Modi-Revlon – Value Proposition

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Decision and Background: Despite being well associated with high quality cosmetics products, Modi-Revlon has failed to increase sales and turn profitable last three years, mostly because the company’s highly-priced products are only affordable to a very small percentage of wealthiest Indian women. Megna Modi, executive director for Modi-Revlon must decide how to make Revlon-branded products’ prices more attractive to the mass premium market while maintaining Revlon’s position as high-end cosmetics products.

Modi-Revlon’s main focus, the high-end premium market, is too small to have any profitable return. Revlon needs to penetrate down to the mass premium market, which has generally been rejecting Revlon’s highly-priced products. Surveys show that Revlon’s products are perceived as high quality but not worth the expensive price. Revlon’s initial strategy to have both breadth (wide variety of products) and depth (high availability of products) in Indian market has failed due to a number of reasons: importation delay because of shipment embargo, poor coordination between promotion and distribution, and most importantly, a thinly-stretched distribution network.

Recommendation: Megna Modi should restore Modi-Revlon’s initially intended position, “affordable glamour,” by lowering the price of its products, as well as offering the products in smaller quantity, to appeal to a broader range clientele, including the existing premium and the prospective mass premium ones. Additionally, Revlon needs to drop unprofitable retail outlets and the ones that are not in the highly populated metropolitan areas, to focus the company marketing resources to fewer but more profitable areas. Revlon should have adequate advertising to compete with Lakme for media coverage.

Basis for Recommendation: Revlon’s surveys in 1997 showed that 21% of nail enamel users committed to buy Revlon’s 15ml bottle at Rs. 79 while only wealthiest 2% of Indian women can afford the 15ml at its...
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