Avon Calls on Foreign Markets
Scholarly Activity 3 – Unit VII
Kayla J. Jackson
Columbia Southern University
Marketing Orientations Avon’s entrance into Canada, its first foreign market, was based on a sales orientated marketing scheme and had little to do with product orientation. When the company developed “skin-lightening creams in Asia and long-lasting citrus fragrances in Mediterranean countries,” it exemplified a customer orientation, tailoring its products to meet specific consumer tastes (Daniels, Radebaugh, & Sullivan, 2011, p. 622). In China, the company changed its distribution channels from direct selling to making “products available in virtually every corner of the country” as part of a strategic marketing orientation
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622). The company must also examine if women are accessible at home to meet with salespeople. Additionally, the rising middle class sector in developing countries could help broaden Avon’s client base (Daniels et al., 2011).
Global Recession A country’s “economic environment shapes its foreign” investment appeal (Daniels et al., 2011, p. 173). For instance, a global recession could affect the “ability of Avon’s broad-based geographic portfolio to withstand a downturn in a particular region” (“Avon,” 2008, para. 9). This is because customers view many of Avon products as nonessential luxuries and will not purchase such items during financial hardships. As a result, worldwide profit decreases, which could halt international growth and impede new product development. In situations like these, the firm must reevaluate cost structures and make significant changes to its organizational and competitive strategies in order to maintain gross profit margins (Daniels et al., 2011).
Competitive Advantages A corporation’s “competitive strategy influences how and where it can best operate” (Daniels et al., 2011, p. 28). Not only is Avon one of the most powerful and recognizable brands in the world, it also has attractive earnings opportunities for sales representatives and leading technological innovations (“Why,” 2011). The new “Hello Tomorrow” ad campaign has a new brand-marketing concept and uses celebrities to attract consumers. Avon has been very successful
Avon, started its journey in the early 1886 is now the oldest and the largest marketers and manufactures of the beauty products. The advertisements from “Ding dong, Avon Calling” to “Hello Tomorrow” and from “You never looked so good” to the latest one “The Company For Women”, always helped Avon to improve its image and enhance the marketing strategies to serve the purpose. One of the amazing facts about Avon includes that it’s headquarter is situated in USA but major portion of its sales comes from outside North America. Avon has captured a huge market all over the world and its distributing the beauty solutions to almost all parts of the world. With Avon being a part of 112 countries, the company has
Migrate from the current 18 annual sales campaign to 26 as per the US model in year 2006.
Avon Corporation In order to begin to understand the industry in which Avon functions as well as the specifics around the introduction of the new EAS drive, I used the 5Cs analysis to outline the company’s current situation. Situation Analysis via the 5Cs:
1. What is competitive advantage, and how does it relate to a company’s business model?
He goes on to imply that business must make global strategies that would involve making investments in as much countries as possible. Rajdeep, Murali & Robert (2008) agrees with Tallman, as he extends his view that these strategies must become more flexible and effective to comply with needs of the changing environment.
The process of globalization has numerous significant effects on countries, organizations, and individuals. These effects can be observed in the quality of products, in their prices, but also in their availability. Because of globalization, numerous companies prefer to expand their business on international level. Some of them outsource some of their processes and activities to cheaper destinations that allow them to reduce their investments.
In what way does Avon follow a global strategy? Does this experience indicate that it should pursue a different strategy? Avon pursues economies of scale by choosing facility location that minimizes the cost of manufacturing, logistics, etc, and it does so on a global basis. Avon also limited product variations which save the company from spending extra money and it also balances the cost-saving potential of standardization with responsiveness to individual market needs in pursuing both profits and market share. With $4.8 billion in sales each year and 65% of the sales coming from abroad, it’s clear to see that Avon does not need to change its overall
Strong global growths from United States’ companies tend to produce better returns to shareholders. However, the United States has suffered from a slow growth. Therefore global expansion has become an essential strategic support for many companies. Regardless of the risk, uncertainties, other obstacles that come with international expansion, there are rewarding benefits that out shine the risk. Benefits include an overall revenue growth at an accelerated pace, diversified stream of revenue, and improved return on capital. Lastly, international growth is more valuable to shareholders. Not only for the countries whose markets are already developed but also for emerging markets. Many are less developed so increased growth is forecasted to remain lofty for longer periods of time.
Integral to Avon’s brand area are its key resources. Key resources contain conventions, customer events, enterprise awards, cause marketing, scholarships, websites, publications and parties/open houses. Thousands of thrilled, passionate sale representatives attend alongside alongside key administrators, top sellers and operatives alongside an atmosphere of company and fun. On the company side, there are motivational talkers, product and training seminars, product displays, alongside alongside the latest news on all of the upcoming adjustments in produce, association plans and e-commerce. On the fun side, there are celebrities, period displays, raffles and free products. On the weighty side, news considering the cause marketing efforts is relayed but the vibe stays affirmative and energizing.
1. Referring to this chapter and chapter 9, evaluate Avon’s Strategic International Human Resources practice in global market regarding development of a global management cadre, HCNs, and building company associates and independent representatives in host countries.
Companies are constantly reinventing themselves in the name of profit. International business strategies are one form by which companies are able to successfully compete. There are numerous strategies capable of generating abnormal profits or taking a company into bankruptcy. The spectrum holds no magic formula as a variety of resources and capabilities is necessary to successfully compete. What works or is frowned upon in one market can become a cash cow in another. This was demonstrated by Lenovo, who has continued to grow despite declining sales in the U.S. computer market. Their ability to grow has been driven by capturing share in emerging markets such as China (Gupta, 2012).
Ball, D., McCulloch Jr., W., Geringer, J., Minor, M., & McNett, J. (2005) (11th ed.) International Business: The Challenge of Global Competition. McGraw-Hill.
Doing business internationally is not the same as doing business locally (Lambert, 2000). There are new, interesting and exciting opportunities that face the management. However, in some cases, there are inevitable challenges. The challenges are more prevalent when it comes to management of risks and keeping the business running (Dally, 2007). To do this effectively, there are significant skills to learn; also it’s necessary to adopt certain strategies and understand the different environments within which the business operates.
Firms should look out for global market opportunities to expand their business into various markets and also to estimate the demand for products and services in various economies. There are many markers that could indicate favorable opportunities for companies to export, invest, source or partner in foreign markets, and these could be promising mixtures of circumstance, locations and timing (Cavusgil et al. 2014). Firms can carry out a global market opportunity assessment to analyze a market’s suitability to the firm. There are six tasks for the global market opportunity assessment. Firstly is the organizational readiness to globalize. This could gauge a firm’s preparedness to conduct international business with an initial assessment, which includes its financial resources and management’s commitment. Secondly is the suitability of products and services for foreign market. Products that sell well in the domestic market might not be suitable to sell in other markets, so firms need to determine how
Companies can decide to go global or to enter international markets for various reasons, and these different objectives at the time of entry that enable the business to produce different strategies and the performance goals, and even forms of market participation.