Avon, the beauty company that created the model for the direct sale of fragrances, cosmetics and personal care products 118 years ago, is in the midst of a renaissance.

Chosen as the 2003 Company of the Year: Excellence in Packaging by the readers of Cosmetic Packaging & Design, Avon’s history of providing American women with quality beauty products has evolved into the global “company for women.”

The Avon story closely parallels that of the American woman, the consumer the company has served since its start. As American women have expanded their worlds, pursuing new opportunities, becoming ever more proactive and productive, so has Avon.

At first a natural evolution, Avon’s growth is now part of a determined global transformation to “better serve customers and Representatives and drive future growth.”

Lipstick Styling Evolution Avon’s been making and marketing lipsticks for a long time. In the last 40 years or so, there’s been a shift from formal, more ornate looks to tailored, streamlined styles. In 1965, Avon topped a silver and gold metal case with four “A’s” in an art deco style. In 1969, a harlequin pattern in blue, green and gold was created in a metal case. Fashion was simplified in 1985 with a black and red case. In 1996, Avon went tailored with Avon Color in blue and gold plastic and in 2000, Avon Color was slightly redesigned, tapering from top and bottom in navy blue and gold. 1965 1969 1985 1996 2000

Today’s Avon Is True to the Original
Avon’s overall business model is the same today as it was when David H. McConnell first conceived it in 1886, according to Bill Susetka, president global marketing for the company. “Avon’s model is based on providing earnings opportunities and empowerment for its Sales Representatives,” Susetka said. “Our core values, principles and mission are also still the same, anchored by a strong belief in people, the highest quality products and continuous innovation.”

Avon’s top leadership is committed to the company’s tradition and future. “We are privileged to be the stewards of Avon in the 21st century. This is a special moment in our company’s history because our hard work and our belief will help create better lives and open new opportunities for future generations of women. But with this opportunity comes significant responsibility. Thankfully, we are guided by our vision, our mission, our values and our principles—reminding us of our starting point and lighting the way,” stated Andrea Jung, Avon’s chief executive and chairman of the board.

Bill Susetka	H. William Singleton	Jill Scalamandre	Deborah Fine	Kathy Kordowski

Avon Calling The World
Avon is a society of consumers, independent Sales Representatives and company associates spanning ages, cultures, and countries. In 2003, Avon had more than four million independent Sales Representatives in over 140 countries, serving tens of millions of customers. In the U.S., there are more than 600,000 Representatives.

Ever since McConnell, of New York, NY, hired Mrs. P.F.E. Albee of Winchester, NH, to sell his fragrances door-to-door, the independent contractor has been the foundation of Avon’s direct sales business.

Establishing a tradition, Albee recruited other women to offer McConnell’s products and quickly expanded her territory to cover the entire Northeast region of the U.S.

While no records are available for how the number of Representatives increased in the early years, growth is now accelerating.

“The numbers are growing faster now for two main reasons,” explained H. William Singleton, regional vice president of sales for Avon North. “With the Leadership Program, Representatives can now have a partnership with Avon in which they recruit and train others to be Avon Representatives and have potentially greater earnings. And this year, Avon launched mark, targeted to young women, reaching a whole new group of potential consumers and Representatives. There are already more than 20,000 new Representatives for mark.”

The Avon Family: Millions Strong
Avon’s corps of Representatives is made up of such a cross section of individuals that it’s impossible to describe a typical Representative. “There are all ages and sales levels,” said Singleton. “The position can meet the needs of the individual. We have Representatives that are earning in excess of $160,000 from a combination of sales and the Leadership Program and some earning more than $100,000 solely from sales. Earnings can be as little or as much as an individual rep is motivated to earn.” The Leadership Program was established in 1991 as a way to encourage individual Sales Representatives to create and run their own business units by recruiting, training and managing more Representatives. In the U.S. in 2002, 45% of Representatives were involved in Sales Leadership, up from 38% in 2001.

Most Avon Representatives get started by meeting someone who is already a Representative or by answering an ad. The majority, 75%, know Avon by word-of-mouth. Once someone decides to be an Avon Representative, it only takes a small investment of $10 to get the basic materials to start selling. The materials include basic sales techniques and information on how to sell color and skin care. For those who want to grow in the position, it is possible to be trained to be a Beauty Advisor with additional training for skin care and information needed to sell the beComing line. Ongoing support includes monthly sales meetings, one-on-one contacts with the district sales managers and quarterly career seminars. “It is a business for themselves, but not by themselves,” Singleton stressed.

