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    Case Study of Avon - Case 2

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    gregbaccay
    Avon built its business on direct sales by representatives going door-to-door, but faced challenges as more women entered the workforce in the 1980s. Sales and profits declined as its pool of customers and sales representatives dwindled. To address this, Avon updated its product lines, improved compensation for representatives, and offered training. This helped sales rise 17% within a year. However, Avon estimated 10 million interested women could not buy due to a lack of local representatives. So Avon began mailing catalogs directly to potential customers nationwide to reach "stranded" buyers and attract new customers, while still allowing ordering through representatives. The move showed Avon's concern that its core direct sales market had matured with more time-constrained customers

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    Case Study of Avon - Case 2

    Uploaded by

    gregbaccay
    295 views2 pages
    Avon built its business on direct sales by representatives going door-to-door, but faced challenges as more women entered the workforce in the 1980s. Sales and profits declined as its pool of customers and sales representatives dwindled. To address this, Avon updated its product lines, improved compensation for representatives, and offered training. This helped sales rise 17% within a year. However, Avon estimated 10 million interested women could not buy due to a lack of local representatives. So Avon began mailing catalogs directly to potential customers nationwide to reach "stranded" buyers and attract new customers, while still allowing ordering through representatives. The move showed Avon's concern that its core direct sales market had matured with more time-constrained customers

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    Avon built its business on direct sales by representatives going door-to-door, but faced challenges as more women entered the workforce in the 1980s. Sales and profits declined as its pool of customers and sales representatives dwindled. To address this, Avon updated its product lines, improved compensation for representatives, and offered training. This helped sales rise 17% within a year. However, Avon estimated 10 million interested women could not buy due to a lack of local representatives. So Avon began mailing catalogs directly to potential customers nationwide to reach "stranded" buyers and attract new customers, while still allowing ordering through representatives. The move showed Avon's concern that its core direct sales market had matured with more time-constrained customers

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    295 views2 pages

    Case Study of Avon - Case 2

    Uploaded by

    gregbaccay
    Avon built its business on direct sales by representatives going door-to-door, but faced challenges as more women entered the workforce in the 1980s. Sales and profits declined as its pool of customers and sales representatives dwindled. To address this, Avon updated its product lines, improved compensation for representatives, and offered training. This helped sales rise 17% within a year. However, Avon estimated 10 million interested women could not buy due to a lack of local representatives. So Avon began mailing catalogs directly to potential customers nationwide to reach "stranded" buyers and attract new customers, while still allowing ordering through representatives. The move showed Avon's concern that its core direct sales market had matured with more time-constrained customers

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    Case Study of Avon: From Direct Selling to

    Direct Marketing
    For years, Avon lady was a fixture in American  neighborhoods.  Selling door-to-door
    built Avon into the world’s largest manufacturer  of beauty products. Avon operates in
    135 countries and besides  the cosmetics it also sells jewelry, home furnishings, and
    babycare  products. Avon pioneered the idea of hiring housewives for  direct selling
    cosmetics in the neighborhood. But in 1980s, as  millions of women began to work
    outside the home, the cosmetics  maker’s pool of customers and sales representatives
    dwindled,  and its sales faltered. By 1985, its profits were half what they had  been in
    1979.

    Consumer research showed that many women thought Avon’s make-up was  “stodgy,”
    its gifts products overpriced, and its jewelry old-fashioned. So the  company created a
    more contemporary line of jewelry, lowered the prices of  its giftware to offer more items
    under $15, and expanded its lipstick and nail  polish colours.

    On the selling side, recruiting sales people had become problematic, much  as it had for
    other direct sellers like Mary Kay Cosmetics and Premark  International’s Tupperware
    division. To attract sales representatives and boost  productivity, Avon improved
    incentive-compensation plans and offered free  training programmes for recruits. As a
    result, Avon’s direct-sales business —  which accounts for 70 per cent of sales and 85
    per cent of operating profits  — experienced a dramatic turnaround. Within a year sales
    rose 17 per cent,  to $2.9 billion, and profits jumped as much as 25 per cent.

    Today more than 450,000 sales representatives work for Avon and fill out  some 50,000
    orders daily. Sales exceed $3.5 billion a year. Nonetheless,  Avon estimates that at
    least ten million women in the US who are interested  in buying from Avon are unable
    because no sales representative is calling.  To win back some of the customers and
    attract new ones, the company has  begun mailing catalogues directly to potential
    customers nationwide. The  move represents growing concern at Avon that its core
    market has matured.  The growing number of women joining work force means that
    fewer of them  have time to meet with Avon representatives. Although Avon remains the
    nation’s largest direct seller of beauty products, supermarkets and discount  stores are
    stealing market share. Avon hopes that mail-order catalogues will  help to reach
    “stranded” customers.

    The plan is to send catalogues to people who have moved or who no longer  are active
    buyers. They can then order directly through the company or  through a salesperson.
    Initial expectations are modest. Avon hopes catalogue  sales will reach $25 million the
    first year. In the long run, Avon hopes to  penetrate major cities and suburbs, the places
    where much of the female  work force is absent at prime selling times. Avon is also
    increasing the use  of toll free numbers in conjunction with this strategy.

    DR. GREGORIO BACCAY 1


    Source: Pat Sloan, “Avon Looks Beyond Direct Sales,” Advertising Age, February  22,
    1993.

    Questions For Discussion

    1. What are the significant issues in the case?


    2. Do you think Avon’s approach in response for changing conditions is  right for
    products that need personal contact by saleswomen?
    3. Suggest any other solution than what Avon is planning to do.

    DR. GREGORIO BACCAY 2

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