Strategic ManagementStrategic Management

Amyn JessaAmyn Jessa -- 36403640Shahmeena Shahmeena KhanKhan -- 37383738Hafizuddin HalimHafizuddin Halim -- 34493449Muhammad IqbalMuhammad Iqbal -- 34453445

M. Hanif FataniM. Hanif Fatani - 2686 - 2686

Table of ContentsTable of ContentsEXECUTIVE SUMMARY

INDUSTRY ANALYSIS

STRUCTURAL ANALYSIS OF THE INDUSTRY

STRATEGIC GROUP ANALYSIS

KEY DRIVING FORCES

KEY SUCCESS FACTORS

SWOT ANALYSIS

EFAS

COMPANY ANALYSIS (MISSION, OBJECTIVE, STRATEGY)

VALUE CHAIN ACTIVITY

FINANCIAL ANALYSIS

IFAS

Table of ContentsTable of ContentsBCG, GE AND GRAND STRATEGY MATRIX

SPACE

IDENTIFICATION OF KEY ISSUES FACED BY THE COMPANY

TOWS MATRIX

LONG TERM STRATEGIES

ANNUAL OBJECTIVES

PROFORMA STATEMENT

IMPLEMENTATION

Executive SummaryExecutive SummaryAvon has a three distribution channel: Direct Selling, Limited Avon has a three distribution channel: Direct Selling, Limited Retailers, Online. Avon has a large number of sales representatives Retailers, Online. Avon has a large number of sales representatives due to which it is the largest selling brand. due to which it is the largest selling brand.

From a few years there is a slow growth in the sales because From a few years there is a slow growth in the sales because change in the customer preferences and customers habit. The change in the customer preferences and customers habit. The mobility of people are increasing, more women are working and mobility of people are increasing, more women are working and many men now coming towards personal care products in order to many men now coming towards personal care products in order to make their personality attractive in the work environment. make their personality attractive in the work environment.

The older citizens like to shop in convenient place so that is why The older citizens like to shop in convenient place so that is why Avon is successful in this market. At the other side due to the lack of Avon is successful in this market. At the other side due to the lack of the new innovation for Generation Y and men, they have bad image the new innovation for Generation Y and men, they have bad image in these markets. in these markets.

They need to improve their brand image by promotion in these They need to improve their brand image by promotion in these areas. Baby boomers prefer high quality and they are the core areas. Baby boomers prefer high quality and they are the core customers of Avon but due to the lack of providing information and customers of Avon but due to the lack of providing information and education about their products, the satisfaction of these customers. education about their products, the satisfaction of these customers. Avon needs to develop new products according to the specific Avon needs to develop new products according to the specific needs of the specific customer segment. needs of the specific customer segment.

Executive SummaryExecutive Summary

The website of the company is not fully The website of the company is not fully advertised and due to the decentralization advertised and due to the decentralization system in the website. The brand image of the system in the website. The brand image of the company is affecting so they need to have a company is affecting so they need to have a centralized website system and providing other centralized website system and providing other services like free coupon, free sample, price services like free coupon, free sample, price discounts, and tips of beauty. discounts, and tips of beauty.

Avon needs to expand its business in Asia, and Avon needs to expand its business in Asia, and other emerging economies like Taiwan, Russia other emerging economies like Taiwan, Russia and China.and China.

General Environmental FactorsGeneral Environmental FactorsPOLITICAL FACTORSPOLITICAL FACTORSFederal Food Drugs (FD&C) and Fair Packaging and Federal Food Drugs (FD&C) and Fair Packaging and labeling act (FPLA )labeling act (FPLA )

Present ImpactPresent Impact1.1. Personal care Industry most of the products are Personal care Industry most of the products are

used in the sensitive areas of the body therefore used in the sensitive areas of the body therefore testing are important for ensuring the quality of testing are important for ensuring the quality of products.products.

2.2. Companies are implementing self inspections Companies are implementing self inspections systems and the quality of products remain sustain.systems and the quality of products remain sustain.

