Term Paper on "Marketing Analysis AVON"

Term Paper 7 pages (1989 words) Sources: 6

[EXCERPT] . . . .

Company Description

In business since 1886, Avon Products is one of the world's largest cosmetic companies with over $10 billion in revenue. Avon markets its products using a direct selling model. Through its 5.4 million independent Avon Sales Representatives the company is able to reach consumers in over 100 countries around the world. The company bills itself as "Avon, the company for women" and has stated a "dedication to supporting women, not only in beauty but in health, fitness, self-empowerment and financial independence." The company is also committed to maintaining positive community involvement including funding for breast cancer, domestic violence and disasters such as Hurricane Katrina.

Product Analysis

The product selected is the ANEW Lash-Transforming Mascara + Serum. This product has passed rigorous testing and independent studies report up to 5 times the volume after 8 weeks of continual use twice a day. The packaging is simple but elegant, with dual end brush of gold container for mascara at one end and the serum in a white container at the other. The retail price is $20 but the company has offered it at an introductory price of $15. One of the current trends in makeup over the past several years has been the introduction of lash growing, thickening solutions for women who want fuller and longer lashes. There are a number of different competitors in the mascara business, in particular several focused on thickening and lengthening lashes. Among them are Rapid Lash, which claims that it "helps thicken the appearance of and improve the condition of your lashes and brows" in 4-6 weeks. This product has been promoted on a number of daytime talk shows. ActivLash is another competitor, retailing for $129 at the premium end of the market.

The packaging for ANEW Lash-Transforming Mascara + Serum is excellent, so no changes are recommended for that component of the product. The design is sleek, appealing and easy to carry in a purse. The name, however, is in need of improvement. The name is cumbersome and can be difficult to remember. Much of the name is descriptor. The core brand for the product is "ANEW," which while descriptive of the product's benefits is fairly nondescript and lacks punch. The name should be modified or replaced to improve the strength of the brand.

Place Analysis

Avon Products uses a distribution strategy based on independent representatives -- the Avon. The mechanism behind this distribution system is relatively simple -- individuals sign up to become Avon representatives and are essentially granted franchises that allow them access to the name and products and some marketing advice. The representative can sign up with a local sponsor, directly with the company or even online. Avon representatives have the ability to purchase the company's cosmetics products at discount prices. These are then sold to the end users at catalog rates.

In some countries, Avon markets through more traditional retail channels, as the franchising technique relying on marketing from home is relatively unknown. In the United States, however, Avon focuses on the franchise marketing technique. There are many benefits to using this technique to market the ANEW mascara, not the least of which is that it is the primary distribution method for which Avon has a competency. It would be unreasonable to expect Avon to market this product through other means. The other benefits of using the existing representatives to market the product are that the representatives create word-of-mouth about the product; the distribution channel has been established as a profitable one for the company and there is very little marginal cost of adding a new product to the lines already being promoted by the Avon representatives; and there are few geographic barriers to distribution.

The product is delivered to the representatives via the mail, and from that point the representatives are free to use whatever means at their disposal to deliver the product to the end user physically. In this respect, Avon representatives are independent businesses so there will be a number of different techniques used throughout the distribution channel to bring the product to the end user. These same techniques will be used with the ANEW mascara as well. The company has also set up on its website a mechanism by which the interested consumer can be introduced to an Avon representative. The site promotes the products, but the end sale is still conducted by the Avon representative. From Avon's perspective, the inventory is held centrally and shipped to the representatives as it is ordered, and the representatives are responsible for inventory from that point.

Price Analysis

Avon has adopted a cost leadership pricing strategy. While the products are of comparable high quality to those of premium brands such as L'Oreal or Vichy, they are sold at lower prices, meaning as such that they are more easily accessible to consumers. In order to execute this strategy, Avon utilizes a combination of efficient management and the representatives as distribution channel, which reduces organizational costs. The representatives bear some of the costs associated with bringing the products to the consumer, so in doing so act as de facto retailer. Avon only faces costs associated with production and distribution to the representatives, and the price at which it sells to its representatives, along with the recommended catalogue price, is based on these production and distribution costs. As such, Avon offers a high level of value and attempts to leverage this enhanced value proposition to increase its market share.

Promotion Analysis

The promotional message for ANEW focuses on the product's benefits. The primary differentiator of the mascara is the use of a serum and nutrients that nurture and strengthen the lash at the root. Avon has taken this as the foundation of its communications strategy. It has created digital content and marketing materials and has distributed these materials through its traditional franchise channels. The result is that the mascara is being heavily promoted by franchisors both in face-to-face meetings with customers and online through their websites and blogs.

This communications strategy supports both offline or print and online communications as the unique value proposition of the mascara is clear, concise, and easily communicated. The use of social networks for the promoting of products can be achieved after trust is attained with the prospect, and for brands whose identities are well-known, social networks are easily used (Bernoff, Li, 2008). Avon's long history and strong brand recognition make it a perfect candidate for the use of social media based on this finding. The use of customer feedback sessions on the Avon website further supports the messaging and communications strategy that seeks to attract the customer to the mascara rather than pushing it on them through traditional heavy advertising and promotion.

It is understandable that the communications strategy and sales approach concentrates on social media. Younger women are using social networks and social media prevalently; in fact, they are the dominant demographic group globally using these networks (Bernoff, Li, 2008). Avon has not been able to successfully sell to younger women and is relying on social media as a means to connect and sell to them (Sullivan, 2010). What is interesting is how far Avon is taking their social media communications strategy. They have sponsored and sanction YouTube videos from customers speaking about the mascara, demonstrating how to apply it, and showing the value of the serum. They are in effect working to create customer evangelists.

The communications program at the company-wide level should also include a greater emphasis on publicity. Competitors often take their marketing campaigns to talk shows -- competitor Rapid Lash has had success with this strategy. By doing this, Avon can increase the amount of publicity the product receives. In addition, the company itself receives publicity, which is essentially given the lack of in-store presence. While Avon's a household name, the company needs to consistently reinforce its message and publicity through traditional media outlets is a strong way to achieve this goal.

Overall Marketing Strategy

The company's overall marketing strategy is strong, but may be losing appeal to younger consumers. The company's traditional approach has served it well, and in terms of sheer numbers Avon has the sales force to market this new product effectively. While the representatives conduct the bulk of the marketing activity, Avon has the ability to promote the product as well. Three key areas of initiative are essential to this product's success. The first is to advertise the product. This has not traditionally been a strong component of Avon's marketing strategy because consumers attracted by an advertisement may not have been able to contact a representative. However, that is no longer the case, as consumers can easily conduct a representative through the company's website. By acting as a conduit for new customers, Avon not only helps its representatives to grow their businesses, but it grows its own business as well. The second element of the strategy is the use of publicity. This tactic has been adopted by Avon's competitors, and the company should introduce this tactic… READ MORE

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