The case of Avon deals with a very difficult situation in which the possibility of losing a significant share of the market is at stake within the Cosmetic Industry. The industry, as it pertains to this case, has steadily grown throughout the years and has grown 2.8 % from 1995-1999. Furthermore, the industry was expected to grow another 26.58 billion by 2003. To best explain how Avon could help their market share, I will discuss some driving forces in the industry and the possible strategies to be able to effectively combat these forces. Three of the main driving forces include: shifting distribution networks, shifting market demands, and increasing consumer awareness.
In regards to the shifting distribution channels, their current methods of direct sales would be inappropriate for the future. The market is steadily moving towards a system of where the consumer would be considered “on the go.” Avon’s highest portion of sales generally stems from their Door-to-Door sales methods. Nowadays, more people have to work; which leaves no one home to answer the door for these Avon sales people. To battle this growing concern, Avon has begun to launch a couple of different methods. For one, they have started Avon.com, to be able to get into the Internet market (for those who shop more online). Secondly, they are devising a plan to enter into an agreement with Sears and JCPenny to be able to compete with some of the retail competition that has stifled their growth in the past (Mary Kay, Lancome, etc….).
Not only has there been a shift in the sales distribution networks but also in age, gender, and race demographics. For example, the older generation is accustomed to Avon products, and is used to their Door-to-Door sales approach. But the other three age distributions (Baby boomers, Gen X, and Gen Y) are unaccustomed to this sales method. These are the groups that shop online and go shopping at retail outlets. But the main key to these groups is effective marketing (magazine ads), rebates (brochures) or discounts. Another key to their growth issues, is marketing to men as well as women (as it is, men are increasingly buying more cosmetics daily). Race, is beginning to have an increasing demand on the industry. In the past, Avon has been very bad at accommodating their products to various races (e.g. not having different shades of blush for various types of skin), but they are beginning to create a variety of choices in regards to color (skin, hair, etc…)
The third issue that Avon should be wary in the future is the growing consumer knowledge base. For instance, people are becoming more educated, so in effect they have a higher spending power. Which, in effect may cause these people to choose a higher quality product because they have the money to spend. But, on the other hand, these same people are beginning to learn that some products may be similar or even the same as another product (just more expensive). The consumer is becoming more “aware” and although they may be able to spend more, they may also be looking for a product that really is different in quality. There are various generic brands of the same products, and consumers must understand that these products will not do the same thing as the “high quality” product.