Avon reborn, refocuses on younger generation

SANTA CRUZ — She’s no longer the woman of a certain age going door-to-door with her toiletries catalogs, wearing a pillbox hat, conservative ladies’ suit and sensible shoes.

Avon — the company we all remember for the Avon lady of yore — has come out in the past five years with innovative new product lines and lucrative incentives for its independent contractors.

Add that to a nurturing corporate culture, a gracious low profile, a long-standing tradition of outstanding customer service and an appealingly simple business model that lets representatives start their own businesses for an upfront cost of only $10, and you’ve got a sleeper hit of a company for a new era of entrepreneurial women.

Ding dong, indeed — Avon is calling.

The 117-year-old company, which faded somewhat from public consciousness in recent times, is now bursting from the gates and red hot. Its numbers and long history bear out its immensely good reputation among its clients and contractors.

A Fortune 500 company and the world’s largest manufacturer of mass-market women’s fragrances and bath products, Avon has been profitable every quarter since 1998. It is the world’s leading direct seller of beauty and related products, with sales of $6.2 billion worldwide. Its products are sold in 143 countries through 3.9 million sales representatives, nearly 600,000 of whom are in the United States.

Hitting the mark.
In recent times, the company has taken steps to modernize its image, with trendy lines like wellness products and aromatherapy, early Web sales and hip products — including a new line called mark., featuring blue liquid eyeliner and hot-pink lip gloss in funky packaging — aimed at 16- to 24-year-old young women.

So far, the reception has been strong, company officials said, but the challenge is whether the strategy will be compelling enough to woo young women away from other brands in a very competitive business.

Some marketing experts believe Avon’s timing is right.

"You would have never thought of the Avon lady as cool. But for the teen community, the sense of gals marketing to other gals — this whole tribal marketing — is very timely at the moment," said Wendy Liebmann, president of WSL Strategic Retail, a consulting firm.

Avon periodically has offered beauty items for teens, but this is the first time it has developed a specific brand for this age group. The company is counting on its network of 550,000 active U.S. Avon representatives to recruit their teenage daughters and other young women expected to do most of the selling of the 300 products.

Deborah Fine, president of Avon Future, a new division that serves as the umbrella for mark., projects that the line will generate $100 million in sales in 2004, the first full year of the launch of mark. is slated to roll out overseas in late 2004.

Less than five years ago, the Santa Cruz County sales district, which encompasses Santa Cruz, Capitola, Aptos, Watsonville, Castroville and Scotts Valley, had 169 representatives. Today, that number has ballooned to 416 and growing.

Avon’s success has translated into personal success for Jean Morrison, a single mother of two and a local "Avon lady."

Three years ago, Morrison quit her job working in payroll for the Soquel School District to become a full-time Avon representative.

"We grew up with the Avon lady coming by every other week, but I hadn’t really thought about it in a long time," said Morrison. "About three-and-a-half years ago, I just wanted some VitaMoist lotion. But I couldn’t find an Avon lady to save my life."

A career is born
She called the company’s 800 number and ended up dabbling in sales for awhile. Then, after beginning to attend the meetings regularly and working for a short time in the corporate office, she began to see how enormously profitable being an Avon representative could be, without the rigidity of a typical office job.

"Avon’s CEO, Andrea Jung, is just with it. She knows what the women of today need," said Morrison. "She’s made it easy for people like me — a single mom — to be able to have a great career without being stuck in an office 8-5 when I really want to be doing something else."

Morrison built her own business as an independent contractor for Avon and has become one of the district’s No. 1 representatives. She profits from her sales, but she also cashes in on one of the company’s incentives, a leadership program that pays her whenever she signs up new representative recruits and mentors them. She makes a percentage of the new recruits’ sales, taken from Avon’s portion of the profits.

Morrison has been responsible for bringing in about one-quarter of the district’s representatives. She credits from the people she signs up as well as the people those people sign up.

"The system is not a pyramid," said Melissa Neumann, district sales manager for Santa Cruz County. "It’s basically paid coaching. People can do leadership, and it’s encouraged, but if you don’t want anything to do with it, Avon will still give you a reward for signing someone up, and the district manager will do the work."

