Download - Avon Competitive Strategy
AVON
Ana Inda Joyce Yuli
Agenda
• Overview• Environmental, Market Analysis• Consumer, Competitor Analysis• Internal Analysis • Competitive Advantage• Value Proposition• Brand Equity• Leveraging, Energizing the Business• Creating New Business• Conclusion
• Global Business in 140 Countries
• 6.4 Millions Representatives• Declining Market Share
Overview 1886
1939
1957Avon 100,000
Representatives
1971
1990
2011
2013
USA Cosmetic Market
?
Vanish?
External
Analysis
P E
S T
• Against Animal Testing
• Avon In China• Against Brand
Image
• Economic Recession• Turning Point of
Avon
• Sustainability trend• Go Green
• E-commerce Trend• Digital Marketing
MarketAnalysi
s
Fragrance10%
Personal Care23%
Color Cosmetic
20%Hair Care
20%
Skin Care27%
Beauty Industry
Source: Perry. “A Cosmetic Industry Overview for Cosmetic Chemists”
Total Size: $53.70 billion
Porter Five Factors
• New Entry Competitors
• Substitute Products
• Competitive Intensity
• Power of Customers
• Power of Suppliers
Profitability
Analysis
High
Medium -High
Medium -High
Medium -High
Very High
Competitors
Analysis
Attributes Avon Mary Kay Beauty.com Olay
Products
Service
Channel
Finance
Brand
Manufacturing
Market Share
KSFAnalysi
s
Credible brand
Strong Direct
Marketing Program
Personalized Sales
Experience
Philanthropy
Activities
Vast product
mix
Global presence
Customer
Analysis
• 45 years old
• Married, Mom
• Graphic designer
• Lives in the suburbs of MA
• Middle class
• Penny wise shopper
• Concerned for her image
• She “doesn’t have enough time”
Meet Jennifer:
Financial Performan
ce
Market Share
• 2013 1st QTR : 4%• Operating Profit: $172
million• Operating Margin: 6.9%
31.6%
Source : Avon Official Website
Performance Indicators:
• Leading global beauty company
• World's largest direct seller
• Top of the Customer Satisfaction
Survey
• Ranked #2 in Top 50 cosmetics
brands
• Oracle Hyperion-based EPM
SWOTAnalysi
s
S W
O T
Direct Selling LeaderCommitted WorkforceSelf-Own Facilities
Decrease SalesLow Brand LoyaltyWeak Brand image
Green Products Trend Anti-Aging ProductsUrban Trendsetter
Inflation RatesRising Costs of commodities Low Internet Selling
Competitive
Advantage
Basis of Competition
Where You Compete
What You Offer
Way You Compete
• Manufacturing• Avon Lady• Consumer Data
• Beauty Industry• Olay, Mary-Kay • Global
• Customized Products
• Flexible Schedule• Personal
Connection
• Direct Selling• E - Commerce• Own facilities
AVON is the best at understanding the modern woman because they interact with her daily, on a personal level.
Competitive
Advantage
Value Propositi
on
TARGET
Mass Market Woman Age
25-50
VALUE
Low Price with a Personal
Connection
OFFER
Beauty, Fashion and
Home
BENEFIT
Understands Consumer
Needs
POD
Customized Products
PROOF
Direct Selling and the Avon
Lady
Value Proposition
Value Propositio
n
FOR the busy, modern, working woman WHO struggles to find time to purchase make-up, Avon IS a direct seller of beauty products THAT creates a customized make-up palette for you, on your time.
THE COMPANY FOR WOMEN
• Flexible Schedules• Knowledgeable Avon Ladies• Established Reputation
Brand Identity
Essence Understand women's needs more than they do globally.
Core Extended Identity
Direct Selling 6.4 millions representative in 140 countries
Positive Brand Image
Walk for Breast CancerClose Tie with APF
Brand Equity
High Brand Awareness
- Walk for Breast Cancer- 125 old Company
High Brand Loyalty
- #41 Best Global Green Brands- #6 Top 50 Cosmetics Brands- #20 Valuable U.S. Retail Brands
Brand Association
Reliable
Eco -Friendly
Direct Seller
Business &
Brand Portfoli
o
BCG GROWTH-SHARE MATRIX
High Low
Low
Hig
h
Mark
et
Gro
wth
Rate
Competitive Position
Problem Child!
