PROJECT REPORT

ON

RESEARCH ON MARKETING STRATEGY OF COSMETIC COMPANY – AVON

M.COM – I ADVANCED ACCOUNTANCY

2015 - 2016

SUBMITTED BY

KAVITAKE CHHAYA LAXMAN

ROLL NO –A/24

PROJECT GUIDE

PROF. DR. AMIT PRAJAPATI

SUBJECT: STRATEGIC MANAGEMENT

People’s Education Society’s

DR. AMBEDKAR COLLEGE OFCOMMERCE AND ECONOMICS

WADALA, MUMBAI- 400 031.

ACKNOWLEDGEMENT

I hereby acknowledge all those who directly or indirectly helped me to draft the

project report. It would not have been possible for me to complete the task without

their help and guidance. It is my great privilege to thank Dr. Ambedkar College of

Commerce and Economics.

First of all I would like to thank the principal Dr. S.R Kamble and the coordinator

Prof. Sanjay H. Khaire who gave me the opportunity to do this project work. They

also conveyed the important instructions from the university from time to time.

Secondly, I am very much obliged of Prof. Dr. Amit Prajapati for giving guidance

for completing the project.

I am thankful to all those persons who co-operated with me. They not only

rendered time out of their busy scheduled but also answered my queries without

hesitation.

I must mention my hearty gratitude towards my family, other faculties and friends

who supported me to go ahead with the project.

Place: MUMBAI

Date:

(Signature):

People’s Education Society’s

DR. AMBEDKAR COLLEGE OF COMMERCE AND ECONOMICS

WADALA, MUMBAI- 400 031.

CERTIFICATE

This is to certify that, Miss. Kavitake Chhaya Laxman of M.Com - I

Advanced Accountancy Semester I (2015-2016) has successfully

completed project on Research on Marketing Strategy Of Cosmetic

Company – AVON PRODUCTS under the guidance of Prof. Dr. Amit

Prajapati.

(Principal) (Co-ordinator)

(Project Guide) (External Examiner)

DECLARATION

I Miss. Kavitake Chhaya Laxman the student of Dr. Ambedkar College

of Commerce & Economics, studying in M.Com – I Advanced

Accountacny (Semester I), hereby declare that I have completed the

project report on on Research on Marketing Strategy Of Cosmetic

Company – AVON PRODUCTS in the academic year 2015 – 2016.

The information submitted is genuine and practical to the best of my

knowledge.

Place: ______________

Kavitake Chhaya Laxman

( Roll No.A/24)

Date:_________________

Index

S.no List of content Page no.1 Introduction

Industry profile About the Business Future of AVON industry History of AVON Top COSMETIC Company Product Line of AVON Marketing Concept Marketing Strategy of AVON 4 P’s

1 - 234 – 56 - 78910 - 1112 13 – 1516 - 22

2 Analysis SWOT Analysis PEST Analysis

23 – 2525 - 28

3 Literature Review 29 - 30

4 Market segments 31 - 32

5 Research Methodology & Result 33 - 35

6 Competitors & Target 36 - 37

7 Recommendation 38 - 39

8 Conclusion & Proposal 40 - 41

Introduction

This Project is Research of Marketing Strategy of the company which

is active on the cosmetics market. I have realized the case study about the company

Avon Cosmetics Romania. I chose this company because it is one of the largest

and well known cosmetics producers in the world, operating in direct sales system.

It is therefore, extremely important the role of the representatives, the way they act

and persuade potential customers. Also the rapid growth and company’s image on

the market impressed me and made me tackle this topic. In this Project I want to

determine the position of the company in the market, to show the Process of

Marketing Strategy and show the importance of the Company. These are some of

the objectives that I want to reach by realizing this project.

Avon Company is present in whole world, in over 143 countries and it has

over 3.7 millions of representatives. The company respects the international

standards for the environment, so that its activity is not harmful for the

environment. It was the first company that eliminated from its product’s

composition the CFC gases (chlorofluorocarbons) – gases which are harmful for

ozone blanket. Almost all packaging is recyclable.

The market target for Avon Company is situated in urban area and is

represented by persons aged between 35 and 45 years old, with higher education,

who are interested in cosmetics and who have medium and big incomes. They are

strong, professional women, educated, independent, and interested in the way they

look. These are persons who can appreciate better the products and are attentive to

every detail. Another aim of this paper is to reveal the main competitors and to

point out the clients’ satisfaction degree regarding product range complexity and

product distribution process.

            Avon Cosmetics is one of the largest and well known companies producing

cosmetics in the world and operating in direct sales system. The company was

founded in America in 1886, by David McConnell, a book seller who was offering

samples of perfume with his books.

Avon Products, Inc. is a global manufacturer and marketer of beauty and

related products. The firm groups these products into three categories: Beauty,

consisting of cosmetics, fragrances and toiletries; beauty Plus, made up of jeweler,

watches, apparel and accessories; and Beyond Beauty, with home products, gifts,

candles, and other decorative items. The company sells makeup under the Avon

Color and Beyond Color brands; skincare products under Anew and Avon

Solutions; bath and body products under Avon Skin-So-Soft and Naturals; hair

care products under Advance techniques; supplements and therapeutic products

under Avon wellness; and fragrance products under Avon Fragrance.

