UBI - Business Intelligence Concepts

Presented by:

Business Intelligence Concepts

IIM/EURO MBA Studies

Presented by:

Ivana Rajkov

Aleksandra Simsic

Ljiljana Radanov

Miroslav Pajic

Radomir Cupara

Milan Djeric

Competitors

Customers

Distribution

Value and ethics

Market trends

Finance

Geography

Identity

Avon

Avon is the largest direct selling beauty company in

the world.

Avon is the first company to be selected by the Chinese government to test direct selling.The first fragrance in the newly-launched Today.Tomorrow.Always trilogy wins a FiFi Award.

2005

Avon launches its First-ever Men s Catalog, called M

Avon Foundation launches new domestic violence program, Speak Out Against

Domestic Violence with celebrity spokesperson Salma Hayek2004

Avon signs tennis greats, Venus and Serena Williams, to be the company sFirst global celebrity spokespersons to promote Avon

2000

First ever global advertising campaign themed 'Let s Talk'1999

First Avon Running Global Women s Circuit - Avon Breast Cancer 3-Day fundraising walk.1998

Avon launches its first women's health care initiative program in the U.S. with the "Breast Cancer Awareness Crusade".

1993

Avon U.K. launches the company s first women s health care initiative to raise funds andawareness for breast cancer.

1992

Avon becomes the first beauty company to bring the alpha hydroxy (AHA) technology.1991

First major cosmetics manufacturer to announce a permanent end to animal testing.1989

Avon celebrates its centennial: 1886-1986 1986

First time sales top $1 billion. 1972

Avon listed on New York Stock Exchange, trading starts April 20. 1964

First television advertising launched.1953

California Perfume Company name changed to Avon Products, Inc.1939

First international office opened: Montreal, Canada. Manufacturing starts in 1915. 1914

First print ads published in Good Housekeeping Magazine and First color catalog1905

First laboratory built in Suffern, NY1897

First catalog issued1896

California Perfume Company (CPC) founded in New York City by David H. McConnell. First Avon Sales Representative, Mrs. P.F.E. Albee, now-famous direct-selling methodFirst product produced called the Little Dot Perfume Set included five fragrances

1886

Identity1

Women have been sellingAvon since 1886 - 34

years before women in the US won the right to

vote!

To provide individuals to earn in support of their well-being and happiness.

To serve families throughout the world with products of the backed by a .

To render a service to customers that is outstanding in its and

To give to employees and Representatives, on whose contributions Avon depends.

To share with others the .

To meet fully the obligations of corporate citizenship by

To maintain and cherish the .

O U R G U I D I N G

T R U S TR E S P E C TB E L I E FH U M I L I T YI N T E G R I T Y

G L O B A L L Y

A focus on as a key driver of sales growth,

New product lines such as products and .

Further expansion of ,

A career opportunity for ,

Exploration of geographic opportunities, in particular

Within the following discussion and analysis, we utilize the key performance indicators ( KPIs )

defined below to assist in the evaluation of Avon business.

which consists of cosmetics, fragrances, skin care and toiletries;

which consists of:

$100 million state-of-the art Research and Development Center in Suffern, New York

Opened in 2005 and constructed on the existing Suffern, New York site, this facility represents Avon s continuing commitment to deliver leading-edge, technology-based cosmetic products to the .

Product categories, include:

Low

High

High Low

1Beauty

Net Sale Growth

Net Sale by Brand share

2Beauty

Plus

3BeyondBeauty

Legend:

1 Avon Beyond Color, Anew, Mark, Avon Solutions, Skin So Soft, Avon Wellness, Advance Technique Hair Care

2 Watches, Apparel, Accessories.

3 Home products and Gift&Decorative products.

Strengthening and repositioning key mid-tier brands such as mass skin care brand, Avon Solutions and Avon Color.

Launch a new Avon Solutions franchise called Ageless Results, with anti-aging technology now formulated at a mass price point to capitalize on growing consumer interest in this segment.

Breakthroughs in the nail, lip and mascara categories

Focus on innovation will be supported by a significant acceleration in advertising. In 2006 alone, total company advertising will increase by 50%.