Business &
Brand Portfoli
o
GE – MCKINSEY MATRIX
Selective Investment!
High Medium Low
Low
Med
ium
Hig
h
Busi
ness
Posi
tion
Market Attractiveness
Business
Portfolio
Make Up
Skin Care
Bath & Body
Fragrance
Children
Home
Fashion
Jewelry
Hair Care
Men
Lips, eyes, face, nails, beauty tools
Cleanser & toner, eye care, moisturizers, body treatmentBody lotion, body spray, deodorant, depilatories, etcPerfume, spray, shower gel, powder, etc
Shampoo, conditioners, treatments, hair color, brushesBracelets, necklace, pins, rings, watches, earrings, etcApparel, handbags, accessories, footwear
Kitchen, home accents, games & gadgets
Bath & body, fashion, room décor, toys
Skincare, fragrance, grooming, apparel, jewelry, etc
Business
Portfolio
Beauty73%, +5%
Fashion 18%, -1%
Home9%, +0%
NET SALES BY CATEGORY:
DIVEST!
INVEST!
Why?• No
competitive advantage
• Incompatible with the brand image
Why?• Have loyal
customers• Compatible with
brand image• More resources &
knowledge in beauty area
Sources: Avon Financial Report 2012
Website:• Navigation• Product/ cost
comparisons• Reviews
Energizing,
Leveraging the
Business
Purchase• At home• Online
Shipping• Delivery time• Quality
Feedback, platforms, WOM, Advocacy
Touch-pointsAds:
• Media channels(billboards, email, online)
Direct marketing:• Sales repor
Experience:• Sales rep attitude,
knowledge• Try, touch products
Energizing the
Business
Need for innovation• A purely rep-based system is no longer effective
Brand energizers• The “New Avon Lady”• Branded social programs• Branded sponsorships, brand
endorsers• Holistic marketing plan
Increasing existing customers usage
• Frequent use• Incentives• Reminder
communications
Leveraging the
Business
Brand Extensions:
Expanding Scope:
Viable New Markets:
• 4 geographical divisions
• Distribution channels, Age, Gender
Mark Anew Liz Earle
Makeup, perfume
Skin care, hair care products
Jewelry, fashion,
home items
Creating New
Business
Does Avon need to create new business?WE DON’T THINK SO…
BRAND RESTRUCTIZATION AND NEW BUSINESS MODEL ARE
THE KEYS
Restructure Brand
Make Up Skin Care Bath & Body FragranceHair Care
Capitalize on Avon’s competitive advantage:BEAUTY PRODUCTS
Key takeaways: leaner, focus and efficient
Make emphasis on organic make up
New Business
Model
TRANSFORMATION TIME!ALL OVER THE WORLD EXCEPT LATIN AMERICA
Old, Door-to-Door Strategy
Modern, Mobile, Paperless Strategy
Answer survey online to diagnose the problem
Talk with Avon ladies for further consultation if needed
24 hrs online customer service
Costly Catalogue
YOUR PERSONALIZED BEAUTY EXPERT
New Marketin
g Strategy
Social media Brand Ambassadors
Innovative Advertising Event Sponsorship
• Aggressive advertising
• Editorial• PR efforts• Product
placement
• Sampling in the event
• Co-ops
• Integrated social media campaign
• Blogger reach out
• New relevant brand ambassadors
• Capitalize on them
Summary
Losing sustainable competitive advantage
Change in consumers’ habits and
trends
Inconsistent brand identity
CHALLENGES:
ASSETS & COMPETENCIES:
High brand recognition
High customer loyalty
Control over manufacturing facilities
No synergy in product portfolio
Summary Reduce Brand
Portfolio
Strengthen the
Ecommerce Market Strategy
Transform Avon
“Ladies”
Innovative, Sustainable
Products
New brand identity for
Avon
Increase in sales (market share)
OUR RECOMMENDATIONS:
Increase in customer acquisition
Higher stock price
RESULT: