REVLON MARKETING DECISIONS ANALYSIS
THE ANALYSIS OF REVLON MARKETING DECISION OPTIONS
By: Oluwaseun P. Adeola
This article provides answers to some questions arising from the marketing decisions and strategic management issues concerning an international company- Revlon. Revlon is one of the world’s leading skin care manufacturer with it products physically manifested in various countries of the world. Some of Revlon most recognized names are Ultima ll, Almay, Revlon, and Colorsilk to mention but a few.
Now, I will bear my mind on the following questions that many business-minded people have been asking over the years.
I. Should Revlon concentrate its efforts on international markets, given the low value of the dollar and competitive pressures? What countries should Revlon focus on?
II. Should Revlon diversify its operations or develop joint ventures with other cosmetics company? Would jewellery be a good industry to enter given the ageing society?
III. Does Revlon have too many brands? Should the company keep brands such as Colorstay and get rid of brand such as Mitchum?
IV. Should Revlon agree to sell itself to Perllman or to a rival firm? What is Revlon worth on the market?
International markets (Question 1)
In providing answer for the first question, I would say that it will be of a strategic and economic benefit for Revlon to direct more of its effort on international market. There are a few reasons why I am thinking in that direction. First, it is a fact that countries where the company sells more of its products such as Japan, US, Canada and European states are becoming more ageing in population in relative terms. And as people get older, they tend to spend less on personal care products. Consequently, it is almost certain that revenue will continue to dwindle even as competitors fight for their share of the market. Therefore, it will only be strategically pertinent for Revlon to shift its focus and efforts in markets where the majority of the population is still vibrant and young.
Secondly, it is absolutely vital to examine the population matrix of the various markets Revlon currently sells most of its personal care products. The countries as aforementioned constitute only 20 % of the world population while the Asian region constitutes about 60 %. Moreover, the population of the Asian countries are much younger and vibrant than their western counterparts.
Thirdly, one of the most important reasons for Revlon to direct its efforts on international markets is the economic benefit of cashing in on the historic plummeting value of the dollar. As more women and teenagers move away from the poverty line in Asia and the mid-east they tend to communicate their new status in styles and physical appearance. And one effective way to achieve that is through personal care products. Therefore, as the dollar probably continue to fall in value, Revlon products become cheaper and seemingly affordable by women and teenagers of this region.
Having said that, it becomes ostensibly clear that the company should focus on Asian countries such China, India, Indonesia, Singapore and some countries in the South America. Albeit, as promising and profitable the listed countries may seem, it does not constitute sufficient reason for Revlon to lose focus and interest in the current markets which yield the most revenue.
Diversification of operation (QUESTION 2)
If the popular old saying which says that jack of all trade is master of none is anything to go by, I think diversification may not be the best option for Revlon. To properly answer this question, it is appropriate to check what the strategic mission of the company is. Revlon state in its mission statement that it wants to emerge as the dominant cosmetics and personal care firm in the twenty-first century by appealing to young/trendy women, health conscious women and older women with its varieties of brands. The mission statement reveals what the essence of Revlon is; what and for whom it will produce. Now, I think it is fair to say that it may not seem a disastrous decision for Revlon to diversify, but it can learn from its history.
Michael Bergerac, after the death of Charles Revson shifted the focus of the company to the pharmaceutical side of the business. Gradually, the core of Revlon was soon significantly reduced to only one third of the company’s offerings. Consequently, what ensued was a drastic loss of market share of cosmetics and personal care products to its major competitors. There is usually a danger that comes with diversification, despite the possibility of opening up an extra channel of revenue for the company; a business might lose the core of its existence.
In recent times, Revlon has gone through all sorts of downsizing, de-layering and restructuring in the ultimate bid of combating and/or overcoming its financial quandary. Therefore, it will be more rewarding for the company to concentrate on products and markets that are sustainably profitable instead of looking out for a route of escape into an entirely new business. In that light, the first and important step for Revlon to take is to strategically position the company in a way that the organizational mission and goals will be accomplished. Thereafter, it can then diversify. It is essentially important to state here that a company can fully maximize the benefits accruable from diversification only if it has record considerable success on the current line of business. The goodwill and good brand image of the successful business can then be transferred to the new business line. For example, BMW is doing remarkably well in its financial services sector, owing partly, to the fact that the company is known for its veritable reputation in the auto industry.
So, instead of attempting to diversify, Revlon should consider the option of merging with other companies. Because the cosmetics/skin care industry is such a huge industry, competition tends to be somewhat stiff and turbulent. Therefore, to be afloat and secure some competitive edge, apart from given customers value for their money, a company would need to spend a lot of money in fighting the necessary competition war. So, with Revlon still grappling with its debt issue, joining with other companies might help reduce its overhead while at same time reach for customers.
Too many brands (QUESTION 3)
In principle, it is arguable for a company to own as many brands as possible in other to reach various market segments. But in practice, it is essential for any company to determine before introducing a new brand if it can provide superior value to its intended markets than the competitors. This can be seen with the Vital Radiance launched by Revlon in January 2006. Six months after the launch, the brand had to be discontinued because other companies already offer similar products which cost less. And as a result of that, it was gathered that the negative effect of the vital radiance on Revlon was approximately $110 million. Therefore, the question is never whether a company has too many brands or too little brands; it is about asking simple strategic questions before introducing a new brand.
From a broader spectrum, if Revlon has some brands that are not fulfilling the purpose for which they were introduced; one can then conclude that it has too many brands- since it cannot manage it to give superior value to customers and equally give reasonable returns to the company. Therefore, whether it is Colorstay brand or it is Mitchum brand, the bottom line is clear: keep the brand that is profitable and discontinue the one that eats up the revenue of the company. By so doing, it will afford Revlon the better opportunity to focus and improve on the brands that give customer values for their money.
Revlon Market Value (QUESTION 4)
Revlon has long been grappling with debts for a long time even after several exercises of one restructuring after another. Therefore, it may not be out of place for the company to sell itself to Perlman. At the moment, it can be deduced from Revlon balance sheet as at 2006 that its total debt is rather huge. And as such the worth of the company will be perceived by various external stakeholders might be lower than what the assessment of Revlon will be by the internal stakeholders.
In conclusion, Revelon as one of the leaders in the personal care company can still meet customers’ expectations and give values to customers and would-be customers even better than competitors if the company gets its marketing strategic decisions right.
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