Cosmetics brand Avon may have a quaint image but it has ambitions to raise its global profile while keeping the human touch. By Barny Stokes
Avon’s new executive director of marketing for the UK, Andy Watts, (MW last week) is joining the company at a pivotal moment in its 120-year history. In recent times, chief executive Andrea Jung has been busy modernising the brand, delivering double-digit sales growth and generally moving into the territory inhabited by multinational giants including L’Oréal, Procter & Gamble (P&G) and Unilever.
In the US, Avon has hired Wieden & Kennedy to promote its Mark range – a new line aimed at younger women. In the UK, meanwhile, it is sponsoring hit ITV drama Footballers’ Wives. Add aggressive expansion plans for the emerging markets of Eastern Europe and China, and it is clear that Watts is joining a company with serious ambition.
Currently working his notice as UK marketing director at food company Bernard Matthews, Watts admits that part of the attraction of moving to Avon was having a “significantly increased” marketing budget to play with. He comments: “One-third of women in the UK are already Avon customers and we’ll be spending a lot more on marketing to make sure we reach out to the two-thirds who are not currently buying from us.” He adds that his priority for the coming year will be to raise Avon’s visibility even further.
Ostensibly, such a bullish attitude could be deemed optimistic. Among some consumer groups, Avon is still considered a quaint, 1950s-style brand, forever linked with the “Avon calling” tagline. But in reality, the company has always been a quietly understated global player.
As the world’s leading direct seller of beauty products, it notched up global sales of $8bn (£4.6bn) in 2005. It is active in more than 100 countries and employs 5 million sales representatives around the world. Euromonitor ranks it ninth in the global cosmetics and toiletries market.
It is also gaining a foothold in the emerging markets of Eastern Europe, the Asia-Pacific region and Latin America. According to Euromonitor, 2004 saw it report sales growth of 70% in Russia and 42% in China, offsetting a sluggish performance in the US. Perhaps most surprisingly, it achieves such figures with marketing budgets that are a fraction of its rivals’ outlay.
For industry observers, Avon’s success highlights just how effective its direct-selling business model is. For while it does have a flagship store in New York, and has flirted with other retail ventures in the US (notably with the JC Penney and Sears chain stores), more than half of its global sales are still generated by its representatives, the famous Avon Ladies.
“Avon is one of those brands that’s traditionally been passed on by friends of friends,” says Peter Shaw, managing director of branding consultancy Brand Catalyst. “You interact with the people you’re buying with and buy on trust.” Shaw adds: “The irony is that 20 years ago, when everyone was into mass marketing, this kind of relationship would have been looked down on. Now companies like P&G and L’Oréal are desperately trying to engender the kind of one-to-one relationship that Avon has always had.”
It’s a point that others strongly agree with. Rita Clifton, chairman of Interbrand, argues that word-of-mouth marketing is now considered so powerful that Avon’s established business model could, in hindsight, be considered ahead of its time. “The big cosmetics companies would give their eye teeth to build the kind of infrastructure that Avon has, but it’s just too expensive,” she states. “What Avon has is global reach coupled with sales strategies that are perfectly tailored for local markets.”
Yet others argue that Avon’s reliance on direct sales could lead to problems in the future. Marketing analyst at the Value Engineers, Rosa Wilkinson, says Avon is missing out on the “retail theatre” provided by
stores and so valued by younger consumers. As a result, it may not catch the teenagers who first try out beauty products on the high street and develop enduring brand loyalties in the process. “Young women are always in Boots, experimenting and forming habits and relationships with brands,” she says. “You can’t do that by looking at a catalogue. By not being part of that process, Avon is missing out.”
That said, analysts point out that Avon has been particularly adept at using the Web to reach a younger audience and drive sales. It is deliberately undercutting its mass-market rivals on price and is proving highly successful in some of the world’s biggest emerging markets. So while it may still be some time yet before it manages to lose its slightly dated image, it seems as though Avon may soon be calling the shots in the beauty market.
Facts and Figures:
New York door-to-door salesman David McConnell founded Avon in 1886, initially as the California Perfume Company
McConnell appointed his first general sales agent, Mrs PFE Albee, who established the key Avon sales techniques still used today
McConnell decided to rename the company Avon in 1939 after visiting Stratford-upon-Avon
Avon expanded overseas in 1954, entering Puerto Rico and Venezuela, then Mexico in 1958. It moved into the UK and Europe in 1959
Today Avon is the world’s largest direct selling company, operating in over 100 countries. It employs 5 million sales reps globally, including 160,000 in the UK
Avon produces 600 million brochures in 25 languages, sells more bottles of fragrance than any other company and had global sales of $8bn (£4.6bn) last year