A Case Study on Avon India Limited


By

Ms. Sneha Dave
Lecturer
Ms. Sejal Acharya
Lecturer
MBA Dept, LDRP-ITR
Sector-15, Gandhinagar
 


A case study  on AVON India (P) Limited- A Company for Women

"Have you asked any person whether he/she wants to look older? Why the person do not want to look black? Why everyone wants to look handsome and beautiful? Why we do not want to show our real age to any one?

The answer is the expectation of  staying young and  beautiful every time. The cosmetics business worldwide is more than $200 million. In India, it is growing at even faster pace. Earlier only the women used to go for beauty  treatment, hair treatment but during the last decade the scenario has changed. The men also started taking care of their hair, skin, and their beauty. 

Target any of the age group whether it is male or female, whether working or non working wants to be super women or superman. The advertisements make the people sometimes so crazy that then they go for operation or surgery and suffer from health problems. The powders, tubes and creams make your face glow in 10-15 minutes, you are ready for that  but ever thought about side effects?

The companies which are popular in the cosmetics and toiletries are

* Emami
* Godrej
* Kaya Skin Clinic
* P  &G
* HUL
* Himalaya
* ITC
* AVON
* Amway
* Modicare
* Revlon
* Oriflame
* Ayur
* VLCC
* Personal Point

"AVON" –it's a common name which is found every where. Whether it is individual or company everyone wants to be A-1. Whether it is cosmetics or bicycles or dress materials the name is common. But still there are some questions of its infant stage in India specially Gujarat like,

* Why it is not popular?
* Why it is still private limited?
* Why they have not targeted the rural markets of India?
* Why it is called the company of women?

Sometimes we are hearing that " A women is the door of Narka" or "the mind of the ladies is on the joints of legs" or "women are fools". On the another side, "Yatra Naryastu  pujyante ramante tatra devatah"

Which one is correct? Why a women needs sacrifice/ kills/ raped/used as a tool for success?

As being a women have you ever thought about the freedom, success, own identity, fighting spirit against child and girl amusement, child marriage, health and nutrition problems?

It is said that one women is the enemy of another women and can not see others growing. Same way most of us have no thought except being mother, daughter, bhabhi, sister, sister in law, daughter in law and following the traditions.

The opportunity is in front of us but we have not thought. AVON means

A- Admiring and adorable
V- Vision
O-Opportunity
N- Nearness and Nice

It is called company of women which has given all of the above things to the women who have connected with them. They have made them independent, good earner, socialites and creator of good vision and personality.

Literature review

Below the line initiatives are extremely important in the cosmetic segment since the buying experience is as important as brand image and advertising. Significant focus is on sales counters, beauty advisors and dealer aids. We constantly integrate a lot of the above the line campaigns like 'Whose watching your lips' with below the line initiatives - Anil Chopra, Business Head, Lakme Lever.

''Lakmé is at the forefront of product-innovation. Almost everyone has a Lakmé-something in their (cosmetics) collection,'' said  Mumbai-based fashion choreographer Lubna Adams.

The Indian cosmetics industry is in churn. Even as the premium segment is getting crowded, the rural market is turning out to be the stronghold of smaller, regional players. Although stiff competition has emerged for Lakme Lever within the Rs 250-crore colour cosmetics market, it continues to lead. In the skincare market, estimated at Rs 700 crore, Lakme's market share averages 7-8 per cent. Catalyst spoke to Anil Chopra, Lakme Lever's Business Head.

A study by Voss and Parasuraman (2003) suggests that the purchase preference is primarily determined by price than quality during pre-purchase evaluation. Given explicit quality information, price had no effect on pre-purchase or post-consumption quality perceptions. Instead, post consumption quality evaluations had a favorable impact on price evaluations.

Another study by Chernev (1997) analyzed the effect of common features on brand choice and the moderating role of attribute importance. It is argued that when brand attributes differ in importance, with the best value on the most important attribute, thus further polarizing brands' choice shares. In contrast, when attributes are similar in their importance, common features are likely to have an opposite effect, equalizing brands share.

Russo and France (1994), studied the nature of the choice process for commonly purchased nondurables by tracking eye fixations in a laboratory simulation of supermarket shelves. The findings are fully compatible with the general view that the choice process is constructed to adapt to the immediate purchase environment.

While describing about shopping orientation, Sinha (2003) reports that Indian Shoppers seek emotional value more than the functional value of shopping. Their orientation is based more on the entertainment value than on the functional value. The orientation is found to be affected primarily by the type of store, the frequency of buying and to some extent by the socio-economic classification. The retailers need to experiment with a format that attracts both types of shoppers.

Research suggests that beauty consciousness among people in general is changing.