It’s possible to chart a very successful career path starting as a Representative. Maria Peninger, current regional vice president for the Southeast and the Northeast, has such a story. Peninger began as a Representative, eventually became a district sales manager (a salaried Avon staff position), was promoted to divisional sales manager and then regional sales director, before being named to her current position. In the U.S., there are approximately 1,500 district sales managers, each managing 300 to 350 Sales Representatives with annual sales of approximately $1.5 million from each district.

While Avon’s Representatives are independent contractors, the company offers them access to a number of insurance options and a 401A program.

The Avon brand includes a wide variety of color cosmetics.	The Anew line of skin care has several sub brands.

And while the image of an Avon Representative is female, there are male Representatives as well. “With the opportunities our new programs offer, more couples are working together because of the flexibility and great earnings potential,” Singleton added.

The large number of Avon Representatives is a very effective strategy to reach consumers. More than 40 million women worldwide (25 million in the U.S.) have sold Avon products since the company’s beginning in 1886.

Avon Representatives fit no single mold. Some work full time, but the majority appreciate the flexibility that selling Avon affords them to balance work and family and/or school. There’s no set number of years that most Representatives serve, but there are levels of achievement ranging from President’s Club ($10,000 and up) to Inner Circle (more than $275,000) for those top sellers, who are often also those with the longest service.

Avon corporate maintains as close connections with its Representatives as the Representatives maintain with their customers. “It’s that personal relationship that is the foundation of Avon that hasn’t changed,” stressed Susetka.

Avon, the Company for Women
Avon serves a primarily female audience with a majority of female Representatives, and its corporate structure is mainly female too. Avon has more women in management positions (over 80%) than any other Fortune 500 company. Women hold 47% of positions at the vice president level and above. And, women make up 54% of Avon’s board of directors.

The Avon Brand River – Wide and Deep

The Avon Brand
The Avon brand, consisting of the traditional mix of color cosmetics, fragrances, personal care and treatment products as well as an array of apparel, accessories and gift items, is sold through Avon’s corps of more than 600,000 Representatives in the U.S. and more than four million around the world. In the U.S., Avon catalogs are printed every two weeks and include a Spanish language edition.

beComing offers (l-r) Hydrating, Texturizing, Equalizing and Soothing Boosters for skin care.	beComing includes brushes and other makeup accessories.	beComing Eau De Parfum is presented in luxury packaging.

Planet Spa is spotlighted in the Avon Wellness catalogs.

beComing
With its own quarterly catalog, beComing includes fragrance, color cosmetics, skin care and treatment products.

beComing products are sold exclusively at the Avon Salon & Spa retail location, online at www.avon.com and through the 56,000 beauty advisors who have been specially trained to sell the line.

Avon Wellness
Avon Wellness debuted in 2001 carrying products that promote a healthy lifestyle. Products including nutrition, weight management, fitness and spa, are sold through its own catalog that is distributed every four weeks. Vitamins and supplements are sold under the VitAdvance brand, while the SlimWell brand includes balanced meal bars and other diet foods. Exercise equipment and spa accessories are also available.

mark
Avon’s latest brand, mark, unveiled in August 2003, was developed to reach out to young women, 16 to 25, with both beauty products and financial opportunities. Named to acknowledge the young women who are making their mark in the world, the line strives to be “fun and fresh, sexy and witty, different and original.”

Electro-Lights Lip Vitagleam is lip gloss from mark with vitamins and botanicals.	The Face Case from mark allows the consumer to pick her favorite shades for eyes and face to fit in the slim compact

Garden Blu Eau de Parfum is one of mark’s most popular products.

With a tag line that reads, “make money. make friends. make a difference, make your mark,” mark is looking to attract as many of the 17 million young women in the United States as possible with the opportunity “to buy and sell makeup they love.”

By mid-December 2003, mark boasted more than 300 products and more than 20,000 Sales Representatives, according to Deborah Fine, president of Avon Future. “We have exceeded our Representative goals for the year and, in 2004, the skies the limit for mark,” Fine said.

While presently a U.S.-only brand, there are plans to roll out mark on an international basis in the future. “The business has been unanimously well-received,” said Fine. “We’re getting great support and are excited about the future.

“There are two main disciplines to mark’s success. First, we have passed the Avon baton to a whole new generation of women who now have an opportunity to earn financial independence. Second, the response to the mark products has been phenomenal.”

