Avon, 103 years of beauty but limited reach?

Avon is one of the oldest manufacturers of beauty, household and personal care products in the world. The company holds a good global share of beauty products and its goods are been sold in every continent.

 

Amazing ! I will check it out in the weekend when I visit my local shopping canter.

Easy tiger!  You can’t find it at David Jones or Myer, in Australia and many countries in the world Avon uses only two distribution channels, Representatives and online .

Basically, companies have many distribution channels to use in order to reach the final consumer of it’s product.

Direct selling: the oldest way of selling the products directly to consumers away from fixed retail locations.

Indirect selling: also called selling through Intermediaries. The manufacturer sells through retails and uses wholesalers.

In some cases the manufacturer could combine both strategies to widen its reach but this could lead to channel conflict.

Avon have an old tradition of using direct selling strategy and appointing representatives to sell the products directly to pubic.

According to the united states direct selling association, in 2000, 55% of us citizens who were 18 and above had at some point purchased goods or services from a direct selling representative(DSA, 2010). However, though this distribution channel has proven popularity through the years it has a main disadvantage, it reduces the reach of  the products thus reduces its popularity.According to Lars Perner Ph.D. Assistant Professor of Clinical Marketing at University of Southern California “It would be highly inconvenient for customers to have to buy each product at a different store. Most American consumers today also have limited patience with specialty stores in most categories” (Parner, 2013). At this age where customers prefer searching online for the best deals and recommendations then travel to the nearest store where its available to try and feel the product, its hard to just relay on selling representatives.

The 130 years old beauty company has been hit hard by the rise of low-priced beauty products distributed indirectly (mass marketing) specially by the US retailers Walgreen and Dollar General and saw its shares fall continuously since 2011. this led them to a dramatic steps like changing the CEO of the company and even to consider quitting the US market like it did in South Korea and Vietnam, and also moving the companies headquarter from Uk to London cutting more than 2500 jobs (Wahba, 2014).

To tackle this problems Avon has lunched a new E-commerce website targeting the segments that are not attracted to its traditional way of selling, tech-savvy , who represent most of young consumers as well.

 

Though this would not be a quick fix for avon’s problem which has been building up for years but its definitely a step on the right path. according to the Australian Bureau of Statistics more the 87% of Australians have an access to the internet and in 2015 they spent 18 hours online(ABS, 2016).  Avon would need to change it’s strategy in order to meet the new customer trends and behaviours.

A retail experience for the customers would help to reach wider consumer base and allow the company to come back to revenue, but this might as well lead to channel conflict.

This suggestion beside the new online strategy would lead to a channel conflict.

“Channel conflict is generated when one channel member’s actions prevent the channel from achieving its goals” (Tybout and Calder, 2010). Customers would go and buy the products online rather then buying it though representatives or even buy it from retailers if this strategy is adapted.

Conclusion

Avon needs to prioritise and choose between its traditional distribution channel strategy and a multichannel strategy which allows wider reach for its products.

change is inevitable and companies that stick to its ways and not change according to changes in industry environment would fail and Kodak is famous example.

avoid channel conflict when adapting new Place (Distribution) strategies to keep existing representative and their customers satisfied.

 

 

References

DSA – What is Direct Selling (Official website)

Parner, Lars. “Distribution: Channels And Logistics”. Consumerpsychologist.com. N.p., 2013. Web. 15 May 2016.

Wahba, Phil. “The Depths Of Avon’S U.S. Despair”. Fortune. N.p., 2014. Web. 15 May 2016.

ABS,. “8146.0 – Household Use Of Information Technology, Australia, 2014-15”. Abs.gov.au. N.p., 2016. Web. 15 May 2016.

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