Andrea Jung and Avon Products
Avon Products, Inc., originally known as California Perfume Company was founded in 1886 by David H. McConnell, a book salesman who discovered that woman liked to receive a free bottle of perfume when purchasing his products. Shifting his product focus to perfume, he began to sell perfume by going door-to-door, pioneering the direct sales method. In 1914, the company expanded into Canada to become an international manufacturer and marketer of cosmetics, fragrances and toiletry (CFT) related products. In 1939, the company changed its name to Avon Products, Inc., going public in 1946.
Avon utilized the direct sales approach, a method well suited for the economic and society conditions of the 1950's and 1960's, to obtain global market leadership of the cosmetics industry. A position they held into the 1980's. However, Avon experienced difficulty in maintaining this market position as society evolved. As women began to enter the workforce, Avon saw a reduction in the number of women available to sell their product, as well as those available to purchase their product. Also, as the purchasing power of women rose due to their economic improvement, Avon's products were seen as lower quality and yet, to expensive for the lower income women. Additionally, Avon had no brand identify with the youth or male customer segments.
To offset the decline in sales growth, Avon, pursued a diversification strategy to boost its revenues. Unfortunately, this strategy failed and the strategy was abandoned by 1999. Faced with stagnant growth through the 1990's, Avon needed to seek ways to re-engineer their company. In 1997, under the direction of new CEO, Charles Perrin and with help from Andrea Jung, President and Susan Kropf, EVP, Avon implemented several strategy initiatives to revitalize the Avon organization. These mildly effective strategies were part of a $400 million dollar restructuring plan to jump start sales. Money was freed up to develop...