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Avon Products Case Study Solution
Avon Products Case Study Help
Avon Products Case Study Analysis
The following section focuses on the of marketing for Avon Products where the business's customers, rivals and core competencies have examined in order to validate whether the decision to introduce Case Study Help under Avon Products brand name would be a feasible option or not. We have actually firstly taken a look at the kind of clients that Avon Products deals in while an examination of the competitive environment and the business's weaknesses and strengths follows. Embedded in the 3C analysis is the reason for not releasing Case Study Help under Avon Products name.
Avon Products customers can be segmented into two groups, final consumers and industrial consumers. Both the groups use Avon Products high performance adhesives while the company is not only associated with the production of these adhesives however likewise markets them to these client groups. There are 2 types of items that are being offered to these prospective markets; instantaneous adhesives and anaerobic adhesives. We would be focusing on the customers of instant adhesives for this analysis since the market for the latter has a lower potential for Avon Products compared to that of instantaneous adhesives.
The total market for instant adhesives is around 890,000 in the US in 1978 which covers both consumer groups which have actually been identified earlier.If we look at a breakdown of Avon Products possible market or client groups, we can see that the business sells to OEMs (Original Equipment Producers), Do-it-Yourself consumers, repair and revamping companies (MRO) and makers dealing in items made of leather, wood, plastic and metal. This variety in consumers recommends that Avon Products can target has different alternatives in terms of segmenting the market for its new item specifically as each of these groups would be requiring the same kind of item with respective modifications in need, amount or product packaging. Nevertheless, the consumer is not rate sensitive or brand name mindful so launching a low priced dispenser under Avon Products name is not an advised alternative.
Avon Products is not just a maker of adhesives but enjoys market leadership in the instantaneous adhesive market. The business has its own experienced and certified sales force which adds worth to sales by training the company's network of 250 suppliers for assisting in the sale of adhesives. Avon Products believes in unique circulation as shown by the truth that it has selected to sell through 250 distributors whereas there is t a network of 10000 distributors that can be checked out for broadening reach via distributors. The business's reach is not limited to The United States and Canada only as it also takes pleasure in international sales. With 1400 outlets spread out all throughout The United States and Canada, Avon Products has its internal production plants instead of using out-sourcing as the preferred strategy.
Core proficiencies are not limited to adhesive manufacturing only as Avon Products likewise concentrates on making adhesive giving equipment to assist in the use of its products. This double production strategy provides Avon Products an edge over rivals since none of the rivals of giving equipment makes instantaneous adhesives. In addition, none of these rivals offers straight to the customer either and utilizes distributors for connecting to consumers. While we are looking at the strengths of Avon Products, it is crucial to highlight the business's weak points.
Although the company's sales personnel is knowledgeable in training distributors, the fact remains that the sales group is not trained in offering equipment so there is a possibility of relying heavily on distributors when promoting adhesive devices. Nevertheless, it needs to likewise be noted that the distributors are revealing unwillingness when it pertains to offering equipment that requires servicing which increases the challenges of selling devices under a specific brand.
If we look at Avon Products line of product in adhesive equipment especially, the business has products focused on the high end of the marketplace. If Avon Products offers Case Study Help under the same portfolio, the possibility of sales cannibalization exists. Given the reality that Case Study Help is priced lower than Avon Products high-end line of product, sales cannibalization would definitely be affecting Avon Products sales earnings if the adhesive equipment is sold under the business's trademark name.
We can see sales cannibalization impacting Avon Products 27A Pencil Applicator which is priced at $275. If Case Study Help is launched under the business's brand name, there is another possible risk which might decrease Avon Products income. The truth that $175000 has been spent in promoting SuperBonder suggests that it is not a great time for introducing a dispenser which can highlight the reality that SuperBonder can get logged and Case Study Help is the anti-clogging solution for the instantaneous adhesive.
Furthermore, if we take a look at the market in general, the adhesives market does disappoint brand name orientation or price awareness which gives us 2 additional reasons for not introducing a low priced item under the company's brand.
The competitive environment of Avon Products would be studied through Porter's five forces analysis which would highlight the degree of rivalry in the market.
Bargaining Power of Buyer: The Bargaining power of the buyer in this industry is low especially as the buyer has low understanding about the product. While companies like Avon Products have managed to train distributors concerning adhesives, the last customer is dependent on suppliers. Around 72% of sales are made directly by manufacturers and suppliers for instant adhesives so the purchaser has a low bargaining power.
Bargaining Power of Supplier: Offered the fact that the adhesive market is controlled by three gamers, it could be said that the supplier delights in a higher bargaining power compared to the buyer. The truth stays that the provider does not have much influence over the purchaser at this point particularly as the purchaser does not reveal brand acknowledgment or price level of sensitivity. When it comes to the adhesive market while the purchaser and the manufacturer do not have a major control over the actual sales, this shows that the supplier has the higher power.
Threat of new entrants: The competitive environment with its low brand loyalty and the ease of entry revealed by foreign Japanese competitors in the immediate adhesive market suggests that the marketplace enables ease of entry. If we look at Avon Products in particular, the business has double capabilities in terms of being a manufacturer of adhesive dispensers and instant adhesives. Prospective threats in devices dispensing market are low which shows the possibility of producing brand awareness in not only instantaneous adhesives however also in giving adhesives as none of the industry gamers has handled to position itself in double abilities.
Risk of Substitutes: The risk of replacements in the instantaneous adhesive industry is low while the dispenser market in particular has replacements like Glumetic idea applicators, inbuilt applicators, pencil applicators and advanced consoles. The fact remains that if Avon Products presented Case Study Help, it would be indulging in sales cannibalization for its own items. (see appendix 1 for structure).
Despite the fact that our 3C analysis has actually given different reasons for not releasing Case Study Help under Avon Products name, we have actually a suggested marketing mix for Case Study Help offered listed below if Avon Products decides to go on with the launch.
Product & Target Market: The target market picked for Case Study Help is 'Motor car services' for a number of reasons. This market has an additional development capacity of 10.1% which might be an excellent enough specific niche market sector for Case Study Help. Not just would a portable dispenser offer convenience to this particular market, the fact that the Diy market can also be targeted if a safe and clean low priced adhesive is being sold for usage with SuperBonder.
Price: The suggested rate of Case Study Help has been kept at $175 to the end user whether it is offered through distributors or by means of direct selling. A cost listed below $250 would not require approvals from the senior management in case a mechanic at a motor lorry maintenance shop requires to buy the item on his own.
Avon Products would just be getting $157 per unit as displayed in appendix 2 which gives a breakdown of gross profitability and net success for Avon Products for releasing Case Study Help.
Place: A distribution model where Avon Products directly sends out the item to the regional distributor and keeps a 10% drop delivery allowance for the supplier would be used by Avon Products. Considering that the sales team is already participated in offering instantaneous adhesives and they do not have competence in offering dispensers, involving them in the selling process would be pricey particularly as each sales call costs approximately $120. The distributors are currently offering dispensers so selling Case Study Help through them would be a beneficial alternative.
Promotion: Although a low advertising budget plan ought to have been assigned to Case Study Help however the reality that the dispenser is a development and it requires to be marketed well in order to cover the capital expenses incurred for production, the suggested advertising plan costing $51816 is suggested for at first introducing the item in the market. The prepared ads in magazines would be targeted at mechanics in automobile maintenance shops. (Suggested text for the advertisement is displayed in appendix 3 while the 4Ps are summarized in appendix 4).
