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Avon products-China entry Executive Summary - Avon Products Avon Products is one of the major players in the cosmetics and toiletries industry with a sale of about
sales people ("Avon ladies," primarily) and catalogs to advertise its products. In some markets (most notably China, which had banned all door-to-door selling before
brand. These products were top sellers so the company decided to change its name to Avon Products, Inc. in 1939. Avon went public in 1946 (ticker symbol AVP), and
jewelry, dietary supplements, water purifiers, air purifiers and cosmetics as well as other products from top brands. Amway is one of the largest international direct
micro). Chinese government's open door policies, economic reforms, liberalization policies and a shift of agriculture economy towards service economy are some of
Submitted by Marvi on July 28, 2008
Category: Business
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Executive Summary – Avon Products
Avon Products is one of the major players in the cosmetics and toiletries industry with a sale of about 10 billion US dollars in 2007 (Exhibits 1, 2 & 3). It has been globally competitive by creating global brands and nurturing its powerful sales channel of Single-level Marketing (Direct Selling).
Globally, Avon competes with large cosmetics majors like P&G, Revlon and Shiseido to sell its products. At the same time, it also competes with other major direct sellers like Amway, Mary Kay and Tupperware to attract its sales force. Avon has primarily grown by accessing new geographies and emerging economies such as Poland, Hungary, Yugoslavia and China where disposable incomes are rising and women seek an opportunity to earn extra income.
In the 1990s, Avon was the first direct seller to enter China. Other cosmetics players in the Chinese market faced problems with an under-developed infrastructure and had to rely on Government owned distribution systems to retail their products. However, Avon could leverage its direct selling model to penetrate remote areas and provide customized service to customers.
It also partnered with a local company to develop localized products suitable to the Chinese market. Avon’s strong culture and focus on training helped them to drive their global best practices amongst new franchisees and lower the overhead costs.
In China, Government imposed a ban on direct selling in 1998. In this time of crisis, Avon received support from its Chinese partner and other international direct sellers operating in China to lobby with the Government to allow them to operate. Avon responded by temporarily adopting the retails sales model. This case analysis enumerates Avon’s capabilities and strategies engrained in its corporate philosophy and structure to handle uncertainties and volatilities associated with doing business in unpredictable emerging market situations.
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