Vigneron and Johnson (1999) reported that people's needs for appearances and materialism were increasing. That is human beings wanted to satisfy the need to look and feel good. This created a boom in the cosmetic and toiletries sector across the world. Chambers Encyclopedia defines cosmetics as (a) articles intended to be rubbed, poured, sprinkled or sprayed on, introduced into or otherwise applied to the human body or any part thereof for cleaning, beautifying, promoting attractiveness or altering the appearance and (b) articles intended for use as a component of such articles. Now a variety of cosmetic and toiletries ranging from natural to sophisticated items are available in the market. The pattern and preference of use of these items vary according to different segments of gender, age and socio-economic class. When we review the literature on the cosmetic and toiletry industry, not many studies are available especially about Indian scenario. The present study is an attempt to analyse the purchasing pattern of cosmetic consumers in Kerala.

THE CHOICE OF AVON AS BUSINESS

It is one of the world's largest direct selling company. It is the oldest company in terms of cosmetics. It is working through AVON foundation. It is having the base of more than 58 lakhs customers. It has divided each state into zones and appointed zonal managers. It is supplying the products of fragrance, toiletries and cosmetics. They are having one of the best R& D wing which constantly thought about research and development. It gives you rewards, awards, success and your own unique identity.

It has four levels.

Level -0
AVON- Representatives – Consumer
Level – 1
AVON- Unit Leader – Representatives – Consumer
Level-2
AVON-  Advance Unit Leader – Leader – Representatives –Consumer
Level-3
AVON- Executive leader - Advance Unit Leader – Leader – Representatives –Consumer
Level -4
AVON- Senior Executive Unit Leader - Executive leader - Advance Unit Leader – Leader – Representatives –Consumer

In the level -1, the unit  leader should have Rs.1750  order and five representatives. In level-2, the advance unit leader should have three leaders and five representatives with the order of Rs.1750. In level-3, the executive leader should have one advance unit leader, four  leaders and five representatives with the orders of Rs.1750. the level-4, the senior executive unit leader should have one executive unit leader, one advance unit leader, five   leaders and five representatives.

In the starting, they have 0% than 15%, 20% , 25% and 30% commission slabs. The also have bronze, silver and golden level.  The company gives them the credit of 21 days and replace goods also. The recognition in their magazine comes Namaste as well as meetings. Every year they gives foreign trips which is a leading recognition.

Reason for Success

As being the person, they do not ask any qualifications, only two passport size photos and identity as well as residential proof. The success comes with hard work and luck both combines. It is a business which is not going to close down because it supplies and produces necessities. One goes for CTM, anti aging creams, scrub, perfumes, jewellery,  cars, gold, home and secured future of kids. It has still able to capture 5% of the markets only. The company also do the "breast cancer awareness programme.", cost saving for customers, education and AIDS control programs.

Reason for infant stages

Since 1886, in abroad and since 1994, the company has only captured 5% of the market. After seeing the success of P& G, HUL, Cavin care Etc. they have  made sachets about the products. Still due to direct selling company and less awareness stage the company is in the infant stage. The another reason is the misuse of credits. They can cover schools, colleges, coaching classes, offices, grocery stores, GIDC's. the company in order to capture the rest markets, turn the customer to representatives and make them aware about the use.

CONCLUSION

The cosmetics industry is growing faster and faster, so one can spend a little time in doing the work of selling and earns good amount of money. A lady or a male can use power of three. One can meet three people in a day and generate good amount of partial earnings which can be use to secure child future or purchasing of gold or investing in commodities markets. The representatives and leaders can go for capturing 95% markets all over India. The company has Rs.70 out of Rs.100 products sold. Out of that their production cost is not more than 50%, so still it has good amount of profits with them.  One can do this for part time and earn full time or earning and spending time full time. For this, you do not need to leave family apart or give whole day for the job. The company also manages social responsibility. Like P& G's "SHIKSHA" campaign AVON do the " BREAST CANCER AWARENESS PROGRAM". In this way , they are fulfilling their duty towards society.

References

www.in.avon.com
www.facebook.com/avon India
www.gujarattourism.com

Books

Hello Avon
Philip Kotler, Kevin Keller, Abraham Koshty,  Mithileshwar Jha (2009), Marketing Management, 13th edition, Person education
Jim Collins, Jerry Porras(2002), Built to Last, Hypercollins Publication
Corporate Chanakya " Successful management the Chanakya Way"(2009) , Jaico Publication
 


Ms. Sneha Dave
Lecturer
Ms. Sejal Acharya
Lecturer
MBA Dept, LDRP-ITR
Sector-15, Gandhinagar
 

Source: E-mail April 30, 2012

          

Articles No. 1-99 / Articles No. 100-199 / Articles No. 200-299 / Articles No. 300-399 / Articles No. 400-499/ Articles No. 500-599
Articles No. 600-699 / Articles No. 700-799 / Articles No. 800-899 / Articles No. 900-1000 / Articles No. 1001-1100
Articles No. 1101-1200 / Articles No. 1201-1300 / Articles No. 1301-1400 / Articles No. 1401 Onward
Faculty Column Main Page