【正文】 ore than 70 cities in China with a focus on Beijing, Shanghai and Guangzhou。 ? Avon used most of the TV advertisement for the new brand Up2U in 20xx。 PwC 24 Market and Products ? Marketing Promotion Avon Group Source： Industry interview PwC analysis Currently AVON brand and Up2U use the similar promotion approaches, but the emphasis is different : Activities Membership Sales Beauty Lecture Free Nursing/Hairdressing Beauty Center* Sales + Gift Discount/Coupon AVON POP Show Up2U Most often used approach Less frequently used * The beauty center of Avon means the center in the large franchise shops and counters. PwC 25 Market and Products ? Marketing Promotion Avon Group Source： Industry interview PwC analysis Avon Member Club To join ? Submit application forms to the Avon offices, franchise shops, counters, salespersons or via inter directly。 ? Birthday gift products ? Exclusive plan to get coupons or bonus products when making purchases。 PwC 26 II. Avon Group i: Target Overview ii: Market and Products iii: Distribution Channel iv: SWOT Analysis and Comments iv: Financial Analysis PwC 27 Avon Products Distribution Channel ? Current Distribution Channel – Avon Group Avon Manufacturing Avon China 79 Offices in 77 cities Distributors Counters Consumer Franchise Shops/counters Main responsibilities of the offices are: ? Help set up franchise shops。 ? Product ordering and logistics。 ：Headquarter: Chengdu Province: Shanxi Sichuan Chongqing Hubei Qinghai Ningxia Xinjiang West Headquarter: Guangzhou Province: Guangdong Fujian Yunnan Guangxi Hainan South Headquarter: Beijing Province: Heilongjiang Tianjin Shandong Liaoning Shanxi Jilin North * The list of offices can be found in the appendix. PwC 29 Distribution Channel ? Terms with Distributors – Avon Group Distributors (counters in department store and supermarket) Other Policies Credit Term Trading Margin Cash on delivery (15 days after goods arrive to the key distributors) Basic Discount 30%35% None ? Not allowed to buy the products from outside the area。 ? Not allowed to sell any other brand products。 ? The number of Up2U counters was over 200 in nearly 30 cities in China till 20xx and will continue to grow from 20xx。 ? Not allowed to pete with the adjacent shops intentionally。 ? The place can be purchased or rented by the shop owner。 PwC 35 Distribution Channel Source： Industry interview PwC analysis Common Franchise Shop* ? Franchise Shop System – Avon Group Products to be sold All the Avon?s beauty products excluding Up2U products: ? Facialcare。 ? Fragrance。 ‘MEI LI JIA’ Franchise Shop + Total capital needed on the left + All the products on the left * The capital needed for the franchise shop will be different in different cities. Avon Special Counter Decoration Cost Staff Salary(per month) Place rent(per month) Equipment deposit Daily Expenses Relative Equipment Total Avon Special Underwear Counter Total RMB 13,000 –18,000 RMB 5,000 8,000 RMB 3,000 6,000 RMB 3,000 RMB 4,000 7,000 RMB 3,000 RMB 5,000 20,000 RMB 48,00083,000 RMB 1,800 RMB 49,80084,800 RMB 48,00083,000 Assumption: 1. 30 , working area 2. 47 staff for a franchise shop 3. RMB 1,000 /staff/month 4. Equipment such as the beauty equipment and puter etc. Goods RMB 12,000 20,000 Fixed cost when opening a franchise shop. PwC 36 Distribution Channel Source： Industry interview PwC analysis ? Franchise Shop System – Avon Group When open During the operation Franchise shop profit Common Discount 72% “onetime” discount to purchase a package including each of Avon?s beauty products 30% discount to purchase Avon’s products ? 1%4% additional discount if the shop purchases over RMB 20,000 per month ? Varying special discounts by season ? Gifts when purchasing ? Special award to the outstanding shops The actual profit for the franchise shop is nearly 35%50% given all the discounts Special Discount PwC 37 Distribution Channel Source： Industry interview PwC analysis ? Franchise Shop System – Avon Group When open During the operation Franchise shop Credit terms Common Terms Cash on delivery (COD) ? Special loan will be provided by Avon after three months ? The Avon offices will decide whether to provide the loan and the loan amount based on the shops? monthly sales revenue Special Loan ? No special loan PwC 38 Distribution Channel Source： Industry interview PwC analysis ? Franchise Shop System – Avon Group When open During the operation Franchise shop Product ordering Product change ‘For Test Only’ Product ? 5% goods ordered last month can be changed to other products at equal price ? Free supply of “new test” products equal to % the total value of goods ordered the month before Approach ? Beauty products: by telephone or inter ? Other products including underwear by inter Now Avon offices encourage all the shops to order products via inter Delivery time ? Beauty products: At once from Avon offices ? Other products including underwear After 35 days from Avon offices PwC 39 II. Avon Group i: Target Overview ii: Market and Products iii: Distribution Channel iv: SWOT Analysis and Comments iv: Financial Analysis PwC 40 SWOT Analysis and Comments Source： Industry interview PwC analysis ? Main Products – Avon Group Category Facialcare Makeup Bath a