1. Presented By: Steven Doman CGA080079 Lim Kim Leong (Thomas) CGA 080077 Retailing CMGB6305 Dr. Yusniza Kamarulzaman

2. Avon China Video http://www.youtube.com/watch?v=80naK4NyMZk&fe ature=related http://www.youtube.com/watch?v=80naK4NyMZk&fe ature=related 2

3. Leading Global Beauty Company $9 Billion in annual revenue Markets to women in over 110 countries Direct selling, 5 million independent sales representatives Beauty products, jewelry and apparel Customers, most employees are women but company has traditionally been run by men Poor strategic decisions in 1980s led to change towards increasing diversity

4. 1970’s Management was solely men Ignored their own research that more women were entering their workforce and professional careers Sales growth slowed and sought unrelated diversification as area for growth Brink of bankruptcy CEO Jim Preston refocused on its roots Developed strategies to reach women in the marketplace Realized customers needed to be recognized in senior management

5. Now a leader in management diversity CEO and Board Chairman is Andrea Jung 86 percent of management is women More than any other Fortune 500 Company Half of Board of Directors are Women Many programs to make sure women and minorities have opportunities for development Networks Hispanic, Black, Asian Gay and Lesbian Act as liaisons between management and associates

6. Turned to Foreign Markets for growth 2006 the company earned first foreign direct selling license in China Current management launched new growth initiatives Private label brands Jewelry and apparel High performance hair products for every hair type/ethnicity Avon wellness promotes balanced healthy lifestyle for women and their families Strategic Partnership with Curves

7. Started to offer grooming products and accessories in a Men’s catalog Technology to support efforts of 5 million reps Reps can manage business electronically Personalized web pages Place and track orders online Target specific groups and customers Track orders Use e-mail to share product information, selling tips and marketing incentives

8. 2008-(In millions) Total Revenue $10,690.1 (8% increase) Cost of sales $3,949.1 (no significant change) Net Income $875.3 (65% increase) Earnings per share $2.04 (69% increase)

9. Why is Avon so committed to diversity? Primary customer is female, need to have females in leadership role More women and minorities are entering the workforce Networks allow minorities to interact among each other since they do not report directly to an office

10. Select another retailer that also values diversity. How does this commitment also affect its financial results? Amway provides opportunities for more than 3 million people worldwide. Operates in over 80 countries and territories Annual turnover exceeding USD $8.2 billion Where you find Amway, you'll discover people sharing the entrepreneurial spirit Amway is the global leader in the direct sales business sector

11. Amway Malaysia Began with five employees, in a small office facility in Jalan Ipoh in 1976 Amway Malaysia was one of the pioneers in the direct selling industry at that time. Today, Amway Malaysia is the leading direct selling company in Malaysia with a core distributor force of 195,000 and a sales revenue of RM645.5 million for 2008 Profit after tax of RM95.1 million

12. AMSB and ABSB provide direct employment to 359 employees throughout Malaysia They have a core distribution force of 195,000 Distributors are independent business owners. Amway products and services are marketed solely through independent Amway Distributors

13. Amway's direct selling approach offers three important advantages, including a diversity focus: An opportunity for anyone to own a business Low entry cost and high quality products no sales territories, an Amway business that starts locally can grow as large as desired, even worldwide

14. In 2001, Amway Malaysia was honored for its corporate leadership by making the top 10 list in these categories: Overall Best Managed Company - ranked 7 th Corporate Governance - ranked 5 th Treatment of Minority Shareholders - ranked 3rd

15. Make a projection for the results of the test market of Avon’s direct selling strategy in China. How did you develop this projection?

16. Make a projection for the results of the test market of Avon’s direct selling strategy in China. Year20062007200820092010 China Cosmetic Market SizeUS$2,200MUS$2,600MUS$3,200MUS$3,800MUS$4,600M Avon China US$212.0M US$280.5M US$350.9M US$438.6M US$548.3M Avon Beauty Category US$152.6M UD$202.0M UD$252.6M US$315.8M US$394.8M Avon Direct Selling $$ US$106.0M US$140.3M UD$175.5M US$219.3M US$274.1M Distributor200,000400,000600,0001,000M1,600M Concept Store6,0007,0007,5008,0008,500 MSS %6.947.777.908.318.58 16

17. Principal market drivers Strong economic growth and growing awareness of personal well-being The fast expanding rural market The rise of the middle-class Women fueling the market growth The emerging markets Babies & Children Men 17

18. Principal market drivers Mainland people are now better-educated, better-paid and they attach more attention to fashion and their personal image. They not only focus on improving basic living conditions, but are also keen to enhance their overall quality of life. Their increasing awareness of health, hygiene and appearance has made cosmetic products one of the consumption hotspots. In fact, the pursuit of beauty and health is no longer confined to young women only. Cosmetic products are gaining popularity among men, children and the elder people. The cosmetics market is getting bigger and bigger embracing consumers from all ages and from all walks of life 18

19. China Cosmetic Distribution Channels Department stores – most popular among more affluent consumers Supermarkets, hypermarkets and grocery stores – major distribution channels for mass Products Pharmacy chains – an emerging channel for medicated cosmetics Specialty stores – providing professional services and full range of merchandises of a specific brand Professional stores – dominated by numerous small players but some big ones targeting at mid- to high- end segment emerging Direct selling – awaiting market liberalization Online sales – in initial stage of development Cosmeceutical stores – selling pharmaceutical products with cosmetic benefits 19

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