【正文】 al products. ? Production All the Avon beauty products are produced by Avon Manufacturing (Guangzhou) Co., Ltd。 Some Avon products are sold through the special counters in the department stores and supermarkets。 (To be continued) PwC 5 Executive Summary ? Main Promotion Methods: AVON Up2U Membership Sales Sales+Gift Beauty Center POP Show Sales+Gift Discount/Coupon。 bodycare 49 64 98 Fragrance amp。 ? Distribution All products are sold through Beijing Sanlu Factory。 Now it has 28 offices mostly located in the capital cities of the provinces in the country。 Establishment Product amp。 Establishment Product amp。 ? Effectively implement Avon’s strategies。 ? Develop worldclass talents and skills。 ? Plan to improve the management and control to the franchise shops。 Flagship Shops ? Open more than 10 flagship shops in the mid to large cities。 bodycare 12% Fragrance /Ladycare etc. 5% * Operating Revenue = Retail sales/(1+VAT)/(1+trading margin)。 bodycare Operating Revenue 1999 to 20xx Value: RMB Million 49 64 98 ? Revenue of bath amp。 * Up2U launched in Nov, 20xx and the revenue of the last two months in 20xx was nearly RMB 7 million. PwC 23 Market and Products ? Marketing Promotion Avon Group Source： Industry interview PwC analysis ? Newspaper and magazines? advertisement accounted for over 90% of the total newspaper, magazine and outdoor advertisement expenditures in 20xx。 Newspapers, Magazines, Outdoors etc. 65% TV, Radio etc. 35% Total Advertisement Expenditure ? Totaled nearly RMB 90 to 100 million in 20xx*。 ? Most expenditures are on the TV advertisement。 Nearly 20%25% of the figure was the expenditure which was paid in 20xx but the advertisement will be carried out actually in 20xx。 ? Free trial new products (for test only)。 ? Beauty classes and parties, etc。 ? Distributor management ? Plan and anize promotional activities。 ? Plan to set up more offices in the small to mid size cities in order to develop new potential market。 Source： Industry interview PwC analysis Franchise shop* 30% Cash on delivery (provide loan after three month) 1%4% * The details can be found in the later ?Franchise Shop System? part. ? Must buy the products from Avon local offices。 ? Up2U, launched in November 20xx, was pletely sold through the special counters in the department stores and supermarkets。 ? A small part of Avon products were sold through other channels such as the beauty salons etc. Miscellaneous 5%10% PwC 34 Distribution Channel Source： Industry interview PwC analysis ? Franchise Shop System – Avon Group Franchise Shop Owner Common Procedures Avon Offices Shop Space Human Resources Main Regulation ? Not allowed to sell other brand products, but the accessory products used in the beauty salon are allowed。 ? The area is larger than 30 。 ? Proper business licenses and other necessary licenses。 bodycare。 ? Jewelry。 Commercial Administration Bureau PwC analysis Avon Product (China) Co., Ltd* B A L A N C E S H E ETA S A T 31 D EC EMB ER 1 99 9 In R m b YuanAS S E T S 1999 1998CU RR E NT AS S E T SCa s h 564 , 905 . 30 130 , 709 . 70Ca s h i n ba n k 113 , 223 , 560 .35 107 , 737 , 359 .09A c c ou nt s r e c eiv a。 Bodycare Fragrance Ladycare Avon has many categories and series of products: Products CLEAWHITE, AVON SUN, NINGBAI* series XINXUAN* series XIANTILU* series WOMEN OF EARTH, INCANDESSENCE, LITTLE BLACK DRESS series LADYCARE series * Direct Chinese translation PwC 41 ? Product Life Phase – Avon Group Source： Industry interview PwC analysis Main Types Short Long Products Replacement Period Common Replacement Period: to 2 years Improve the products without changing the names Add similar new products (nearly same functions) in some series with new names Create pletely new product series to expand the product category Add new types of products (new functions) in some series with new names As the largest category of Avon, facialcare often launches more and faster than any other categories SWOT Analysis and Comments PwC 42 Source： Industry interview PwC analysis ? SWOT – Avon Group Product ? Good brand image and stable customer base ? Long product lines in beauty products Distribution ? Nationwide distribution works covering the small to large 77 cities all over China ? Nearly 4,800 franchise shops to market Avon products Company ? Good pany culture and value theory ? Lots of focus on improving the manpower Strength Weakness Product ? Lack of a “star” product category ? Lack of multiple brands other than Avon and Up2U。 ? Other beauty products。 ? Makeup。 ? The place should be more than 500 meters far away from another shop。 Conditions for opening franchise shop Provide consulting and help go through all the steps Avon is not the employer of the franchise shop owner, but has a cooperative business relationship Remend and approve the possible places Help train the shop owner and staffs Checking by field visit or telephone Other responsibilities: Monitor and evaluate shops? sales performance and order monthly ? Staff are employed by the shop owner。 Distributors / Counters 20% PwC 33 Avon Products Distribution Channel ? Current Distribution Channel – Avon Group Avon Manufacturing Avon China 79 Offices in 77 cities Distributors Counters Consumer Franchise Shops/counters Miscellaneous Source： Public information from Avon Industry interview PwC analysis ? Avon ha