By: Ashley Reeves

PEST AND INDUSTRY

ANALYSIS

HISTORY

Founded in 1932 by Charles and Joseph Revson, along with chemist

Charles Lachman
Products: Global color cosmetics, hair color, beauty tools, fragrances,
skincare, anti-perspirant/deodorants and beauty care tools
Net Sales 2010= $1.32 Billion
U.S.=

55%
International= 45%

Vision: Glamour, excitement, and innovation through high-quality

products at affordable prices.

Target market = women of all ages worldwide

Brands:

Revlon
Almay
Age

Defying
ColorStay

HISTORY CONTINUED

Headquartered in New York, NY

CEO Alan Ennis as of May 2009

4,900 employees

17 manufacturing locations worldwide

U.S.,

Canada, Europe, Latin America, and Asia Pacific

EXTERNAL MACROENVIRONMENT FACTORS

POLITICAL FACTORS

Strict FDA regulations in the U.S. and other

countries

ECONOMIC FACTORS

Currency exchange rates

Revlon

would benefit from a weak U.S. dollar relative to

the currencies of other countries.

Growth in emerging markets

Sales

have grown immensely in the Asia Pacific region.

Global economic conditions

Higher

unemployment levels
Decreased consumer spending

SOCIAL FACTORS

Changes in consumer purchasing habits

Increased customer awareness of permanent

make-up options

TECHNOLOGICAL FACTORS

E-Commerce

Use of social media

PEST ANALYSIS
Factor

Trend

Evaluation

Impact

Rank

(1=low,5=high)

Political

Economic

Strict FDA
regulations in the
U.S. and other
countries

threat

currency exchange
rates
growth in emerging
markets
Global economic
conditions

opportunity/threat

opportunity/threat

opportunity/threat

changes in consumer
purchasing habits

threat

Social

2
Increased customer
awareness of
permanent make-up
options
E-Commerce

threat

opportunity

INDUSTRY ANALYSIS

Porters Five Forces Model

PERSONAL PRODUCTS INDUSTRY

Buyers

Suppliers

Large mass volume retailers

Raw materials

Chain drug and food stores

Packaging

Department and specialty

stores

Competitors

Substitutes

Estee Lauder Companies Inc.

Other cosmetic products not

intended for the same use

L'Oreal

Permanent make-up

Procter & Gamble Co.

Deciding not to purchase

THREAT OF NEW ENTRANTS

Barriers to entry

Nature of Barrier

Extent of Barrier

Supply-side economies of scale

High

Demand-side benefits of scale

High

Capital Requirements

High

Incumbency advantages
independent of size

High

Customer-switching costs

Low

Unequal access to distribution

channels

High

Restrictive Government Policy

Medium

POWER OF SUPPLIERS
Power

Degree of Power

Bargaining Power

Switching costs

Low

High

Suppliers offer
differentiated
products

Low

High

Number of
substitutes available

High

Low

is strong if:

POWER OF BUYERS
Powers

Degree of Power

Bargaining Power

Number of Buyers

High

High

Purchases volume

Low

High

Product Differentiation

High

Low

Vendor Switching Costs

Low

Low

Degree of backward
integration

Low

High

is strong when:

POWER OF SUBSTITUTES

Powers

Degree of Power

Threat is strong if:

Substitute offers
attractive priceperformance trade-off

Low

High

Switching Costs

Low

Low

INTENSITY OF RIVALRY

Power

Degree of Power

Rivalry is strong if:

Number of competitors

High

High

Industry Growth

High

Low

Exit Barriers

High

High

NATURE OF THE FORCES

Factor

Evaluation

Intensity of Rivalry

Strong : several major players with

similar product offerings.

Consumer Buyer Power

Moderate: purchases volume,

differentiation, and backward
integration do not coincide with
strong buyer power.

Supplier Power

Benign: other supplier options are

available if needed.

Threat of Substitute Products

Benign: many customers are loyal

to their personal product items.

Threat of New Entrants

Benign: barriers to entry are high

with patents, research and
development, and pricing strategies.

SUGGESTIONS FOR ADDRESSING

KEY FORCES

Intensity of Rivalry
Continue

producing quality products, anticipating

and responding to changes in consumer demands,
and educating product benefits.

PEST & INDUSTRY

ANALYSIS CONCLUSIONS

Economic and social factors have the greatest affect on

Revlon.
Intensity of rivalry is the greatest force for Revlon.
It is important for companies in the personal products
industry to stay on top of changing consumer
preferences and needs in order to stand out among the
competition.
Although the cosmetics and personal products industries
have fierce competition, by continuing to spend more
time on research and development to create
differentiated and quality products, Revlon can increase
their position in the personal products industry.

COMPETITOR AND
MARKET ANALYSIS

KEY COMPETITORS

"Bringing the Best to

Everyone We Touch
and Being the Best in
Everything We Do."

We will provide branded

products and services of
superior quality and value
that improve the lives of the
worlds consumers, now and
for generations to come.