            This report analyzes the marketing environment and the different marketing

strategies that Avon employs. The author also intends to present suggestions in

marketing.

Avon Cosmetics Romania SRL was founded in 1997 and then were

registered the first 6 Avon representatives, who were the first sales directors in

Romania. Avon is the largest company of cosmetics, operating in direct sales

system and its achievements in the world are:

Over 3.7 million representatives in entire world

Over 143 countries in which is operating

INDUSTRY PROFILE

"Avon calling" -- calling for a younger crowd, overseas reps, and improved

global operational efficiencies. Avon Products, the world's top direct seller of

cosmetics and beauty-related items is busy building a global brand and

enticing more consumers to buy its products. Direct selling remains itsmodus

operandi; sales also come from catalogs and a website.

Its lineup includes cosmetics, fragrances, toiletries, apparel, home

furnishings, and more. Avon boasts more than 6 million independent

representatives worldwide. With sales and distribution operations in more than

100 countries, nearly 90% of sales come from outside the US. Avon is working to

transform its business amid falling sales and profits.

The company's products are sold through catalogs, mall kiosks, its prestigious

day spa in Trump Tower in New York, the Internet, and in J.C. Penney stores. Its

products are also sold directly to customers in nearly 143 countries by 3.5 million

independent sales representatives, making Avon the number one direct sales

company in the world.

ABOUT THE BUSINESS

Avon" –it's a common name which is found everywhere. Whether it is

individual or company everyone wants to be a-1. Whether it is cosmetics or

bicycles or dress materials the name is common. But still there are some questions

of its infant stage in india specially gujarat like

* WHY IT IS NOT POPULAR?

* WHY IT IS STILL PRIVATE LIMITED?

* WHY THEY HAVE NOT TARGETED THE RURAL MARKETS OF INDIA?

* WHY IT IS CALLED THE COMPANY OF WOMEN?

Sometimes we are hearing that " a women is the door of narka" or "the mind of

the ladies is on the joints of legs" or "women are fools". on the another side, "yatra

naryastu  pujyante ramante tatra devatah" which one is correct? why a women nee

ds sacrifice/ kills/ raped/used as a tool for success? 

As being a women have you ever thought about the freedom, success, own

identity, fighting spirit against child and girl amusement, child marriage, health

and nutrition problems? it is said that one women is the enemy of another women

and can not see others growing. same way most of us have no thought except being

mother, daughter, bhabhi, sister, sister in law, daughter in law and following the

traditions. 

The opportunity is in front of us but we have not thought. Avon means

A- Admiring and adorable 

V- Vision 

O-Opportunity 

N- Nearness and nice 

It is called company of women which has given all of the above things to the

women who have connected with them. They have made them independent, good

earner, socialites and creator of good vision and personality. 

FUTURE OF AVON INDUSTRY

In recent years, Avon’s U.S. business has struggled to adapt its direct

selling model to the realities of modern life. Last year, Avon completed the first

major overhaul of theavon.com website in 10 years, but it is now contending with

nimble e-commerce rivals such as beauty online retailer Birch box.

Avon’s offerings, generally lower-end, must also compete with vastly improved

offerings at brick-and-mortar retailers such as Target   TGT   , Walgreens,

Kohl’s   KSS    and J.C. Penney   JCP   , which has Sephora boutiques at hundreds of

its stores. Some of the pain has come from confusing customers about what it

stands for. Just a few years ago, Avon unsuccessfully tried to add higher-end

products as well as silver jewelry to its line-up. The move was a total flop.

Efforts under Sheri McCoy — a Johnson & Johnson executive who took the reins

in 2012 — to fix Avon’s U.S. problems have not worked. Avon has struggled to

make its commission structure competitive with that of competitors such as Mary

Kay Cosmetics. One big failed effort was the cancellation a couple of years ago of

a big software upgrade that had been designed to make tracking orders and

compensation easier for reps.

While many on Wall Street have clamored for years for Avon to consider

exiting the U.S. business altogether to focus on more promising markets such as

Brazil, Russia, and Mexico, McCoy told Fortune last year that success in Avon’s

home market was too important: “To not compete in one of the largest markets in

the world doesn’t make sense. It’s the founding country of the brand; there are a lot

of roots to the brand,” she said in September.

What’s more, going the retail route is not that simple either, given that

the company has no systems in place to sell to stores. It’s hard to see anything

encouraging in Avon’s North American sales, particularly as the business is clearly

unprofitable, losing $132 million in the last two years.

“Avon needs to do something big. This may be too little, too late,” said Ali Dibadj,

a Sanford C Bernstein analyst. “They’ve been throwing good money after bad for

years.”

Until last year, Avon could at least find some solace overseas, with

promising numbers in some markets. But revenue in Latin America (Brazil is

Avon’s biggest market), Europe, and Asia (Avon’s bribery scandal in China

destroyed its business there, erasing a lead it had gotten by being the first U.S.

direct seller) all fell last year. (To be fair, Avon has said the strong U.S. dollar was

behind a lot of that.)

