The Guideline to addressing the Case of Revlon ( The First

Case) :

From Case – Facts to identifying the issues , and

Assessing the Vision and Mission Statement

By DR. Mas Bambang Baroto

August 22nd , 2010

 I. External Environment :

Excerpt form : Thomson / Stricland / Gamble : “ Crafting and Executing Strategy, 17th Edition

Demographic and Social Trends Issues :

1. “Cosmetic and personal care “ industry is impacted by 2 major changes in
demographic in US composition :

a. Aging population

b. Change proportional of racial & ethnic population

2. Baby boomers : Americans born in 1946 – 1964

: significant market of cosmetics and personal care

: high level of disposable income

: brand loyal consumers

: consumption pattern almost constant

: 55 and older

: remain active in the workforce for longer period of time

3. Other segment for cosmetics and personal care : Females ( Age 12 – 19) :
population will become 20 million by 2010

4. Racial / ethnic : shifting

: African – American is largest segment

: Hispanic is the fast growing largest minority segment : by 2010

the population will be achieving 404.5 million individual.

: white non Hispanic is to decline 68 % by 2010

: Asian – American is growing rapidly.

5. International market : is opportunities

: Asian countries have the population 60 % of the world

 6. The existing major market of personal care products : US, Japan,
European countries, of which are having 20 % of the world’s population; Thus
Potential market around the world is excellent.

7. Social demographic issues that may impact the industry include :

a. Consumers’ concern about safety and use of animal testing by

cosmetic companies.

b. Consumers of cosmetics / personal care products is not only women

c. The market for hair coloring has expanded with teenagers and
adults

d. Older people tend to spend less on cosmetics

e. Gas prices are high – rising living cost of Americans – lesser

disposable income for purchasing cosmetic

8. March 2006 : many major retailers, including Wal - Mart did strategic intent :

a. Reduced inventory level

b. Leaving cosmetic companies with viewer opportunities to stock

additional products in retail store shelves

9. The value of US dollar has dropped to historic lows, which benefits cosmetic
firms that do considerable global business, such as Avon.

10.Women in China, India, and the Middle-East rapidly growing interested in

purchasing more cosmetics and fragrances.

Competition Issues :

1. Intense : in the cosmetic/skin care industry

2. The size of the industry is :$ 200 billion world –wide

3. Large number of women prefer to purchase these items at : Drug stores,

supermarkets, and mass - volume retailers such as K- Mart and Wal-Mart.

4. Outlet : door – to – door (Avon) and the internet

5. Revlon major competitors : P&G, Avon Products, Estee Lauder Co., L’Oreal
and Unilever.

6. Other competitors of Revlon include small companies include :

a. Urban Decay,

b. Specialty stores such as Bath and Body Works, Body Shop, and
Sephora.

c. Retailers selling their own brand such as Gap, Banana Republic, and
Victoria Secret.

7. Competition for the African – American market is also increasing with brands
such as Fashion Fair and cosmetic line launched by Iman and Patti Label

II. The member of the Industry Issues : ( Excel – File)

III. Revlon Issues :

1. 75 year history : high quality product, at affordable price to women

2. A World leader in cosmetic, skin care, fragrance and personal care.

3. Leading “mass-market” cosmetic brand.

4. Vision : “ to provide glamour, excitement innovation through quality

products at affordable price”

Exercise this Vision :

5. CEO : David Kennedy

His current Strategic intent :

“ consolidated sales and marketing functions to reduce operational costs” :

• Eliminated some senior positions, and Reduce staffing +/- 8 % of

US workforce to save +/- $ 33 million / year

6. Revlon Sales data :

N Revlon Sales 2007 2006 2005 Growth

o
1. Net Sales 1,331 1,332
 (Billion)
Net Loss 251 84
(Million)
Sales Outside 43 %
US
First Half 677.8 646.6 4.8 %
(Million)
1st Half US 397.5 378.3 5.1 %
1st Half (Million) 280.3 268.3 4.5 %
International
1st Half (%) 2007 – 2006
International = 2.6 %
Sales

Are there any special issue(s) that you could draw from the above
table?

Losses 8 Years consecutive years and struggled with debt since

RON PERELMAN purchased a majority stakes in 1985

Revlon is in Trouble
7. Distribution of products : 100 Countries around the world ( Exhibit – 1)

8. Products :

1). Product Categories : SkinCare, Cosmetic, PersonalCare,

Fragrance, and professional products.

2). Most recognized brand names: Revlon, Ultima II, Color Stay,
Almay, Charlie, Flex, Mitchum, Jean Nate, and ColorSilk

3). The company continues to introduce new products :

2005 : intro of : Almay Intense Eye Color, and Almay Smart

Shade

2006 : intro of : Color Stay Smooth Lip

9. Mission : “ to emerge as dominant cosmetics and personal care firm in the

twenty-first century by appealing to young/trendy women, health conscious
(skin care), and elder women with ist variety of brands”

Exercise this mission :