Avon takes its vitamins

Avon Canada recently entered the multimillion-dollar vitamin category with Avon Life brand and is banking on the power of its distribution channel to capture a sizeable share of the market.National drugstores sales of vitamins to the end of June 1994, according...

Avon Canada recently entered the multimillion-dollar vitamin category with Avon Life brand and is banking on the power of its distribution channel to capture a sizeable share of the market.

National drugstores sales of vitamins to the end of June 1994, according to Nielsen Marketing Research, were more than $127 million.

That figure does not include the growing direct sales vitamin market now being covered by companies such as Shaklee and Amway.

In researching the market before its July product launch, Montreal-based Avon discovered an interesting statistic: its customers used vitamins more frequently than the average Canadian.

Avon says 60% of its customers use some form of vitamin supplement compared with only 48% of Canadians.

That research, coupled with successes the company has had recently in launching new divisions in fashion and family entertainment, paved the way for the new venture.

Mike File, Avon vice-president of marketing, says the company’s ongoing ability to grow and expand from a vertical beauty company into a diversified lifestyles company is related directly to the effectiveness of its distribution network, which is a direct salesforce of more than 60,000 people.

‘We clearly have a very powerful channel, which we felt was not being fully utilized selling beauty products alone,’ File says.

‘We’d known that for many years because of our success in expanding into the gift and jewellery areas, and from tests that had gone on in other Avon countries around the world,’ he says.

‘It led us to believe the channel was so powerful and dynamic that it really did offer an opportunity to broaden the product offering, while, at the same time, providing an earning opportunity for our representatives.

‘More attractive’

‘Obviously, as sales increase, our representative’s sales increase and they find it more attractive to sell Avon.’

The company has also branched out into new areas of distribution.

It has a 1-800 telephone number for mail order shopping, and an Avon boutique in the downtown Montreal ym/ywca.

Avon was established in Canada 80 years ago as a cosmetics and fragrance company.

Over the years, it expanded into other product lines including gift products, and, in the 1970s, costume jewellery.

File says product expansion began to accelerate in the late 1980s, adding a strategic plan developed in 1989 pointed to a number of untapped market categories.

The vitamin category was on the list, but Avon chose first, in the fourth quarter of 1989, to move into fashion with the launch of pantyhose and sleepwear lines.

In subsequent years, additional lines such as foundation garments and leisure wear were introduced, and the company is moving into business wear and the distribution of several lines of Warner-brand foundations and undergarments.

Fashion-conscious

While in the past it was assumed that the typical Avon customer was in the 40- to 60-year age group, Sandy Murphy, Avon’s business unit leader, fashion, says experience has proven the company’s customers are quite fashion-conscious, so most of the clothing is now geared to 25- to 35-year-olds.

That strategy has proved successful.

The Canadian Apparel Monitor reports in one of its latest studies that Avon has grown to be the fifth-largest Canadian ladies’ apparel outlet.

Murphy says Avon’s fashion sales in 1991 were $23 million. Sales grew to $32 million in 1993, and she projects this year’s tally will be $40 million in net sales, which equates to about $50 million retail.

Avon will continue to publish 18 digest-sized catalogues a year, but File says the company’s rapid diversification might require, as early as next year, the production of separate brochures for its various business divisions.

Lifestyles unit

After launching the fashion division, the company started a second spin-off unit, Avon Lifestyles.

Lifestyles is a family entertainment division offering videotapes and audiotapes, books, crafts for adults and children, board games, toys and electronic items such as Texas Instruments merchandise.

Despite all the new irons it has been putting into the fire, Avon has not ignored its core business in cosmetics and fragrance.

Last year, for example, it introduced a line of prestige fragrances, which was expanded this year.

In 1993, Avon also became the first skincare company to launch an alpha hydroxy acid (aha) product, which it did under the Nova brand name.

ahas are natural acids that promote mild exfoliation of the skin.

Although it is newly formed, Avon’s vitamin division is also scheduled for expansion.

Avon Life offers five multivitamin and multimineral formulas, but there will be more vitamin C products added, and File sees the division growing to include related products such as food supplements and nutritional bars.

During its 80 years in Canada, the company has built the Avon name into a powerful and trusted brand, initially through its salesforce only.

The company began conducting traditional advertising in the 1980s. It handles the work in-house.

Currently, efforts are being concentrated in two areas, Nova and the promotion of Avon direct mail and its 1-800 number, with print ads in magazines such as Chatelaine and Canadian Living.

File says Avon is looking to expand its advertising next year.

He says direct mail is a possibility, and, perhaps, television, which has been used by its u.s. sister company for the past few years. PS