To help men and women around

the world aspire to beauty and
express their individual
personalities to the full.

Revlon
Net Sales
(2010)

LOreal

Estee

Procter &

Lauder

Gamble
$19.5 Billion

$1.32
Billion

19.5 Billion
($26 Billion)

$7.8 Billion

Net Income

$327.3 M

$3.13 B

$616.4 M

$12.7 B

Employees

4,900

64,600

31,000

127,000

Geographic
Scope
(countries)

100

130

150

180

23

28

32

Brands

(beauty & grooming)

(beauty & grooming)

R&D % of
Sales

1.8

3.4

1.1

2.5

Headquarters

U.S.

France

U.S.

U.S.

PRODUCTS
Revlon

LOreal

Estee Lauder

P&G

Cosmetics (make-up)

Skin care

Hair care

Deodorant

Fragrance/cologne

Hair color

SALES BY REGION
Revlon

LOreal

U.S.

57%

Asia/Pacific/
Africa

18%

Europe/Canada

15%

Latin America

10%

Procter & Gamble

Western Europe

43%

North America

23%

Asia

13%

Eastern Europe

8%

Latin America

7%

Africa/Orient/Pacific

6%

Estee Lauder

North America

42%

Western Europe

21%

Americas

44%

Asia

15%

37%

Central & Eastern

Europe, Middle East,
Africa

Europe/Middle
East/Africa

13%

Asia/Pacific

19%

SALES BY SEGMENT
LOreal

Revlon
Color Cosmetics

64%

Skin Care

27%

Womens Hair Color

11%

Hair Care

23%

AP/DEO

8%

Make-up

21%

Other Personal Care

7%

Hair Color

15%

Fragrances

6%

Perfumes

11%

Beauty Tools

4%

Other

3%

Estee Lauder
Skin Care

42%

Make Up

21%

Fragrance

16%

Hair Care

5%

Procter & Gamble

Household Care

48%

Beauty

34%

Health + Well-Being

18%

TRENDS & FORCES

*Lack of research and development due to a history of losses caused by increased competition and
decrease in sale of color cosmetics.
*Large dependency on Wal-Mart for sales (23%)
*Revlon is a lot smaller than its competition but has a more focused product offering.

*Approximately 34% of sales came from emerging markets in 2009.

This presents an opportunity to increase revenues from rising income
growths in those markets.

*Diverse brand names target different market niches.

*Large presence in global market exposes currency fluctuation risks. More than half of their sales
come from outside the U.S.

*Different product price points provide some insulation against recession.

*Rises in powerful low-priced retailers negatively affect consumer product companies.
* Looking to expand presence in emerging markets. They have created products designed
specifically to target developing nations.

Procter & Gamble

Delight customers with sustainable innovations
that improve the environmental profile of their
products
Improve the environmental profile of their own
operations
Improve childrens lives through social
responsibility programs
Engage and equip employees to build
sustainability thinking and practices in their work
Work with stakeholders to enable continued
freedom to innovate in a responsible way

service and education

Using diversified staff to create
innovative products
Philanthropy
Minimize impact of products and
operations on the environment
Use the latest technological
advancements to develop cosmetics that
provide superior aesthetics

Commitment to excellent personalized

Estee Lauder

Business
Strategies

Continue to improve products

Find ways to promote business
affordably
Make products irresistible for
distributors
Take position early on evolving trends
Take advantage of events
Develop the ability to continue to create
innovative products

LOreal

Revlon

Build their strong brands

Develop their organizational capability
Drive their company to act globally
Increase operating profits and cash flow
Improve capital structure

High

Stars

Question Marks

Cash Cows

Dogs

Low

Market Growth
Rate

COSMETIC INDUSTRY BCG

MATRIX

High

Low

Relative Market Share Position

COMPETITOR AND
MARKET ANALYSIS
CONCLUSIONS

Revlon has a vast amount of competition in the

personal products industry.
Being a lot smaller than the competition has
caused them to fall behind in revenues and the
amount of money they are able to spend on
research and development.
By continuing to develop unique products and
investing more money in R&D, Revlon can work
their way to becoming as big as the competition.

INTERNAL AND SWOT

ANALYSIS
GENERIC AND GRAND
STRATEGIES

BUSINESS MODEL

Sell to a large mass-market

Cost Saving
Brand Building
Corporate Social Responsibility
Developing Organizational Capability
Increase operating profit and cash flow
Improve capital structure
Anticipating and responding to changing consumer demands

PERFORMANCE
2010
Net Sales

2009

2008

2007

2006

2005

$1321.4 $1295.9 $1346.8 $1367.1 $1298.7

$1303.5

$866.1

$810.5

(in millions)

Gross Profit

$821.2

$855.9

$861.4

$771.0

(in millions)

Sales have fluctuated from 2005 on.

