Avon case study answers

Read Chapter 1, Case #3: Making Over Avon. Answer questions 1-4 Below in a 3-5 page Double Spaced APA style paper (Including references pages), and support with the concepts outlined in your text and from your previous classes. Please insert references as it applies to the section of the paper. Must be original work. Thank You

Please Read: As the world’s largest direct seller of cosmetics and beauty-related items, Avon Products wants to continue building its global reach (more than two-thirds of Avon’s sales revenues come from outside North America) and attracting younger customers. To do so, however, Andrea Jung, chairman and CEO, must continually juggle the strategic challenges of guiding this almost $10.7 billion company and its worldwide army of over 5.4 million independent representatives.

Jung was named Avon’s first female CEO in 1999. Since that time, she has overseen some significant strategic initiatives. One of these was the company’s $100 million investment in a state-of-the-art product research facility outside of New York City. Avon had always lagged behind its competitors in R&D (research and development), spending less than 1 percent of sales while Esteé Lauder Companies was spending over 1.3 percent of sales and L’Oreal SA about 3 percent of sales. Because this industry is one in which customers continually look for new products that make them look good and that are also good for the skin, R&D is critical. In addition, Avon is primarily a direct sales company whose representatives pitch new products to customers every two weeks, so it’s important to invest in new product development.

Another of Jung’s strategic moves was a revamp of Avon’s old-fashioned image through new marketing and advertising. Avon—best known for its troops of mostly middle-aged women selling skin creams and cosmetics to their neighbors from catalogs—needed a serious overhaul of that dated image. Jung ordered a new design for the company’s all-important sales brochure using heavier, glossier paper that was more visually appealing. Also, the company is “going Hollywood.” MTV star Lauren Conrad, Patrick Dempsey of the TV drama Grey’s Anatomy, and actress Reese Witherspoon (who is Avon’s Global Ambassador) are a few of the celebrity relationships that Avon has initiated. Even with its revamped marketing strategies, Avon has work to do. In a study of mass-market cosmetics brands, it lagged behind seven others in terms of customer loyalty, while one of its main competitors, Mary Kay Cosmetics, topped the list.