The most popular mark product so far is The Hook Up, a system that allows the consumer to decide which two products from an assortment of lip glosses, concealers, mascara, eyeliner and shimmer powders, to hook up to a central connector. There are more than 500 different combinations possible, according to Fine, who added, “At $5 an end, it’s a great value.”

The Glow Baby Glow lip glosses fit into mark’s Hook Up system.

The packaging for mark is very much about an attitude, according to Fine. “It’s clean, sophisticated,” with clever names such as Glow Baby Glow Hook Up Lip Gloss and On the Edge Hook Up Liquid Eyeliner.

Not only does mark provide an attractive alternative to traditional employment to young women in high school and college, but it also offers a way to earn college credits through the University of Phoenix by successfully completing a 12-part series of on online training courses.

A mark magalog (magazine+catalog=magalog), published every four weeks, is filled with color cosmetics, bath and body products and skin care, along with fun accessories and gift items. The website, www.meetmark.com, is a community base where customers can learn about mark and connect with Representatives 24 hours a day.

Globalization Changes Process
Today, “The biggest difference is that Avon has evolved into a truly global company with a mindset to share its resources around the world,” observed Susetka. “Seventy percent of Avon’s brands are global brands.”

Avon services its consumers on a regional basis: North America, Latin America, Europe and the Pacific. “An international company sells its products to a lot of different countries, but a global company actually shares its resources around the world to produce the best product at the best cost, Susetka explained. “We’ve made a lot of progress on a regional basis. In Europe now, most of Avon’s product is being made in Eastern Europe.”

The trend to choose sourcing from a global perspective started in some geographic areas about 10 years ago, but has been a focus for Avon for the past five years. “Technology, especially the ability to communicate via the Internet, has given us better tools to serve the customer,” noted Susetka.

Global Product Development
A key aspect of being global is that Avon brands have the same message around the world, noted Jill Scalamandre, group vice president, who added, “Before we launch a new product, we make sure it will translate into the various markets. We formulate a product, a lipstick for example, and then might change the assortment of colors according to each region.”

New Products Are Constant and Essential
Another key change at Avon in the 21st century is the critical importance of maintaining a stream of innovation from Avon to its consumers. “We are responsible for keeping that stream filled with exciting new products at different price points to serve all our customers,” Susetka stressed. “There is so much noise in the market and so many products on the shelves, that Avon must constantly offer its consumer unique, new products in every brochure.”

The entire Avon line, including all brands, totals more than 50,000 products. “There has to be a huge number of products, because in the U.S. alone, we ship 17 million brochures every two weeks—800 million globally—and every new brochure must have some totally new products as well as the core of products that stay in the line over time. About 40% of Avon’s volume each year comes from new product, because the channel demands excitement and newness. We have consumers who know what they want, but others are looking to find something new,” Susetka stated. Avon provides that newness. He added, “In the U.S., about 40% of all American women buy at least one Avon product a year.”

Wild Country has been a popular men’s fragrance for over 20 years.	HisStory is a recent men’s fragrance in contemporary packaging.

About two-thirds of Avon’s product line is beauty products and one-third is composed of non-beauty items, such as jewelry and accessories. Annual sales for all Avon products are approximately $7 billion. The beauty items are made up of almost equal parts: skin care, personal care, color and fragrance. Susetka explained, “We have a very balanced portfolio that is wide and deep. We go to where the opportunity is.”

While 40% of the line is new each year, there are old favorites, especially some fragrances that have been popular for a long time. Wild Country, a men’s fragrance, has been a staple for over 20 years. These constants in the line are kept current through updated design. Skin-So-Soft, for example, has evolved to its present packaging with refreshing—not a complete change—every three to five years. “We must keep the key elements for identification and still provide the newness,” said Scalamandre.

Package Development
Coming up with the packaging for all that product is a Herculean task. Marketing services, which maintains tracking on some 700 new products a year, across all Avon categories including health and wellness and mark, is very busy department, according to Kathy Kordowski, vice president global package development.

“From concept to catalog, it takes approximately one year for a custom package product, or, if we choose to use stock packaging, it can take as little as 12 weeks. Of course, certain innovative formulas can take years to develop and perfect,” Kordowski said.

Products are put on a schedule according to complexity, which allows the group to keep to a schedule. A new lipstick shade will not take the same amount of time as a new fragrance.