In quantitative analysis advertising delivers a greater payback for Avon because of its ability to motivate both consumers and Representatives.

United States

Puerto Rico

Dominican Republic

Canada

Chile

Ecuador

Central America

Brazil

Bolivia

Argentina

Venezuela

Uruguay

Peru

Paraguay

Mexico

Thailand

Taiwan

New Zealand

Japan

Hong Kong

Chile

South Korea

Malaysia

Indonesia

Australia

Serbia & Montenegro

United Kingdom

Ukraine

Turkey

Spain

Poland

Moldavia

Macedonia

Lithuania

Latvia

Italy

South Africa

Slovenia

Slovakia

Russia

Romania

Portugal

Israel

Ireland

Hungary

Greece

Germany

France

Estonia

Czech Republic

Bulgaria

Finland

Croatia

Bosnia

Avon s

global markets

Geography

Finance

In Asia Pacific, total revenue was consistent with the prior year as declines in China and Japan were offset by increases in nearly all other markets in the region.

In Asia Pacific, total revenue was consistent with the prior year as declines in China and Japan were offset by increases in nearly all other markets in the region.

In Latin America, total revenue increased in 2005 with increases in all markets in the region, except Mexico.

The purchase of licensee in Colombia favorably impacted the region s revenue growth by 2 points.

In Latin America, total revenue total revenue increasedincreased in 2005 with increases in all markets in the region, except Mexico.

The purchase of licensee in Colombia favorably impacted the region s revenue revenue growth by 2 pointsgrowth by 2 points.

In late February 2006, Avon was granted a direct selling license by China s Ministry of Commerce. That license will allow Avon to commence direct selling in China under the regulations issued by that government in late 2005

In late February 2006, Avon was granted a direct selling license by China s Ministry of Commerce. That license will allow Avon to commence direct selling in China under the regulations issued by that government in late 2005

Future outlook

Lip balms, specialty hair care products,and skin care products for men will be among the fastest growing categories. Favorable demographics and technologically advanced products will drive sales.

Market Trend4

Sales will exceed, an average annual

increase of 2.9%2.9% from 2002.

Actual and Forecast Growth of the

Cosmetics&Toiletries IndustryActual and Forecast Growth of the

Cosmetics&Toiletries Industry

0,00%

0,50%

1,00%

1,50%

2,00%

2,50%

3,00%

3,50%

4,00%

4,50%

1997 2002 2007

The U.S. cosmetics and toiletries market has experienced growth for 11 consecutiveyears, with sales reaching almost at the manufacturers' level in 2005.

the lowest level of growth since 1993. facial treatments, personal cleansing products,

fragrances for women, shampoos, and hand and body lotions account for about 40% of total industry sales.

Sale by product class, 2005

16.1%Wellness(weight loss products, vitamins, etc.)

8.3%Leisure/educational(books, videos, toys, etc.)

14.3%Services/other

30.5%Home/family care products(cleaning products, cookware, cutlery, etc.)

30.8%Personal care products(cosmetics, jewelry, skin care, etc.)

Percent of Sales by Major Product Groups

Biggest producers and markets are . In 2004. Western European market summed in wholesale prices, and 58.10 billions EUR in retail More then

is consisted of 5 countries: Germany, France, Great Britain, Italy and Spain.

Western market consumption increased 3.5% in 2004, Spain had the biggest growth of 7%, the least growth had Germany with 1.5%, while Swiss market slops down to -1.1%

Moderate, consistent, and somewhat slowed down growth of production and market (2004- 4,8: 2001- 4,1%: 2002- 3,6% and 2003-3,5%)* Skin care products will have the fastest growth, following with hair care and bath products. Switching soaps with other newer products. Massive of man care products (20-30%) and teeth whitening products

will remain its high level in global costs, primarily for accomplishing goals in decreasing waste, protection of surroundings and human health. Even though markets are growing because of rationalization in industries, unemployment are expected to increase.

