Number
42
Avon Products Inc.
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"Avon calling!”
Few corporate slogans are more recognizable than this cheerful doorstep greeting (which always has demanded an exclamation point). It still defines the company standing behind it. Avon, after all, initially made its mark by peddling beauty products and related items door-todoor across 19th century America. And while changing times and tastes have wrought significant changes, its core tenets and basic strategies remain intact. Some 2.3 million sales representatives ring doorbells for Avon today…but they do it now in offices and factories as well as in homes.
The company’s impact, however, has really been determined by who these people are—rather than how or where they work. For Avon, unlike nearly all its corporate peers, has been a women’s company from the beginning. More than three decades before they were given the right to vote, Avon provided American women with one of their first real chances for economic independence. Some 40 million (25 million in the United States alone) have since accepted the offer. Many have also taken the opportunity to climb Avon’s gender-blind corporate ladder. Today, women fill 86 percent of its managerial slots (more, the company says, than any other entry in the Fortune 500), as well as 32 percent of all officer’s positions.
There’s more. In conjunction with the U.S. Small Business Administration, Avon’s Women of Enterprise Awards have recognized five notable female entrepreneurs each year since 1987. Among athletic initiatives, it sponsored the Olympic Woman Exhibition at the 1996 summer games to provide an all-too-rare look at a century of sporting achievement. And since the early 1990s, it has focused on the health concerns of its primary employee and customer base, implementing the Avon Breast Cancer Awareness Crusade (which has raised $25 million to support education and access to early detection services) and the Avon Worldwide Fund for Women’s Health (amassing over $45 million for numerous related global issues).
This is, as Fortune magazine declared, “not your mother’s Avon.” By all accounts, though, your mom would still recognize it. And your daughter would still find its door wide open.
Avon got its start in 1886, when traveling salesman David McConnell sought something new to sell door-to-door. He wanted a product that people would use quickly and replace, and perfume seemed the perfect pitch. He concocted a couple of corresponding batches in his New York pantry, put them together as the Little Dot Perfume Set, adopted the exotic-sounding California Perfume Company moniker, and hit the road. It quickly became apparent that McConnell had guessed correctly. Sales were strong from the outset and he soon strengthened his line with balm, shampoo, cream, and even something called tooth tablets.
To satisfy demand, McConnell increasingly found himself at home developing new products. This kept him off the sales circuit, so he hired Mrs. P. F. E. Albee of Winchester, N.H., to handle distribution. Mrs. Albee, who exhibited an obvious flair for her job, thus became the first Avon lady. But she didn’t handle the merchandising tasks alone for long: By the turn of the century, her skills and McConnell’s talents had grown the business to a point where it required a sales force of 5,000. Around the time, it first began articulating a policy of honesty and fairness toward workers and the public. This would indelibly shape its behavior far beyond the McConnellAlbee era.
In combination, everything clicked. An increasingly receptive audience eagerly snapped up new fragrances—such as American Ideal in 1907, Jardin d’Amour in 1926, and Topaz in 1935—as soon as they were introduced. Their appeal was bolstered by the allure of the legions of genial doorbell-ringing salespeople, who always arrived with a friendly smile and an enticing brochure filled with affordable luxuries. Their low-key but sincere approach was driven by the “Avon spirit” generated in New York, where everyone at headquarters remained on a first-name basis. As much as anything, this helped create an organization that has been repeatedly praised for its warmth and generosity toward employees, customers, and outside causes. In 1939, the company name was changed to Avon. Because the “personalinvolvement” sales methods it championed still proved remarkably effective, little else was altered.
When a high school graduate named Dave Mitchell interviewed a few years after the name change, for a position at a distribution branch in Pasadena, Calif., he liked what he saw. Mitchell accepted a job as a $35-a-week mail-room clerk even though he had been offered more elsewhere, and quickly developed a passion for the company. On his own he learned as much about management as he could. He moved into production control, and then manufacturing. He also rang doorbells in several New England states before winding up at headquarters. In 1977, he assumed the company’s top position and immediately began preparing for its future.
