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Avon's Product Line Case Study

Essay by   •  August 9, 2019  •  Case Study  •  1,502 Words (7 Pages)  •  59 Views

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The Assignment One

Group Members: Xue Wang, Ting Wang, Shuwei Hang, Rujing Xu

PROBLEM ONE

(1)Avon’s product line

Product

Advantages

Disadvantages

MAS

Low prices

(1) Remote control could be achieved only by means of complicated systems using chain drives or geared motors.

(2) V-belts, pulleys, and bearings required frequent replacement.

(3) Size is too large

(4) Bulky to install at the work location.

EAS

(1)Smooth, acceleration, implicity, compactness, and ease of installation.

(2)Obtain a zero-to-full speed range which was substantially stepless for intermittent operation.

(1) Inefficient

(2) Heated up under conditions of sustained low-speed operation

(3) Overheating and unsatisfactory operation

(4) vibration problems

AVDC

(1)Speed could be precisely adjusted through a remote control system

(2)More efficient than EAS

(3)Not have the disadvantages of high power losses and overheating at low speed operation.

(4)Could be installed much smaller than an EAS drive unit.

Price is high

NEW MAS

(1)Easier to maintain

(2)More efficient with less power input relative to output than existing EAS equipment.

(3)Power output is more closely controlled and kept within a narrower range.

Functional disadvantage

According to the segmentation of the whole market which will be described in details in the Market Players, the current product line is not able to satisfy the customers and industries’ needs, which is a main reason for Avon to promote a new product.

What’s more, Avon had lost sales of AVDC drives when prospective customers had been persuaded to purchase an EAS drive and the competition from EAS drives would be greater. So Avon needs to promote a new product to gain profit.

Finally, EAS drive was not completely efficient while the new drive is equal to or better than the EAS efficiency at normal operating speed.

Price

Advantages

Disadvantages

  1. Penetration strategy---quickly occupy

the market share of all products, and people who use old products gradually change into new products

  1. Minimize the risk

(1)Price will be hard to rise

(2)Hard to recover cost

(3)Cannot match the value provided

Mas

(1) Grab market share of EAS

(2) Price is moderate. Avoid the risk of being difficult to recover cost due to low price and low purchase because of high price

(1)Reduce profit

(2)Cannot match with value

>EAS

(1)Skimming strategy—recover the development & design cost quickly

(2)Match of value and price

(3)The price is very reasonable for large companies.

(4) High prices will make people think that quality is good and recognition is high.

(5)Large initiative. When product is mature, the price can be gradually reduced in stages, conducive to attracting new buyers

(1)Not accept high prices

(2)Loss some customers. Small companies and small and medium-sized companies won't buy.

(3)A large gap between providing other companies access and customers’ choices .

(3)Pricing of New Avon Product

(4)Place

AS for how to promote the new product, Avon may sell through authorized sales reps and distributors. The new product is aimed at manufacturing companies, which have to supply a source of adjustable speed power for some equipment, such as conveyor belts and printing presses in warehouses and factories. There are several reasons why Avon should outsource the sales. Firstly, those sales reps and distributors have an important effect that can’t be ignored to the choices of the potential buyers. In other words, they have good reputation and endorsement in this field. Others are likely to adopt their advice. Besides, they have a wide circle of contacts and get to know some companies’ managers in the engineering department. More importantly, they are far more professional at issues related to sales, like sales pitch. At last, Avon could rely on them about the placement and maintenance of the new EAS product and ongoing supply. All of these measures are aimed at lowering the employee costs, management costs and maintenance costs and increasing the sales and profile of the new product.

(5)Market players

1.Avon

   Avon Company manufactured a wide line of electrical products. It decided to promote a new EAS product to supplement the shortcomings of existing EAS products and occupy objective market share on the electrical product market. This machine operates better in many applications than the original product.

2.Customers

   The target customers of the new product of Avon come from industries like machinery manufacturing, metal processing, petrochemical, plastics and bamboo. We will state is specifically in the “targeted customers below.

3. Competitors

As is mentioned in the case, Avon doesn’t produce MAS and doesn’t have a product line in this field, so we don’t consider the other MAS companies as Avon’s competitors. Therefore, Avon faces competition from EAS and ADVC companies.

Firstly, manufacturers of other companies may redesign their products in a year’s time to reduce manufacturing cost and improve performance. Although other companies, who want to duplicate the new product completely, would need to much time to create new one, the effects from this aspect can’t be ignored. Avon Company will be forced to innovate faster.

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