Three years ago, when Avon urged shareholders to reject Coty’s

unsolicited bid, the company’s board argued that they would get a better return by

giving the newly appointed McCoy a chance to fix a company left in a shambles by

her predecessor Andrea Jung. But fast forward to now, despite all the time McCoy

has had, the company is in worse shape. Its revenue is down 22% over a 3-year

period to $8.8 billion, and the company is struggling to compete with aggressive

competitors in places such as Brazil. It’s hard to argue McCoy has not had enough

time to at least stabilize the ship.

“Avon gets more grief from equity analysts than any company we’ve

ever followed and it’s no wonder. Management continues to claim they know

what’s wrong and how to fix it, yet results continue to languish,” said Carol

Levenson, director of research, at Gimme Credit, an independent research service

on corporate bonds, in a research note.

History of avon

“Ding Dong Avon calling” is one of the best-known branding catch

phrases for the 1950s, but the Avon Ladies have moved on from the iconic-smiling

American homemaker to the working mother on-the-go of today. In response,

Avon has had to rethink, reevaluate and redefine its customers, products and

business strategies to reclaim the market power and presence it once had.

Historically, the first Avon Lady was actually a man, young salesman

named David McConnell. He launched Avon Calling in 1886, offering women

cosmetics in the comfort and privacy of their own homes, but ironically, perfumes

and hand-cream were not McConnell’s initial merchandise. At the age of sixteen,

McConnell sold books door-to-door and when they were not well received, he

resorted to the advertising gimmick of offering a free gift in exchange for being

allowed to make a sales pitch. McConnell realized that women liked his perfume

more than his books. So, he abandoned books and organized the New York-based

California Perfume Company and the door-to-door approach seemed a perfect fit

for cosmetics, particularly in rural areas, where homemakers, in horse-and-buggy

days, had poor access to better stores.

In 1939, California Perfume Company name changed to Avon Products,

Inc. The company was renamed Avon for the simple reason that the New York

State town in which David McConnell lived, Suffern on the Ramapo, reminded

him of Shakespeare’s Stratford-on-Avon (idea finder).

THE TOP COMPANIES WHICH ARE POPULAR IN THE COSMETICS

* EMAMI 

* GODREJ 

* AVON

* P  & G 

* HUL 

* HIMALAYA 

* ITC

* KAYA SKIN CLINIC 

* AMWAY

* LAKME 

* REVLON

* ORIFLAME

* AYUR

* VLCC

* LOREAL 

AVON PRODUCT LINE

The company has a broad and panoptic product line which fulfils the

consumers' desires of purchasing the commanded goods.

Avon Product line is described as follows:

MAKE UP

It consists of the products applied to alter and modify the appearance without

having an effect upon the functions with the purpose of enhancing beauty and

attractiveness e.g. lipstick, nail polish, eye shadow, foundation, powder, etc.

SKIN CARE

Skin is a part of the body which gives shape to the beauty of a person and

for a company like Avon, which emphasizes on the aspect of beauty with glamour;

it can't ignore the skin care product line. Major products that Avon provide within

this area are: cleansers & toners, eye care, moisturizers, problem solvers, anti-

aging, skincare.

BATH & BODY

Avon look after the bath and body products with extensive care as it soften

and lightens the skin and give a glow to it with beautiful fragrance which gives a

pleasant feeling. It includes (body lotion, hand cream, bath & shower, body sprays,

foot care, sun care, depilatories, bath & body).

HAIR CARE

A wide range of products which are Perfect for all hair types(shampoo &

conditioner, treatments, brushes)

AVON WELLNESS (home environment, fitness, Wellness Specials)

FRAGRANCE:

GIFTS & FASHION (Gifts, jewelry, apparel, accessories, inspirational treasures

etc. apparel jewelry accessories

OUT DOOR PROTECTION: These products prevent the skin from the

exposures in the sun (self-tanners', suntan lotions, insect repellents, children's)

Marketing concept OF AVON ?

            Marketing in a nutshell, is defined as the art of selling products. However,

marketing does not only aim to sell products. It involves a deep understanding of

the customer and identification of products or services that will satisfy their needs

and wants. Marketing according to Bradley (2003) is a philosophy that leads to the

process by which organizations, groups, and individuals obtain what they need and

want by identifying value, providing it, communicating it and delivering it to

others. Marketing is strategically concerned with the direction and scope of the

long-term activities performed by the organization to obtain a competitive

advantage. This paper generally, looks at how marketing is employed in Avon and

how Avon creates its marketing strategies. Avon presents an excellent case in

marketing because of its innovative business philosophy. In the succeeding

sections, the author intends to tackle the different marketing techniques of Avon.

Marketing concept was founded in 1957 by Jhon B. Mc. Kitterick (CEO

General Electric): marketing concept is the philosophy of consumer orientation,

philosophy which implies integral and coordinated actions and reaching a certain

goal .The most basic concept underlying marketing is that of human needs. Human

needs are states of felt deprivation. Wants are the form human needs take as they

are shaped by culture and individual personality.

