The marketing process and strategy for Avon
Category : Marketing, Marketing Papers, Marketing Strategies, Marketing Strategy Direct Marketing, PEST Analysis Examples, Sample SWOT Analysis
Avon Products, Inc. is a global manufacturer and marketer of beauty and related products. The firm groups these products into three categories: Beauty, consisting of cosmetics, fragrances and toiletries; beauty Plus, made up of jeweler, watches, apparel and accessories; and Beyond Beauty, with home products, gifts, candles, and other decorative items. The company sells makeup under the Avon Color and Beyond Color brands; skincare products under Anew and Avon Solutions; bath and body products under Avon Skin-So-Soft and Naturals; hair care products under Advance techniques; supplements and therapeutic products under Avon wellness; and fragrance products under Avon Fragrance.
This report analyzes the marketing environment and the different marketing strategies that Avon employs. The author also intends to present suggestions in marketing.
In order to establish an understanding of where the marketing strategies of Avon is based, let us look at Avon’s company mission. Avon is a global company, thus the business environment in which it operates is more complex and challenging. The company upholds its high standards of integrity and ethical conduct.
In this section, two marketing environment analysis tools will be used in order to analyze the marketing environment of Avon. These tools are SWOT analysis and PEST analysis.
1. SWOT Analysis
The SWOT analysis is intended to provide a brief and concise information on the strengths and weaknesses of the company as well as the opportunities and threats it faces. These information are important in crafting the marketing strategies of the company as they give direction to which the strategies must be focused.
- Marketing strategies vary from country to country designed to meet the unique demands and culture of each geographic region
- Strong financial position in the international market
- Established customers and those in developing markets offer the greatest potential for increasing the company’s customer base
- Erosion of the core customer base in the United States
- Poor marketing and advertising strategies in the United States and abroad
- Products are not easily accessible
- People in developing countries have more money to spend
- Middle-class families in developing countries are increasing in number
- High interest rates in some countries
2. PEST Analysis
A PEST analysis looks at the Political, Economic, Social and Technological drivers of a particular industry. PEST are external factors that must be analyzed and understood in order for an organization to succeed. The PEST analysis focuses on the external forces that affects the organization. It is most useful when used together with other tools such as the SWOT analysis.
- Political Factors – may have direct or indirect impact on the organization’s operation. Decisions made by the government may have an effect on the business. The political arena has a big influence on how organizations operate, the purchasing power of the customers and other businesses.
- Economic Factors – the organization is affected by economic factors. Economy also affects the purchasing power and behavior of the consumers.
- Sociological Factors – include the demography, lifestyle, cultural aspects of the consumers. These factors have a big influence on the consumer needs and wants. Sociological factors also affect the size of potential markets.
- Technological Factors – technological change plays an important role in shaping how organizations operate. Technological factors are important in gaining competitive advantage. Technological innovations can improve production efficiency, quality and speed. New technology is changing how organizations operate.
What is Marketing?
Marketing in a nutshell, is defined as the art of selling products. However, marketing does not only aim to sell products. It involves a deep understanding of the customer and identification of products or services that will satisfy their needs and wants. Marketing according to Bradley (2003) is a philosophy that leads to the process by which organizations, groups, and individuals obtain what they need and want by identifying value, providing it, communicating it and delivering it to others. Marketing is strategically concerned with the direction and scope of the long-term activities performed by the organization to obtain a competitive advantage. Marketing according to Proctor (2000) is about satisfying wants and needs and in the course of doing so facilitating the achievement of an organization’s objectives. By paying attention to customer wants and needs, organizations are more likely to achieve their objectives in the marketplace.
This paper generally, looks at how marketing is employed in Avon and how Avon creates its marketing strategies. Avon presents am excellent case in marketing because of its innovative business philosophy. In the succeeding sections, the author intends to tackle the different marketing techniques of Avon.
In this section, the author will discuss how Avon segments its markets and what bases for segmentation the company uses.
Market segmentation, according to Applbaum (2004), is the act of dividing distinct groups of buyers who might require separate products and/or marketing mixes (p. 32). According to Mochis (1994), market segmentation refers to subdividing the market into several groupings, with each group being recognized for its preferences regarding products/services and methods of delivery (p.41). Market Segmentation is a marketing management technique which can help firms find ways of establishing competitive advantage. A market segment is a section of a market which possesses one or more unique features that both give it an identity and set it apart form other segments. Market segmentation amounts to partitioning a market into a number of distinct sections, using criteria, which reflect different and distinctive purchasing motives and behaviour of customers. Segmentation makes it easier for firms to produce goods or services that fit closely with what people want (Proctor, 2000). Segmentation enables marketers to divide prospective customer groups into segments that consist of people with similar demographic, psychographic or usage patterns (Locke, 2001).
