A V O NA Case Presentation with Analysis

Introduction

Problem Statement

Analysis

Recommendation

Conclusion

QUALITY

Superior Customer Service

Product Diversification Innovative

Bra

nd R

ecog

nitio

n

The Avon vision is to be the company that best

understands and satisfies the product, service and

self-fulfillment needs of women globally..

Trust Respect Belief

Humility Integrity

Mr. David H. McConnell

SKIN CARE

MAKEUP

BATH AND BODY

FRAGRANCE

FASHION

Gaisano City Mall, Araneta St.,

Singcang, Bacolod City

Promoting

Marketing

Recruiting

Sales Incentives Programs

Trainings &Seminar

Store Operations

Staff Manpower

Customer Service

Ordering & Collecting

Security & Maintenance

OBSOLESCENCE

ob so·les cence n.

Being in the process of passing out of use or usefulness; becoming obsolete.

Opportunity Loss

Cost RecoveryStock-out

O B S O L E S C E N C EALES

PR

DUCT IONI V E N T O R Y

T R N D S

Direct Selling

Single level Direct Selling

Multi-level Marketing

Narrow Sense Broad Sense

• Direct Seller is also the consumer

• Also called Network Marketing

Alternative 1

• Avon should have an inventory control

system that specifically provides control

over the slow-moving products.

Advantages

Relatively easy tracking of inventory levels.

Use as an indicator whether to produce or not.

Could also be used to prevent stock outs.

Indicator to replenish the stocks in its stores.

DisadvantagesThe more diverse the transactions involved the more expensive it will be.

Persons using it must be well trained in order for it to be useful, this provides for an added cost.

Possibility that the system may not be used promptly because of the installation period.

The cost is very significant that there must be proper planning and that the authority still vest with the general manager.

Alternative 2

• Focusing efforts on the products that are

giving Avon a higher return and cutting

off production of products that are fast

becoming obsolete.

Advantages

Give proper emphasis to products that are indicative of quality and standards set forth by Avon.

Minimal effort on the part of Avon, it only needs to focus on its best-selling products.

It eliminates waste costs and rejected products resulting to decreased obsolescence.

Increased customer satisfaction because of the improved process and quality of its best-selling products.

The obsolete products could either be sold at a high discounted price or given as promos in order to at least recover the cost in making it.

Obsolete products could also be given as incentives to its consumers either through gifts or awards through prizes.

Avon could still produce other new products on the premise that customer demands changes from time to time and that these new products are only produced on a limited amount.

It can no longer recover what past losses it had incurred due to obsolete products.

There must be more effort on the part of the employees integrating it.

There is also a chance that the Avon personnel may not know whether the product is becoming obsolete or not, so in effect to this Avon must be very sensitive to the changing tastes of its customers.

Alternative 3

• Remodeling or recreating the products.

Concentrates on the idea that the obsolete products could still be given a chance by proper inspection and check-up of the quality and advertising campaign.

Incorporating past experiences with the present information at hand could help in evaluating what should be done to the obsolete products.

The fact that there is an added cost in recreating the products.

The seasonality and the changing trends of the customers are also to be taken into consideration.

There is also the chance that customers don’t want to buy.

It could only be done to products which are still sold to the customers and that Avon must quickly address the issue before it’s too late.

The alternative that is deemed to be effective when implemented is when Avon focuses more on products that are giving it a higher return in terms of profit.

Recommendation

Comparing the three alternatives only alternative 2 has the realistic approach in solving the problem of obsolescence.

Regarding its obsolescence, Avon could only recover its cost through the incentives to its Sales Representatives and customers by way of discounts and regular promos. Quality products should be given importance because it is where Avon generates its main profit.

Conclusion

Avon’s quality products are its lifeblood and therefore it must be carefully taken care of. Therefore I conclude that if the recommendation given is implemented combined with proper supervision, monitoring, and evaluation the problem could be solved.

END