When wants are backed by buying power they become demands. Marketing

definition is based on the following concepts: needs, wants, demands, markets,

change, transaction and relations, satisfaction and value, products, services and

experiences.

Marketing Strategies           This section discusses the different marketing strategies that Avon employs

in order to reach its customers and to encourage customer patronage and loyalty;

The Company has diverse marketing strategies.

 

Direct-Selling

            A major characteristic of direct selling is the personal contact between a

sales person and a consumer, away from a retail store. Avon implements the door-

to-door selling type of direct selling. Avon uses freelance salespeople or agents to

visit people in their own homes and to demonstrate and explain the use of a range

of beauty products. Direct-selling provides important benefits to individuals who

desire an opportunity to earn an income and build a business of their own. It offers

the prospect of self-determination and financial independence.

It also offers an alternative to consumers who want something different

from the traditional shopping centers, department stores or other forms of

conventional shopping. It offers an alternative to traditional employment for those

who desire a flexible income-earning opportunity to supplement their household

income, or whose responsibilities or circumstances do not allow for regular part-

time or full-time employment (Lancaster and Reynolds 2000).

 

Product Trial and Sampling Events

            Avon is popular for its product trial and sampling events. Avon uses events

to encourage trial of its products among non-users and to encourage further

purchases from existing customers. These events include demonstrations and

sampling presented in supermarkets, shopping malls, and other locations where a

big number of the desired target market can be reached.

Avon focuses on product trial events as one of its forms of communication

with the end customer. Its representatives, agents or distributors are recruited from

their target markets and are encouraged to hold parties or events within their homes

to offer friends and acquaintances the opportunity to  try, feel, use the products, to

interact with it in an experiential setting (Masterman and Wood 2006).

Marketing Research

Research in general con notes a systematic and objective investigation of a

subject or problem in order to discover relevant information or principles. It can be

considered to be primarily fundamental or applied in nature. Fundamental research,

frequently called basic or pure research, seeks to extend the boundaries of

knowledge in a given area with no necessary immediate application to existing

problems.

Applied research, also known as decisional research attempts to use existing

knowledge to aid in the solution of some given problem or set of problems.

Marketing research is the systematic and objective search for and analysis of,

information relevant to the identification and solution of any problem in the field

of marketing.

            The marketing research at Avon is directed towards gathering information

from the customers in order to develop products and services that will satisfy the

needs, wants and demands of the customers. The marketing research also aids in

directing the marketing strategies of the company. In general information are

gathered from the customers through surveys (sometimes in the form of customer

feedbacks or suggestion form) (Smith and Albaum 2005).

STUDY OF AVON WITH RESPECT TO 4 P’S

            Achieving a favorable position in the minds of the consumers and making

the product or service attractive to the target market entails careful formulation of

the marketing mix. Getting the right mixture of the product, promotion, price, and

distribution is important in marketing.

The goal of the marketing mix is to portray an image for the product or

service that will match with how the organization wants the product or service to

be visualized in people’s minds. Marketing mix according to Kotler (2001) is the

set of marketing tools that the firm uses to pursue its marketing objectives in the

target market.

Product – The products or services of an organization help in creating an

image of the firm in the mind of the consumer. This image is reflected in the

customer’s perceptions and feeling about its products or services. The product

is the element in the marketing mix that includes all of the issues surrounding

the development of the product or service.

Price – where market demand and the cost of producing the product or

service come together and determine the profitability or lack of it.

Promotion – Promotion is consist of all of the methods of communicating

the product offering to the target market, such as advertising, publicity, and

sales promotion.

Place – Place is the task of getting the goods to market.

 

1.Product

            Avon is considered as the world’s largest manufacturer of cosmetics,

fragrances and toiletries. Avon’s core offer consists of competitively priced beauty

products and gifts. Lisa Midyett, director of world marketing project for Avon

spoke about Avon new product development process that has put an effect on

process of forming ideas to the execution process.

The company entered into a new project four years back when Avon had

clearly separate process of development for each country they were carrying their

business operation. They planned to work on globally-aligned process which

would work in the same manner for everyone but later implemented a process

which had some drawback too and required a lot of administrative and

management work which company found ineffective and wanted to focus on

innovation rather than spending time in management.

2.Price

            Avon markets most of its products at moderate price points in relation to

the industry. Discounts and price reductions are offered periodically. New brand

extension products are priced at approximately the same price as the original

brand. Although many respondents were not serious about the Avon price issues

and as a matter of fact, many of the girls thought that the price of the product are

mutually and logically connected to the quality.

Since their faces are something that represents them, hence they wanted the

perfect cosmetic for adding value to their face beauty because it represents them

how they want to see themselves (Beasley, 2007)

.

3.Promotion

            Sales promotion and sales development activities are directed at assisting

sales representatives through sales aids like brochures, product samples and

demonstration products. In order to support the efforts of sales representatives to

reach new customers, specifically designed sales aids, promotional pieces,

customer flyers, television and print advertising are used. A number of

merchandising techniques are used, including the introduction of new products, the

use of combination offers, the use of trial sizes and samples, and the promotion of

products packaged as gift items.

