Assessing Avon Company Marketing Strategies - Case Study Example

Table of Contents Introduction 2 Purpose of the report 2 Current Strategy adopted by Avon 2 External Analysis of Avon 3 Internal Analysis of Avon 5 Issues faced by Avon 6 Different Strategy Options 7 Recommendations 8 References 9 Introduction Avon performs in the cosmetic industry and has been in the market since 1886. The company deals in different types of products like cosmetics, perfume and toys that has ensured that the company is able to tap on the different segment of market (Avon, 2011). The company relies on direct marketing and has ensured that they have branches and establishment all over the world thereby ensuring that they are able to cater a large woman population. The company needs to ensure that they continue to use a similar strategy so that they are able to grow and increase their market share. Purpose of the report To identify the current issues facing Avon To identify different strategic options that will help Avon to improve their current position and improve their image To provide recommendations which when employed will ensure that the firm is able to perform better. Current Strategy adopted by Avon Avon is looking towards adopting a strategy which helps to increase the penetration level as the company offers products which are low priced and are looking towards direct sales. For this the company has looked to provide the required training and skills to its employees, improving the logistics management and ensuring availability of the products, improving the brand awareness and ensuring transparency by building on the values of a trustworthy brand which makes more customers choose the brand. The company recently looked towards selling products which are less cheap and looked towards entering into agreement with franchise and retail stores which have made the company move away from the unique proposition strategy adopted by the company. This has complicated the matter and is not able to identify the strategy that will help them to ensure same brand image. This has made it important that Avon clears its stand and look towards ensuring efficiency in the operations. External Analysis of Avon Economic High commodity and input cost Increase in income level as increasing trend seen in both women and men looking towards job Slow growth in traditional grocery stores making it easy to market through big outlets Socio-cultural Slow to change to the changing consumer demand as can be seen from increase consumer concern because of downturn in the economy Increasing trend towards cosmetics and products that help to enhance the image because of the following Launch of wellness product in 2002 for women between 16 and 24 years of age Increase in the number of cosmetics specialist like Body Shop and Douglas Political Strong government legislation in regard to safety while using cosmetic Strong government laws to ensure that the injuries due to cosmetics are limited Demographic Increase concern towards beauty range products 0.5 million sales representatives in US and Canada 5.3 million representatives across Latin America Young population are on a rise Global Availability of product in 110 countries highlights global availability Presence of different producers and opening of economies makes organization have a global effect Technological Matching the technology advancement as can be seen from manner advertisement evolved Increased media attention beauty and cosmetic range Internal Analysis of Avon The following is the internal analysis of Avon Tangible resources Strong network coverage by having its presence in 110 countries giving a strong market Huge employee base of 5.8 million who are loyal market the product Ability to identify areas to advertise like billboards, television, to keep with the changing times Addition of new products into the product line like perfume, toy and cheap products Intangible resources Strong brand presence due to strong marketing and quality in the product Improved focus on business development by dividing the business into three core product line i.e. cosmetics, perfume and toy Consolidation through huge size which provides competitive advantage as purchasing power multiplies. Capabilities Developing new product through innovation which has been the key for years and attracted consumers due to it. Ability to identify business to acquire which will strengthen their sale Being in business since age’s shows the reputation level developed. Reputation thus had added to the growth and made customers look towards their products. Core Competencies Rare: Development of new products like toys and cosmetics which are cheap and enable the lower income group to purchase one Non substitutable: The presence in industry since 1886 cannot be matched by others Differentiating factor: Ability to sell products directly to the customer by having a strong network of employees Issues faced by Avon Avon faces same serious issues which the company needs to pay attention to. The issues faced by Avon are as follows; PRODUCT PORTFOLIO EXPANSION (Problem: Lost of simplicity) Development of new products which are cheaper has complicated the management about the strategy they need to adopt. This has diverted the attention of the management towards other product and loose simplicity (Cravens, David & Nigel, 2009). ADVERTISEMENT EXPANSION Looking towards different medium of communication like print, radio and television with growing popularity of video advertisement and banner has increased the cost associated with advertisement. Looking towards different forms of media has increased the cost (Hooley, Saunders & Piercy, 2004). Different Strategy Options On the basis of the issues involved and the prime issue facing Avon it has various alternatives which the company can opt for. They are as follows Concentrate on core activity: Avon to achieve simplicity and look to hive off its non core activities and concentrate on its core activity (Ranchod, 2004) i.e. cosmetics product which matches their brand name. This would make Avon concentrate and improve its focus on its main business but it would mean a financial loss to the company. Still, this will help to solve the problem to a certain extent. Concentrating on the core activity will help Avon to improve its corporate image. Slow down their new advertising ventures: Avon should looks towards concentrating on more core issues