Page1/70PREPAREDBYLeoBurnett-GUANGZHOUJuly2002AVONBrandReviewPage2/70TableofContentsI.CompanyBackgroundII.OperationOutlookI.StructureII.AvonShopsIII.ProductOffersIII.MediaSpendIV.CommunicationMeansV.PR/EventActivitiesVI.TheDiscoveryRoadofAvonVII.TheDiscoveryRoadofAmwayPage3/70CompanyBackgroundPage4/70AglobalbeautycompanyFoundedin1886inNewYork,AvonwasnamedbyMr.DavidMcConnellwhopaidtributetohisfavoriteplaywright,WilliamShakespeare(AvonisthenameofariverinthehometownofShakespeare).Sincethen,Avonhascreatedcareeropportunitiesformillionsofwomenaroundtheworld.Today,Avonisaleaderinbeautyandatrustednameindirectselling.Shehasgrownintoaglobalcorporation,aFortune500company,withSRnumberingthreeandahalfmillionandproductssoldin143countriesaroundtheworld.Page5/70OperationOutlookinChinaPage6/70OperationOutlookinChinaAmwayhasofferedproductsandservicessince1995Avonstartedtoofferproductsandservicestoconsumersin1990Avon’sfactoryislocatedinGuangdongChonghuaIndustrialArea,covering80,000sqmeterswithannualproductioncapacityof120millionunitsofproductsAmway’sfactoryislocatedinGuangzhouEconomicTechnologicalDevelopmentZone,covering91,000sqmeterswithannualproductioncapacityof3billionunitsofproductsPage7/7077branches5,000outlets20,000SRsMainoutletsfocusaroundcoastalareas.Over100outletsineverymaincities(BJ,SH,GZ,CQ…)FranchisebusinesstoexpandbusinessOperationOutlookinChinaPage8/70OutletsaremainlyAvondirectsellingaswellasfranchiseshopsOutletsareallAmwaydirectsellingstores77branches,over5,000outletsand20,000SRs58storesand130,000SRsMaintainednetworkinthemaincities,whileexpandingin2ndand3rdcities.MainlyinrelativelydevelopedcitiesOperationOutlookinChinaPage9/70“Workalongbothlines”strategy(双管齐下)Definition-Beautycounter:OpenedbyAvoncompany.Uniquearea/counterinsidethemerchandisestoreorhypermarket-Chainstore:IncludeAvondirectshopandfranchiseshop(1)normal:noneedtosellallcategories,butskincareandcosmeticsarerequired(2)flagship:modelshopwithstandarddesignforothershops-Conceptstore:Avondirectshop.Self-servingstyle,forconsumerstoenjoyfreetrialandtochoosewiderangeofproductsRetailSR+BeautyCounterConceptStoreChainStoreMarketpenetrationMarketcoverageroleFranchise“0”feetoencouragemorepeopletodevoteintoAvon’sbusinessOperationOutlookinChinaPage10/70Avonretailchannel+SRsAmwayshop+SRsKeyroletobuildupbusinessSupportingroleToexpandmarketcoverageToincreasemarketpenetrationMainroleSupportingroleStoresoperationinaccordancewithgovernmentpolicyStrengthenrelationshipwithconsumersandensurepersonalserviceMarketsizeQualityserviceOperationOutlookinChinaPage11/70AvonShopsPage12/70Windowdisplaydressingchangesbymonthlywithdifferenttheme.Averagestorespaceisnomorethan40m2Standarddecoappliedineveryshop.AvonShops-OverviewOneoftheshopentranceviewPage13/70AvonShops-OverviewGenerallyallshopsarelocatedalongrowofshoplotswithhighresidentialtraffic.Locationisusuallyatthegroundfloorwithhighvisibilityandeasyaccessibility.InGZ,therearemorethan100shops,however,thesurroundingenvironmentisbeyondcontrolwhichattimesaffecttheAvonpremiumimagewhichittriestoproject.Page14/70AvonShops-Service•Only2-3personsareindutyperstore.•OverallresponsibilitiesincludeSales,Cashier&Merchandising•Allsalespersonareinuniform.•Servicesinclude:•Personalbeautyconsultant•Offer(free/partialpayment)FacialCareifpurchaseisaccumulatedtoacertainamount.•OfferspecialdiscountstoClubMembers.Page15/70Avonfrequentlyholdsboothpromotiontointeractwithconsumersandattractimpulsepurchase.OutdoorPromotionPage16/70ProductOffersPage17/70ProductOffers-GlobalCosmeticFragrance12Gifts3undergarments5Jewelry4HealthsupplementSkinCarelinesSeriesofproductsforwomenandpeoplearoundthem678KidsproductMen’sproductOthersPage18/70CosmeticFragrance12Gifts3undergarments5Jewelry4HealthsupplementSeriesofproductsmainlytofulfillwomen’sneedsSkinCarelinesWiththeworldwidefamouspartners.AvonisstrategicallyexpandingbusinessintothehealthsupplementfieldProductOffers-ChinaPage19/70Globally,offersover450withconcentrationonnarrowertargetgroupandspecificcategoryi.e.healthcare,householdandpersonalcareproductsGlobally,offersmorethan20,000productsgenerallyconcentrateonwiderproductrangeandtargetgroupTargetmainlywomenOfferwiderangetocreateaffordabilityfordifferentagegroup.TargettosatisfyfamilyneedsMainlyoffertopeoplewhopursueforhighqualitylifestyleProductOffers-OverviewPage20/70OperationOutlookImplicationPage21/70OperationOutlook-ImplicationAvonStrategy:TooccupymarketplacewithintheshortesttimeHence,Avonhasopenedlargenumberofstorestobuildupawareness,andreachtargetconsumerseffectively.Keeplaunchingnewcategoriestailor-madeforChinamarket,soastosatisfyvariousneedsfromwomen.AmwayStrategy:TowinmarketsharebyofferinghighqualityproductsandservicesAmwayvalues“persontopersonservice”,whichisbelievedcriticaltostrengthenrelationshipwithconsumersandtoensurehighqualityservicesHighinvestmentinresearchandproductdevelopment,toensurequalityofproductsandultimateconsumersatisfactionPage22/70MediaSpendByMonthByMediumByMarketPage23/70MediaSpend-ByMonthSource:ACNlisenPeriod:Jan01-May02‘RMB0