Mitchell took control of a sales force that numbered 1.3 million, all but about 5,000 of whom were women. In 1979, he broadened the source of profits they could bring in by purchasing the world-famous jeweler Tiffany and Company, which he vowed to run as a separate enterprise. There was some initial doubt about how effectively this could be done, but Mitchell based his diversification strategies on the earlier launch of Avon Fashions. Sales there were handled through mail-order catalogs rather than door-to-door salespeople, and it worked. Avon soon used the same model to introduce men’s and children’s clothing. Inspired perhaps by the Tiffany acquisition, it also beefed up jewelry selections. And it even entered the healthcare market, purchasing a firm that made medical and diagnostic products.
Mitchell understood that the needs and aspirations of his customers were changing, and he knew that his salespeople were going through a similar metamorphosis. He increased internal employment opportunities for them in hopes of keeping their commitments strong, and predicted that the moves would eventually propel a woman to the company’s top spot. He also initiated a variety of external programs such as the Avon International Running Circuit—which some say drove the International Olympic Committee to add a women’s marathon to the quadrennial competition in 1984—and pledged $500,000 to the Memorial Sloan-Kettering Cancer Center for research on cancers of the female reproductive organs.
Mitchell moved upstairs to the board of directors a few months before that first women’s Olympic marathon was run in Los Angeles, but his successors tried to hold the course he had set. In 1985, the company placed electronic sales terminals in 15 shopping malls around the country to reach working women who were no longer at home when the Avon lady called. Within a few years, though, it was apparent that such strategies were insufficient to stem the evolving tides. Door-to-door sales were becoming an anachronism. The healthcare line failed and was jettisoned. CEOs quickly came and went, and by 1988 Avon’s stock had tanked. Takeover rumors surfaced on a regular basis.
Notably, Avon never lessened it support of progressive programs and policies. In 1989, for instance, it became the first major U.S. cosmetics company to announce a permanent end to animal testing. In 1992, it activated the Worldwide Fund for Women’s Health. And the very next year, it created the Breast Cancer Awareness Crusade. The company tried a few product twists as well. They contracted with Elizabeth Taylor to design an exclusive line of costume jewelry. The eight pieces, which sold for $50 to $250, were either replicas of her own jewelry or inspired by her movie “Cleopatra.” However, they weren’t enough to pull Avon out of its deepening corporate funk.
Perhaps the most significant step in the company’s resurgence was taken in 1994, when Andrea Jung left the upscale world of Neiman Marcus to join Avon. Four years later, promoted to second-in-command, she began seriously tinkering with many of the century-old ideas about Avon product lines—and how they should be merchandised. One result was a broadening of the mix to include items, such as home furnishings. Retail stores were also opened, as was a Manhattan day spa called The Avon Centre, which offered trendy treatments (such as a Deep Sea Mud Body Wrap for $125) and ritzy specialists (such as an “eyebrow expert” who only accepted bookings months in advance). As writer Bethany McLean noted in Forbes, the place was still “friendly and unpretentious, as befits the legacy of the Avon Lady.” And a Web site, in addition to a toll-free telephone line, were established for those who wanted to shop on their own. (“If you think about it,” Jung told Money magazine, “the Internet is direct selling, and that is what we invented 114 years ago.”)
The company’s globalization efforts continued as well. By the end of 1999, when the company’s first worldwide advertising campaign was inaugurated, Avon was operating in approximately 130 countries—from China to Canada to the Czech Republic. Some 600 million sales brochures were printed in over a dozen languages each year, and more than twice the revenue generated inside the United States was now generated outside of it.
And then, less than two months before the end of the 20th century, Jung was named the first female CEO in Avon’s history. She immediately implemented major cost-cutting initiatives, activated an ambitious growth plan, and proposed a variety of innovative retailing efforts. Avon has announced it will start selling products through JC Penney and Sears stores during the second half of 2001. The stores will be selling a new makeup and skincare line (called Becoming), which shouldn’t directly cannibalize the sales of other products through their independent reps. Analysts estimate the venture could generate revenues of $300 million by 2005. Jung knew Avon still had much to do to achieve a healthy bottom line. But it quickly became apparent to observers that the legendary Avon lady—along with her cheerful doorstep greeting—would not be disappearing any time soon.