Businessmodel of Avery Dennison

Customer Segments

Avery Dennison provides a range of products and solutions to commercial and industrial customers. The Company’s three operating segments serve distinct customers segments, including:

• Pressure-sensitive Materials, which provides products to label converters, package designers, packaging engineers and manufacturers, industrial manufacturers, printers, advertising agencies, government agencies, sign manufacturers, graphic vendors, tape converters, original equipment manufacturers, original design manufacturers, construction firms, personal care product manufacturers;
• Retail Branding and Information Solutions, which provides products to apparel and footwear brands, manufacturers and retailers, food service companies, grocery and pharmaceutical supply chains, consumer goods brands, automotive manufacturers, and transportation companies; and
• Vancive Medical Technologies, including medical technology companies and healthcare providers. Avery Dennison also sells products to specialist distributors. In 2015 no single customer accounted for more than 10% of the Company’s total sales.

The Company serves an international network of customers, including major markets across the US, Asia, Europe, and Latin America, as well as in various other jurisdiction around the world.

Value Propositions

Avery Dennison provides value to its customers in the following ways:

• Its industry standing and reputation, with the Company established as a leading provider of pressure-sensitive materials, as well as a range of tickets, tags, labels, having a track record for reliable and efficient supply to its customers;
• Its broad portfolio of products, with the Company manufacturing and selling a wide range of products – including packaging materials, graphics, reflective products, and adhesive materials – that serve a diverse client base, including industrial and commercial customers;
• Its international sales reach, with the Company making sales to customers across the US, Asia, the Americas, Europe, and various other jurisdictions around the world;
• Its extensive network of manufacturing facilities, with the Company operating an international network of manufacturing facilities that enable the Company to serve its customers quickly and efficiently through local and regional bases;
• Its specialist expertise and personnel, with the Company employing specialist technical personnel across its operating divisions, as well as an experienced team of industry executives. ### Channels

Avery Dennison operates a website at www.averydennison.com, through which it provides information on its various products, target industries, and technologies. The Company does not operate an online sales channel, nor does it provide customers with an online customer portal.

Avery Dennison makes its sales through its own in-house sales organisation, which is arranged into individual sales team by geographic region and operating segment. The Company has operations in more than 50 countries around the world, with the Company’s sales personnel operating out of offices across the Americas, Asia, Africa, the Middle East, and Europe, including in Japan, Singapore, South Africa, France, and Brazil.

Avery Dennison operates its own manufacturing and distribution infrastructure. This includes a network of around 180 manufacturing and distribution facilities across all of its operating regions. The Company serves its international customers through locally or regionally-based facilities.

Customer Relationships

Avery Dennison does not provide services to its customers on a self-service basis. Instead, the Company makes its sales directly through in-house sales personnel that consult with clients in order to agree the details of each individual sales and distribution contract. The Company seeks to establish long-term relationships with its customers and secure recurring business.

Avery Dennison provides ongoing support to its customers. The Company provides contact details for its various, enabling customers to contact the relevant departments over the phone or by post. Avery Dennison is also an active social media user, providing options for customers to make enquiries and queries directly through the Company’s Facebook, Twitter, and Google+ accounts. The company also operates separate social media accounts for its three operating segments, including with Instagram, LinkedIn, Pinterest, and YouTube.

Avery Dennison provides a range of online resources to its customers, including technical information on its products, news coverage, FAQs, and information on its sustainability and research and development activities.

Key Activities

Avery Dennison is engaged primarily in the production of pressure-sensitive materials, as well as a range of tickets, tags, labels and other converted products.

The Company organises its operations into three reportable business segments: Pressure-sensitive Materials, which manufactures and sells branded pressure-sensitive label and packaging materials, graphics, reflective products, tapes, and performance polymers; Retail Branding and Information Solutions, which designs, manufactures, and sells a variety of branding and information solutions; and Vancive Medical Technologies, which develops technologies for medical applications, including a range of pressure-sensitive adhesive materials. The Company’s pressure-sensitive materials are sold to label printers and converters that convert the materials into labels and other products through embossing, printing, stamping and die-cutting.

It also serves a network of footwear brands, manufacturers and retailers, food service companies, consumer goods brands, automotive manufacturers, and transportation companies.

Key Partners

Avery Dennison collaborates with a network of partner companies and organisations in support of its various manufacturing and distribution activities. These partnerships can be organised into several categories:

• Supplier and Vendor Partners, including suppliers of materials, equipment, and tools used in the Company’s manufacturing processes, as well as suppliers of technologies and services that are utilised across the Company’s operating segment more broadly;
• Channel and Distribution Partners, including various distribution and logistics companies that support the Company sales and distribution activities, in particular across jurisdictions where it is not itself well-served;
• Sustainability and Community Partners, including various charitable organisations and non-profits that work with the Company on sustainability and community projects around the world; and
• Strategic and Alliance Partners, including market leading companies across multiple business segments that work in collaboration with the Company on various joint projects and promotions. Avery Dennison has launched partnerships with a number of companies in recent years. This includes a manufacturing partnership with NXP Semiconductors, a charitable partnership with the Smile Foundation, and an alliance partner with GS1.

Key Resources

Avery Dennison’s key resources are its technologies and intellectual properties, its material and supply chain, its manufacturing and distribution facilities, its sales channels, its partnerships, and its personnel.

Avery owns a number of patents that it utilises in the manufacture of its various products. Searches of records published by the US Patent and Trademark Office identified numerous patent applications filed in the name of Avery Dennison, including applications entitled ‘System and method for RFID-based remote material analysis’, ‘System, method, and apparatus for RFID hang tag’ and ‘System and method for label matrix stripping’.

Avery Dennison also owns and or leases a broad network of properties around the world that are key to its manufacturing and distribution activities. This notably includes the Company’s network of 180 manufacturing and distribution facilities across the Americas, Europe, Asia, and Africa.

Cost Structure

Avery Dennison incurs costs in relation to the development of its technologies, the procurement of materials and supplies, the operation of its manufacturing and distribution facilities, the operating of its sales channels, the implementation of marketing campaigns, the management of its partnerships, and the retention of its personnel.

In 2015 Avery Dennison recorded cost of goods sold in the amount of $4.32 billion and marketing, general and administrative expenses totaling $1.11 billion. The Company’s research and development costs for the year totaled $91.9 million.

Revenue Streams

Avery Dennison generates revenue primarily through the manufacture and sale of a range of packaging and labelling products, as well as products with medical technology applications. These products include label and packaging materials, graphics, performance polymers reflective products, pressure-sensitive adhesive materials, and tapes. The Company also generates service revenue in relation to its provision of various retail branding and information solutions.

In 2015 Avery Dennison generated revenue in the amount of $5.97 billion, down slightly on the $6.33 billion recorded by the Company in 2014. The majority of the Company’s revenue was generated by the Company’s Pressure Sensitive Materials segment, which alone recorded annual revenue of $4.37 billion. This was followed by the Retail Branding and Information Solutions, which generated $1.52 billion, while the Vancive Medical Technologies recorded just $73 million.