Marketing orientations and their applicability in Avon’s global operations
According to Singh (2004, p.9), marketing orientation is considered a cornerstone in marketing management. This is because all the operations of the firm are geared towards ensuring that the entire firm remains customer focused. This enables a firm to attain a high competitive advantage and also to succeed in the long-term as a going concern entity.
Considering the intensity of competition within the business environment, management teams of firms in different economic sectors have integrated various concepts of marketing orientations (Jain, 1999, p.22). One of the firms that have incorporated this concept is Avon which deals with the manufacture and marketing of various beauty products. In its operation, Avon has incorporated both internal and external marketing orientations.
External marketing orientations
With regard to external marketing orientations, Avon has incorporated the elements of price, promotion, distribution and product.
Product
In order to ensure that its customers attain value for their money, the firm has decentralized its operations. This enables the firm’s research and development department to produce beauty products that are in line with the local market demand in its international markets.
Through its research and development, the firm ensures that new product development is continuous. This has been attained via entering into an agreement with various universities in Australia, China, Thailand and Japan. The firm has also ensured that its brands are standardized across the globe so as to maintain quality.
Promotion
Creating market awareness is vital in ensuring product proliferation in the market. In order to attain this, Avon’s management team has integrated the use of catalogs. To reach a wide market in the United States, the firm distributes catalogs every fortnight but in its international markets, this is done on a monthly basis.
The firm’s promotion strategy ensures that various languages are used according to international market requirements. The management team ensures that its logo appears in all its products. In addition, product promotion is also conducted via use of the media and billboards.
Pricing
Considering the market diversity, firm’s management teams of various subsidiary firms have the discretion of setting products prices according to the prevailing market conditions.
Distribution
In its global distribution strategy, the firm uses independent representatives who sell products to known customers. The firm also has incorporated the use of mail order business in countries such as Japan and the establishment of beauty centers in Argentina. Through the establishment of elaborate beauty centres, the firm has been able to access a wide market in countries which have stringent regulations with regard to direct selling such as China.
Internal marketing
Direct selling
The firm undertakes internal marketing via the incorporation of direct selling. This is attained via the development of marketing programmes that are aimed at establishing a relationship with the customers.
Through personal selling, Avon’s representatives are able to understand customers’ products needs more effectively. This enables the firm to produce products which results in the customers attaining a high level of utility. In addition, direct selling enables customers to gain comprehensive understanding of product usage (Gilmore, 2003, p.148).
Why is Avon so much more dependent on its foreign operations than on its home (U.S.) operations?
The market opportunity presented in the international market made the firm’s management team to focus mainly on its foreign operations. For example, the United States market for beauty products is limited considering the fact that only 5% of women in the United States are in the age of beauty product consumers. This presents a small proportion of the entire market.
Lack of well developed infrastructure in the international market enabled the firm to tap the market opportunities. This arises from the fact that its house to house selling strategy enabled the firm to reach to remote places in other countries with poorly developed infrastructure such as Philippines and Brazil. As a result, the firm has been able to attain a high competitive advantage in the international market.
Socioeconomic and demographic changes that could affect Avon
Avon’s direct selling strategy in its United States is presented with a challenge with regard to the socio-economic and demographic changes. Some of these changes are due to the wide number of women who are its key target market are taking full time jobs. This means that the firm’s direct selling strategy will be challenged.
For example, the time available for women to attend to the firm’s sales persons is limited. Considering its domestic market, the proportion of women who consume beauty products is limited. This means that the future of the firm is dependent on the growth of women who consume beauty products in the domestic market.
In addition, consumers are becoming more health conscious in consumption of beauty products. This arises from the fact that there are some products which have negative health effects due to the ingredients used in their manufacture. This presents a challenge to the firm’s future operation (Diane Publishing Company, 1994, p.87).
How might a global recession, such as the one that began in 2008, impact Avon’s operations?
The occurrence of a global recession has a negative impact on individual’s consumption patterns. This arises from the fact that recession result into reduction of individuals’ personal disposal income. The resultant effect is that individuals limit their consumption of beauty products and concentrate on necessities (Daniels, Radebaugh & Daniel, 2008, p.5).
This means that there is a high probability of a global recession culminating into a reduction in the firm’s sales volume. In addition, Avon may not be able to conduct its global operations effectively due to financial constraints. This arises from the fact that financial institutions limit their credit lending capacity during recession making it hard for businesses to access capital in form of loans.
Avon’s competitive advantage
In its operations, the firm has managed to develop a high competitive advantage. One of its competitive advantages arises from its elaborate distribution system. Through house to house selling strategy, the firm is able to reach a wide a wide market range both in the domestic and international market.
By incorporating a comprehensive research and development, the firm has been able to develop a wide product line. The resultant effect is that its products are able to appeal to a large number of customers. In order to ensure that its competitors do not duplicate these advantages such as production of similar products, the firm should integrate a comprehensive product differentiation strategy. This will ensure that its products are unique.
Pros and cons of not selling within the United States in retail establishments
Through the use of direct selling in its domestic market, Avon is able to reach a wide range of customers. In addition, direct selling strategy is cost saving, thereby enabling the firm to maintain its advertising budget at a minimal point.
Through the use of the Avon ladies in its distribution strategy, the firm is able to maintain the price of its products at a relatively lower point due by avoiding paying for spaces in retail stores. However, this strategy has a drawback in that there is no central purchasing point. This limits accessibility of the firm’s products.
Selection of suppliers
In selecting new suppliers, the firm should select firms which are quality conscious. This will ensure that the firm produces high quality products culminating into high level of customer satisfaction. In order to attain this, the firm should ensure that the firm only selects suppliers who have integrated the concept of quality control in their operation. In addition, the suppliers should be conversant with the distribution system both in the local and international market.
Challenges faced by Avon
In its global manufacturing and supply chain network expansion, the firm will be faced with a number of challenges. Some of these relates to legislation. For example, such countries as China have stringent rules with regard to direct selling. Such legislation will limit the firm’s effort to establish an effective supply chain network.
Reference List
Daniels, J., Radebaugh, L. & Daniel, S. (2008). International business. New Jersey: Prentice Hall.
Diane Publishing Company. (1994). Current issues in women health: an FDA consumer special report. Baltimore: Diane Publishing.
Gilmore, A. (2003). Services marketing and management. New York: Sage.
Jain, A. (1999). International Development Research Center. Canada: IDRC.
Singh, S. (2004). Market orientation, corporate structure and business performance. Sydney: Ashgate Publishing Ltd.