Packaging is a good place to adjust product costs for global distribution without changing the actual product, according to Kordowski. She explained, “When developing a product for different regions, it’s important to understand the costs involved and the various technologies available. We could take a fragrance and tailor some of the packaging—for example, eliminate some secondary packaging—to keep the costs in line for a particular region.”

Packaging Differentiates Products within Avon
Avon’s challenge in developing product and packaging is that it offers a wide variety of price points—mass to “masstige”—and all are Avon. “We serve a diverse group of consumers and strive to sell products that will appeal to them all,” stressed Scalamandre.

The first step to serving such a varied audience is to divide and define them by “lifestyles, interests, socio-economic backgrounds, cultural differences and target price points,” explained Patricia Demnisky-Green, director global package design.

For example, the Anew brand, a “masstige” line of advanced products that look and perform like upscale department store lines, is within the Avon skin care category.

Developed for a sophisticated consumer who is looking for products to fight signs of aging and willing to spend a bit more on skin care, Anew includes three sub-brands. A group packaged in luxury shades of pale aqua and white is for “minimal/moderate signs of aging,” another is packaged in gold for “advanced signs of aging,” and the new Anew Clinical, a line of targeted skin treatments that offer at-home alternatives to professional treatments, is presented in white and silver gray.

Also in the line of products, Avon Solutions is targeted to a younger, more mass-priced consumer. Solutions is a mid-tier line of skin care, including a broad range of quality treatment products packaged in quality containers that have a simpler, more straightforward look.

The third skin care group, Avon Basics, is a value-priced hand and body line presented in packaging that is very simple with a no-frills approach.

Anew Clinical, packaged in sophisticated gray and white, is the latest in Avon’s Anew line of skin treatment products.	Solutions, in tailored, quality packaging, is a mid-tier group of skin care products under the Avon brand.

Product Development Is a Team Effort
An important part of the transformation of Avon has been a continued upgrade of its product portfolio. In the Avon product line, fragrance is evolving. There are some favorites that have been in the line a long time and will be continued. But there is also a new direction that is reaching out for a new consumer, offering more sophisticated fragrances created with more essential oils and other prestige ingredients. These fragrances, such as Dreamlife and Treselle, are being packaged in more upscale bottles and cartons and cello-wrapped for a thoroughly prestige presentation.

Team Brief is a new strategy that is part of the Transformation program, explained Kordowski. It brings cross-functional staff together on a weekly basis to brainstorm new products. New ideas can come from a variety of sources: the market, the competition or a business need. The key is that the development becomes a collaborative, team approach. The meetings gather engineering and design staff with marketers and research and development specialists to suggest new products and then discuss the best way to turn a concept into a commercial product.

Kordowski noted, “We’re even inviting some suppliers into the team meetings to see if there might be interest in a new material or technology. It’s been very exciting and many of the concepts developed this way have been very successful. We can get input from the various global markets and give it to the team to work on. The team approach has also raised the level of satisfaction among the members as they now have a forum where they can discuss new ideas and solutions.”

The packaging for Advance Techniques, a new hair care line, was developed through the team approach. Kordowski said, “It’s a global formula and the packaging is the same around the world with the same silhouette. We were able to have one supplier with plants around the world make all the dispensers for Europe, North America, Latin America and Pacific. The plastic bottles were supplied by different manufacturers but all to the same specifications.

“We have eliminated “hand-offs,” added Kordowski, “those situations where one department did their part on a project and “handed it off” to the next department. The new process reduces the time line and gives everyone involved greater satisfaction and more interaction.”

Demnisky-Green added that in the Team Brief, all various needs are considered. “Design works with engineering and sourcing. We can decide whether it must be custom tooled or stock packaging,” she said.

Avon’s recent fragrances —(l-r) Dreamlife, Treselle and Goddess—feature prestige ingredients and packaging.

Regional Differences Considered
When products are sold literally around the world, regulatory and consumer preferences vary from market to market and must be considered. “It is a market-by-market process where differences are considered and resolved,” Susetka said.

Scalamandre added that in addition to government regulations that apply to information on labels and language changes, some ingredients that are accepted in one country are not permitted in another. “Even the use of child-proof closures varies and there are also cultural preferences. Europe might prefer a tottle for a product that the U.S. market wants in a bottle,” she explained.

“And it’s always critical to have a particular consumer in mind,” said Scalamandre. “In the brainstorming session, we will identify the target audience and make sure that the packaging will meet that target’s needs. Making the right choice stems from understanding what the consumer wants and needs. The package must be right. It brings the brand—Avon—to life. It’s what the consumer touches and sees, every time she uses the product.”

