What is Andrea Jung’s strategic vision for Avon? Do you approve of
the company’s new strategic direction? Why was it time for Avon to
fundamentally change direction?
Avon’s Vision :
Andrea Jung envisioned an Avon that would be the “Ultimate relationship
makeover of products and services for women”. Under Jung Avon’s vision
statement read, “Our vision is to be the company that best understands and
satisfies the product, service and self-fulfillment needs of women globally. Our
dedication to supporting women touches not only beauty – but health, fitness, self-
empowerment and financial independence.”
Avon’s new strategic direction launched an entirely new line of business, the
development of innovative products, new packaging, new channels to do
distribution, a new approach to supply chain management, new sales models, and
new approaches to image building. The new strategies yielded results much faster
than the expected with increased profit margins, market share and expansion of
Avon in Europe and China.
Need for a change :
➢ Internal operating problems:
Avon has been on a turnaround for several years now but this
turnaround was needed because of the internal operating problems. Orders
were being placed and not filled, packaging was out of date and customers
were becoming disgruntled. The Internet was also not being utilized as a
marketing and selling tool. Since these problems have been brought to the
attention of Andrea Jung changes have been made but Avon needs to
continue to pay attention to its internal operations to avoid a reoccurring
problem in the future.
➢ Obsolete products
Although Avon develops new products every year they have in the
past overlooked current products that are becoming obsolete. This causes a
loss in profits due to decreased sales and wasted money spent on marketing,
packaging, and buying the supplies for the product. More recently Avon has
retired products off of the product line but they need to get into the habit of
evaluating every product at some time during the year and determining if
they need to produce less, more, or stop producing the product altogether.
➢ Focused product line
Avon has been in the cosmetic industry since it was founded in the
1800’s. Major companies that are ahead of Avon in the CFT industry include
Unilever and Procter and Gamble. Both of these companies offer a variety of
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products including cosmetics, lotions, shaving products for men and women,
baby care products, and shampoos/ conditioners and other hair care products
just to name a few. If Avon wants to become the number one seller in the
CFT industry they have tough competition to surpass because of their diverse
product line. Putting the Avon name and symbol of quality on a new product
line would definitely attract consumers.
➢ Inconsistency
Although Avon has been around for over 100 years they have never
really been super consistent with their promotions, product launches or
retirements, and training and distribution changes. Avon has gone through
some changes more so in the past 15 years than any other time but it has
always been an abrupt change without warning to people in the company
such as direct sales representatives. This causes tension because people are
reluctant to change and always like a warning before it happens. I am by no
means trying to say that the changes Avon has gone through are a weakness
but I am saying their inconsistency in the warning or enlightenment of the
change to the rest of the company has been weak.
Other major reasons for change were :
Avon’s representatives were vigilant in protecting their customers and sales,
and they were aggressive in reversing strategies that might increase sales for Avon
but limit sales growth opportunities for sales representatives.
➢ Sales representatives were displaced with any recommendation to make any
Avon products available for sale in department stores or malls.
➢ The company was limited by its dowdy brand image
➢ Market research found that most women viewed Avon as “my Grandmother’s
brand” or “Not for me”
➢ Avon had no Products in some of the fastest-growing CFT categories, and it
had not introduced a hit product in decades
➢ Distribution inefficiencies, limited income opportunity for the average sales
representative
➢ Difficult in selling products to busy women as 75% of American women are
working class
References :
1. http://classes.bus.oregonstate.edu/fall-05/ba590/avon.doc
2. http://essayinfo.com/sample/essay/1096/
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3 What is your assessment of the financial and strategic
objectives Jung has set for Avon? Do they contain too much stretch?
Too little stretch?
After becoming CEO of Avon, Andrea Jung developed a strategy based on the
market position or core competencies of Avon products. Andrea Jung’s Eight
Strategic Priorities as the catalyst of change in the company after having presented
a daring vision for Avon to be the “ultimate relationship marketer of products
and services for women” which at first seemed implausible are as follows.
➢ Grow global beauty category sales through continued investment in
new product development, advertising, and sampling.
Through research development Avon was able to launch innovative
products that opened doors of beauty products industry. Research has also
contributed to the study of breast cancer early detection, prevention and
recently for the cure. They also invested for improvement of brochure,
broadcast advertisements, interactive voice response system, fax and toll-
free ordering of products took substantial savings and also it had gained
enormous returns.
➢ Provide representatives with greater career opportunities through
sales leadership, enhanced sales Internet capabilities, and training.
The implementation of Sales Leadership program in the Avon
community was designed to give better chances of accumulating income for
career-minded women. The said program imparts business savvy,
opportunity to recruit, mentor and train new sales representatives while they
gain commission from it. They can make use of Internet system – Avon.com,
and become e-Representatives.
Therefore, the Avon Company had successfully activated Sales Leadership
plan globally, engendered representative occupation, enhanced efficiency, in
addition to that had vied with further direct-selling enterprises in order to
utilize and retain sales representatives.
➢ Reduce inventory levels while at the same time improving service to
representatives
The policy behind the new procedure of accounts cataloging is that
inventories are stated at the lower cost of or market. As a result, it improved
the assessment or evaluation of stocks, supply fitting balancing of profits and
operating cost and expenses, and appraisal of company accounting to
comparable bookkeeping system. It is also designed to reveal non-recurring
charges for inventory write-downs and eliminate cease manufacture of
product lines, closures of facilities, reductions of size-of-line, and unseen
product nature modification. The company had also executed an effective
centralization of product inventory distribution hubs.
➢ Improve operating margins by 50-100 basis points thru business
process redesign
The process reengineering is utilized to eliminate non-value adding
costs. The company had allotted premeditated expenditure of more than
$100 million every year to buttress manufactured goods improvement,
effectively implement e-commerce initiatives, improve commission prospects
for self-sufficient sales representatives, and large-scale branding build up. In
consequence, the company had a pretax charges of $97.4 million 2001 and
$43.6 million in 2002 associated to expenses to speed up business
renovation schemes, and were projected to upgrading operating margins by
250 basis points and operating cash flow by $500-$800 million by year end
2004 which more than materialized.
➢ Successfully launch the Avon Wellness line of nutritional
supplements and vitamins
Avon planned to polish its brand image by the expansion of its line of
products by the invention of wellness products that promoted women’s
health and well-being. It was a new business venture, a new opportunity for
revenue gaining for sales representatives. It is designed to help women of all