Future impactFuture impact In future the key to success will depend upon In future the key to success will depend upon 1.1. Good relation with regulation officerGood relation with regulation officer2.2. Self InspectionsSelf Inspections

POLITICAL FACTORSPOLITICAL FACTORS

No change in tax since 3 yearsNo change in tax since 3 yearsPresent Impact: Present Impact:

1.1. The Operating income in personal care industry The Operating income in personal care industry is increasing because of no change in the is increasing because of no change in the income tax since 3 yearsincome tax since 3 years

2.2. Therefore numbers of new entrants are Therefore numbers of new entrants are increasing.increasing.Future Impact:Future Impact:

1.1. The Fixed cost would remain same, the industry The Fixed cost would remain same, the industry will remain profitable and investments will will remain profitable and investments will increase in this industry.increase in this industry.

POLITICAL FACTORSPOLITICAL FACTORS

PATENTSPATENTSPresent ImpactPresent Impact

1.1. The companies are protecting their products and The companies are protecting their products and manufacturing mechanism by patent.manufacturing mechanism by patent.

2.2. They can build their brand image and loyalty by They can build their brand image and loyalty by giving consistent quality of products to giving consistent quality of products to customers. customers. Future ImpactFuture Impact

1.1. Brand loyalty and image will increase due to Brand loyalty and image will increase due to patent of products and techniques.patent of products and techniques.

Economical FactorsEconomical FactorsInflation Rate :Inflation Rate :% change Inflation% change InflationUSA 1.9USA 1.9Present ImpactPresent Impact

1.1.Inflation is increasing due to which profit Inflation is increasing due to which profit margin is decreasing because of margin is decreasing because of increasing in operating cost.increasing in operating cost.Future ImpactFuture Impact

1.1.In future Industry will have to face increase In future Industry will have to face increase in variable cost.in variable cost.

Economical FactorsEconomical Factors

GDPGDPIn the third quarter of 2000, according to revised In the third quarter of 2000, according to revised estimates, current- dollar gross domestic product (GDP) estimates, current- dollar gross domestic product (GDP) rose 3.8 %( US).rose 3.8 %( US).

Present Impact:Present Impact:1.1. Personal Care industry shows growth in 2000 due to Personal Care industry shows growth in 2000 due to

which sales of firms continue to grow.which sales of firms continue to grow.

Future ImpactFuture Impact1.1. Consumption of personal care industry will increase as Consumption of personal care industry will increase as

result Personal care industry products will become the result Personal care industry products will become the necessity.necessity.

Economical FactorsEconomical Factors

NATIONAL INCOMENATIONAL INCOME

Present ImpactPresent Impact

1.1. Use of cosmetics is increasing because the Use of cosmetics is increasing because the buying power of consumer is increasing in US. buying power of consumer is increasing in US.

Future ImpactFuture Impact

1.1. Personal care industry will expand and become Personal care industry will expand and become more attractive because of increase in the more attractive because of increase in the national Income of working women and Baby national Income of working women and Baby Boomers (expected growth 16%). Boomers (expected growth 16%).

Economical FactorsEconomical FactorsCONSUMPTION PATTERNSCONSUMPTION PATTERNS

Purchasing % of Personal care ProductsPurchasing % of Personal care Products1.1. Baby Boomers 98%Baby Boomers 98%2.2. Generation X 97%Generation X 97%3.3. Generation Y 13.1%Generation Y 13.1%4.4. African Americans 64%African Americans 64%

Present ImpactPresent Impact 1.1. In personal care Industry most of the firm are focusing In personal care Industry most of the firm are focusing

on the baby boomers because of the purchasing on the baby boomers because of the purchasing percentage of the personal care products. Women’s are percentage of the personal care products. Women’s are their core customer.their core customer.Future Impact Future Impact

1.1. Generation X, Y and African Americans will be more Generation X, Y and African Americans will be more attractive and profitable market in futureattractive and profitable market in future

Socio-Culture FactorsSocio-Culture FactorsChange in the perception of males Change in the perception of males consumersconsumers Influence by services rather than advise of wife.Influence by services rather than advise of wife. Men prefer those companies which specifically target Men prefer those companies which specifically target

them them

Present ImpactPresent Impact1.1. Companies offering masculine packages, Companies offering masculine packages,

services and to promote the brand image by services and to promote the brand image by advertising in which they are aimed. advertising in which they are aimed. Future ImpactFuture Impact

1.1. The product line of male products of companies The product line of male products of companies will increase to satisfy their male customers will increase to satisfy their male customers needneed

Socio-Culture FactorsSocio-Culture Factors

WORKING WOMENWORKING WOMENPresent ImpactPresent Impact

1.1. Consumption is increasing because currently Consumption is increasing because currently more than half % women are working and in more than half % women are working and in future it will be high. future it will be high.

