Revlon Case Study

Case Study on Revlon- By Priya Tharwani (154) (MMS Marketing)

Vision Statement
To provide glamour, excitement, and innovation through quality products at affordable prices

Mission Statement
To emerge as the dominant cosmetics and personal care firm in the 21st century by appealing to young/trendy women, health-conscious women (skin care) and older women with its variety of brands

Internal Audit (IFE matrix)

a. Strengths Sr No Factor 1. Excellent Research and Development Programs 2. Variety of Products offered 3. Use of Strong Advertising Techniques 4. Continuous New Product Development 5. Increased operating efficiency (Due to consolidation of production facilities) 6. Spending on CSR 7. Decent manufacturing and distribution network Weightage 0.1 0.1 0.05 0.1 0.05 Rating 3 3 2 2 2 Weighted Score 0.3 0.3 0.1 0.2 0.1

0.05 0.2

1 2

0.05 0.4

b. Weakness Sr No 1. 2. 3. Factor Continuous Restructuring of the organization Huge Debts Poor Financial conditions (Due to high losses and low sales) Weightage 0.2 0.1 0.05 Rating 3 3 2 Weighted Score 0.6 0.3 0.1

Revlon Case Study The total weighted score of IFE matrix is 2.45 The above score indicates that Revlon can improve upon its internal weaknesses and develop on its strengths External Audit (EFE Matrix) a. Opportunities Sr No 1. 2. 3. 4. 5. 6. 7. 8. Factor Fall in dollar price leading to globalization opportunities Exploring markets of China, India and Middle East Growth of Hispanic Segment Cosmetic Products for Men Youth in Latin America Direct Sales as an option Use of online media to enhance sales Baby Boomers with high disposable income and inclination to use cosmetics Growth of use of personal care products across the world Weightage 0.05 0.1 0.06 0.2 0.09 0.1 0.1 0.1 Rating 2 3 2 3 3 3 3 3 Weighted Score 0.1 0.3 0.12 0.6 0.27 0.3 0.3 0.3

9.

0.07

0.21

b. Threats Sr No Factor 1. Presence of many competitors 2. Increase in gas and oil prices 3. Decrease in shelf space in stores due to recession Weightage 0.03 0.05 0.05 Rating 3 2 3 Weighted Score 0.09 0.1 0.15

The total weighted score of EFE matrix is 2.84 The above score indicated that the response of Revlon to external environment is unsatisfactory

Revlon Case Study

Space Analysis The Graph

Financial Posn

Competitive Posn

Industry Posn

Revlons Posn Stability Posn Product Development Market Penetration Vertical Integration

Financial Position Sr No 1. 2. 3. 4. 5. 6. 7. 8. Factor Return on Investment Amount of Liquidity Working Capital Cash Flow PE Ratio Earning Per Share Inventory Turn Over Total Ratings 1.0 1.0 1.0 1.0 1.0 1.0 2.0 8.0

Weighted Score=1.14
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Revlon Case Study Stability Position Sr No 1. 2. 3. 4. 5. 6. Factor Price Range of Competitors Rising Demand Price Elasticity Risks involved in Business Competition Total Ratings -5.0 -3.0 -4.0 -2.0 -3.0 -17.0

Weighted Score= -3.4 Industry Position Sr No 1. 2. 3. 4. Factor Growth Potential Profit Potential Productivity Total Ratings 4.0 3.0 4.0 11.0

Weighted Score= 3.67 Competitive Position Sr No 1. 2. 3. 4. 5. Factor Market Share Product Life Cycle Customer Loyalty Control over suppliers and distributors Total Ratings -4.0 -3.0 -4.0 -2.0 -13.0

Weighted Score=-3.25 On X-axis, we have Industry Posn and Competitive Posn (3.67-3.25) = 0.42 On Y-axis, we have Financial Posn and Stability Posn (1.14-3.4) = -2.26

From the above analysis we can see that Revlon stands in Quadrant IV, which indicates Revlon is quite Competitive and hence it can go for Product development, Market Penetration and Vertical Integration.

Revlon Case Study

Grand Strategy
From the case study we can analyse that the market for Cosmetic products is growing rapidly and Revlon has a weak competitive position in the market
Rapid Market Growth Mkt Development Prod Development Retrenchment Divestiture Mkt Penetration Strong Competitive Posn

Weak Competitve Posn

Slow Market Growth

So, Revlon is positioned in quadrant II for the Grand Strategy Matrix and as per me, it should continue with new product development, explore the current markets it is targeting by market penetration and some new market development in India, China and Middle East. Also it can go for Divestiture wherein it can sell its loss making department and also continue with its retrenchment strategies. Answers to questions 1. Yes, Revlon can concentrate on International markets given the potential of growth in the international markets. It can focus on India, China, Middle East and Latin America since the women in these countries are willing to use cosmetic products. 2. Yes, Revlon can diversify its operations and can enter into the jewelry segment, since it has got a good R&D department and it can help to know the customer needs and demands and hence would help in diversification.
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Revlon Case Study 3. Revlon has too many brands. Given the current market scenario, it should get rid off few of its brands which are making losses and focus on pushing its other brands by improving upon its marketing efforts, going for direct selling and online marketing as the trend in the current market is going online 4. Yes, Revlon should continue with its strategy of restructuring. But it should not sell itself to its rival. It has got a competent workforce and excellent leaders, which can help the company regain its market share and come out of losses. If all above strategies fail, then Revlon should go for Liquidation