Programs like this can make being an independent contractor for Avon extremely lucrative.

"There are several representatives around the United States that make more than $300,000 a year," said Neumann. "And that’s just the leadership portion of their Avon income — that doesn’t include their sales."

Not everyone wants to build a business empire with Avon. The company recognizes that there are as many reasons for selling its products as there are representatives. There are even some male representatives — what Avon media relations manager Stephanie DuPre calls "Avon lads."

Some people join simply to get Avon products for themselves, and never sell a thing. Avon doesn’t mind — it has no quotas, no shipping fee, no minimum order and everything is guaranteed.

"In a room full of 100 women, some would join just to get their own products," said Neumann. "Some would want to build big businesses. Some just want extra money and some want to support their families."

For Morrison, teaming up with Avon has brought personal rewards as well as financial ones.

"I’ve got a lot of my own time and freedom," she said. "And in the future I’m going to have a lot more opportunity to do a lot of things, like travel. The leadership program is going to put my kids through college."

Teen marketing
Teens are everywhere in the new Avon.

The company aims to take teenage business away from mass merchandisers, department store chains and smaller retailers. The big chains in particular have been pursuing the teen customer with trendier beauty items — Wal-Mart Stores Inc., for example, has brought out a Mary-Kate and Ashley cosmetics line, named after the teenage TV celebrity Olsen twins.

While Avon’s representatives sell cosmetics at their home or where they work, these mark. representatives are selling through more informal settings: slumber parties, sororities and campus events.

"This is a portable retail environment that fits seamlessly into the way young women live and shop today," Fine said.

Avon’s launch of mark. is the company’s latest attempt to reach out to new customers. The company made an unsuccessful try at retailing with a line of beauty products called beComing, sold in J.C. Penney Co. Inc. and Sears, Roebuck and Co. stores. Last year, Sears dropped out, followed by Penney’s in January — both cited their overall strategy to exit from cosmetics.

To recruit sales people and to pitch products, Avon is printing 13 million to 16 million new editions of its mark. "magalog" every four to six weeks that representatives pass out in malls and other venues. The magalog is a blend of magazine content and a catalog.

Fine said Avon hopes to give young women an opportunity to run their own business and become successful. She said she’s confident the commission structure is lucrative enough to attract teens.

Sellers can earn 40 percent sales commission for beauty products and 25 percent on fashion accessories. Opportunities to earn college credit are also available.

So who is today’s Avon lady?

"The Avon lady today is everybody," said Morrison. "It’s the soccer mom, the football mom, the corporate CEO. She’s versatile, she’s with the times, she’s busy. And I tend to think that she’s happier than a lot of people, because she gets to do what she wants to do, when she wants to do it."

The Associated Press contributed to this report.

Contact Gwendolyn Mickelson at jcopeland@santacruzsentinel.com.

Avon Products Inc.
WHAT: World’s largest direct seller and sixth largest global beauty company.

INFORMATION: www.avon.com; Jean Morrison: avonjean4U@aol.com.

INTERESTING FACTS: Avon has been profitable every quarter since 1998. Its products are sold in 143 countries through 3.9 million sales representatives, nearly 600,000 of whom are in the United States.

FINANCIALS: Stock ticker: NYSE: AVP; annual sales revenues: Approximately $6 billion; recent quarter performance: Reported earnings per share in third quarter 2003 of $.56, exceeding the high end of the company’s earlier guidance GUIDANCE: Raised its earnings expectation for full-year 2003 to $2.65 - $2.70 per share, up from earlier guidance of $2.60 - $2.65 per share.

ABOUT MARK.: New line of products aimed at 16-24-year-olds. The line, which can be purchased by dialing (800) meetmark, or through the Web site www.meetmark.com, includes different varieties of lip gloss, eye shadow, nail polish, fragrance and accessories. mark. products range from $5 lip gloss to $25 for 30 milliliters of a fragrance called Garden Blu fragrance. Accessories include $15 denim hats and a $30 patchwork denim bags. To start selling, women can sign up through the Web site or through the toll free number.