Avon Products Inc's Business Segments

Avon commenced operations in 1886 and was incorporated in the State of New York on January 27, 1916. Avon is a global manufacturer and marketer of beauty and related products. Avon's products fall into three product categories: Beauty, which consists of cosmetics, fragrances and toiletries ('CFT'); Beauty Plus, which consists of fashion jewelry, watches, apparel and accessories; and Beyond Beauty, which consists of home products, gift and decorative products and candles.'In 2003, Avon launched in the U.S. a new global cosmetics brand, focusing on the market for young women. The brand is named 'mark.' and the product line is targeted to young women in the 16 to 24 age group, with an objective of enhancing Avon's share of the worldwide youth market. The 'mark.' brand is sold both through the Company's core group of Representatives and a separate 'mark.' sales force. The Company intends to introduce 'mark.' into additional markets over the next several years.

Avon's business primarily is comprised of one industry segment, direct selling, which is conducted worldwide. The Company's reportable segments are based on geographic operations in four regions: North America, Latin America,

Distribution

Avon presently has sales operations in 60 countries or territories, including the United States, and distributes its products in 72 more. Sales are made to the ultimate customer principally through a combination of direct selling and marketing by approximately 4.4 million active independent Avon Representatives, approximately 500,000 of whom are in the United States. Representatives are independent contractors or independent dealers, who are not agents or employees of Avon. Representatives purchase products at a discount from the brochure price directly from Avon and sell them to their customers. The Representatives are the customers of Avon and Avon generally has no arrangement with any end user of its product beyond the Representative. Representatives are invoiced for their order and are responsible for payment to Avon upon delivery of product to the Representative, regardless of whether or not the Representative sells the products to an end user.

Competitive Conditions

The cosmetic, fragrance and toiletries (CFT), gift and decorative, apparel and fashion jewelry industries are highly competitive. Avon's principal competitors in the CFT industry are large and well-known cosmetics and fragrances companies that manufacture and sell broad product lines through various types of retail establishments. There are many other companies that compete in particular CFT products or product lines sold through retail establishments.

Avon's business primarily is comprised of one industry segment, direct selling, which is conducted worldwide. The Company's reportable segments are based on geographic operations in four regions: North America, Latin America, Europe and the Pacific.