Industry Changes

• Cosmetic market is very saturated with competition

• Recently the market has been experiencing a modest growth rate and this trend will continue into the future

• In 2004 cosmetic sales= 6 billion dollars

Industry Changes

• Between 2000 -2010 the number of women aged 35-64 is expected to grow by 30%

• Because of this statistic manufacturers are placing a greater emphasis on foundations that contain anti-aging components

Industry

• The major driving force for the continual growth of makeup and cosmetic sales is the growing population of women

• Females outnumber males in society today and this trend will continue into the future

• Traditionally skin manufacturers have been dealing with beauty from the outside but now they are promoting products that consumers ingest that can help their skin look and feel healthier

• Certain compounds when digested help your skin regenerate and look better

• Companies are trying to combine inner and external beauty products

• For Example= Olay Vitamins made a partnership with Pharmavite Corporation

• Avon developed a new product line called Wellness

Marketing Strategies

• In 2003 Avon introduced the new product line Mark

• Mark consists of over 300 exclusive products including cosmetics, skincare, fragrances and accessories such as jewelry and handbags

• Makeup you can buy and sell• Named in celebration of young women

making their “Mark” on the world

Mark Product Line

• Mark is sold through a magalog

• Published every 4 to 6 weeks

• Published in Spanish and English

• Large distribution base=7 million copies distributed to young women each month

• Mark representatives earn 40% commission on the sale of beauty products and jewelry

• Earn a 25% commission on the sale of all watches and accessories

• Mark offers you the opportunity to be the CEO of your own business

• In 2004 Mark achieved net sales of 47 million

M Catalog

• In 2004 Avon broke a 118 year old tradition and launched it’s first ever Men’s catalog called the M catalog

• Offers 16 pages of men’s grooming products and accessories

• Avon is trying to cash in on the growing metro-sexual trend

• Avon is targeting men to broaden their customer base and get into a new market

• Avon has 2 product lines for men– 1) Targets the career

man– 2) Targets the athlete

Avon.com• was one of the first direct selling companies to

venture online in 1997 • The initial website was very restricted and limited • working with a budget of only $400,000 • little advertising and effort were put into the initial

website

Avon.com take II

• By the end of 1998, Avon began to realize the tremendous potential and opportunities that the Web truly had to offer for the company

• Edwards was hired to become to new president and general manager of the new and improved Avon.com Web strategy

B2B vs. B2C

• 4 Key criteria to consider:

• Commissions• Marketing• Products• Shipping

New and Improved

• They came up with a compromise, by incorporating a little of both B2B and B2C into the website

• They designed a way for their representatives to place customer orders online

• Still provided for direct-to-customer sales which is the bread and butter for Avon

• Avon finally settled on an updated version of the website to suit all of the company’s needs for about $5 million

• This allowed transactions to go faster, which means they could sell more, and have the products shipped to the customer’s door faster than they ever could.

Financial

• Since 1999 Avon.com has shown great financial growth

• Entered many new direct investment markets

• In 1999, net sales and net income increased

• Same trend in 2000

Financial Cont’d.

• In 2001, overall sales were $5.95 billion• In 2002 launched new product line to

attract younger customers• 2003 and 2004 numbers were more of the

same– Earnings per share grew 25%– Cash flow from operations rose to $745

million– Sales increased to $7.7 billion

Financial Cont’d.

• 3 years in a row, earnings per share increased by more than 20%

• Sales have increased by nearly $2.5 billion since 1999

• Cash flow from operations is nearly double what it was in 1999

International Expansion

• http://www.avoncompany.com/women/world.html

• Over 120 countries on all continents– http://www.avoncompany.com/about/history.ht

ml

• Kiss Goodbye to Breast Cancer campaign

• The largest women’s running event in Germany

International Expansion

• Countries overseas could not understand the United States slogan.

• Avon.com moved too fast into international expansion

International Expansion

• Financial gains:– Europe has made $1 billion– 70% increase in Russia’s sales, they are

expected to double their sales to $800 million

• To keep things moving smoothly, Avon is going to continue with their philanthropic towards Breast Cancer and domestic violence against women; send out US resources

Any Questions?