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
Dec 24, 2015
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?