Avon Calls for Foreign Market - Case Study Example

Avon Calls on Foreign Markets Avon Calls on Foreign Markets Different companies use different marketing strategies such as Avon’smarketing orientation. This paper discusses the applicability of Avon’s marketing orientation to its global operations. The paper covers Avon’s reasons for depending on its foreign operations more than its home operations. The paper will discuss the socioeconomic and demographic changes and the global recession on Avon’s operations. There is a review on Avon’s competitive advantages and emphases in distributing more to its foreign market than home market. There is a brief section on major considerations in choosing new suppliers and manufacturing location. The paper closes with Avon’s challenges in maintaining and expanding global manufacturing and supply chain network. Initially, Avon applied product orientation strategy where it produced its goods and went to its customers to check whether they will be interested. Oudan & N.S. U, 2007 observes that this orientation has the advantage of saving the customer the burden to second-guess how a new product would develop. Product orientation allowed Avon to keep producing the items it was good in without having to deal with the risks involved in producing new products. Marketing orientation bears more advantages. In their line of duty, Avon representatives meet people and they get to hear their varying queries, ideas, and needs. Marketing orientation allows Avon to adapt its products to address their customers’ felt needs. Customers’ needs vary with individuals and regions and Avon’s flexibility and adaptability helps build and retain loyalty. This loyalty is what guarantees Avon’s profits in its foreign markets (Oudan & N.S. U, 2007). Avon depends more on foreign markets because they do not stiff competition. There are many cosmetic manufacturers in the U.S. cosmetic industry. Avon’s independent salespersons help advertise products through the word of mouth. This cuts advertising costs that would accrue from other ways of marketing such as media (Oudan & N.S. U, 2007). Growth in the numbers of women who use cosmetics would raise Avon’s profitability. These are women of ages ranging between young adulthood and middle age. On the other hand, if the elderly exceeded the young, Avon’s profitability will go down. Avon targets women and an unbalanced growth in population that would lead to more men than women would reduce Avon’s sales and profitability. Global recession renders some people unemployed because companies resort to lay-offs and retrenchments in order to cut on their costs. This provides Avon with more people to work as direct sellers from the resultant pool of job seekers. Increase in the number of direct sellers increases Avon’s sales. Avon’s direct sales strategy is its competitive advantage. Its representatives are able to reach some of the places that would seem relatively inaccessible using other sales methods. The representatives canoe across rivers to interior parts where there is poor infrastructure. According to Singh, 2008 direct selling is a convenient strategy that costs companies little to adopt. The strategy is flexible and helps companies to attend to all consumers including those who prefer door-to-door services and those who cannot afford time for product demonstrations. Expansion into new markets is another element of Avon’s business strategy that companies can domesticate. Avon’s emphasis in selling largely to its foreign market has the advantage of earning it profound reputation. This leads to a proportionate growth in its sales in the foreign market. On the other hand, U.S’s cosmetic industry is flooded and a firm’s reputation does not stand out as much as in foreign markets. Selling to the home market through kiosks allows Avon to attend to its loyal customers in the U.S. However, this way of distribution has the risk of not having a good standing to fall back on in the home market. This is because home market serves to cushion businesses when their foreign operations fail (Singh, 2008). Price is an element of consideration when choosing new suppliers. The services of the new supplier have to be affordable but competitive pricing is the best option. Avon has to be cautious not to focus so much on price as to compromise the quality of its products. Avon also needs to consider supplier reliability in order to identify the suppliers who can deliver the right goods or services on time in order not to delay the availability of Avon’s products to its customers. Supplier capacity is important and companies measure it through the amount of stock the supplier can produce or keep at a time (Gordon, 2008). Gordon, 2008 asserts that the proximity and distance of a supplier from the company is important because it determines whether goods and services will get to the company on time or not. In deciding where to manufacture their products, Avon should consider transportation. A strategic location for a manufacturing plant should be open to at least two means of transport. They should consider the location of their markets and ensure that their manufacturing sites are near their markets. Political and strategic considerations will require Avon to manufacture its products from the place where the government would direct. Places where raw materials are readily availability would be ideal for Avon to manufacture its products. A challenge that Avon experiences in maintaining and expanding its manufacturing operations is how to come up with a procurement network that supports and reacts to its supply chain needs. Koster & Delfmann, 2007 argue that it is challenging to select strategic suppliers who can provide manufacturing locations that works well with a company’s global quality and still maintain local service that is reliable. It is becoming increasingly challenging to access latest technology that supports new product development. According to Sule, 2009 increased business expansion and growth such as Avon’s requires global customer and supplier networks. Some of these networks form complex global supply chains that need highly effective management. Optimizing end-to-end supply chains costs is a task for a company of Avon’s caliber and outsourcing and improved globalization of supply chains are some of the ways of reducing these costs. In conclusion, Avon’s marketing orientation enables it to address customers’ felt needs and helps cut down on advertising costs. Avon depends on its foreign markets more than its home market because foreign markets do not have competition as stiff as its home market. A growth in the numbers of women who uses cosmetics would increase Avon’s sales and profitability whereas more men than women would mean a decrease in the same. Through direct selling, Avon enjoys improved access to places inaccessible to other businesses. Price, reliability and capacity are examples of major considerations in choosing suppliers. Transportation and proximity to the market are determinants of an ideal place for locating a manufacturing plant. Global supply chain complexity and end-to-end cost optimization are Avon’s challenges in maintaining and expanding global manufacturing and supply chain networks. References Gordon, S. (2008). Supplier evaluation and performance management excellence. Boca Raton, Fla: J. Ross. Koster, M. B. M., & Delfmann, W. (2007). Managing supply chains: Challenges and opportunities. Køge, Denmark: Copenhagen Business School Press. Oudan, R., & Nova Southeastern University. (2007). Market Orientation: Benefits to firm and economic development, theories, concepts and methods. Saarbrucken: VDM Verlag Dr. Muller. Singh, M. (2008). Strategic management and competitive advantage. New Delhi: Global India Publications. Sule, D. R. (2009). Manufacturing facilities: Location, planning, and design. Boca Raton: CRC Press. Read More