Essay on Avon Case Analysis

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Avon As of November 1999, Avon was experiencing economic troubles. Avon’s growth rate of annual sales was less than 1.5 percent during the greatest economic boom in history. This prompted a transfer in leadership which appointed Andrea Jung as CEO. Since that time, Avon has experienced remarkable growth. Under the direction of the new CEO, a new strategy was developed to reinvent Avon’s image, improve customer satisfaction, and to increase profit margins and market share. Avon has gained an outstanding reputation as the best direct seller of beauty products. Through the continued efforts and achievements of its sales representatives, Avon is now known worldwide. Avon’s core competence has mainly been its direct selling busniess…show more content…
Realizing this, Jung endorsed the Williams sisters. Venus and Serena Williams were popular teen icons that portrayed the image Jung hoped to achieve for Avon; young, powerful, and ambitious. Avon is highly backward integrated, self-manufacturing many of the items that they sell. This causes the competitive pressures of suppliers to be weak. Avon can get supplies from many parts of the world because they have entered foreign markets and produce products in different countries. A lot of Avon’s supplies such as packaging, may be easily substituted if a supplier raised prices. Competitive pressures stemming from customer buying power is moderate because switching costs are low and customers have the ability to fulfill their needs by switching brands. Buyers tend to be well informed about Avon’s product prices and costs largely due to the Internet and this puts customers at a position of higher bargaining power. Customers do not pose a threat of integrating backwards, because it would not be easy for women to develop their own make-up, perfume or skin care products. Due to the dirct selling business model, there is an extremely large number of buyers. Losing one will not significantly impact the company’s market share or financial position. While there is strong competition in the CFT industry, there is a weak threat of new entrants and an even lesser threat of substitute products. The market is comprised of major players who have the

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