Recommendations for Avon

Recommendations for Avon

Based on their current market conditions, Avon should maintain its "broad differentiation" strategy, i.e. a strategy of being unique in valuable ways to a wide variety of customers. This strategy is advisable when buyer's needs and preferences are too diverse to be fully satisfied by a standardized product or service (Gamble and Thompson, 2009). Likewise, in spite of its predominance of female users, the cosmetic industry is actually rife with customers who differ over their cosmetic use for various reasons (Dortch, 1997). Broad differentiation should also be adopted if there are diverse ways of differentiating the products and services (Gamble and Thompson, 2009). For instance, the cosmetic offers not only multiple categories or subcategories of cosmetic, i.e. lip gloss or eye shadow, but also multiple colors and shades possible for each product (Ibisworld, 2010). Moreover, when technological change is fast paced and competition revolves around rapidly changing product features, broad differentiation can help keep a cosmetic company ahead of the curve (Gamble and Thompson, 2009). For example, increasing medical knowledge of skincare has not only compelled many companies to revise their cosmetics but also enabled some companies, like Mary Kay, to enhance and market their products as (Dortch, 2009). Although Avon lacks a monopoly on the direct selling of personal care products, very few personal care/cosmetic companies operate as heavily through direct selling (Ibisworld, 2010).

In order to successfully pursue this strategy, companies need to their buyer's needs and behavior carefully to learn what buyers think has value and what they are willing to pay for.

Likewise, Avon not only operates and owns multimillion product centers in America but has also opened research facilities in mainland China to better understand Chinese consumer preferences for cosmetics (Ibisworld, 2010). Based on this research, the company should include those desirable features in its products/services in order to clearly set itself apart from rivals lacking these features in their own products/service attributes. For example, companies selling anti-aging cosmetics have begun including novel chemical processes for their product's absorption, including peptides¸ substantiated botanicals, and even nano-particles (Ibisworld, 2010).

With a broad differentiation strategy, companies may choose to exercise the option of command a premium price, increase unit sales, or gain buyer loyalty to its brand. Avon has strong customer loyalty among its users (Adkins, 2010). For instance, 97% of its footwork product users have indicated that they will buy and use their products again (Adkins, 2010). Meanwhile, although Avon traditionally favored discounted prices, it instead generally keeps its prices even with conventional retail cosmetic products and simply markets its own products as superior quality for a similar price to them (Ibisworld, 2010; Adkins, 2010). Nevertheless, Avon does charge premium prices for some of its anti-aging products (Avon, 2010). Since moving away from discount pricing in 2003, Avon's beauty sales have been increasing every year, (except during last year's economic slump) (Ibisworld, 2010).

As mentioned above, Avon's competitive business strategy is broad differentiation. The profitability of this approach hinges upon the additional costs of differentiation being outweighed by the extra price of its unique products/services (Gamble and Thompson, 2009). Accordingly, implementation requires delivering attributes that lower buyer's cost, delivering features that tangibly or intangibly improve product/service value, delivering value to the customer by exploiting competencies/ competitive capabilities that competitors cannot match (or afford to match) (Gamble and Thompson, 2009). Accordingly, for its new Mark Girl products, Avon is using cleverly packaged cosmetic kits that not only reduces costs for the buyer but also provided added utility and convenience for young consumers accustomed to the compactness of cell phones (Deutsch, 2007). Moreover,