*Source: Colipa

• Environmental Management Systems

(ISO 14001 worldwide)

• Global Environmental Audit Program (All

manufacturing locations are audited every 3

years)

• Global Environmental Metrics

• Compliance

• Waste Management and Recycling

• Air

• Energy

• Water Consumption

• Greenhouse Gases

Avon policy requires:

Conduct operations in a manner that demonstrates respect for the environment through the

;

Meet or exceed all environmental laws and regulations of the countries and communities in which Avon operate;

Continue to that improve the environmental quality of

operations and products across their life cycle,from initial design to ultimate disposal;

Value and ethics5

Product Safety & Integrity s role is to:

Ensure new & existing cosmetic products are and meet regulatory requirements;

Develop & implement cosmetic (ingredient/product specifications, test

methodology & manufacturing controls);

Ensure product claims based on are adequately substantiated.

Breast Cancer Programs

Women s Empowerment Programs

Speak Up Against Domestic Violence

Sales Representative Earnings

Training

Recognition and Awards Programs

INVESTING IN SALES REPRESENTATIVES

Area

Zone and

District managers.

Avon has one of the most compelling consumer sales channels in the world.

Associates work in over 63 countries around the world, in: manufacturing; sales management and support; marketing;customer service; research and development; legal; finance and other departments.

Distributing sale channels

Over the past decade, the market has been going through a . New channels of distribution have been capturing marketers' interest, forcing many to rethink their retailstrategies as well as rationalize product offerings.Mass merchandisers remained the leading outlet with a 27% share. Mass merchandisers were also one of the fastest growing channels in 2005, along with direct sales and salons.

Drug stores18%

Direct sale17%

Department stores16%

Speciality stores8%

Salons5%

Mass merchandise

27%

All others 9%

79,90%

20,10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Female Male

54%

23%

8% 14%0%

10%

20%

30%

40%

50%

60%

35-54 18-34 65+ 55-64

76%

5% 18%0%

10%

20%

30%

40%

50%

60%

70%

80%

Married Other Single

32%

24%

8%

35%

0%

5%

10%

15%

20%

25%

30%

35%

Some college,technical ortrade school

High schoolgraduate or

less

Postgraduate CollegeGraduate

Self-Indulgence - What do I do just for me? Physical Appearance/Aging - "Fountain of Youth Options"

93% of women globally saying they put some effort into improving theiroverall appearance

51%

49%

38%

38%

36%

0% 10% 20% 30% 40% 50% 60%

Eating healthy

Drink plenty of water

Exercising

Facial Skin care routine

Get plenty of sleep

More than half of women say the first thing they would do when signsof aging emerge would be to reach for an appropriate facial skin care product, preferably one that contains both natural herbs and medicinal plants, and modern science's most advanced ingredients.

Globally, 95 % of women say that they have not had any cosmetic surgery.

Concerns about the risk

27%

High cost40%

lack of interest

33%

Race against time" and skin care

Avon 2005 Global Women s Survey

buying make-up

30%

eating out30%

hair done40%

All others37%

Limited Brands 5%

Estee Lauder9%

Avon13%

L'Oreal20%

Procter&Gamble16%

Shiseido Co. Ltd.

Estee Lauder

ColgatePalmolive

AvonProdutcs

RankMarket

Cap

RankProfit

Margin

RankGrowth

Sales

RankEmployees

RankRevenue

Company

Colgate-Palmolive

Avon

Shisheido

EsteeLauder

4-point turnaround planto restore sustainable growth

41%

20%

13%

7%0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Nivea Avon Dove Oriflame

23%

12% 14%

7%

0%

5%

10%

15%

20%

25%

Nivea Avon Dove Oriflame

MBI and Target Group Index

5 top brands of body care products, most often used in 2005. Sample: urban population in Serbia (without Kosovo) - 3024 participants use products from TGI base of 10028 participants

49%

28%

14%

6%0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Nivea Avon Dove Oriflame

Continuing of spreading production selling program

under penetrated in the market at mid-tier price segments

Cooperation with competitive companiesin humanitarian actions

Spreading of selling network

Growth on Central & Eastern Europe

Development of education for employees

Perfecting new keys of selling

Development of products for women of other races according to their skin types

Perfection alternative for estetic hirurgy

Untrained selling personnel in some regions

Bad prediction of sales volume

Bad marvet network on certain markets(Japan,Pacific)

