A V O Nthe company for women

Final PresentationDecember 6, 2010

Jen Callaghan J.R. Longino Rasa Navickaite Meghan Quinn Lia Torre

Avon is a leading global beauty company, with over $10 billion in annual revenue. As the world's largest direct seller, Avon markets to women in more than 100 countries through 6.2 million independent Avon Sales Representatives. Avon's product line includes beauty products, as well as fashion and home products, and features such well-recognized brand names as Avon Color, Anew, Skin-So-Soft, Advance Techniques, Avon Naturals, and Mark.

Corporate Overview• Current Long Term Objectives

- Retain their representatives and increase their productivity

- Leverage technology and the viral power of the Internet

- Broaden shopping opportunities with new product categories

- Restore Sustainable Growth- Committing to brand competitiveness

Corporate Overview• Current Short Term Objectives- Committing to brand competitiveness - Winning with commercial edge - Improving the attractiveness of Representative

earnings opportunity as needed;- Elevating organizational effectiveness - Transforming the cost structure

Corporate Overview• Core Competencies- Branding

– 90% awareness globally– Advertising invetsment with Celebs

- Channel- #1 Direct Selling Company

- Cost management– $1B in savings by 2013

- Organization – Matrix of global and commercial business units.– 71% employee engagement

SWOT• Strengths- Diverse Market

Presence - Direct-Selling Model- Brand Equity

• Weaknesses- Chinese Operations- Strategy in non-beauty- Declining Margins

• Opportunities- Restructuring Initiatives- Social Media & Technology- Rebranding Strategy- Emerging Markets• Threats- Competition in Industry- Revenue tied to Reps- Currency Fluctuation

Recommendations• Opportunities- Restructuring Initiatives- Social Media & Technology- Rebranding Strategy- Emerging Markets

Technology and Social Media• Advertising on Social Media- 25% of advertising budget to Social Networks- Create social selling applications - all Avon brands• Upgrade Online Marketplace- Through sales reps promote online sales- Take advantage of early mover advantage• Empower Sales Reps with Technology- Sales Applications for Mobile Devices- Video chats for representative meetings

Evaluation of BRIC opportunity for AVON

BRAZIL RUSSIA INDIA CHINA

‘10-’14 Beauty $ Growth*

$651MM $717MM $50MM $428MM

5 Forces* Moderate Moderate Moderate Moderate

Demographic Fit

Exponential growth of

Middle Class

Aging Pop Emergence of Young Urban

elite

Aging Pop

Segment growth

Lipstick Eye Lipstick Lipstick

Formal Considerations

• Unstable economy & high

import tax

• Corruption •Easing of trade barriers

• Direct selling heavily

regulatedInformal Considerations

• Role of women increasing

• High value placed on

luxury

• Growth of urbanization

• Close family connections

*Projected: Datamonitor, 2009

RUSSIA• Economic situation:

– #1 predicted dollar growth of BRIC ‘10-14

• Demographics: – Growing affluent

population• Importance of beauty

as a status symbol within the culture

Russia Recommendation• Leverage brands to capture

consumer segments

Ages 16-29

Ages 30-39

Ages 40+

India

India Recommendation

CHINA• Economic situation:

– Avg. GDP growth 10.3%

• Demographics: – Growing population– Urbanization– Aging population & longer life expectancy

• Importance of beauty within the culture

China Recommendation

• Focus and target the “fashion-conscious” urban beauty consumers

• Focus on anti-aging product line

• Emphasize the competitive price

• Emphasize opportunities of entrepreneurship

BRAZIL• Economic situation:

– World’s third largest beauty market

• Demographics: – Growing middle class

• Importance of Hygiene within the culture

Brazil

• Politics – growing middle class

• World’s third largest beauty market

• Hygiene as part of culture

Brazil Recommendation• Focus on Product line simplification-Lip-Hair care• Continue to spend advertising money

in Brazil to gain new representatives• Take advantage of Brazils natural

resources

Conclusions• Avon can leverage its core competencies to drive growth globally.• Stay true to its efforts to streamline costs

• Harness the power of technology as a selling tool

• Strategically enter each of the BRIC countries

Questions

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