AVON

Ana Inda Joyce Yuli

Agenda

• Overview• Environmental, Market Analysis• Consumer, Competitor Analysis• Internal Analysis • Competitive Advantage• Value Proposition• Brand Equity• Leveraging, Energizing the Business• Creating New Business• Conclusion

• Global Business in 140 Countries

• 6.4 Millions Representatives• Declining Market Share

Overview 1886

1939

1957Avon 100,000

Representatives

1971

1990

2011

2013

USA Cosmetic Market

?

Vanish?

External

Analysis

P E

S T

• Against Animal Testing

• Avon In China• Against Brand

Image

• Economic Recession• Turning Point of

Avon

• Sustainability trend• Go Green

• E-commerce Trend• Digital Marketing

MarketAnalysi

s

Fragrance10%

Personal Care23%

Color Cosmetic

20%Hair Care

20%

Skin Care27%

Beauty Industry

Source: Perry. “A Cosmetic Industry Overview for Cosmetic Chemists”

Total Size: $53.70 billion

Porter Five Factors

• New Entry Competitors

• Substitute Products

• Competitive Intensity

• Power of Customers

• Power of Suppliers

Profitability

Analysis

High

Medium -High

Medium -High

Medium -High

Very High

Competitors

Analysis

Attributes Avon Mary Kay Beauty.com Olay

Products

Service

Channel

Finance

Brand

Manufacturing

Market Share

KSFAnalysi

s

Credible brand

Strong Direct

Marketing Program

Personalized Sales

Experience

Philanthropy

Activities

Vast product

mix

Global presence

Customer

Analysis

• 45 years old

• Married, Mom

• Graphic designer

• Lives in the suburbs of MA

• Middle class

• Penny wise shopper

• Concerned for her image

• She “doesn’t have enough time”

Meet Jennifer:

Financial Performan

ce

Market Share

• 2013 1st QTR : 4%• Operating Profit: $172

million• Operating Margin: 6.9%

31.6%

Source : Avon Official Website

Performance Indicators:

• Leading global beauty company

• World's largest direct seller

• Top of the Customer Satisfaction

Survey

• Ranked #2 in Top 50 cosmetics

brands

• Oracle Hyperion-based EPM

SWOTAnalysi

s

S W

O T

Direct Selling LeaderCommitted WorkforceSelf-Own Facilities

Decrease SalesLow Brand LoyaltyWeak Brand image

Green Products Trend Anti-Aging ProductsUrban Trendsetter

Inflation RatesRising Costs of commodities Low Internet Selling

Competitive

Advantage

Basis of Competition

Where You Compete

What You Offer

Way You Compete

• Manufacturing• Avon Lady• Consumer Data

• Beauty Industry• Olay, Mary-Kay • Global

• Customized Products

• Flexible Schedule• Personal

Connection

• Direct Selling• E - Commerce• Own facilities

AVON is the best at understanding the modern woman because they interact with her daily, on a personal level.

Competitive

Advantage

Value Propositi

on

TARGET

Mass Market Woman Age

25-50

VALUE

Low Price with a Personal

Connection

OFFER

Beauty, Fashion and

Home

BENEFIT

Understands Consumer

Needs

POD

Customized Products

PROOF

Direct Selling and the Avon

Lady

Value Proposition

Value Propositio

n

FOR the busy, modern, working woman WHO struggles to find time to purchase make-up, Avon IS a direct seller of beauty products THAT creates a customized make-up palette for you, on your time.

THE COMPANY FOR WOMEN

• Flexible Schedules• Knowledgeable Avon Ladies• Established Reputation

Brand Identity

Essence Understand women's needs more than they do globally.

Core Extended Identity

Direct Selling 6.4 millions representative in 140 countries

Positive Brand Image

Walk for Breast CancerClose Tie with APF

Brand Equity

High Brand Awareness

- Walk for Breast Cancer- 125 old Company

High Brand Loyalty

- #41 Best Global Green Brands- #6 Top 50 Cosmetics Brands- #20 Valuable U.S. Retail Brands

Brand Association

Reliable

Eco -Friendly

Direct Seller

Business &

Brand Portfoli

o

BCG GROWTH-SHARE MATRIX

High Low

Low

Hig

h

Mark

et

Gro

wth

Rate

Competitive Position

Problem Child!