2.2. And women are the core customers of the And women are the core customers of the personal care industry.personal care industry.Future ImpactFuture Impact

1.1. Personal Care industry will be more profitable Personal Care industry will be more profitable and they have to adopt the various distribution and they have to adopt the various distribution channels to access the working women.channels to access the working women.

Socio-Culture FactorsSocio-Culture Factors

HEALTH AND EDUCATIONHEALTH AND EDUCATIONUsage of computer is increasing Usage of computer is increasing More health consciousMore health consciousPresent ImpactPresent Impact

1.1. Personal care firms are adding natural ingredients in Personal care firms are adding natural ingredients in their products because people have strong believe their products because people have strong believe about the benefit of natural ingredients.about the benefit of natural ingredients.

2.2. Trends in online selling is increasing. Companies offer Trends in online selling is increasing. Companies offer tips of health and beauty. tips of health and beauty. Future ImpactFuture Impact

1.1. In personal care Industry those companies will survive In personal care Industry those companies will survive who will educate and inform customers about their who will educate and inform customers about their products well.products well.

Socio-Culture FactorsSocio-Culture Factors

LIFE STYLE CHANGELIFE STYLE CHANGELess time for shoppingLess time for shoppingFashion and trend followerFashion and trend followerIncrease in mobility of people Increase in mobility of people Present ImpactPresent Impact

1.1. Due to above changes in the lifestyle of the people, the Due to above changes in the lifestyle of the people, the Industry is focusing in various distribution channels to Industry is focusing in various distribution channels to access the customersaccess the customers

2.2. They need a strong analysis of fashion and trends, and They need a strong analysis of fashion and trends, and innovation of a new trendy product which are tailored to innovation of a new trendy product which are tailored to specific needs of consumers. specific needs of consumers. Future ImpactFuture Impact

1.1. More innovation will be needed in the products and More innovation will be needed in the products and distribution channels .distribution channels .

Socio-Culture FactorsSocio-Culture Factors

Asian Americans prefer quality Asian Americans prefer quality Y generation prefer quality with affordable pricesY generation prefer quality with affordable pricesMales are less price sensitive Males are less price sensitive Baby Boomers prefer high quality Baby Boomers prefer high quality Present ImpactPresent Impact

1.1. The companies which are targeting Baby Boomers , The companies which are targeting Baby Boomers , Males and Asians Americans they offer average to high Males and Asians Americans they offer average to high quality products at high prices. quality products at high prices.

2.2. The companies focusing on the Y generation they give The companies focusing on the Y generation they give products at affordable prices.products at affordable prices.Future ImpactFuture Impact

1.1. The companies will have to offer product lines of The companies will have to offer product lines of different quality to different markets. The selection of different quality to different markets. The selection of distribution channel will be more important. distribution channel will be more important.

Technological FactorsTechnological Factors

Rapid changeRapid changeInnovation in productsInnovation in productsPresent ImpactPresent Impact

1.1. Life cycle of product is very short because of Life cycle of product is very short because of development of new products. development of new products.

2.2. Companies are focusing on research and development Companies are focusing on research and development of new products to fulfill the demand of the customers. of new products to fulfill the demand of the customers. Future ImpactFuture Impact

1.1. Industry will be more hyper competition because of rapid Industry will be more hyper competition because of rapid development of products.development of products.

2.2. The innovation of a products will be the corner stone of The innovation of a products will be the corner stone of success. success.

Technological FactorsTechnological Factors

STANDARD OF PACKAGINGSTANDARD OF PACKAGING Contents of the productsContents of the products Specification of particular consumer needs( like skin color)Specification of particular consumer needs( like skin color) Container filled in standard manner Container filled in standard manner

Present ImpactPresent ImpactIn personal Care Industry companies apply self testing to In personal Care Industry companies apply self testing to check the packaging and manufacturing up to the check the packaging and manufacturing up to the standard.standard.Future ImpactFuture ImpactCompanies will focus on the good manufacturing Companies will focus on the good manufacturing practices and self inspection to survive in this industry.practices and self inspection to survive in this industry.