In general, for each sales campaign, a distinctive brochure is published, in

which new products are introduced and selected items are offered as special

promotions or are given particular prominence in the brochure. The Company

follows a pull strategy as they don't put pressures on the retailers and distribution

channels to provoke customers to buy their products instead they focus on

promoting their company through advertising and through other forums of sales

promotion. Advertising this way itself creates an emotional charm that helps the

consumer to select the product they are looking for.

SPECIAL PROMOTION EVENTS:

Brochures: It is the main important marketing instrument used by Avon (Kumar,

Massie and Dumonceaux, 2006).

TVs, magazines and Radio announcements

Product sampling: They give product samples sometimes so that consumer may

use them and try before making a purchasing decision.

Bulletin boards: Representatives leaves their telephone numbers on the board to

contact them with a few words written on it to attract customers.

Discount coupons: Company gives discount coupons sometimes on the purchase

of Avon products.

Gifts: To please customers and attract them, the company offers small gifts to

them.

ONLINE ADVERTISING:

Avon.Com gives consumers the knowledge about the company's product

promotions that tempts and attracts a consumer to purchase products at discounted

prices.

myavon.co.uk/earn with: This is for the person who wants to work for Avon.

www.AvonShop.co.uk: Free delivery if a person shop more than 20 pounds (Avon,

2010)

Social Networking websites: They try to promote their product using social

communities such as facebook, twitter and my space

SLOGAN AND JINGLES

Avon Calling The Company for Women Avon is made with you in mind Avon is For life's unforgettable moments

UPGRADING THE BRAND IMAGE:

Job fairs: Avon organizes a Job fair for the people who are unemployed and wants

to work for Avon and have high interest to serve the company.

Corporate social responsibility- contributes in well being of the society and its

environs. Mainly focused on women issues, empowerment and health.

(Eikenberry, 2009)

4.Place

            Avon is the pioneer of direct-selling approach in the cosmetics industry.

Avon reaches its customers primarily through its traditional distribution channel

made up of a network of 3 million independent sales representatives. The network

spans 140 countries over six continents.

The vast majority of the representatives are women and all are rewarded on

a commission-only basis (Christopher and Peck 2003).

Avon reaches its customers primarily through its traditional distribution

channel made up of a network of 3 million independent sales representatives. The

network spans 140 countries over six continents.

RETAIL CHANNELS: Company hires the independent sales

representatives to market their products which are not the workers of the

company but neutral dealers. As soon as they receive orders from the clients

they send on the request to the nearest distribution centre of Avon and are

then delivered to the representative by local delivery system.

ONLINE: Consumers can buy the products online from Avon website :

www.Avon.uk.com

Positioning

            In this section, the author will discuss the position of Avon in the market

and in the minds of the customers. Positioning is a very important topic in

marketing as it provides information to the company on where they are now and

how they are faring compared to their competitors.

            Positioning refers to the decisions and activities intended to create and

maintain a firm’s product concept in the customer’s minds. Market positioning

amounts to arranging for a product or service to occupy a clear, distinctive and

desirable place relative to competing products – in the minds of target customers

(Proctor, 200). Positioning is the process of distinguishing a company or product

from competitors along such dimensions as product characteristics or values that

are meaningful to consumers.

Positioning strategy aids customers in evaluating product attributes that are

of significance or value to them (Michman et al 2003). Once the segment is

determined then a decision has to be made as to how to position the product. The

idea of positioning is to find out how the consumers/ consumers in particular

segments are going to perceive the product and service and the company’s message

about these products and service (Kermally, 2003).

According to Paley (2006), positioning is not what you do to a product, it is

what you do to the mind of the prospect. Positioning is the act of designing the

company offer and image so that it occupies a distinct and valued place in the

target customers’ minds.

            Image is extremely important to Avon. The company maintains the position

as the world’s leading direct seller of beauty and related products. Avon embarks

on expanding new marketing opportunities without disrupting the current direct

sales.

ANALYSE THE MARKETING ENVIRONMENT

            In this section, two marketing environment analysis tools will be used in

order to analyze the marketing environment of Avon. These tools are SWOT

analysis and PEST analysis.

1. SWOT Analysis          The SWOT analysis is intended to provide brief and concise information on

the strengths and weaknesses of the company as well as the opportunities and

threats it faces. These information are important in crafting the marketing

strategies of the company as they give direction to which the strategies must be

focused.

Strengths Marketing strategies vary from country to country designed to meet

the unique demands and culture of each geographic region

Strong financial position in the international market

Established customers and those in developing markets offer the

greatest potential for increasing the company’s customer base

One of the highlighted strengths of the company is the fact that Avon is the most

popular brand of beauty. This thing offers the necessary notoriety and confidence

to the company. Also the expanded number of representatives is an important

strength. Avon has over 3.7 million representatives in the entire world and over

100000 in Romania. With such a big number of representatives it is a certainty that

the company reaches the ears of every woman

Weaknesses

Erosion of the core customer base in the United States Poor marketing and advertising strategies in the United States and

abroad Products are not easily accessible

I consider that the main weak point is represented by the differences between the

nuances of the products shown in catalogs and the product itself. Also Avon

Cosmetics Romania doesn’t update the brochures in the same time with those from

outside the country. The possibility to return the products is a weakness because

the procedure is very complicated.

