2. Price is not a major concern for the consumers as they don’t want to compromise with their skin, and looks. So, the Avon products are always in demand due to their high quality and competitive price. (FIGURE A) Marketing plays an important role in changing consumer preferences. According to Avon’s annual report, they had decreased their advertising budget by 3%. However, it can be justified by their increased IT budget, as more and more consumers are preferring e-commerce.

3. Income: As the income changes, customers move to a different quality/brand. This also tends to shift the demand. Example of this is growing demand of Avon products in India and China where the income of people has grown over the past decade. This growth is well reflected in Avon’s third quarter report for 2008 which has shown 6% increase in revenue in Asia pacific and 25% increase in China. Contrarily, the revenues had fallen in the US by 9.2% during 2008-2009, peak period of economic downturn. This also shows that Avon revenue is also hit if the unemployment rate goes high as in that case, the income would go down.

4. Substitutes available in market: Although there is a medium threat from the substitutes, however still the threat is there. For example, instead of buying cosmetics from Avon, consumers could buy organic beauty products because they will get the same service but in a natural way. Avon being at number 5, faces a tough competition by other companies in skin care industry.(FIGURE B)

5. Technology: Avon sales increased in 2008 since they started online shopping. Avon has continued to enhance their e-commerce options in 2009 by increasing IT budget by 3%.

7. It reduces the cost of opening retail stores.

9. Recent cost cuttings

10. Wide global coverage and presenceThe biggest announcement by Avon about their future plans is to open a state-of-the-art regional Research and Development center in Shanghai in the People's Republic of China. The new regional R&D center in Shanghai will be Avon's largest R&D facility outside of the U.S. Located in the Jinqiao Hi-Tech Park, the stand-alone 40,000 sq.-ft building will span six floors and have additional capacity to expand Avon's overall scientific capabilities in China and Asia. <br />Avon said that the new regional R&D center will house scientific experts in the areas of product development, safety and quality testing, microbiology, chemical engineering and consumer research. In addition, the new center will enable Avon to grow and leverage its R&D alliances in China as well as hire and retain world-class scientists. The center is expected to open in late 2010. <br />Avon said that the new R&D center will primarily serve China but also support other markets in the Asia Pacific region, while reporting directly to the Global R&D Center located in Suffern, N.Y., (near New York City).<br />Avon's Chairman and Chief Executive Officer, Andrea Jung, said, quot;
We're delighted to be opening our new R&D center in Shanghai. This reflects our continuing commitment to the China market, which remains a significant long-term growth opportunity.<br />Last three months for Avon<br />Last three months for Avon brought some good and some bad news. While dealing with the downturn of the economy, Avon managed to acquire another company, thus making its product line even stronger. On March 25th 2010, Avon announced its acquisition of Liz Earle Beauty Co. Limited, a fast-growing, privately-held brand of naturally active skincare products sold primarily through direct-to-consumer channels. The U.K. brand will become part of Avon's global skincare portfolio, broadening Avon's leadership position in anti-aging skincare with Liz Earle's expertise in botanical ingredients and natural positioning.<br />Secondly, on February 4, 2010, Avon Products, Inc. announced that, effective with the beginning of its 2010 fiscal year, Avon will account for Venezuela as a highly inflationary economy. Effective January 11, 2010 the Venezuelan government devalued its currency and moved to a two-tier exchange structure. The official exchange rate moved from 2.15 to 2.60 for essential goods and to 4.30 for non-essential goods and services. Although no official rules have yet been issued, most of Avon’s imports are expected to fall into the non-essential classification. As a result of the change in the official rate to 4.30, revenue and operating profit for Avon’s Venezuela operations will be negatively impacted by $85 million when translated into dollars at the new official exchange rate. performance<br />The company is worth of $6.8 billion and there has been 12.5% increase in company’s total assets. Because of Avon’s strategies, Avon has been able to survive in economic downturn successfully. The reason behind this is their vast geographical presence and cost reduction by restructuring and investing more in recruitments of sales representative, which lead to sales growth. To compensate the losses incurred in this period, Avon has already announced a long term investment in Chinese market, showing their understanding of the market trends and economical changes.<br />Conclusion<br />Avon is one of the oldest and leading cosmetic companies. It has maintained high standards of quality since 1886, and with their direct door to door selling strategy, they are able to maintain their revenues. Although the current economic crisis is clearly visible in their annual report, but still a new ray of hope is there with increased sales in Asian countries. The biggest reason of ever growing popularity of Avon products is their availability, thanks to door to door sales strategy. In my opinion, looking at the current financial crisis, Avon should look into their inventory and make sure the production is in sync with the current market demand as investing in production during inflation period and economic crisis can cause them losses in future. At last, no matter how diversified the Avon is in the product range, it has clearly made a mark in a modern woman’s day to day life, and as quoted by Andrea Jung, CEO of Avon products inc, “Avon is a true force for good, improving, and changing the lives of others as we continue to fulfill our vision as the company for the women.”<br />