow from Operations (In Million $)

$745

$883

+18%

20042003 Year

Cash Flow Operations IncreasedBy 18% Between Years 2003And 2004



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Products

• SKIN CARE

• MAKEUP

• HAIR CARE

• FRAGRANCES

• BATH

• JEWELRY & MORE

6 product lines, 600 products

Source: www.avon.com, November 2005

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Who Are Avon Competitors

Direct-selling industry: – few large, well-established firms &

many small ones that sell about any product imaginable

competitors:Mary Kay (cosmetics), Amway (home maintenance products), Shaklee Corporation (vitamins and health foods), Encyclopedia Britannica, Tupperware (plastic dishes), etc.

competitors:Procter & Gamble, Unilever, Revlon (Max Factor, Almay), Estée Lauder, L'Oréal, etc.

Direct sales /all kinds of products/

Department stores/cosmetics and personal care/

Source: authors

Stores offering beauty products :- regular stores, supermarkets, hypermarkets, drugstores, independent retailers, specialized beauty stores

2 basic types of competition: direct sales and department stores

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What Are Avon Practices

Operations that demonstrate respect for the environment - efficient use of natural resources, waste minimization, reuse and recycling practices

No Animal Testing

Environmentally conscious

Safe products

Helping the community

Avon does not conduct animal testing on any of its products or raw ingredients

The safety of every product must be substantiated prior to product introduction.

Fight against breast cancer, support for women's empowerment programs, and issue of domestic violence


Concerns for social

issues

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…15 years in Slovakia

Avon started in the Slovak market in 1991

Avon expanded relatively quickly and with success

Offers products through direct-sales - Avon Lady/Avon Gentleman

Serves more than 3,6 million customers

Employs 50 employees

Offers flexible income

Source: www.avon.sk, November 2005

Avon in Slovakia Today

Starting up in Slovakia

Customer-oriented &

flexible

Long & successful

tradition

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2. PROBLEM DEFINITION

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Why We Are Here…

2. Basic question

to be resolved

6. Decision makers

1. Perspective / Context

3. Criteria for success

4. Scope of solution

space

5. Constraints within the solution space

Source: authors

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1. Perspective / Context

In general, the effectiveness of the Avon sales force has declined in recent years due to:

- increasingly sophisticated customer - competition of other mass merchandisers

They are paid commissions in the amount of 20%-50% of the price of products they sell

In Slovakia, the only way Avon sells its products is via its local independent sales representatives

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Quite a costly way of doing business

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= What led the Avon management to invite a consulting company?

Source: authors

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2. Basic Question To Be Solved

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Based on the current situation, Avon local management in cooperation with our consulting company defined the problem as follows:

What would be the best sales model for Avon in Slovakia?

Being more specific, the task we will be dealing with is:

Design a new, most effective sales model for Avon operations in Slovakia, prepare a framework plan for its implementation, and guide the implementation process as such.

= What are we here for?

Source: authors

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3. Criteria For Success

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= How will we measure our success?

2. The following schedule is kept:

The project was successful if:

A) ½ year for designing the new model and providing for its successful implementation

B) next ½ year for implementation of communication campaign

C) 1 year for shifting the abovementioned % of Avon customers to the newly designed sales channel(s)

1. In 2 years after the project has begun, 20% of Avon customers shift to the newly designed sales channel(s)

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4. Scope…

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= What are the limitations the Avon management has established?

3. No cutting of the number of sales force, at least not directly.

2. Budgetary constraints.

1. The effects must be visible in maximum of 2 years.

Source: authors

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5. Constraints…= How are we limited by the conditions in the Avon’s external environment?

Commercial Law – meeting the legal requirements for conducting sales in any of the possibly proposed forms Work Law –

minimum wages / salaries, working hours

Regulations of the Council for Advertising – meeting the ethical as well as legal requirements regarding the content and context of advertising campaigns

Source: authors

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6. Decision Makers= Who has the final say over the project proposals?

• CEO for SR

• Sales and Marketing Manager SR

Possibly vetoed by:

• Person at Avon’s US Headquarters responsible for strategic decisions regarding sales channels

Source: authors

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To be continued...

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• Backupy

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ProductsProduct Line Brands

SKIN CARE

Anew

Avon Skin Care

Basics

Clearskin

Moisture Therapy

MAKEUP

Avon Color

Beyond Color

Hydra Finish

Perfect Wear

Color Trend

HAIR CAREAdvance Techniques Hair Care

Herbal Care

FRAGRANCES one new product each year

BATH

Skin-So-Soft

Naturals

Aromatherapy

Footworks

Avon Bubble Bath

Milk Made

JEWELRY & MORE

jewelry - fashion, classic and seasonal

apparel - watches, shoes and purses

gifts - collectibles, toys and unique gifts

Around 600 items in their product line

Cosmetics, skin care, and fragrance

The worlds largest manufacturer and distributor of fashion jewelry


Documents

1 Lucia Procivňáková Veronika Sviteková. 2 The Story Line… How It All Began Where Avon Is Now Avon Vision And Mission Financial Data Products Who Are