Technological FactorsTechnological Factors

USE OF INTERNETUSE OF INTERNET Online SellingOnline Selling

Present ImpactPresent Impact1.1. Use of internet is increasing and firms are focusing on Use of internet is increasing and firms are focusing on

web-based selling because now people like to do web-based selling because now people like to do shopping online because of the following reasons:shopping online because of the following reasons:Increase in mobility of people Increase in mobility of people Increase in the usage of computersIncrease in the usage of computersConvenient distribution channelConvenient distribution channelFuture ImpactFuture Impact

1.1. Online selling will be the most efficient distribution Online selling will be the most efficient distribution channelchannel

PORTER’S FIVE FORCES PORTER’S FIVE FORCES ANALYSISANALYSIS

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Strategic GroupStrategic Group

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INDUSTRY DOMINANT TRAITSINDUSTRY DOMINANT TRAITSThe types of distribution channels used to access The types of distribution channels used to access consumers:consumers:

1.1. Direct SellingDirect Selling2.2. Retail selling Retail selling

department stores department stores specialty storesspecialty storesdrugs storesdrugs storesKiosksKiosks

3.3. Online selling Online sellingProduct innovation : Product innovation : Rapid, due to intense competition Rapid, due to intense competition and product innovationand product innovationDifferentiated Products: Differentiated Products: Products are differentiated Products are differentiated through features, which tailored to specific needs.through features, which tailored to specific needs.

Driver of Change in IndustryDriver of Change in IndustryInternet ( Online selling):Internet ( Online selling):

One of the most important drivers of change is the use of One of the most important drivers of change is the use of internet therefore the companies are focusing online selling in internet therefore the companies are focusing online selling in order to success in the personal care industry. order to success in the personal care industry.

They are offering online samples and trials, tips, advisories for They are offering online samples and trials, tips, advisories for beauty.beauty.

Customer Preference:Customer Preference: The consumer buying habit is changing due to which the The consumer buying habit is changing due to which the

companies have to analyze the market constantly and develop companies have to analyze the market constantly and develop new products according to the culture and the needs of specific new products according to the culture and the needs of specific customers. customers.

Life styles Life styles Men are becoming the important customers of the personal care Men are becoming the important customers of the personal care

industry because they like to build their personality in working industry because they like to build their personality in working environment. Companies needs to develop product tailoring to environment. Companies needs to develop product tailoring to their specific needs.their specific needs.

Key Success FactorsKey Success Factors

QualityQuality

PricePrice

Distribution Channels ( Relations , various type)Distribution Channels ( Relations , various type)

Brand Image and loyaltyBrand Image and loyalty

Product Innovation (R&D)Product Innovation (R&D)

Marketing Strategies ( Target Segments)Marketing Strategies ( Target Segments)

Products LinesProducts Lines

ServicesServices

External Factor Analysis Summary External Factor Analysis Summary (EFAS)(EFAS)

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Internal Factor Analysis Summary Internal Factor Analysis Summary (IFAS)(IFAS)

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MISSION STATEMENTMISSION STATEMENT

The Global Beauty LeaderThe Global Beauty Leader

The Women's Choice for BuyingThe Women's Choice for Buying

The Premier Direct SellerThe Premier Direct Seller

The Largest Women's FoundationThe Largest Women's Foundation

Objectives:Objectives:Marketing Transformations

20002000 20042004

Breakthrough innovation Breakthrough innovation frequencyfrequency

3 years3 years 2 years2 years

Product development Product development (average)(average)

88 weeks88 weeks 50 weeks50 weeks

Supply chain improvement

20002000 20042004

Days of InventoryDays of Inventory 119119 8-108-10

Forecasting accuracyForecasting accuracy BaselineBaseline +30%+30%

Sales Leadership

20002000 20042004

Representatives per U.S. Representatives per U.S. districtdistrict

322322 440440

Growth in active Growth in active representativesrepresentatives

2%-3%2%-3% 2%-3%2%-3%

Objectives:Objectives:E-Commerce and Internet 20002000

20022002

E-Representative E-Representative participationparticipation

13%13% 50%50%

Representative support cost Representative support cost savingssavings

$3 million$3 million +$20 million+$20 million

Geographic market Geographic market penetrationpenetration

U.S., Japan, U.S., Japan, TaiwanTaiwan

20 markets20 markets

International

Sales outlets (China)Sales outlets (China) 3,4633,463 6,0006,000

Value Chain Activity of the Avon Value Chain Activity of the Avon Inc.Inc.