Business &

Brand Portfoli

o

GE – MCKINSEY MATRIX

Selective Investment!

High Medium Low

Low

Med

ium

Hig

h

Busi

ness

Posi

tion

Market Attractiveness

Business

Portfolio

Make Up

Skin Care

Bath & Body

Fragrance

Children

Home

Fashion

Jewelry

Hair Care

Men

Lips, eyes, face, nails, beauty tools

Cleanser & toner, eye care, moisturizers, body treatmentBody lotion, body spray, deodorant, depilatories, etcPerfume, spray, shower gel, powder, etc

Shampoo, conditioners, treatments, hair color, brushesBracelets, necklace, pins, rings, watches, earrings, etcApparel, handbags, accessories, footwear

Kitchen, home accents, games & gadgets

Bath & body, fashion, room décor, toys

Skincare, fragrance, grooming, apparel, jewelry, etc

Business

Portfolio

Beauty73%, +5%

Fashion 18%, -1%

Home9%, +0%

NET SALES BY CATEGORY:

DIVEST!

INVEST!

Why?• No

competitive advantage

• Incompatible with the brand image

Why?• Have loyal

customers• Compatible with

brand image• More resources &

knowledge in beauty area

Sources: Avon Financial Report 2012

Website:• Navigation• Product/ cost

comparisons• Reviews

Energizing,

Leveraging the

Business

Purchase• At home• Online

Shipping• Delivery time• Quality

Feedback, platforms, WOM, Advocacy

Touch-pointsAds:

• Media channels(billboards, email, online)

Direct marketing:• Sales repor

Experience:• Sales rep attitude,

knowledge• Try, touch products

Energizing the

Business

Need for innovation• A purely rep-based system is no longer effective

Brand energizers• The “New Avon Lady”• Branded social programs• Branded sponsorships, brand

endorsers• Holistic marketing plan

Increasing existing customers usage

• Frequent use• Incentives• Reminder

communications

Leveraging the

Business

Brand Extensions:

Expanding Scope:

Viable New Markets:

• 4 geographical divisions

• Distribution channels, Age, Gender

Mark Anew Liz Earle

Makeup, perfume

Skin care, hair care products

Jewelry, fashion,

home items

Creating New

Business

Does Avon need to create new business?WE DON’T THINK SO…

BRAND RESTRUCTIZATION AND NEW BUSINESS MODEL ARE

THE KEYS

Restructure Brand

Make Up Skin Care Bath & Body FragranceHair Care

Capitalize on Avon’s competitive advantage:BEAUTY PRODUCTS

Key takeaways: leaner, focus and efficient

Make emphasis on organic make up

New Business

Model

TRANSFORMATION TIME!ALL OVER THE WORLD EXCEPT LATIN AMERICA

Old, Door-to-Door Strategy

Modern, Mobile, Paperless Strategy

Answer survey online to diagnose the problem

Talk with Avon ladies for further consultation if needed

24 hrs online customer service

Costly Catalogue

YOUR PERSONALIZED BEAUTY EXPERT

New Marketin

g Strategy

Social media Brand Ambassadors

Innovative Advertising Event Sponsorship

• Aggressive advertising

• Editorial• PR efforts• Product

placement

• Sampling in the event

• Co-ops

• Integrated social media campaign

• Blogger reach out

• New relevant brand ambassadors

• Capitalize on them

Summary

Losing sustainable competitive advantage

Change in consumers’ habits and

trends

Inconsistent brand identity

CHALLENGES:

ASSETS & COMPETENCIES:

High brand recognition

High customer loyalty

Control over manufacturing facilities

No synergy in product portfolio

Summary Reduce Brand

Portfolio

Strengthen the

Ecommerce Market Strategy

Transform Avon

“Ladies”

Innovative, Sustainable

Products

New brand identity for

Avon

Increase in sales (market share)

OUR RECOMMENDATIONS:

Increase in customer acquisition

Higher stock price

RESULT: