Avon 2007 Annual Report Download - page 4

Powerful Channel
The foundation on which Avon’s success has
always been built is our powerful direct-selling
channel. Avon is by far the world’s largest direct
seller with 5.4 million Avon Representatives in
over 100 countries. Avon Representatives are
icons in their communities. They are friends and
neighbors, providing a unique level of personal
service and customer connection that is a rarity
in today’s world.
The number of Active Representatives has
always been a defining measure of our
company’s success. I’m very pleased that
Active Representatives grew 9% in 2007, with
healthy growth across both our developed and
developing markets. This strong growth reflects
our actions over the last two years to improve
our Representatives’ earnings and selling
experiences with Avon.
In 2007 alone, we increased our investment in
our Representatives by over $120 million. This
money funded a range of initiatives including
the continuing rollout of our Sales Leadership
opportunity, improved training, as well as
changes to the commission structure and selling
frequency in several markets. We also took a
major step forward in the e-transformation of
the Avon opportunity with new web-based and
mobile-technology tools.
In addition, we rebranded all recruiting and
training materials worldwide, and introduced
our first-ever global recruiting advertising,
all reflecting the energy and optimism of our
Hello Tomorrow campaign. In fact, for the first
time in Avon’s history, we have aligned both
our direct-selling and brand communications
under one integrated platform that presents a
consistent face of Avon to every audience in
every country where we do business.
Powerful Brand
The increased investment in our Representatives
has been supported by detailed analysis that
confirms that this is the right first step towards
sustainable growth. Our analysis also confirmed
significant potential returns when we invest in
the second powerful equity of our business, our
global brand.
Avon is one of the world’s great beauty brands,
and is consistently ranked as one of the top 100
global consumer brands of any type. With 90%
brand awareness around the world, Avon is known
and loved by women on every continent. Every
single second of the day, a woman buys an Avon
lipstick. We are the fragrance leader in developing
and emerging markets, and a world leader in anti-
aging skincare, a category that Avon pioneered.
To further unleash this powerful equity, in
2007 we increased our advertising investment
to nearly $370 million. That’s our largest
advertising investment ever – and almost
three times the $136 million we spent in 2005.
We made the decision to reach this level of
spending a year ahead of our initial plan based
on the exceptional paybacks we were seeing.
In fact, Beauty revenue increased 15% in 2007.
Our Beauty growth rate has more than doubled
over the past two years, and in 2007, we grew
nearly one and a half times the rate of the market
overall, driving important market share gains.
With the rebranding and relaunch of our flagship
Avon Color line, we significantly outperformed
the market in the color cosmetics category, with
16% growth, and reversed two years of market
share declines. In Fragrance, the blockbuster
launches of Rouge and Noir by Paris designer
Christian Lacroix contributed to 20% growth
in this category, and confirmed the value of
targeted alliances to drive a major shift in both
our price point and our brand image.
Personal Care was up 21% as a result of
sharpened brochure merchandising. And in
Skin Care, we successfully launched our newest
anti-aging breakthrough, Anew Ultimate Night
Cream and Elixir, at price points ranging as
high as $80, as we continued to leverage major
innovation to drive pricing and brand value.
This category increased 6% for the year.