The Value chain activities plays a vital role in the The Value chain activities plays a vital role in the demand and supply chain of Avon Inc demand and supply chain of Avon Inc Products .Products .

The heart of Avon’s strategy implementation The heart of Avon’s strategy implementation efforts was its ability to eliminate non-value efforts was its ability to eliminate non-value adding costs from its value chain, adding costs from its value chain,

Kropf’s (Kropf’s (COO of Avon Inc)COO of Avon Inc) business process business process reengineering (BPR) efforts achieved great reengineering (BPR) efforts achieved great success in 2000, with cost savings of more than success in 2000, with cost savings of more than $150 million delivered. $150 million delivered.

Supply chain improvementSupply chain improvement

Supplier management/sourcing savingsSupplier management/sourcing savings

Leverage supply chain planning tools to Leverage supply chain planning tools to reduce cost and inventory levelsreduce cost and inventory levels

Consensus-based forecastingConsensus-based forecasting

Strong linkages and focus between Strong linkages and focus between marketing and supply chain operationsmarketing and supply chain operations

ABC planning and product segmentationABC planning and product segmentation

Centralized inventory distribution hubsCentralized inventory distribution hubs

SUPPLIERSSUPPLIERS

SuppliersSuppliersAvon have different suppliers for its different product lines. Using BPR Avon have different suppliers for its different product lines. Using BPR systems in the supplier Avon Inc saved $56 million annually after cutting its systems in the supplier Avon Inc saved $56 million annually after cutting its number of suppliers fromnumber of suppliers from300 to 75.300 to 75.

Strengths:Strengths:1.1. Avon Inc greater bargaining power with its suppliers due Avon Inc greater bargaining power with its suppliers due

to large number of orders.to large number of orders.Weakness: Weakness:

1.1. Threat of Quality standards problem from suppliers sideThreat of Quality standards problem from suppliers side2.2. Threat of Inventory problem from supplier’s side.Threat of Inventory problem from supplier’s side.3.3. Threat of on time delivery problem from suppliers sideThreat of on time delivery problem from suppliers side

OPERATIONSOPERATIONSOperationsOperations The Operations division supports the The Operations division supports the development, procurement, manufacturing, and fulfillment of Avon’s development, procurement, manufacturing, and fulfillment of Avon’s leading-edge products. Continues Information and feed backs are leading-edge products. Continues Information and feed backs are given by the R&D department to operational Department.given by the R&D department to operational Department.

Strengths: Strengths: 1.1.On time linking of activitiesOn time linking of activities

Weaknesses:Weaknesses: 1.1.Too much work load may disturb the Too much work load may disturb the

whole value chainwhole value chain2.2.Incorrect data of inventories may lead to Incorrect data of inventories may lead to

increase costs.increase costs.

LOGISTICSLOGISTICSAvon Inc, outsourcers different Logistics Companies to handle Avon Inc, outsourcers different Logistics Companies to handle and deliver its outbound shipments (materials, supplies, and deliver its outbound shipments (materials, supplies, finished goods) to its different located regions for its finished goods) to its different located regions for its manufacturing zones, warehouses and retailers.manufacturing zones, warehouses and retailers.Uses information systems to automate order processing and Uses information systems to automate order processing and logistics to reduce transportation costs by $22 million,logistics to reduce transportation costs by $22 million,

Avon Inc distributes its products directly i.e. by internet Avon Inc distributes its products directly i.e. by internet ordering systems its own online stores and by the help of ordering systems its own online stores and by the help of its direct selling model i.e. sales representatives using its direct selling model i.e. sales representatives using catalogues and brochures. catalogues and brochures. By Retailing using Avon Beauty centre Kiosks , free By Retailing using Avon Beauty centre Kiosks , free standing mini display stores. Which was designed to standing mini display stores. Which was designed to display an upscale beauty image, showcase the beauty display an upscale beauty image, showcase the beauty brands and encourage customer trail of product brands and encourage customer trail of product

LOGISTICS….LOGISTICS….

Strengths: Strengths: 1.1. Avon’s Own online store creates a global image for Avon Avon’s Own online store creates a global image for Avon

and its consumption rate.and its consumption rate.2.2. Kiosks increase learning experiences for consumers.Kiosks increase learning experiences for consumers.

Weaknesses: Weaknesses: 1.1. Threat i.e. too much dependant on Logistic companies Threat i.e. too much dependant on Logistic companies

for its transportation of suppliesfor its transportation of supplies2.2. Threat i.e. too much dependant on sales Threat i.e. too much dependant on sales

representatives for its distribution of suppliesrepresentatives for its distribution of supplies3.3. Non accuracy of sales figures using Kiosks.Non accuracy of sales figures using Kiosks.4.4. Weak relationship with retailers Weak relationship with retailers

SALES & MARKETINGSALES & MARKETING

*According to the current trend of the market Avon Inc trains their own *According to the current trend of the market Avon Inc trains their own employees and service contract sales representatives for direct employees and service contract sales representatives for direct selling,selling,

*Avon products are marketed through sales campaign *Avon products are marketed through sales campaign brochures( based on changing fashion trends) frequency of which is brochures( based on changing fashion trends) frequency of which is 12-26 individual sales campaigns each year. 12-26 individual sales campaigns each year.

*Avon publishes 600 Million sales brochures, one idea to target *Avon publishes 600 Million sales brochures, one idea to target women (age 20) of cosmeceuticalwomen (age 20) of cosmeceutical productsproducts

*the company was also developing global brand campaign featuring *the company was also developing global brand campaign featuring new themes “Let’s Talknew themes “Let’s Talk

*Avon has also developed brand image by various charitable activities *Avon has also developed brand image by various charitable activities such as Breast Cancer Awareness Crusade, the Avon Global Running such as Breast Cancer Awareness Crusade, the Avon Global Running Women’s circuit, Women of enterprise programs and the Avon Women’s circuit, Women of enterprise programs and the Avon worldwide Funds for women.worldwide Funds for women.

SALES & MARKETINGSALES & MARKETING

Strengths: Strengths:

1.1.Excessive promotions, good relationship Excessive promotions, good relationship with customers and brand loyaltywith customers and brand loyalty

Weaknesses: Weaknesses:

1.1.Imitablility of marketing campaignsImitablility of marketing campaigns

2.2.Too much cost on advertising and Too much cost on advertising and brochuresbrochures

R & DR & D

Product R&D Technology and System Product R&D Technology and System Development, Human Resource And General Development, Human Resource And General AdministrationAdministration

Strengths:Strengths:

1.1. Supportive and corrective actions Supportive and corrective actions

Weaknesses:Weaknesses:

1.1. No action taken, over costs (input) by R&D than No action taken, over costs (input) by R&D than its results in sales, quality (output)its results in sales, quality (output)

FINANCIAL ANALYSISFINANCIAL ANALYSIS

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BCG, GE AND GRAND BCG, GE AND GRAND STRATEGYSTRATEGY

PLEASE REFER TO EXCEL SHEET FOR PLEASE REFER TO EXCEL SHEET FOR APPENDIX OF BCG, GE AND GRAND APPENDIX OF BCG, GE AND GRAND STRATEGYSTRATEGY

SPACE MATRIXSPACE MATRIX

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Key Issues Faced by the Key Issues Faced by the companycompany

Following are the issues / problems faced by the Following are the issues / problems faced by the company.company.Successful internet Presence (Online Selling)Successful internet Presence (Online Selling)Avon is using direct selling since many yearsAvon is using direct selling since many years92% of revenues were generated from direct 92% of revenues were generated from direct selling selling but from few decades they had to face drop in but from few decades they had to face drop in the sales growth rate because of the use of the sales growth rate because of the use of internet in personal care industry.internet in personal care industry.

It is difficult to switch to online selling rapidly It is difficult to switch to online selling rapidly because of so many reasons. Other reasons to because of so many reasons. Other reasons to avoid internet was cannibalization in sales.avoid internet was cannibalization in sales.

Key Issues Faced by the companyKey Issues Faced by the company

Protest of sales representative Protest of sales representative

Problems were occurring among sales Problems were occurring among sales representatives and company representatives and company management and its marketing strategies. management and its marketing strategies.

when firms (Avon Inc ) decided to start when firms (Avon Inc ) decided to start online selling through its brochures, sales online selling through its brochures, sales representatives did not agree on posting representatives did not agree on posting the web address of the company as result the web address of the company as result other competitors gain competitive edge. other competitors gain competitive edge.

Key Issues Faced by the companyKey Issues Faced by the companyLoss Of market shareLoss Of market shareFrom few decades Avon Inc is loosing share because of From few decades Avon Inc is loosing share because of the success of the less established firms and the the success of the less established firms and the barriers to entry is dropping due to which number of barriers to entry is dropping due to which number of competitors are increasing. competitors are increasing. Weak relation with Distribution ChannelWeak relation with Distribution ChannelThe channels used were Direct selling, Internet, Limited The channels used were Direct selling, Internet, Limited Retail selling (Kiosk).Retail selling (Kiosk).Avon has less capability of distribution because it is Avon has less capability of distribution because it is weak in good relation with distribution channels therefore weak in good relation with distribution channels therefore its is difficult for them access the customers. its is difficult for them access the customers. They have to use various distribution channels to They have to use various distribution channels to increase the growth of sales increase the growth of sales

Key Issues Faced by the companyKey Issues Faced by the companyFinancial Problems were face while planning for Financial Problems were face while planning for expansionsexpansionsOne of the important issues which they faced when they One of the important issues which they faced when they are planning enhance their market share by specialty are planning enhance their market share by specialty stores, full line discount stores and Kiosks but they stores, full line discount stores and Kiosks but they planned to expand gradually rather than simultaneously planned to expand gradually rather than simultaneously because of the financial.because of the financial.Brand Image Brand Image //Brand Awareness in Latin and Asia Brand Awareness in Latin and Asia AmericaAmericaAvon Inc is focusing on African American rather Asian Avon Inc is focusing on African American rather Asian Americans and Latin Americans, due to which they have Americans and Latin Americans, due to which they have weak brand image and awareness in these areas. weak brand image and awareness in these areas. Avon Inc are not providing hair colors according to the Avon Inc are not providing hair colors according to the fashion and trend as a result weak brand awareness in Y fashion and trend as a result weak brand awareness in Y generation. generation.

Key Issues Faced by the companyKey Issues Faced by the companyDirect selling no longer effective (Baby Direct selling no longer effective (Baby Boomers are more mobileBoomers are more mobile) ) The Baby Boomers are the core customers of The Baby Boomers are the core customers of Avon Inc most of them are working in offices and Avon Inc most of them are working in offices and they are more mobile due to which direct selling they are more mobile due to which direct selling is no longer effective.is no longer effective.Low Product Line Extensions for menLow Product Line Extensions for menAvon Inc was weak in promotions in generating Avon Inc was weak in promotions in generating brand awareness because they did not provide brand awareness because they did not provide trial and samples .trial and samples .Most of the males perceived the image of Avon Most of the males perceived the image of Avon products aimed to women products. products aimed to women products.

TOWS MATRIXTOWS MATRIX

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Three Alternative strategiesThree Alternative strategiesExtension in the main productsExtension in the main products::

The sales of the personal care products are increasing in the The sales of the personal care products are increasing in the main sectors because of the following reasons.main sectors because of the following reasons.

To become attractive in working area.To become attractive in working area.Becoming more Health Conscious Becoming more Health Conscious Due to change in fashion & Trends.Due to change in fashion & Trends.

So Avon should increase its product line.So Avon should increase its product line.Strengths:Strengths: Synergies in distribution channel possible. Synergies in distribution channel possible. Aware about the existing culture & trends factors.Aware about the existing culture & trends factors. Good R & D.Good R & D.Weakness:Weakness: Bad image in men market.Bad image in men market. Limited distribution channelsLimited distribution channels Lack of coordination from sales representativeLack of coordination from sales representative

Three Alternative strategiesThree Alternative strategies Expand In Taiwan, Malaysia & RussiaExpand In Taiwan, Malaysia & Russia::

Asian countries like Malaysia, Taiwan & Russia are a huge market Asian countries like Malaysia, Taiwan & Russia are a huge market because of the two reasons:because of the two reasons:

1.1. Stability in economiesStability in economies2.2. Population growthPopulation growthStrengths:Strengths:

Strong Brand ImageStrong Brand ImageInnovationInnovationAvon’s product qualities are proffered in these countries.Avon’s product qualities are proffered in these countries.

Weakness:Weakness:Bad relationship with the retailersBad relationship with the retailersLack of product promotion in these segments.Lack of product promotion in these segments.Less market shareLess market shareChanges in Political scenarioChanges in Political scenario

Three Alternative strategiesThree Alternative strategies Build a brand image in Latin American and Build a brand image in Latin American and

Generation Y in existing markets by promotions Generation Y in existing markets by promotions and innovation of new product which are tailored and innovation of new product which are tailored to their specific needsto their specific needs::

The Generation Y is the second largest population segment which is not The Generation Y is the second largest population segment which is not focused by Avon and due to the lack of a proportion Avon has not a focused by Avon and due to the lack of a proportion Avon has not a good image in Latin America. But Avon has a competitive advantage to good image in Latin America. But Avon has a competitive advantage to expand in these markets. expand in these markets.

Strength:Strength:InnovationInnovationSynergiesSynergiesExisting marketing channelsExisting marketing channelsBrand Image Brand Image Quality at affordable priceQuality at affordable price

Weakness:Weakness:Lack of awarenessLack of awarenessBad Relationship with the retailersBad Relationship with the retailers

RECOMMENDED STRATEGYRECOMMENDED STRATEGY

Build a brand image in Latin American Build a brand image in Latin American and Generation Y in existing markets and Generation Y in existing markets by promotions and innovation of new by promotions and innovation of new product which are tailored to their product which are tailored to their specific needs.specific needs.

Expand In Taiwan, Malaysia & RussiaExpand In Taiwan, Malaysia & Russia

Yearly objectivesYearly objectivesFirst year:First year:

In first year we would get the market share 18%In first year we would get the market share 18%Cost Reduction by 10% in 1st year.Cost Reduction by 10% in 1st year.Market share is 40% in 1st yearMarket share is 40% in 1st year

Second Year:Second Year:In 2nd year we would get the market share 20%In 2nd year we would get the market share 20%Cost Reduction by 15% in 2nd year.Cost Reduction by 15% in 2nd year.Market share is 45% in 2nd yearMarket share is 45% in 2nd year

Third Year:Third Year:In 3rd year we would get the market share 23%In 3rd year we would get the market share 23%Cost Reduction by 16% in 3rd year.Cost Reduction by 16% in 3rd year.Market share is 52% in 3rd yearMarket share is 52% in 3rd year

Implementation of StrategyImplementation of Strategy

We need to change the mission of our We need to change the mission of our organization because till now Avon organization because till now Avon considered premium brand for women. So considered premium brand for women. So do due to the environment we have to do due to the environment we have to change our mission. The new mission is:change our mission. The new mission is:

““The Premium brand of personal The Premium brand of personal care products for everyone”care products for everyone”

Drawback of Old organization Drawback of Old organization structure:structure:

Bad image of organization because of Bad image of organization because of decentralized websitedecentralized website

Lack in flexibility in the organization Lack in flexibility in the organization structure because high number of sales structure because high number of sales representatives.representatives.

Awards were based on measures, not on Awards were based on measures, not on creativity.creativity.

Structure & Culture of Structure & Culture of Organization:Organization:

Recruitment & Appointment of more men Recruitment & Appointment of more men employeesemployees

Centralize the websiteCentralize the website

Online sellingOnline selling

Degrees in number of sales Degrees in number of sales representatives.representatives.

Award should be based creativity.Award should be based creativity.