Deminsky-Green added, “For the designer, it’s important that we get a well thought-out concept. A great package needs a great concept.”

The Public Face of Avon Today Avon on 5th Avenue, New York. The Spa reception area is luxurious. While the vast majority of Avon customers connect with the company through the personal relationship of an Avon Representative, consumers can also meet the company at The Avon Salon & Spa on 5th Avenue at Trump Tower, New York, a bricks and mortar symbol of the new Avon. Sophisticated and modern, the retail store on the first floor has a decidedly prestige look. When Cosmetic Packaging & Design visited in early December, frosted, square columns flanked the entrance, supporting clear display cases that showed off a variety of Avon brands, augmented by lines created by the experts aligned with services offered at the location. Brad Johns, artistic director of Avon Salon & Spa, is a celebrity colorist who offers his expert services as well as his Colorsave hair care line of products. Eliza, the eyebrow expert, is waxing director/eyebrow designer at Avon Salon & Spa. To compliment the eyebrow services offered by Eliza and her assistants, Eliza’s Essentials, a range of eye color and accessories, are available in the store and salon. In the retail boutique, product display of Anew, beComing, mark and Planet Spa (from Avon’s Wellness division), is beautifully executed and customer service is luxe-like, while product prices are in keeping with Avon’s value tradition. Avon Salon & Spa opened in 1998, offering a full range of beauty services: hair cut and color, facials, manicures, pedicures, makeup, massage and body treatments, nutrition and yoga. The products used are from Avon with a few spa specific exceptions. Avon has no plans to expand its flagship concept to other cities and will continue to rely on the person-to-person direct sales model that has served it so well. “Our main strategy will continue to focus on our Representatives—to build and grow together, but there are different models in other regions,” noted Susetka. “In China, there are some 7000 beauty boutiques.”

Advanced Techniques is an example of Avon’s global sourcing.

Supply Chain Sourcing
Avon’s incredibly wide-spread distribution calls for large volumes. The entire Avon line, including all brands and mark, totals more than 50,000 products. The company has the expertise and clout to shop the sources of the world to find the best supplier and the best price for every component. The company sources all packaging components from outside manufacturers, but formulates and fills approximately 90% of its product, according to Kordowsky. “It’s the best way to get the best finished product. We invest heavily in product development and partner with the best suppliers for the best packaging result.”

Dawn LaHart, director global sourcing for North America, said that many promotional items are sourced overseas. “Efficiencies of scale come into play when we (North America) work with other regions to develop the global products. We have an especially close partnership with the Europe region and Mexico is growing as a source of components.”

Packaging for Skin-So-Soft has been refreshed several times.

Avon believes in evaluating as many suppliers as necessary to assure the best value, but has pared down the list through supplier rationalization, according to LaHart. “Fewer suppliers mean stronger relationships between Avon and the manufacturer. However, if we have chosen to work with a few suppliers in a category we will be certain there are not constraints on quality or innovation.”

LaHart and her team are constantly on the look out for that something special. She stressed, “We do a lot of researching and investigating,” she said. “We need suppliers that are quick to understand what Avon wants and can deliver what Avon needs.”

Package Testing
Because Avon sends its product to Sales Representatives, who deliver it or ship it direct to the consumer, every package must be tested to assure that it can handle the shipping process. “In package evaluation, we test for fit, function and transportation,” Kordowsky noted, “so that every product arrives in perfect condition. We have a protocol and testing equipment for all the various conditions a product may encounter in shipping.”

Naturals is a line of bath and body products.	Foot Works makes an at-home pedicure easy.

Avon in the Future
Susetka explained that Avon plans to continue to accelerate the growth of its core business through careful nurturing of the major drivers of its business. Avon will continue to provide constant innovation and excitement with a stream of new products. The company is investing in that future with a $100 million project in Suffern, NY, where a new research and development building is being constructed. It is slated to open in March or April 2005.

Avon will also continue to invest in its armies of Sales Representatives in terms of sales leadership programs, recruiting and training. “Supporting the Representative will always be our number one priority,” said Susetka.

And, Avon will also continue to seek out new segments to serve such as mark for a younger audience as well as new geographic expansion. “Right now there’s great opportunity for Avon to carry out its mission in countries such as China, Russia, Turkey and eventually India.”