Avon is a global leader in cosmetics and as a company with global presence the company uses different bases for segmenting its customers and target markets. Among the bases of segmentation that Avon uses are:
1. Geographic - geographic segments mean location and this can include streets, towns, cities, regions, countries, continents etc (Proctor, 2000).
2. Demographic - demographics or social statistics includes age, sex, family, life cycle, job type/socioeconomic and group income level (Proctor, 2000).
3. Psychographic - psychographics attempts to segment according to psychological profiles of people in terms of their life-styles, attitudes, and personalities (Proctor, 2000). This approach according to Sternthal and Tybout (2001a) focuses on lifestyle rather than demographic information as a basis for describing segments. For this purpose, questions about activities, interests, and opinions are asked.
In recent years, Avon started focusing on capturing the market for younger women, College students, and men with disposable income. Avon also looks at extending market growth to include developing countries such as Poland, Vietnam, Cambodia, and Czech Republic.
In this section, the author will discuss the position of Avon in the market and in the minds of the customers. Positioning is a very important topic in marketing as it provides information to the company on where they are now and how they are faring compared to their competitors.
Positioning refers to the decisions and activities intended to create and maintain a firm’s product concept in the customer’s minds. Market positioning amounts to arranging for a product or service to occupy a clear, distinctive and desirable place relative to competing products – in the minds of target customers (Proctor, 200). Positioning is the process of distinguishing a company or product from competitors along such dimensions as product characteristics or values that are meaningful to consumers. Positioning strategy aids customers in evaluating product attributes that are of significance or value to them (Michman et al 2003). Once the segment is determined then a decision has to be made as to how to position the product. The idea of positioning is to find out how the consumers/ consumers in particular segments are going to perceive the product and service and the company’s message about these products and service (Kermally, 2003). According to Paley (2006), positioning is not what you do to a product, it is what you do to the mind of the prospect. Positioning is the act of designing the company offer and image so that it occupies a distinct and valued place in the target customers’ minds.
Image is extremely important to Avon. The company maintains the position as the world’s leading direct seller of beauty and related products. Avon embarks on expanding new marketing opportunities without disrupting the current direct sales.
Avon’s Marketing Environment
This section discusses the different marketing strategies that Avon employs in order to reach its customers and to encourage customer patronage and loyalty, The company has diverse marketing strategies.
A major characteristic of direct selling is the personal contact between a sales person and a consumer, away from a retail store. Avon implements the door-to-door selling type of direct selling. Avon uses freelance salespeople or agents to visit people in their own homes and to demonstrate and explain the use of a range of beauty products. Direct-selling provides important benefits to individuals who desire an opportunity to earn an income and build a business of their own. It offers the prospect of self-determination and financial independence. It also offers an alternative to consumers who want something different from the traditional shopping centers, department stores or other forms of conventional shopping. It offers an alternative to traditional employment for those who desire a flexible income-earning opportunity to supplement their household income, or whose responsibilities or circumstances do not allow for regular part-time or full-time employment (Lancaster and Reynolds 2000).
Product Trial and Sampling Events
Avon is popular for its product trial and sampling events. Avon uses events to encourage trial of its products among non-users and to encourage further purchases from existing customers. These events include demonstrations and sampling presented in supermarkets, shopping malls, and other locations where a big number of the desired target market can be reached. Avon focuses on product trial events as one of its forms of communication with the end customer. Its representatives, agents or distributors are recruited from their target markets and are encouraged to hold parties or events within their homes to offer friends and acquaintances the opportunity to try, feel, use the products, to interact with it in an experiential setting (Masterman and Wood 2006).
Avon reaches around a billion women through 3 million independent sales representatives in 136 countries. The company is committed to its mission of becoming a company that understands and satisfies the product service and self-fulfillment needs of women globally. In line with this mission, the company has been supporting the “Crusade Against Breast Cancer” in order to uplift the lives of women around the world. Through this cause Avon is able to meet business marketing and communications objectives at the same time support a cause of real concern to their target market. Through Avon’s partnerships with various organizations combating breast cancer, the company is able to implement cause-related marketing strategy effectively. Avon’s cause-related marketing strategy has been implemented using a number of different elements of the marketing mix. The Crusade has involved sales of products where a proportion of the price is donated to charity. It has also included sales of charity fundraising products, sponsorship of fashion shows that aim to spread awareness about breast cancer and political lobbying through consumer petitions. Avon has benefited greatly from this association, enhancing their corporate profile, engaging new and existing customers, receiving enormous publicity, fostering feelings of affiliation among staff, representatives and customers, bringing the company’s vision to life (Baker 2003).
Achieving a favorable position in the minds of the consumers and making the product or service attractive to the target market entails careful formulation of the marketing mix. Getting the right mixture of the product, promotion, price, and distribution is important in marketing. The goal of the marketing mix is to portray an image for the product or service that will match with how the organization wants the product or service to be visualized in people’s minds. Marketing mix according to Kotler (2001) is the set of marketing tools that the firm uses to pursue its marketing objectives in the target market.
