Avon Restructuring Includes Big Hike in Marketing Budget
WSJ (paid subscription required), Wednesday, November 16, 2005 1:30 PM
Avon Products Inc. is embarking on a massive restructuring that will include a substantial increase in advertising spending. In an attempt to improve its overall performance, the company said it would spend $300 million to $500 million on a multiyear restructuring, with ad spending projected to more than double by 2008. Avon CEO Andrea Jung said Avon had cut its advertising spending by 50 percent in the U.S., and found that a 40 percent increase in ad spending outside the U.S. wasn't enough to keep up with rivals. "The role of advertising was less well-known to us as a direct-selling company," she said. The restructuring will include what the company called a "substantial" work-force reduction along with cost cuts aimed at a simplified manufacturing structure and outsourcing of some services to low-cost countries.
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