Avon 2015 Annual Report Download - page 18

PART I
The loss of any one supplier would not have a material impact on our ability to source raw materials for our Beauty products or source
products for our Fashion & Home categories or paper for the brochures.
Packages, consisting of containers and packaging components, are designed by our staff of artists and designers. The design and
development of new Beauty products are affected by the cost and availability of materials such as glass, plastics and chemicals. We believe
that we can continue to obtain sufficient raw materials and supplies to manufacture and produce our Beauty products for the foreseeable
future.
See Item 2, Properties, on pages 22 through 23 of our 2015 Annual Report for additional information regarding the location of our principal
manufacturing facilities.
Product Categories
Both of our product categories individually account for 10% or more of consolidated net sales in 2015. The following is the percentage of
net sales by product category for the years ended December 31:
2015 2014 2013
Beauty 74% 75% 75%
Fashion & Home 26% 25% 25%
Trademarks and Patents
Our business is not materially dependent on the existence of third-party patent, trademark or other third-party intellectual property rights,
and we are not a party to any ongoing material licenses, franchises or concessions. We do seek to protect our key proprietary technologies
by aggressively pursuing comprehensive patent coverage in major markets. We protect our Avon name and other major proprietary
trademarks through registration of these trademarks in the markets where we sell our products, monitoring the markets for infringement of
such trademarks by others, and by taking appropriate steps to stop any infringing activities.
Seasonal Nature of Business
Our sales and earnings are typically affected by seasonal variations, a characteristic of many companies selling beauty, gift and decorative
products, apparel and fashion jewelry. For instance, our sales are generally highest during the fourth quarter due to seasonal and holiday-
related patterns. However, the sales volume of holiday gift items is, by its nature, difficult to forecast, and taken as a whole, seasonality does
not have a material impact on our financial results.
Research and Product Development Activities
New products are essential to growth in the highly competitive cosmetics industry. Our research and development (“R&D”) department’s
efforts are important to developing new products, including formulating effective beauty treatments relevant to women’s needs, and
redesigning or reformulating existing products. To increase our brand competitiveness, we have sustained our focus on new technology and
product innovation to deliver first-to-market products that provide visible consumer benefits.
Our global R&D facility is located in Suffern, NY. A team of researchers and technicians apply the disciplines of science to the practical
aspects of bringing products to market around the world. Relationships with dermatologists and other specialists enhance our ability to
deliver new formulas and ingredients to market. Additionally, we have an R&D facility located in Shanghai, China and satellite R&D
operations located in Argentina, Brazil, China, Mexico, Poland and South Africa.
In 2015, our most significant product launches included: Anew Clinical Overnight Hydration Mask, Anew Power Serum, Ultra Color
Indulgence Lip Color, SuperExtend Winged Out Mascara, Big & False Lash Volume Mascara, Outspoken Party! by Fergie Fragrance and Avon
Attraction for Him and for Her Fragrances.
The amounts incurred on research activities relating to the development of new products and the improvement of existing products were
$61.9 in 2015, $64.7 in 2014 and $66.9 in 2013. This research included the activities of product research and development and package
design and development. Most of these activities were related to the design and development of Beauty products.
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