Avon calling for a new generation

Avon’s ethos of quality products at reasonable prices may strike a chord with consumers

It is said that when there’s an economic downturn, lipstick sales soar as women treat themselves in small ways. Direct-to-consumer cosmetics company Avon is hoping to capitalise on this trend and convert what it calls the “smarter woman” to its products from more expensive brands.

Earlier this year, it launched its Anew Clinical Derma-Full X3 Facial Filling Serum, the most expensive product it has yet brought to market at 28. The product includes what Avon claims to be the “exact same quality injectable-grade hyaluronic acid facial filler used by dermatologists”.

Andy Watts, marketing director in the UK for Avon, says that while it might not seem logical to launch the company’s most expensive face serum during a recession, it is aiming for a consumer usually accustomed to spending hundreds of pounds on Botox or pricey skin creams.

“We want to bridge the gap between serums and dermatologists,” claims Watts. “Hyaluronic acid is used by dermatologists. Anew is first to market with that injectable-grade skinwear. We can offer something at a very reasonable price.”

Nica Lewis, head consultant for beauty innovation at researcher Mintel, says the launch taps into the current prevailing trend in the cosmetics industry for technology-driven “turbo beauty”. She explains: “Consumers are more results driven. People want to see things really work – and see claims backed up.”

Data from YouGov also supports Avon’s improving reputation with consumers. Its average monthly score on the YouGov Brand Index shows that over the past four years, Avon’s reputation among consumers has risen steadily. The Index scores peak at the time the X3 serum launched earlier this year.

Without being stocked in stores, however, Avon has to work hard to get noticed. With a product such as Anew, it has to rely on its salesforce of representatives to introduce the product personally to potential buyers or push it through online word of mouth.

123 years of door-to-door

Avon representatives have been selling the company’s products door to door since it launched in America in 1886. Since then, the company has extended over the world, with its fastest growing markets now being China and Russia. It still uses salespeople to promote its products in person but its online operations now supplement its traditional catalogues.

However, the company is seeing the effects of the recession on its business – its first-quarter profits, announced last week, were down 36% on the previous year to $117.3m (77.4m). But the number of women signing up to sell the cosmetics range has risen. Watts explains: “There is faster joining than ever before. This is the perfect environment for a company like Avon.”

With many people being laid off from their usual jobs, the flexibility of the Avon role appears to be appealing to a new generation of “Avon ladies”. In the UK, there are 170,000, which Watts says gives the company its ability to reach one in three women.

Watts says it is too soon to tell if the recession has had an impact on the profile of people joining up to become Avon representatives. While the perception of the Avon Lady as depicted in films such as Edward Scissorhands is a middle-class, middle-aged woman, Watts says the salesforce is far more diverse, as is its customer profile.

This diversity of customer means Avon has turned to TV advertising in recent years to raise its profile with people more accustomed to shopping on the high street than through catalogues or online. It signed up American actress Reese Witherspoon in 2007 to become its first “global ambassador”.

“We’ve moved on,” explains Watts. “We’ve invested in advertising, which has created awareness. We’re contemporary and up to date, but one challenge we face is advertising more while targeting existing customers.” He says the brand aims to continue using mass media ads to push its product lines and its recruitment drive.

High street competitor Boots has also started pushing its products by promoting active ingredients, as can be seen with its Protect & Perfect serum. YouGov BrandIndex figures show Boots’ reputation has recently begun to outstrip that of Avon with consumers.

“Using the medium of brochures means people are not trying the product so we have to work hard in our communications,” admits Avon’s Watts.

The virtual door

The company will support its TV marketing with a heavy online presence. The brand uses paid search marketing and its own YouTube channel to help promote its wares. It also flags up any relevant celebrity news about personalities using its ranges on its UK website, along with informative research about beauty.

“The difference between this recession and the one in the 1990s is that consumers are now used to researching products and their ingredients,” says Lewis at Mintel. This is especially important for reaching consumers under the age of 34, who the research suggests are more likely to seek out information on ingredients.

The website also has an online forum where its salesforce can stay in touch and swap best practice tips. Watts says he is weighing up how heavily the brand should get involved in social media and blogs, although it has its own page on Facebook. He says the “market is flooded” with online discussions and for the company to launch further social networks for its reps may be too much.

This restrained attitude to marketing is, Watts reveals, something the brand prides itself on. He describes the brand as being a “best kept secret”. It sees word of mouth as its key promotional tool, backed up with creating interesting stories for women to talk about, such as the work done by the Avon Foundation, a philanthropic arm of the business set up in 1955, which raised $580m (379.8m) in 2007 for good causes.

Can this approach help Avon compete with the brands stocked on Britain’s high streets? “It’s different to the high street experience. You can shop in the comfort of your own home,” says Watts. “Customers are used to buying quality without spending a lot of money, economising by using Avon. As we learned from research, it’s for the ‘smarter woman’.”

Facts & figures

– Avon has $10bn (6.54bn) in annual revenues
– There are 5.4 million Avon representatives worldwide
– Avon reps are very diverse. No one type of person makes up more than 7% of its salesforce
– Avon was founded in 1886 by book salesman David Connell, who diversified to offer perfume, which then overtook his book business
– In 2005, Avon opened a $100m (65.4m) research and development lab
– The Avon Breast Cancer Crusade launched in 1992 and has raised more than $525m (343.7m)
– The Avon Foundation Speak Out Against Domestic Violence programme has awarded more than $7m (4.5m) to more than 400 organisations dealing with domestic violence.

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