Product – The products or services of an organization help in creating an image of the firm in the mind of the consumer. This image is reflected in the customer’s perceptions and feeling about its products or services. The product is the element in the marketing mix that includes all of the issues surrounding the development of the product or service.
Price – where market demand and the cost of producing the product or service come together and determines the profitability or lack of it.
Promotion – Promotion is consist of all of the methods of communicating the product offering to the target market, such as advertising, publicity, and sales promotion.
Place – Place is the task of getting the goods to market.
Avon is considered as the world’s largest manufacturer of cosmetics, fragrances and toiletries. Avon’s core offer consists of competitively priced beauty products and gifts.
Avon markets most of its products at moderate price points in relation to the industry. Discounts and price reductions are offered periodically. New brand extension products are priced at approximately the same price as the original brand.
Sales promotion and sales development activities are directed at assisting sales representatives through sales aids like brochures, product samples and demonstration products. In order to support the efforts of sales representatives to reach new customers, specifically designed sales aids, promotional pieces, customer flyers, television and print advertising are used. A number of merchandising techniques are used, including the introduction of new products, the use of combination offers, the use of trial sizes and samples, and the promotion of products packaged as gift items. In general, for each sales campaign, a distinctive brochure is published, in which new products are introduced and selected items are offered as special promotions or are given particular prominence in the brochure.
Avon is the pioneer of direct-selling approach in the cosmetics industry. Avon reaches its customers primarily through its traditional distribution channel made up of a network of 3 million independent sales representatives. The network spans 140 countries over six continents. The vast majority of the representatives are women and all are rewarded on a commission-only basis (Christopher and Peck 2003).
Research in general connotes a systematic and objective investigation of a subject or problem in order to discover relevant information or principles. It can be considered to be primarily fundamental or applied in nature. Fundamental research, frequently called basic or pure research, seeks to extend the boundaries of knowledge in a given area with no necessary immediate application to existing problems. Applied research, also known as decisional research attempts to use existing knowledge to aid in the solution of some given problem or set of problems. Marketing research is the systematic and objective search for and analysis of, information relevant to the identification and solution of any problem in the field of marketing.
The marketing research at Avon is directed towards gathering information from the customers in order to develop products and services that will satisfy the needs, wants and demands of the customers. The marketing research also aids in directing the marketing strategies of the company. In general information are gathered from the customers through surveys (sometimes in the form of customer feedbacks or suggestion form) (Smith and Albaum 2005).
The recommendation for Avon focuses on ways of reaching out to the customers and gathering information from them that can be used in designing products and services. It is recommended that the company make use of Customer Relationship Management (CRM) in order to build a strong long-term relationship with the customers.
Customer Relationship Management (CRM) can be defined as the development and maintenance of mutually beneficial long-term relationships with strategically significant customers (Buttle 2000). CRM according to Plakoyiannaki and Tzokas (2001) is an IT enhanced value process, which identifies, develops, integrates and focuses the various competencies of the firm to the ‘voice’ of the customer in order to deliver long-tern superior customer value, at a profit to well identified existing and potential customers.
Customer relationship management focuses on strengthening the bond between customers and the firm by maximizing the value of the relationship for the benefit of both the customer and the firm. As a business philosophy, CRM is based upon individual customers and customized products and services supported by open lines of communication and feedback form the participating firms that mutually benefits both by buying and selling organizations. The buying and the selling firms enter into a ‘learning relationship’, with the customer being willing to collaborate with the seller and grow as a loyal customer. In return, the seller works to maximize the value of the relationship for the customer’s benefit. With the objective of most businesses today being to create and maintain loyal customers at a profit, CRM provides the platform for seeking competitive advantage by embracing customer needs and building value-driven long-term relationship (Ford et al 2003).
CRM and Marketing
CRM can be used by Avon in marketing. The starting point of a relationship marketing strategy is a deep understanding of why customers would want a relationship with you as a provider of value. The answer, stated simply, is that a sustained relationship with you must itself provide additional value to the customer. The growing adoption of a customer relationship management system is evidence that more and more providers are trying to put the customer’s interest at the heart of their business by integrating marketing, customer support, and other functions to maximize added value in a dialogical relationship. CRM is a holistic approach to the generation, production and representation of a value-creation system (marketing, customer service and logistics). The aim is to move the supply chain nearer to the customer to link customer needs and more directly into the management of supplies, design, manufacturing, packaging, transport, and the ultimate purpose of all this – profitable exchange. The technology captures and provides information about interaction history, enabling a consistency of experience for valuable customers in all interactions – inquiry, order, delivery, maintenance, upgrade and so on. CRM systems can send customers reminders about essential servicing and tailored offerings based on past trading history and personal information profiles (Varey 2001).
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