Please evaluate my arguments below based on the Classic Avon Case Study which evaluates CEO Andrea Jung's grand strategy. My argument that Jung's strategy is properly focused and directed is followed by a brief argument that her strategy is NOT properly focused and directed. Based on these self developed arguments (I developed these arguments based on reading and interpreting the case study and extracting relevant facts), I have been asked to present an argument (both oral and written) that the position (NOT properly focused and directed) is the strongest argument. Based on my information below, can you offer a brief explanation 200 to 300 words as to why this is the strongest argument - that is that Jung's strategy was not properly focused or directed. (Note that material in arguments below only runs until 1999 as that is the cut-off date of my evaluation & argument). This brief summary/overview is greatly appreciated and will help me tremendously in building my more in-depth and complex argument. Thank you for your assistance in this matter.
Here is my argument that Jung's strategy is properly focused and directed:
Single digit growth
Archaic and limited distribution channel (which would impede the intermediate and long-term)
Jung's strategy: Broaden Avon's reach in the U.S.
Partner with Sears and JC Penney department stores and create store-within-a-store where it could introduce more upscale exclusive product lines.
Done in conjuction with "Direct selling"
Increased profits, sales, nationwide exposure; continue to attract baby boomer segment; financially appropriate as only $15 to $20 million to launch products in these locations and department stores would carry bulk of expenses
JUNG'S ARGUMENTS "FOR" THIS STRATEGY
Retail selling was on the rise
Increase in customer traffic in virtually all traditional department stores
Baby boomers' spending power expected to grow 16% in next five years
Baby boomers are among Avon's main customers
Baby boomers sought alternative distribution with personal care products, especially traditional department stores
Direct selling feasible since personal care products second most popular product group sold via this channel
Direct selling key to senior citizens, who were Avon's most loyal customers
This strategy would win against competitors Mary Kay, L'Oreal, and retail brands in traditional department stores
Edge against Mary Kay: Mary Kay was weak in traditional department stores and if Avon diversifies here, it would win a greater baby boomer customer base
Edge against L'Oreal: Traditional department stores sought new products to add to their mix as well as high turnover personal care merchandise
Edge against retail brands: Avon could match the medium- to high-priced products and is globally recognized brand name and image
To defend her strategy: Avon could allocate portion of following year's marketing budget to increase cosmetic traffic to Sears an JC Penney; Avon could promote certified Beauty Advisors to build traditional department store personal care infrastructure; Avon could increase monetary incentives to sales reps
WHY I THINK THE STRATEGY IS FOCUSED AND DIRECTED:
There are various routes that Avon can take and even the outside consultants had offered several suggestions. However, Jung's grand strategy remained focused on emphasizing WHERE to sell its products, WHO would be the target market, and WHICH product lines best fit its brand image.
WHERE: Nation-wide in department stores Sears and JC Penney
WHO: Baby Boomers mainly and also senior citizens
WHICH: Exclusive upscale new product lines
THIS STRATEGY avoids a marketing position that tries to aim at too many target groups in too many geographic locations where resources will be spread too thinly to be effective. Since Avon seeks to go WHERE they are not already represented, then these two particular department stores would be a great choice. Namely, this avenue represented an opportunity for Avon to "help" these two retailers build cosmetic consumers especially with Avon's "Beauty Advisors." In other words, Avon could focus on being a "specialist" to these consumers and would be credible experts given that it is a globally-known brand name. Also, there would be less competition at these two outlets. As for aiming at Baby Boomers, this group is desirable because of their potential spending power expected to increase over the next five years. They traditionally "outspend" all the other customer group categories, so they would be a great target group for Avon.
Again, the key to success would be to aim at Baby Boomers and what they want is high quality and high value products. Jung's vision of developing an upscale line to suit them would be in line with their needs. Furthermore, this group liked having various distribution channels and by offering Sears and JC Penney, this would be another way to capture more shoppers from this group. Comment about the outside consultant's strategy: Cost too much and had too many focuses.
Jung also addressed the problems brought up about her strategic plans and came up with good remedies to those problems. In short, she FOCUSED on what was the way to go for Avon (i.e. saw an opportunity ("Opportunity"), knew what it was good at ("Strengths"), understood their weaknesses and came up with solutions on how to counter them ("Weaknesses"), and thought about the threats out there as well ("Threats"). Jung's strategy was an OFFENSIVE one rather than DEFENSIVE. She saw an area where Avon could grow (internal expansion) and wants to go after it.
She can go after the other opportunities, such as the Internet, but right now (1999), she is focused on this one!
Argument stating her grand strategy was not properly focused or directed:
In her attempt to expand the market and improve profits for Avon Products, Inc., Andrea Jung has undertaken a grand strategy that includes the expansion of sales by providing an in-store-store experience by venturing with Sears and J.C. Penny. One area of concern with this strategy is that it is lacking support from the Avon board of directors. There are stated concerns from the board related to J.C. Penny's and Sear's position in the retail market. According to the latest retail strategy, which was highlighted during the recent Oscar's, J.C. Penny's executives are specifically targeting the "middle" class market. According to J.C. Penny research their customer focus is on the "missing middle customer which is: females, customers 35 -53, $69k household income, married with kids, seeks stylish and not trendy casual clothes and seeks high-quality form fitting, not too tight (Moore, 2005)." It would appear that by placing Avon products in this environment the Avon product line would also fall prey to a "middle" reputation. One word that seems to fit with "middle" is "average". This doesn't seem to fit with many of the newer product lines that Avon has spent so much time and financial resources to develop such as their spa products. Their goal in development of these products was centered more around a more "superior" approach not an "average" approach. This would seem like a direct conflict with the objectives in developing these products.
Another concern with Ms Jung's strategy is her decision not to heed the advice of the consultants that she brought in. One of their primary recommendations was to distribute the Avon spa products in specialty stores, which seems to be fully in line with current trends in "health". It would appear that the consultant's recommendations are more in line with the current Avon external and internal environment than Ms Jung's.
Lastly, when expanding any business product line, current successful processes must be considered and preserved. By aggressively jumping into the retail market Ms Jung is sure to jeopardize the current relationships with the Avon sales representatives that currently support the Avon Company. If sales representatives become frustrated and leave the organization due to this strategy, which is very likely, then Avon's "core" current business is at serious risk. This places extreme pressure on the ability for the new expansion into the retail market to succeed.
It would appear that Andrea Jung has made a hasty strategic decision that could harm the reputation and profitability of the Avon Company, which has been in existence since 1886. It would seem reasonable for Ms Jung to reconsider her strategy taking into account recommendations made from the board of directors and the consultants that were brought in. Refocusing is in order.
The existing positioning of Avon is upscale, finest quality and premium. However, the strategy that Andrea Jung has suggested would dilute Avon's position and erode Avon's brand equity. There is evidence that customers specifically perceive JC Penny as a middle level stores. Selling Avon products there would water down Avon's premium image. This would adversely affect the sales of all Avon products. Also, the Avon brand is ...
Avon Case Study is assessed.