Flanked by portraits of the Vanderbilt Twomleys, in Fairleigh Dickinson University’s Georgian Revival “Mansion” (a Hampton Court-look alike), Andrea Jung, chairman and CEO of Avon Products Inc. recounted her 10 year journey to rescue the 125-year-old firm from being “your grandmother’s cosmetics company.” Jung, a 1979 Princeton graduate who majored in English, is widely recognized as one of the most powerful women in business. She spoke at the Rothman Institute of Entrepreneurship CEO Innovation series today, November 19. The take-home: To succeed in a down economy, innovate, but look to your roots to figure out how
Jung measured her success by two crossword puzzles in the New York Times. “In 1990, hip chic women did not want to buy Avon. The clue for _V_ _ was “Ding Dong.” This year, the clue was “the company for women.” Among the top 100 companies, it is the only direct selling company, and one of two beauty companies (Chanel being the competitor).
R&D; investment: She built a $100 million R&D; facility in Suffern, New York and honchoed a “robust but disciplined” regime of breakthrough technologies.
Innovative media: She slashed budget for traditional media and started buying celebrity endorsements, like Reese Witherspoon. (The corporate looking Avon rep sitting next to me was wearing Witherspoon’s fragrance, In Bloom.)She bought ad words on Google, not only for cosmetics and beauty but for “part-time job.”
Then she bought an ad for the male-dominated Super Bowl lineup, a 30-second recruiting ad before the kickoff, when the women are watching, and got a 24 percent bump in recruitment.
Every Avon associate has the tools to put up a website. When Avon distributed the Super Bowl spot to the associates’ websites, it got a viral marketing bonanza.
Innovative distribution: Avon took the lead, in the mid 1990s, in the now hot emerging markets. It is # 1 in Latin America and Central & Eastern Europe and strong in Asia. Russia is its second best market, grossing $800 million. “We will get an oversized share of growth in those markets.”
Restructure: “I was hired for growth (she had been at Neiman Marcus and Bloomingdales) and we hit the wall in six years. I was not a cost queen or turnaround expert. My executive coach told me to walk out the door on Friday ‘as if you fired yourself’ and come back new. From ’05 to 08 we took away responsibilities and divided the duties between consumer and commercial. We flattened the structure, took out one-third of 15 layers (to be closer to the consumer and more innovative) and freed up $1.1 billion for advertising and celebrities.”
Grow in a recession: “In a recession, there are more casualties, but there are more heroes, who gain market share. In a time when the world is full of questions, we can show that we have the answers.”
The answer: microloans. A starter kit for an Avon saleswoman used to equal the weekly food budget. Now it costs just $10, and the recruitment ads emphasize “I can’t get fired, I can’t be laid off.” Since the recession started, six million women joined Avon. Comparing job loss numbers and new Avon reps, country by country “became a metric with a lot of pride.”
Communicate in a recession: Go out into the field and repeat the message. “Be consistent and clear. You can’t do that enough.”
Keep prices low: She cited Booz, that a recovery “will not substantially reverse frugal spending plans. Says Jung, “If you can find innovation and quality, why pay more? Lipsticks are $6 and $8, not $15 and $20. Anti aging creams are $36, not $100.
Keep focused on your mission: Avon was founded, and FDU’s mansion was built, in the same time frame, when it was heresy for women to be independent. Avon empowers women, said Jung. More than 85 percent of Avon reps in Russia do Internet marketing – and their families benefit from their being online. “We feel we are part of the solution, and also that we have a social purpose,” says Jung. Avon gave $725 million for women’s health (breast cancer) and funnels money to prevent domestic violence. “Our associates know we continue to do good things. The world needs us to do good things.”