Bad management of stocks & supplies

Poor marketing activities

Marketing orientation toward determines markets

Included sales shortfalls in China and deceleration of growth in Central and Eastern Europe, as well as Latin America

SWOT analysis

High quality wide range of products

Innovation of products

Qualitative & successful management

Long tradition of the company

Market leadership in direct sales field

Ways of selling

Not testing products on animals

Developed selling network companied to competition

Motivating discounts for costmors

Motivating extra earnings based on increased volume of sales

Different politics of the countries on which markets we are involved

New regulative in cosmetics industry

New competitors

Business depends on different needs

Continues decreasing of customers from USA

Aggressive competitor's marketing

Well educated staff from competitive companies

Launched market actual product from competitive retail network well developed

Global economic recession

SWOT analysis

1. Product innovation

2. Simplifying business system

3. Harmonizing process

4. Increasing shared service centers

5. Reducing total number of products

6. Hold fixed costs flat to down

Under penetration of mid-tier brand price segments.Innovation of anti-aging technology formulated at mass price pointAcceleration in advertising, which will increase by 50%High focus on international markets Global Direct Selling team, a multi -level marketing program that enables Representatives to earn through personal sale, as well as through bonuses and training.Avon direct selling Uni, to institulize world class training, ensuring consistency and focus across all markets.Capitalizes on very strong marketsCommercial Business Unit CBU are key commercial strategy along with new Global operating structure.Maximizing Brand power and respond quickly and effectively by supporting CBUs by Business Units and Global Supply ChainReduce 50% of layersReduce number of management positions by 20%-30%

0

10

20

30

40

50

0 50 100 150 200COUNTRIES

Sa

les

%

AVON

YVES ROCHER

MARY KAY

AMWAY

NU SKIN

HERBALIFE

BEAUTICONTROL

Take adventage for being the world s biggest direct seller of beauty products for break through into new markets. Avon has called China , the fastest-growing cosmetics market in Asia,its No.1 opportunity and key to its growth prospects.

In November 2005 Avon announced a four-point turnaround planto restore sustainable growth in business.

Plan builds on:

1. key equities

2. focuses on unleashing the full power of unique brand and channel.

This plan includes:

In total, restructuring initiatives will deliver over $300 million in savings annually, which will be largely reinvested in growth.

Accelerate world-class product innovation.

Significant increase of investment in product innovation and more than doubling advertising spending by 2008.

Brand-building strategy. Focus on major breakthroughs in Skin Care and Color.

Dramatically improve merchandising excellence andshopping appeal with enhanced brochure and more compelling consumer promotions.

Investment in direct-selling channel and establishing a centrally managed Global Direct Selling function.

Relaunch direct selling in China, largest growth opportunity market.

Realign total cost structure and leverage assetsmore strategically to fuel bigger investments and drive revenue growth.

Implement projects focused on realigning global manufacturing base;

Securing additional supply chain efficiencies in the areas of procurement and distribution processes; and

Regionalizing, centralizing and outsourcingcertain activities and transactional processes.

Become leaner, faster-moving, more empowered organization and increase training and development for employees.

New global operating structure that increases the number of geographic business units.

Flatten the organization and reduce management layers to bring senior leaders closer to markets, and markets closer to Representatives and consumers.

Rename geographic regions to Commercial Business Units, or CBUs, as key commercial strategies.

Empowered Global Business Units, GBUs Brand Marketing and Global Supply Chain.

Strategy proposal

for Serbian market

Sources:

Business Intelligence Roadmap: The Complete Project Lifecycle for Decision-Support Applications, By Shaku Atre, Larissa T. Moss , Publishedby Addison Wesley, 2003

www.avoncompany.com

www.youravon.com

www.avon.co.yu

www.nyse.com

www.reuters.com

www.dsa.org

www.colipa.com

www.in-cosmetics.com

www.euromonitor.com