Avon Case Study
Company Case
The Newest Avon Lady—Barbie!
Selling Tradition
"Ding-dong, Avon calling." With that simple advertising message over the past 112 years, Avon Products built a $4 billion worldwide beauty-products business. Founded in 1886, and incorporated as California Perfume Products in 1916, Avon deployed an army of women to sell its products. These "Avon ladies," 40 million of them over the company's history, met with friends and neighbors in their homes, showed products, took and delivered orders, and earned sales commissions. Through direct selling, Avon bypassed the battle for retail space and attention waged by its competitors in department stores, and later in discount drug stores and supermarkets. Direct selling also offered convenience for the customer, coupled with personal beauty-care advice from a friend.
Avon's plan worked well. Most members of its up to 500,000-member U.S. salesforce were homemakers who needed extra money, but did not want a full-time job outside the home. They developed client lists of friends and neighbors whom they called on from time to time. Customers could also call them between visits. Recruiting salespeople was easy, and a good salesperson could develop a loyal core of customers who made repeat purchases. Avon paid the salespeople a commission based on their sales, and a successful salesperson could earn an attractive income.
Times Change
However, during the 1970s and 1980s, the environment changed. First, more women found that they needed to work outside the home. As a result, when Avon ladies rang the doorbell, often no one answered. Second, many Avon ladies decided that they needed more than part-time jobs, and Avon's annual salesforce turnover rates soared to more than 200 percent. Third, because of high salesforce turnover, many Avon customers wanting to see a salesperson could not find one. Fourth, more competitors, such as Amway, Mary Kay Cosmetics, and Tupperware, were competing for the pool of people interested in
The Newest Avon Lady—Barbie!
Selling Tradition
"Ding-dong, Avon calling." With that simple advertising message over the past 112 years, Avon Products built a $4 billion worldwide beauty-products business. Founded in 1886, and incorporated as California Perfume Products in 1916, Avon deployed an army of women to sell its products. These "Avon ladies," 40 million of them over the company's history, met with friends and neighbors in their homes, showed products, took and delivered orders, and earned sales commissions. Through direct selling, Avon bypassed the battle for retail space and attention waged by its competitors in department stores, and later in discount drug stores and supermarkets. Direct selling also offered convenience for the customer, coupled with personal beauty-care advice from a friend.
Avon's plan worked well. Most members of its up to 500,000-member U.S. salesforce were homemakers who needed extra money, but did not want a full-time job outside the home. They developed client lists of friends and neighbors whom they called on from time to time. Customers could also call them between visits. Recruiting salespeople was easy, and a good salesperson could develop a loyal core of customers who made repeat purchases. Avon paid the salespeople a commission based on their sales, and a successful salesperson could earn an attractive income.
Times Change
However, during the 1970s and 1980s, the environment changed. First, more women found that they needed to work outside the home. As a result, when Avon ladies rang the doorbell, often no one answered. Second, many Avon ladies decided that they needed more than part-time jobs, and Avon's annual salesforce turnover rates soared to more than 200 percent. Third, because of high salesforce turnover, many Avon customers wanting to see a salesperson could not find one. Fourth, more competitors, such as Amway, Mary Kay Cosmetics, and Tupperware, were competing for the pool of people interested in