and delay their ventures into other advertising medium till they are able to resolve the different issues. This will help Avon to concentrate on the core issues and help them in proper management (Peterson, 2006) Outsourcing their non core activities: Avon can look forward to outsource their non-core activities and concentrate more on their core activity i.e. cosmetics which match their brand image. This will help Avon take advantage of the expertise outside agencies have on other activities but would increase the risk of leakage of information to the competitors (Ferrell, 2005). Despite the risk associated with outside agencies it will help Avon to ensure that they are able to divert more attention towards their main area of operation and design a mechanism which ensures that Avon is able to improve its relation with the customers and improve its corporate image. Recommendations Based on the above alternatives Avon should concentrate more on their core activity. Avon to ensure that they maintain simplicity should work on the same business model and sell products directly to the customer so that there is maximum efficiency in operations. Following the above will help Avon to create a positive brand image as it will be able to maintain simplicity and at the same time grow by integrating new developments. This will help Avon to bring a change in its brand image and will help them to improve the corporate image. This change will also help Avon to ensure consumer confidence which will help Avon to ensure that they have a base of loyal customers. References Avon. 2011. Avon: The company for women. Retrieved on September 14, 2011 from http://www.in.avon.com/PRSuite/home_page.page Peterson, 2006, Strategic Marketing Problems: Cases and Comments, International Edition, 11th edition. Pearson Prentice Hall, New Jersey Ferrell, O.C. & M.D. Hartline 2005, Marketing Strategy, Mason, Ohio: Thompson Cravens, David W. & Nigel F. Piercy 2009, Strategic Marketing, 9th edition Boston: McGraw-Hill Hooley, G.J, J.A. Saunders & N.F. Piercy, 2004, Marketing Strategy and Competitive Positioning, Harlow: Prentice Hall Ranchod, A. 2004, Marketing Strategies: A Twenty-First Century Approach, Edinburgh, United Kingdom: Prentice Hall Reflection Report The most important issue facing Avon is to ensure simplicity in its operations which has become complex due to addition of new products. This is making many people stay away from the company which has lost of the mantra of being simple and dealing with products which are cheap has tarnished the image of the organization. The issue highlighted above is of prime importance for Avon because it has created confusion about the product. The image of Avon as a result is having a make over shift and their principle to be simple is slowly loosing significance. (Peterson, 2006) Also the fact that different products confronts with the main objective of Avon is thereby creating a state where the management is not able to dwell on important issues. The importance is also highlighted from the fact that diverting into non core activities have resulted in Avon loosing their strategic marketing objective. The company as a result is unable to focus on improving their products and marketing strategy. The magnitude of the problem has multiplied due to cheap products which has tarnished the image. This is making all the more important that Avon simplifies operations and concentrates on core activities. Avon’s corporate strategy is to be built on a solid base and the adaptability to mould itself with the changing times and being innovative at the same time will contribute towards the success of the organization. Avon needs to have a vision for the future and not compromise on their quality. The strategy which the company should follow should have a mix of inward and outward development on all fronts. The company on the outward front had marketers who were able to gauge the requirements of the customer and also market the product. Also the establishment of chain across different regions took care of the fact that if sales fell at a certain location it would be taken care through other stores. Also, the desire of the company to hire regular talents who had some experience kept them abreast with the changing technology. Using the policy of concentrating on the core activity and working on the same business model will have effect on the working of the organization as it will result in loss of income for the organization. It will also result in the organization lose a vital market and tap the population of the growing country as it will have a direct relation with the income level thereby making it difficult for the poor income countries to purchase the product. Avon change in strategy to re-innovate and move back to the core activity might fire back as this would lead to higher cost leading to a rise in price of goods which might clash with the higher brand thereby affecting their niche market. This will also lead in loosing valuable shelf space. The company strategy to sell products trough big retail outlets will result in loosing shelf space from other stores where the competitor will display their products resulting in a certain section of customer who visit those stores to stay away from Avon. Avon producing it products elsewhere might tarnish their image and is a threat as quality will a concern. Also the fact that there are chances of leakage of it to the competitors will result in loosing the image. This could be a case where the company is looking towards entering the niche market by having products which are priced low An environmental factor which will have a toll on Avon is the rapidly changing technology which will make their products being imitated easily and the competitors coming up with the same resulting in a price war finally leading towards sacrificing the quality. Opening of stores worldwide will also reduce the concentration on the customer needs thereby resulting in the competitors taking a hind sight lead The rapidly increasing competition and changing in technology calls for the company to stick to their corporate strategies and change slowly so that the competitors are not allowed to creep in front. Also, different legislation and binding government norms will have an impact on Avon’s strategy. The company needs to recognize those threats and need to be on their feet to tackle those especially in the changing times. Read More