Free Avon Calls on Foreign Markets Essay Sample
Avon Company was founded in 1886. It basically deals with manufacturing and distribution of beauty products worldwide. Over time, Avon has gained attention through its adverts such as "Ding dong, Avon calling" and "hello tomorrow" (Nelson, 2002). These adverts have had positive influences on Avon's markets helping it keep at par with the ever changing and dynamic market demands. Avon's headquarters are based in the United States while most its market demand lies outside North America. The company operates in 66 countries while it distributes its make ups to other 44 territories (Nelson, 2002). Statistics indicate that there are approximately 5.8 million independent representatives who basically sell the company's products (Nelson, 2002). This paper seeks to elaborate the reason as to why Avon is much dependant on international market while putting emphasis on the challenges and benefits that come along with this marketing strategy. The paper will also give special attention to the effect of social economic and demographic changes on the company's operations. Comprehensive recommendations as to how the company should work to maintain its markets and general performance will also be focused.
In the recent past Avon has shown interest in international expansion. The reason behind this is due to the fact that the United States cosmetic market has fully been exploited with cosmetics, toiletries and fragrances products (Wee, 2008). This is reflects a slow growth potential due to the competitive beauty market. As a result Avon has embarked on less competitive markets has shown in its 2010 annual report (Amor, 2010). Avon's distribution system has also played a big role in maintaining international markets. The company relies on distributing through independent persons most of which are ladies who place orders for customers and deliver products to customers. They elaborate to customers how to use their products and how effective their products work. This has helped cut down operating costs for Avon by facilitating accommodation of a limited number of employees while avoiding expenses on shelf space stores (Amor, 2010). Direct selling has helped the company maintain its customers due to the impact of the word-of -mouth on the customer's perceptions about their products.
Due to the dynamic market changes and problems which come along with house -to-house sells, Avon has embarked on allowing its representatives to open retail kiosks (Amor, 2010). Statistics indicate that the number of people seeking for pat time employment is considerably reducing. This is bound to affect Avon's market demand and operations considering the fact that most of Avon's distributors are female representatives seeking part time jobs (Wee, 2008). For instance in Brazil alone Avon has 800, 000 mobile distributors. A decrease in their numbers would mean a decreasing market demand which may end up having grave impacts on Avon's profits. In countries with rapid population growth such as Malaysia and Chile, Avon has an advantage of tapping a middle class market which is in a position to purchase its products (Amor, 2010). Therefore in such areas its general performance and profit outputs are bound to increase.
Recession periods such as the 2008 recession period are bound to have both positive and negative impacts on Avon's market demands. The recession resulted into an increase in the number of people seeking part time jobs (Amor, 2010). This helped maintain Avon's performance by recruiting more mobile sales persons to distribute their products. At the same time it had negative impact on the product market due to the fact that consumers are bound to go for necessities before embarking on purchasing beauty products.
Avon has moved to trade its products internationally. This has given it a competitive market advantage over its competitors. Country managers of the company are allowed to evaluate and come up with appropriate decisions as to what products would do well in their market economies and then such products are manufactured by their R & D units (Heesun, 2002). This implies the fact that the company is in a position to positively respond to the ever changing market demands by producing the exact products demanded by its customers. This has also given it a competitive advantage against its competitors. For instance in Japan the Avon Company has had to come up with emulsion technologies to produce lotions with higher hydration levels and light texture (Wee, 2008). Other companies are likely to duplicate these competitive advantages due to the fact that there is nothing hindering them from tapping international markets too and using the same manufacturing processes as Avon to attract more customers (Nelson, 2002).
Though Avon's international markets seem to work out for it they also come along with some drawbacks. While Avon seeks to meet international market demands it seems to ignore the local demands. This is bound to discourage local consumers as they are unable to get the products when they need it (Heesun, 2002). Also in striving to meet international demands, the company incurs a lot of costs while trying to venture into new methods of production (Heesun, 2002). These costs can otherwise be cut by maintain a local market. Despite these challenges, international markets are still pivotal to Avon's general performance. Diverse demands from international consumers have helped facilitate creativity and dynamic capabilities within the company hence helping increase its profits and global markets (Amor, 2010).
For Avon to maintain its profit margin there has to be an efficient supply chain which works out to ensure that products are available whenever customers need them. Therefore allowing specific retailers to stock their products would help expand their markets as customers are aware of the exact place where they can get these products rather than using mobile sellers who may not be reliable at times. The company should also consider shifting to large scale centralized production to help minimize costs of production for both new and old products. The company should also introduce standardized branding to help create a universal global image for the company. This will help in notifying that the consumers that the product is international and in distinguishing the company's products from other fraudulent products.