International Business, Environment & Operations, Essay Example

Avon

Globalization has spawned the trend of companies having a global outlook for their businesses, as the world has become more open to them as a global marketplace. Many companies and major corporations have gone international with their products and services to take advantage of the profit opportunities that come with reaching out to the global consumer. This has all led to companies analyzing different marketing strategies to use in different global markets. This directly affects a company’s business performance, based on the effectiveness of its marketing orientation strategies(Sin, Tse, Yau, Chow, & Lee, 2005).

Avon’s Global Operations and Different Marketing Orientations

Avon Products, Inc. is one such company that has expanded its operations into global markets, based in part on its marketing orientations used in its business strategy. Following is how Daniels, Radebaugh, & Sullivan (2011) describes different marketing orientations that pertain to business operations, particularly global business operations, as well as the applicability of each to Avon’s global operations.

• International business people dealing with a less familiar environment – Avon already has an international team that is familiar with foreign environments, so there is some familiarity advantage with implementing a new global projectfor its brand. (p. 620).
• Companies’ orientations determine their international marketing strategies – Avon’s marketing orientations include placing emphasis on less-competitive markets to take an advantage in the area of production and sales and it is teaming up with global universities to develop new products. Additionally, its customers are familiar with its brand. The customers are loyal and they spread the word about Avon products through word-of-mouth. This feeds into the company’s strategic plan and social engagement efforts (p. 623).
• Companies need to decide on target market segments – Avon’s targeting strategy includes catering to the uniqueness of each global market. For instance, Avon prints instructions in local languages and customizes the names of brands to fit the culture in which it is being sold. In addition, Avon targets women and their needs. This also includes pricing and Avon sets its pricing to reflect local market conditions (p. 623-624).
• Companies should use a standardized marketing approach – This includes product uniformity in various countries. Avon displays its name on all products in different countries, even though the packaging is developed to cater to specific countries. Additionally, Avon transfers the same selling practices from country to country (p. 624).
• Each global market has different legal, cultural and economic conditions – This requires Avon to alter certain products to conform to a specific countries demands. Decisions are made on what types of products will sell in what market. For instance, Avon’s combination skin cream is sold in Brazil and long-lasting citrus fragrances are sold in Mediterranean countries (p. 622). Other considerations must be taken into account, such as not selling products with certain ingredients in countries that prohibit them. For instance, they would not sell leather handbags in India, as that is a country that worships cows.
• Government regulations may affect prices companies charge – This includes consideration for fluctations in exchange rates, product preferences and pricing. Avon’s various country operations sets its own pricing, based on local market prices.Local laws must also be respected. For instance, Chinese law prohibits door-to-door sales, so Avon upon beauty boutiques and independent stores to comply with the law and still make sales (p. 624).
• Companies must determine push and pull strategies for each country–Avon’s main distribution system is duplicated in various countries. It sells products to independent reprepresentatives who sell directly to customers.In addition, Avon uses the media to generate favorable public media reports to support its global image and attract new reps (p. 624).
• Standardizing advertising among countries can result in legality, translation and message needs problems–Avon sees to it that its brand is recognized in every country, but the packaging and advertising caters to local languages (p. 623).
• Problems with global branding could arise with language differences, acquisitions, nationality images and local laws – Avon has developed a well-recognized global image and is careful to comply with the local laws and customs of the host countries that carry its brand. In addition, Avon employs marketing teams from various countries to share “best practices” and these are implemented in each country (p. 624).
• Distribution channels vary among countries – Although Avon duplicates its basic distribution method, this has to be altered to suit specific country preferences, laws and customs. For example, Avon has a large mail-order business in Japan and many beauty centers in Argentina (p. 624).
• Companies need to choose distributors carefully and present themselves in a way to attract distributors – One way Avon attracts distributors is through its social responsibility campaigns that works on projects that cater to women’s needs, such as breast cancer awareness.It is the largest corporate donor to breast cancer awareness, and Avon also has a program to fight against domestic violence. In addition, Avon offers a lucrative commission structure for representatives (p. 624).
• The Internet offers selling opportunities but companies still need to develop sound programs for their marketing mix – Avon takes care of this by selling in a variety of ways, such as direct selling through representatives, stores, retail outlets, kiosks, boutiques, and mail-order (p. 622-624).
• Gap analysis helps companies determine market potentials in given countries and develop strategic marketing mix–Avon takes care to strategize on its product offerings, pricing, placement and distribution channels, based on specific country demands (p. 622-624).

Avon’s International Business

According to information in Daniels, Radebaugh, & Sullivan (2011), Avon is more dependent on its foreign operations than it is its domestic operations because the global opportunities are big business for them. There are 800,000 Avon representatives, just in Brazil. Additionally, Avon growing middle-class market in foreign countries are able to afford its products.

Socioeconomic and demographic changes that could affect Avon include a low number of women seeking part-time employment, which could result in less representatives. On the other hand, in remote areas, representatives could see more sales because these women lack a means to get to stores. A global recession, such as in 2008 could negatively affect Avon’s operations in the U.S.; however, in foreign markets, Avon should still do well, according to (Daniels, Radebaugh, & Sullivan, 2011).

Avon’s major competitive advantages are its direct sales reach and its solidarity in the marketplace. It has been around for decades and the brand awareness is global. Other companies may not so easily duplicate these advantages, because they may not have as much credibility for direct sales as Avon. The fact that Avon does not sell in retail establishments in the U.S. has its pros and cons. The pros include giving more credibility to its direct sales business model. Additionally, Avon saves the cost of overhead that would associated with retail stores. Cons of this business model could include other brands making the profits from retail that Avon could make. No doubt, people would still buy it in the stores just as they would from reps.

When it comes to new selecting suppliers, Avon should look for suppliers that have some type of awareness in the market, as people are used to knowing where to easily get Avon products. In addition, Avon should choose manufacturers in neutral locations that do not threaten the enviornment or country culture.

Avon faces challenges with maintaining and expanding its global manufacturing and supply chain network with the existence of competitors. There are many competitors, particularly, on the Internet. Online shopping is a large market and consumers have more choices with ecommerce, so there is a challenge in keeping customers. Expanding globally, the company should consider its margins, as suppliers and manufacturers are also looking for the best deals for increasing their bottom lines. Other companies besides Avon see the profit potential in expanding into global markets. Avon’s challenge is to continue making sure that its existing customer base remains loyal and that they are able to attract new customers, through strategic target marketing, as well as attract new representatives to be sure to continue coverage in remote areas and in countries that have a high level of middle- to upper-class incomes.According to Daniels, Radebaugh, & Sullivan (2011), Avon’s international business operations will account for the bulk of its growth and expansion into global markets into the future (p. 624).

References

Daniels, J., Radebaugh, L., & Sullivan, D. (2011). International business, environment & operations (13th ed.). Upper Saddle River, NJ: Prentice Hall.

Sin, L. Y., Tse, A. C., Yau, O. H., Chow, R. P., & Lee, J. S. (2005). Market Orientation, Relationship Marketing Orientation, and Business Performance: The Moderating Effects of Economic Ideology and Industry Type. Moderating Effects of Economic Ideology and Industry Type, 13(1), 36-57.