Revlon Case Study

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Danny Dimo

Professor Golnoosh Hakimdavar

Business Policy – 490

27 January 2011

Revlon is known as one of the best cosmetic companies of all time and is considered to be one of the worlds largest. The primary core products of Revlon are specialty skin products, salon-quality beauty and hair products to include its drugstore line of makeup. Revlon is based in New York and traded publicly. Their goal and vision has been to consistently provide quality beauty aids and products at a reasonable price. In the last few years Revlon has been struggling. With a debt almost at $2.3 billion it has required the cosmetic giant to try and figure ways to reduce this debt. The research and development of Vital Radiance, a line of cosmetics for older women was announced on January 2006, this roll out was suppose to help revitalize sales and profit. The roll out of this product did not fare well and was not received by the market. The already existing competition had lower prices for their cosmetic products. These were being sold by major retailers like Wal-greens and Wal-mart, whom already had other Revlon products on its shelves. This being the case the product line was suspended nine months after being introduced. It is projected that this set back is going to cost the company in the $100 millions. In addition to the Vital Radiance launch, there had been plans to release a new fragrance in 2006 also. This was delayed until the debt that was incurred from their cosmetic introduction could be restructured. After issuing a $185 million in stock to attempt to raise money to lessen the debt, MacAndrews & Forbes Holdings agreed to purchase stock and also agreed to purchase any stock not bought by current stakeholders. The following paragraphs below we will discuss how the future of Revlon is going to be determined by changes in demographic changes, social trends and how the competition adjust to the current economy and the response of internal factors that contribute to the success of the company. The demographic composition of the United States has impacted the cosmetic and personal care industry. A couple of major changes which have occurred that need to be considered, are the aging population and ethnic and racial population changes which are responsible for a major shift change. The period between 1946 and 1964 approximately 75 million Americans were born in the U.S. this number is extremely symbolic for the cosmetic industry. These Americans are referred to as the baby boomers and the major dilemma with the baby boomers they do not like to spend money. Research has determined that the baby boomer generation have not changed how they spend money and the women from this era are working longer than in past years. A couple of other factors to consider is the U.S. teen market along with the ethnic and racial make-up. According to data collected the teen market is expected to be at around 20 million by 2010, this teen market consist of teenagers between the ages of 12 and 19. Along with this growth is the African Americans which is the largest of the ethnic groups is quickly being surpassed by the Hispanic population and this ethnic group is expected to be the largest by 2010 and should surpass 40.5 million individuals. In addition to this multi-cultural growth being experienced throughout the United States, the non-hispanic is expected to shrink 68% by 2010. If Revlon can take advantage of this growth and expand to the foreign markets where analysis has shown that there will be a lot of opportunities for potential sales of cosmetic and personal care products throughout the world. Obviously with when there are positive aspects in business, there is always some type of negative influence that could potentially affect the overall business climate and growth of a company. In regards to Revlon, people are more socially, morally and fiscal conscious more than...
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