The

decline in consolidated net sales was driven by

lower net sales of Revlon and Almay color cosmetics
and certain beauty care products

unfavorable

Profits have also fluctuated in past years due to:

foreign currency fluctuations

higher

pension expenses within cost of goods

higher

returns and allowances

CHANGE IN SALES BY REGION

2009

2008

2007

United States

$747.9

$782.6

$804.2

Asia Pacific

$266.7

$265.0

$255.6

Europe

$172.4

$200.8

$211.1

Latin America

$108.9

$98.4

$96.2

U.S. and Europe have observed a steady decrease in sales over the past few years while Asia
Pacific and Latin America have experienced a steady increase in sales.

While

sales have increased in Asia Pacific and

Latin America, they are not increasing at the
rate in which they should, based on the growth
rate of cosmetics in those regions.

CHANGE IN SALES BY REGION (CONTINUED)

U.S.
lower net sales of Revlon and Almay color cosmetics
and Mitchum anti-perspirant deodorant.
Europe
lower shipments of Revlon and Almay color cosmetics
in Canada
higher allowances for Revlon color cosmetics in the
U.K.
lower shipments of certain beauty care products in
France.

Sales in Asia
Pacific and
Latin America
have increased
due to:

Sales in the U.S.

and Europe have
decreased due to:

Asia Pacific
higher shipments of Revlon color cosmetics in
Australia and China and of beauty care products
in South Africa.
Latin America
the impact of inflation on selling prices in
Venezuela.
higher shipments of Revlon ColorSilk hair color
in Venezuela, Argentina and certain distributor
markets

U.S. SHARE % BY
BRAND/PRODUCT
2009

2008

Revlon Color Cosmetics

12.7

12.7

Almay

5.4

5.9

Revlon ColorSilk Hair Color

9.7

8.3

Mitchum AP/DEO

4.6

5.0

Revlon Beauty Tools

21.0

18.8

RESOURCES

Raw materials and components used

to create their products.
Most of their products are created at
the companys manufacturing
facilities located around the world.

KEY ASSETS
Cash &
cash
equivalents
Goodwill

Trade
receivables

Property,
plant, and
equipment

Inventories

Prepaid
expenses

Market

High

BCG MATRIX

Stars

Rate

Question Marks

Low

Growth

Cash Cows

High

Dogs

Low

Relative Market Share Position

*Market Share: Increase in competition causes a decrease in
market share for Revlon
*Market Growth: A high growth rate is possible in global
countries.

*Revlon works to expand their current products into

new emerging markets where cosmetics sales are
increasing.

VALUE CHAIN
Primary
Activities:
Inbound logistics

Storing inventory and scheduling transportation

of products for distribution.

Operations

Packaging and assembling products for

distribution.

Outbound logistics

Distribution of products through selected

channels to customers.

Marketing & Sales

Advertising and promotion of products using

print, television, and internet.

Service

Tips and services on company website

VALUE CHAIN (CONTINUED)

Support Activities:
Human resource management

Look for energetic, successoriented people who thrive in a

dynamic environment.

Technology development

Global cross-functional product

development process.

Procurement

Receiving raw materials from

vendors.

GENERIC STRATEGY
Low Cost

Differentiation

Broad

Overall Cost
Leadership

Differentiation

Narrow

Competitive Scope

Competitive Advantage

Cost Focus

Differentiation
Focus

REVLONS GRAND STRATEGY

Rapid Market Growth
Quadrant II
Product Development

Weak
Competitive
Position

Quadrant I
Product & Market Development

Market Development

Market penetration

Market Penetration

Backward integration

Horizontal/Vertical integration
Liquidation/Divestiture

Quadrant III
Retrenchment
Related/unrelated diversification
Conglomerate diversification
Liquidation/Divestiture

Forward integration
Concentric diversification

Quadrant IV
Related/unrelated diversification
Horizontal/Vertical diversification
Conglomerate diversification
Joint ventures

Slow Market Growth

*Revlon needs to work to increase research and development in
order to develop new products.
*Sales can be increased by introducing their products into new
markets.

Strong
Competitive
Position

SWOT ANALYSIS
Strengths

Weaknesses

Despite heavy debt and net losses in

previous years, product development
is the main focus

Financial struggles due to the

economy

Strong relationship with retailers

Limited funds for research and

development

Marketing strategies consistent with

current local trends

Higher prices than their competitors

Strong brand recognition

SWOT ANALYSIS CONTINUED

Opportunities

Threats

E-commerce and use of social

media

Changes in consumer
purchasing habits

Growth in emerging markets

Strict regulations in U.S. and

other countries

Increase distribution

Permanent make-up options

INTERNAL AND SWOT

ANALYSIS
GENERIC AND GRAND
STRATEGIES
CONCLUSIONS

Revlons sales and profits have fluctuated in the

past 5 years.
Increase in consumer spending from Asia Pacific
and Latin America has presented Revlon with an
opportunity to expand their product market.
Increased spending on R&D will help Revlon to
create better products and increase their market
share against competitors.
Revlon needs to focus on market development in
emerging markets to help increase sales.