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  • Subject area(s): Marketing
  • Price: Free download
  • Published on: 14th September 2019
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  • Number of pages: 2

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Avon Company was founded by David H. McConnell in 1886. The sole purpose for starting this company was not just to make a profit, but by empowering women, inspiring change, and giving them a chance at financial freedom. As history states back in 1800s women were considered the weaker gender, and lack intellectual development. They were limited to factory or domestic work, and excluded from most professions, except for teaching and writing. McConnell seized the chance to open doors for women to independently become their own boss. In his travels as a book salesman, McConnell made two important discoveries. First, he quickly noticed that his female customers were far more interested in the free perfume samples he offered than they were in his books. He made these fragrances himself to serve as “door openers” when he traveled from home to home. Second, McConnell saw women struggling to make ends meet and recognized in many of them natural salespeople who would easily relate to other women and passionately market the products his new company would first sell -- perfumes. (Avon Company)

Avon is known to be the leading company in beauty products and is the largest direct selling companies in the world. Over the years Avon Company struggled where sales continuously fluctuates despite many efforts to change its structure and marketing.  They posted falling sales for more than four years as it struggled with the change in the taste for consumers, who seem to prefer other brands from competitors. Avon strategy until the mid-2000 was the direct sales model, and localization strategy. Avon use of direct selling eliminate the use of middlemen, wholesalers, and retailors, and representatives sells directly to customers to earn money. With the use of localization strategy country managers independently made decisions for distribution and supply, and prepared the marketing and sales strategy based on the local market. The advantage to this strategy is that it open doors to representatives selling the product all over the world, and the availability of the product is always within reach. The disadvantage is that all representative have the full decision making power, in which this may create issues with duplication of manufacturing operations and supply chain, lack of consistency of manufacturing from nation to nation, and an abundance of new products that is not profitable.

In 2005 sales for Avon took a turn for the worst and this was due to the Chinese government putting a band on direct sales. With her job on the line CEO Andrea Chung implemented new strategies and made changes to the company's structure in order to keep it profitable. She re-evaluated the global strategy in order to maintain control and to ensure focus on the marketing goals. She reduced the management level with layoffs, and hired seasoned employees from other well-known companies in order to improve on the organization.  Andrea Chung revamped the supply chain in order to reduce duplication of products, and moved all decisions to headquarters. By 2007 this strategy was starting to yield dividends. The company\'s performance improved and growth resumed. It didn\'t hurt that Jung, a Chinese-American who speaks Mandarin, was instrumental in persuading Chinese authorities to rescind the ban on direct sales, allowing Avon to recruit 400,000 new representatives in China (Hill, 2014). The company benefited from these changes because it enhances the visibility and transparency which aids in reducing the amount of money lost through corruption. In addition, communication was also enhanced across different levels of the organization which open interaction across the board with different levels of employees.

By late 2000 Avon pursued the global standardization strategy in which new product designs are more centralized at the headquarters, and the products are manufactured and consolidated into regional centers. Andrea Jung wanted Avon to be the same globally, so she unified every parts of the company so that it could operate as one.

In 2010 and 2011 Avon faced a number of issues that was result of changes, and other additional factors. With the changes that were made the company improved on its financial performance, however it hit a financial crisis in 2010 and 2011 (Hill, 2014). The company experience slow economic growth, and there were operational mistakes that was very costly. They also had issues with the Foreign Corrupt Policies Act in which executives in China bribed local government officials.

In conclusion, Avon is trying to save its struggling brand despite all its issues and restructuring over the past few years. Andrea Jung stepped down as CEO after tension flared up between the company and its shareholders. Jung served the company since 1999 in which she had success in making the business profitable, however the company started to tank in sales, and was under investigation in regards to the corruption practices. Despite their continuous restructuring today their sales and stocks are still plummeting and they are looking to cut millions of dollars in annual costs. At this point it will be best for Avon to pull out the market completely.

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