strategic-management

214 ROCHELLE R. BRUNSON AND MARLENE M. REED
Marketing
Avon distributes three product categories—beauty, fashion, and home. Each of these product
categories accounts for 10 percent or more of consolidated net sales as indicated in
Exhibit 1. Exhibit 2 provides a revenue breakdown by product category. Note that Avon’s
Home segment had a 3.2 percent decline in revenues in 2008 whereas the Beauty division
had a 9.6 percent increase in revenues. Exhibit 3 provides a revenue breakdown by geographic
area. Note that Latin America contributes more revenue and profit for Auon than
any other area.
During 2008, Avon made a monumental change in the marketing of its beauty products.
Since its inception, the company had always concentrated on a homey image that
catered more to suburban housewives than urban trendsetters.
Avon’s president, Geralyn R. Breig, suggests that one of the company’s global challenges
is generating buzz. “In market after market, we found that we were meeting women’s
needs in quality, variety, and innovation. Where we fell short was in the image of the brand.” 1
EXHIBIT 1 Net Sales by Product Categories
(for the years ended December 31)
2008 2007 2006
Beauty 72% 70% 69%
Fashion 18% 18% 18%
Home 10% 12% 13%
Source: Avon’s 2008 Form 10K.
EXHIBIT 2 Avon’s Revenue by Product Segment
(in millions)
2008 % 2007 2006
Beauty 7,603.7 +9.6 6,932.5 6,019.6
Fashion 1,863.3 +6.2 1,753.4 1,562.7
Home 1,121.9 -3.2 1,159.5 1,095.0
Total $ 10,588.9 7.5 9,845.2 8,677.3
EXHIBIT 3 Avon’s by Geographic Segment Revenues and Operating
Profit (in millions)
2008 2007
Operating Operating
Revenue Profit Revenue Profit
Latin America 3,884.1 690.3 3,298.9 483.1
North America 2,492.7 213.9 2,622.1 213.1
Central and Eastern Europe
Western Europe, Middle East,
1,719.5 346.2 1,577.8 296.1
and Africa 1,351.7 121.0 1,308.6 33.9
Asia Pacific 891.2 102.4 850.8 64.3
China 350.9 17.7 280.5 2.0
Total $ 10,690.1 1,491.5 9,938.7 1,092.5