Avon Case Study Analysis

2390 Words Sep 5th, 2007 10 Pages
Avon Case Study Analysis
During the 1990s, Avon began to lose its appeal to the public. The number of new company sales representatives had begun to stall; and by 1999, the U.S. sales representatives had dropped 1% from the previous year (Pearce and Robinson, 2005, pg.423). It was at this critical time that Andrea Jung, an Avon saleslady herself, was hired as CEO to help take the company in a new direction. A turnaround grand strategy was envisioned in 2000 to help reenergize the flagging U.S. sales force, which was facing fierce competition from Mary Kay and L'Oreal and seeing profit margins declining. Jung's new strategy focused on the following:
1) "reinvigorating the brand—which had an aging-grandmother feel to it—with new products,
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Despite past failures to launch into retail, Avon finally found prosperity going head to head against rivals such as L'Oreal by creating a modern image and used its direct selling model to complement its entrance into department stores. As a result, Avon's stock price increased 164% in this four-year period, suggesting that stockholders also believed that Jung's grand strategy was appropriate (Setoodeh, 2005, pg.16).
Andrea Jung's grand strategy plan has merit because it has been a direct distributor of beauty products for millions of women and Jung's strategy is to attract the younger women. Retail sales have increased on average 11% annually. Jung moved a tired brand up market and created a global powerhouse opening 39 freestanding Avon Beauty Center kiosks in upscale malls throughout the U.S. Avon could not rely only on direct selling so Jung took a single-channel company and turned it into a multi-channel company. Jung gave the company an extreme makeover, pouring millions into research and development, pushing new lines of skin cream, expanding into overseas markets and developing snazzy ads with celebrities like Salma Hayek. Avon brand name image was given a huge uplift. College girls began peddling Avon on campuses, from a new line called Mark that includes Hook Up for the 16- to 24-year-old crowd. The company's strategy began

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