Opportunities People in developing countries have more money to spend

Middle-class families in developing countries are increasing in

number

Among the opportunities of the company we mention: convenient quality – price

ratio, all Avon products presenting the benefit of: “100% guarantee”. Also there is

the chance to develop your own business and to earn extra incomes. An extremely

important opportunity is to support various social campaigns: breast cancer,

violence in family etc. Also the company can improve its knowledge in beauty

domain and not only. Another opportunity is to launch on the market qualitative

products with an advanced technology.

Threats High interest rates in some countries

The threats of the company are firstly connected with the competition, with the

increased number of suppliers. The technology used by the competitors may

represent a threat, the company being in a continuous development.

2. PEST Analysis            A PEST analysis looks at the Political, Economic, Social and

Technological drivers of a particular industry. PEST are external factors that must

be analyzed and understood in order for an organization to succeed. The PEST

analysis focuses on the external forces that affect the organization. It is most useful

when used together with other tools such as the SWOT analysis.

Political Political Factors – May have direct or indirect impact on the organization’s

operation. Decisions made by the government may have an effect on the

business. The political arena has a big influence on how organizations

operate the purchasing power of the customers and other businesses. As

Avon is based in U.S we have to focus on the relationship between both

Country which is uniquely close and they share enormous trade and

economic relations. Both are top trading partners of each other hence the

business relations of both the countries are strong and have wielding power.

Also the trade bonds and affiliations are strengthened (U.S foreign policy,

2010)

Avon uses its websites to market its products worldwide they have to follow

the copyright policy of the United Kingdom. UK Government recently came

up with the Consumer Protection (Distance Selling) conditions in order to

protect consumers which are buying online and have no direct control with

the seller. These Regulations are only applicable to the users that purchase

commodities or services from a business and not if it is business-to-business

purchases.

Economic Economic Factors – The organization is affected by economic factors.

Economy also affects the purchasing power and behavior of the consumers.

The economic ups and downs such as state of the economy declines called

recession does change the demand for product which is coherent over the

years because in that time women go through the hard times and get

stressed. In that mental strain period their skin gets affected due to burden

and pressure hence they spend money on buying make up to look good and

fresh. Recent report also indicates the figures for the demand of makeup and

cosmetic in U.K has gone up from 4.7% to £15.6bn. This clearly shows that

in recession the demand of the product increases (Cosmetics business,

2008).

Sociological

Sociological Factors – Include the demography, lifestyle, cultural

aspects of the consumers. These factors have a big influence on the

consumer needs and wants. Sociological factors also affect the size of

potential markets. The important category and class of economy is the

fashion industry of UK because it has an increasing and growing

consumer's interest. In order to increase more customer awareness about

the brands and products introduced by the company Avon should

understand about the expansion of the brands existence.

Avon marketing practices are undergoing a change to become

progressively focused on a bond and connection with the customer;

because Participants felt the image of Avon is not positively reflected

by its advertisements and Avon representatives. Although the cosmetics

industry is boosting sales by bringing the products that cater to the

needs and desires of people with particular ethnic backgrounds, skin

and hair types, and genetic characteristics, many customers are not

aware of the brand promotions and its existence in the market.

Technological Technological Factors – technological change plays an important role in

shaping how organizations operate. Technological factors are important in

gaining competitive advantage. Technological innovations can improve

production efficiency, quality and speed. New technology is changing how

organizations operate. The new advanced and modern methods are being

used these days in order to pace up the existing share of the cosmetic

company in the market.

Hence technology is used fully to align and compete in the market of

toiletries and cosmetics. For instance, the virtual make up options available

online on the websites of the company gives an actual effect which has also

helped Avon to take over the region with the help of e-commerce;

accelerating in this field to get the maximum attainable share (Kumar, 2004).

LITRETURE REVIEW

It's a bond forged by everything from shared causes to biology,

tracing back through more than a century of beauty and business opportunity. And

as we stride past the threshold to the next hundred years, that natural affinity is

strengthened by energetic new initiatives, a bolder vision, and a wider, more

diverse community of customers. In a dynamic new world, Avon continues to

connect, reaching women through a vibrant image and outstanding products,

personal relationships, cutting-edge technology, exciting new channels, and

unparalleled support for gender and family issues. When we say we're the

Company for Women ... we mean it.

The oldest beauty company in the United States, Avon Products, Inc. has

grown from a modest line of perfumes sold door-to-door to one of the world's

leading brand of cosmetics. It manufactures and sells cosmetics, fragrances,

toiletries, accessories, apparel, and various decorative home furnishings. Avon

employs a unique direct-selling method, which was greatly responsible for its

incredible success in the 1950s and 1960s, when women were easily found in the

home for sales purposes. After unsuccessful efforts at diversification into the

health-care service industry left the company with massive debts in the late 1980s

and early 1990s, Avon began to refocus on its roots: beauty products and direct

selling. The company's products are sold through catalogs, mall kiosks, its

prestigious day spa in Trump Tower in New York, the Internet, and in J.C. Penney

stores. Its products are also sold directly to customers in nearly 143 countries by

3.5 million independent sales representatives, making Avon the number one direct

sales company in the world.

