MKT: 715 Case Study No. 9-591-111 Harvard Business School. (2003). Avon. com David B. Godes 1) Women are the target market for Avon. Avon is “the company for Women”. Harvard Business School. (2003) p. 8. Since the company began in 1886, the company has promoted building relationship and it seems natural for women to embrace the power of the Web to help women forge relationships beyond their geographic confines. Andrea Jung, CEO. Avon’s market segment is women aged 25-50yrs average to below average income households.
The majority of sales generated from roughly 25 million women in the U. S. Harvard Business School. (2003) p. 3. Avon is the largest direct-seller of beauty products and 5th largest beauty company with overall sales of over $5 billion. Women are the most important segment to the Avon Company; women connect with each other that are confident and loyal to the Avon brand. Women historically make purchases of beauty products based on emotion and image. Society has placed great emphasis on the beauty of women and products that promote youthful and radiate appearance.
The success of Avon has influence other companies to cater to women with bath/spa packages, beauty products, and intimate devices. All target women who desire to look their best emotionally and physically. This market can be segmented by market research data showing where women of particular ages are, shopping habits and income levels. Avon products are very reasonable and maintain quality. Brochures are designed well and provoke a sale. 2) Avon should maintain the integrity of the Avon brand. Women are historically Avon’s customer base and show record profits by direct-selling.
The profitability of the company (Total Revenue: $9. 9 billion 2007) proves that women have purchase power. http://www. avoncompany. com/investor/businessnews Women are interested in personal contact and customer service. Avon brand is the foundation of direct-selling of beauty products. People like to shop through direct selling. According to recent surveys, 74% of Americans have purchased good or services through direct sales. People value the products available through direct selling and 45% of Americans want to buy from direct sellers.
Sales in the U. S. have more than doubled in the last decade to more than $30 billion and are now more than $100billion worldwide. http://www. dsa. org/aboutselling/benefits 3) The Avon concept of “selling” is using a chain of referrals for direct selling. The network of family, friends, co-workers and existing customers enable this process. Harvard Business School. (2003) p. 5. Initially the launch of Avon. com in 1997 and provided direct-to-consumer sales only and was limited in several ways.
The limitations and reduced interaction between representative and customers generated low profits. Today, Avon. com is a viable method of direct-selling because the products are available for view but can only be purchased following a sequence of events. A user id / password is established followed by the site prompting the user to enter the name of an Avon representative / sale consultant or your zip code to locate one. The website maintains the integrity of customer relationship and profit due to the Avon representative; the web accomplishes “selling” for Avon. ) There is low risk for “channel conflict” because the website has mechanisms to prevent this such as log in and connecting with Avon representative in the customer’s geographic region. In addition, technology exists to combat channel conflict problems. Reshare technology is explained below: Unable to realize the full potential of eCommerce due to concerns about channel conflict? Anxious to explore ways of mitigating those concerns and developing an impactful channel strategy for your company and brand(s)?
Reshare® is a leading Internet professional services firm specializing in eBusiness solutions with a strong heritage of business, marketing and communications strategy. Reshare® can perform a diagnostic analysis of the above issues and the balance of power in the channel, and then devise channel strategies for turning conflict into cooperation. http://www. reshare. com/channelmanagement Reshare Corporation provides the only patented Distribution Relationship Management® solution enabling manufacturers to sell online direct to end users without circumventing their valuable channel partners.
Our products and services resolve channel conflict, guarantee complete brand control, and enhance the relationship between manufacturers, distributors, retailers, sales associates and the end user. Reshare offers a complete range of associated consulting and development services along with its Distribution Relationship Management® software. The Company holds a business method and system patent (US No. 6,594,641 and foreign countries) valid until 2019, which encompasses the software and procedures involved in selecting channel partners to receive compensation for direct sales to consumers. ttp://www. reshare. com/channelmanagement 5) The current structure of referential marketing is still a viable marketing strategy. Direct selling is a growing industry. Sales in the U. S. have more than doubled in the last decade to more than $30 billion and are now more than $100 billion worldwide. Referential marketing has influenced many direct-selling businesses today with profitable gains. Early direct sellers were a part of ancient tradition among the early civilizations, Egypt, Syria, Babylonia and India were actually involved in trade. http://www. dsa. org/aboutselling/history
Already in excess of $70 billion, the consumer market for online retail sales is expected to grow at an average rate of 21% per year through 2007, when online sales will account for 5% of all retail sales. Increased penetration of online services and ongoing improvements to customer interface equipment/software are expected to shift more sales volume toward the internet. Channel dependent companies are positioned for disproportionate growth as the world? s gross national product transacted through indirect channels is expected to grow from 50 percent to 65 percent by 2010. ttp://www. dsa. org/aboutselling/history Therefore, referential marketing is still a viable marketing strategy considering the immediacy of communication today. REFERENCE Harvard Business School. (2003). Avon. com (A) (Case Study No. 9-503-016). Boston, MA: Harvard Business School Publishing. http://www. avoncompany. com/investor/businessnews http://www. dsa. org/aboutselling/history/ http://www. reshare. com/channelmanagement/ MKT: 715 Case Study #2 AVON. COM (A) Harvard Business School (2003)