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Case
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Reference no. 306-485-1
Published by: IBS Research Center
Published in: 2006

Abstract

Avon Products, Inc is a leading global beauty company, with over $8 billion in annual revenue in 2005. As the world''s largest direct seller, Avon marketed to women in 143 countries through five million independent Avon Sales Representatives. Avon product lines included popular brand names such as Avon Color, Anew, Skin-So-Soft, Mark, Avon Solutions and also an extensive line of fashion jewellery and apparel. Although revenues increased in 2003, 2004 and 2005, its net income was $848 million in 2005, there was stiff competition in the US market from other cosmetic companies. To hold its feet in the US and also to focus in other countries, especially China, the company announced changes to its global operating structure to: (1) bring senior management closer to its key business geographies; (2) strengthen global integration; (3) speed information flow; and (4) position the company for sustainable growth. Avon expects to incur costs to implement these initiatives over the next several years, with a significant portion of the total costs to be incurred during 2006. The company expects that benefits from restructuring will help to fund a significant increase in consumer investment as well as improve the competitiveness of its direct selling opportunity. Avon expects to increase investment in advertising, marketing intelligence, consumer research and product innovation. These actions are expected to improve growth prospects beginning in 2007. It remains to be seen whether Avon will be successful in its makeover plans.
Location:
Industry:
Size:
USD8 billion revenue
Other setting(s):
2006

About

Abstract

Avon Products, Inc is a leading global beauty company, with over $8 billion in annual revenue in 2005. As the world''s largest direct seller, Avon marketed to women in 143 countries through five million independent Avon Sales Representatives. Avon product lines included popular brand names such as Avon Color, Anew, Skin-So-Soft, Mark, Avon Solutions and also an extensive line of fashion jewellery and apparel. Although revenues increased in 2003, 2004 and 2005, its net income was $848 million in 2005, there was stiff competition in the US market from other cosmetic companies. To hold its feet in the US and also to focus in other countries, especially China, the company announced changes to its global operating structure to: (1) bring senior management closer to its key business geographies; (2) strengthen global integration; (3) speed information flow; and (4) position the company for sustainable growth. Avon expects to incur costs to implement these initiatives over the next several years, with a significant portion of the total costs to be incurred during 2006. The company expects that benefits from restructuring will help to fund a significant increase in consumer investment as well as improve the competitiveness of its direct selling opportunity. Avon expects to increase investment in advertising, marketing intelligence, consumer research and product innovation. These actions are expected to improve growth prospects beginning in 2007. It remains to be seen whether Avon will be successful in its makeover plans.

Settings

Location:
Industry:
Size:
USD8 billion revenue
Other setting(s):
2006

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