The Indian cosmetics industry is in churn. Even as the premium segment is

getting crowded, the rural market is turning out to be the stronghold of smaller,

regional players. Although stiff competition has emerged for Lakme Lever within

the Rs 250-crore colour cosmetics market, it continues to lead. In the skincare

market, estimated at Rs 700 crore, Lakme's market share averages 7-8 per cent.

Catalyst spoke to Anil Chopra, Lakme Lever's Business Head.

Russo and France (1994), studied the nature of the choice process for commonly

purchased nondurables by tracking eye fixations in a laboratory simulation of

supermarket shelves. The findings are fully compatible with the general view that

the choice process is constructed to adapt to the immediate purchase environment.

Another study by Chernev (1997) analyzed the effect of common features on

brand choice and the moderating role of attribute importance. It is argued that

when brand attributes differ in importance, with the best value on the most

important attribute, thus further polarizing brands' choice shares. In contrast, when

attributes are similar in their importance, common features are likely to have an

opposite effect, equalizing brands share.

Market Segmentation

            In this section, the author will discuss how Avon segments its markets and

what bases for segmentation the company uses.

            Market segmentation, according to Applbaum (2004), is the act of dividing

distinct groups of buyers who might require separate products and/or marketing

mixes . According to Mochis (1994), market segmentation refers to subdividing the

market into several groupings, with each group being recognized for its

preferences regarding products/services and methods of delivery (p.41). Market

Segmentation is marketing management techniques which can help firms find

ways of establishing competitive advantage.

Market segmentation amounts to partitioning a market into a number of

distinct sections, using criteria, which reflect different and distinctive purchasing

motives and behavior of customers. 

Avon is a global leader in cosmetics and as a company with global presence the

company uses different bases for segmenting its customers and target markets.

Among the bases of segmentation that Avon uses are:

1. Geographic - geographic segments mean location and this can include streets,

towns, cities, regions, countries, continents etc (Proctor, 2000).

2. Demographic - demographics or social statistics includes age, sex, family, life

cycle, job type/socioeconomic and group income level (Proctor, 2000).

3. Psychographic - psychographics attempts to segment according to

psychological profiles of people in terms of their life-styles, attitudes, and

personalities (Proctor, 2000). This approach according to Sternthal and Tybout

(2001a) focuses on lifestyle rather than demographic information as a basis for

describing segments. For this purpose, questions about activities, interests, and

opinions are asked.

            In recent years, Avon started focusing on capturing the market for younger

women, College students, and men with disposable income. Avon also looks at

extending market growth to include developing countries such as Poland, Vietnam,

Cambodia, and Czech Republic.

Avon has segmented its market in the following Age groups.

Youngsters: From age of 16 to 24

Middle aged women: From age of 25 to 35

Old women: 35 above.

Cause-Related Marketing

           Avon reaches around a billion women through 3 million independent sales

representatives in 136 countries. The company is committed to its mission of

becoming a company that understands and satisfies the product service and self-

fulfillment needs of women globally. In line with this mission, the company has

been supporting the “Crusade Against Breast Cancer” in order to uplift the lives of

women around the world. Through this cause Avon is able to meet business

marketing and communications objectives at the same time support a cause of real

concern to their target market.

MARKETING RESEARCH METHODOLOGY AND RESULT

Research methodology For this chapter I have realized a marketing research with the theme: attitudes,

opinions and behaviors of Brasov women regarding the purchase and use of

cosmetic products. The objectives of this research include:

1. Identifying the main behaviors of Brasov women regarding the purchase of

cosmetic products

2. Identifying the attitudes of Brasov women regarding the used products

3. Identifying the opinions about used cosmetic products In this research I used the

random sampling method, according to which, all individuals that are part of the

studied population have the same probability to be sampled. Because it is very

difficult to obtain a list with the entire female population I chose to make a

stratified sampling. The researched population for this marketing research is

Brasov female population aged 18 and over.

From the 15 districts of Brasov I randomly picked up 3. At this level I have

created a list with all buildings and households. The research was realized on a

sample of 100 persons and it has a maximum error of 9.8%. The questioner

includes 26 questions from which 5 serve for identification.

Research results

Firstly I used a filter question to split up the sample in 2 groups and to focus

on the researched segment. At the question “Do you use cosmetic products?”100%

of the respondents answered with yes.

For the next question “how often do you use cosmetic products?” 77% of

respondents use cosmetic products daily, 12% weekly and the other 4% only few

times per year. We can reach the conclusion that the majority of Brasov women

use cosmetic products daily.

Daily Weekly Yearly0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

The Frequency of use of Cosmetic Products

The Frequency of use of Cosmetic Products

At the question “what range of products do you buy more often?” – 57% from the

respondents purchase personal care products, 23% makeup, 17% perfumes and 3%

accessories. It results that the respondents buy mostly personal care products and

cosmetics. Perfumes and accessories can’t be neglected. This result was expected

because personal care products are used daily, cosmetics are indispensable to any

women and the accessories and perfumes have an extended usage.

The Predominant ac-quired range of products

Personal Care (57%)Product Cos-metics(23%)Perfumery(17%)Accessories(3%)

COMPETITORS & TARGETING

Every company in the cosmetic industry is actively engaged in being a

market leader by fulfilling the needs and peremptory request of the customer

related to health and beauty products.

Companies such as Estee lauder, max factor and Revlon have many

competitors such as Channel, Lancôme, Maybelline, L'Oreal, Lakme but the main

competitors of Avon is Mary Kay across united kingdom as it is similar to Avon

and is dependent upon the independent sales and direct selling method. Hence both

these are the rivals of each other in the same business market (Kumar, Massie and

Dumonceaux, 2006). In Romania, Avon Cosmetics is operating in a market

economy. A basic characteristic of market economy is the competition, reason for

which this is also known as competitive economy.

In market economy, the success or failure of a company’s actions is not

determined only by strategies, methods and tools that the company owns, or by the

professionalism with which they are handled, but also by the moves of the

competitors. In decision making process regarding market actions, should be given

importance to the activities of the other participants with which the company is in

direct or indirect competition.

For Avon Cosmetics Romania, any cosmetic product existent on

Romanian market represents a competitive product. Of course there are some

criteria that differentiate the competitors. The most important competitors of the

company are those who operate on the same target market and utilize the same

strategy. The process of identifying the competitors is very important for the

company. The main competitors of Avon Cosmetics Company are: Oriflame,

Nivea, L’Oreal and Maybelline.

Avon, Company`s most important and primary target market has always

been woman between 35 and 54 but now the company is totally engaged to focus

the teens because of large growing teen market through internet, direct selling, and

catalogues. Promoting and selling Avon product to the youngsters is Avon's new

plan of action to expand the business into new product class and paths to

distribution.

Company is finding the young sales representatives with the age lesser and

equal to thirty five, to market their brand to attract the youngsters (All business,

2001).Avon is focusing on the women possessing high passion and love for

beautifying their body. It follows Differentiated strategy as they are focusing on

two marketing mix for two different target markets.

Recommendation

            The recommendation for Avon focuses on ways of reaching out to the

customers and gathering information from them that can be used in designing

products and services. It is recommended that the company make use of Customer

Relationship Management (CRM) in order to build a strong long-term relationship

with the customers.

            Customer Relationship Management (CRM) can be defined as the

development and maintenance of mutually beneficial long-term relationships with

strategically significant customers (Buttle 2000). CRM according to Plakoyiannaki

and Tzokas (2001) is an IT enhanced value process, which identifies, develops,

integrates and focuses the various competencies of the firm to the ‘voice’ of the

customer in order to deliver long-tern superior customer value, at a profit to well

identified existing and potential customers.

            Customer relationship management focuses on strengthening the bond

between customers and the firm by maximizing the value of the relationship for the

benefit of both the customer and the firm. As a business philosophy, CRM is based

upon individual customers and customized products and services supported by

open lines of communication and feedback form the participating firms that

mutually benefits both by buying and selling organizations.

The buying and the selling firms enter into a ‘learning relationship’, with

the customer being willing to collaborate with the seller and grow as a loyal

customer. In return, the seller works to maximize the value of the relationship for

the customer’s benefit. With the objective of most businesses today being to create

and maintain loyal customers at a profit, CRM provides the platform for seeking

competitive advantage. As a business philosophy, CRM is based upon individual

customers and customized products and services supported by open lines of

communication and feedback form the participating firms that mutually benefits

both by buying and selling organizations.

CONCLUSIONS AND PROPOSALS

Company’s position on the market must always be improved, Avon being

currently considered a strong and modern company, concerned to improve itself.

It must be maintained the quality differentiation strategy in order to offer superior

products and to thank all consumers’ categories. The renewal assortment strategy

is beneficial for Avon, which is a modern company and wishes to correspond to

the new requirements of the fashion and technology.

From the prices point of view, Avon is above the medium price of cosmetic

products from Romania, but the level of price is justified by the quality of sold

products.

From the marketing research we noticed that the majority of Brasov women

purchase products from Avon Company. The frequency of use is important, 77%

of the respondents use cosmetic products daily and 12% weekly. Another

important element is the competition. After analyzing data about Avon Company

and its competitors we observed that the first company in consumer preferences is

Avon, followed by Nivea Company.

This is because Avon addresses it products to all women. To establish the link

between age category of the respondents and the range of products they buy most

often, by using Chi-square test we determined that there is connection between the

range of products bought from Avon and the age of respondents.

It is known that perfumes and accessories specifically are addressed to young

women. As a suggestion for Avon Company I consider that it would be an

advantage if the time between the moment when the order was launched and the

moment when the product was delivered would be diminished. Also I consider that

there should run more advertising spots on television channels at times with high

ratings.