STRATEGIC MANAGEMENT

FINAL PAPER
Anggit Marsanti 1306382285
Namira Lahuddin 1306408265
Namira Maulida N 1306382291
Rosabella Tabita 1306385791
Tania Safira 1306386163


STATEMENT OF AUTHORSHIP
We, who signed on the statement below, declared that this work has been performed and
interpreted solely by ourselves unless otherwise acknowledged in the text.
We confirm that this work has not been submitted elsewhere in any other form for the
fulfilment of any other degree or qualification.
We understand that our work, that we submitted, can be multiple and/or being communicate
with the purpose of detecting if there is any plagiarism.

Course : Strategic Management

Title : Final Paper Case: Revlon
Date : November, 20th 2016
Lecturer : Avanti Fontana / Niken Iswani Putri

Name : Anggit Marsanti Name : Namira Maulida Noviar

Email : anggitmarsanti@gmail.com Email : namira.noviar@gmail.com

Name : Namira Lahuddin Name : Rosabella Tabita

Email : n.lahuddin@gmail.com Email : rosabella.sibuea@gmail.com

Name : Tania Safira

Email : tania_safira@hotmail.com

TABLE OF CONTENTS

COVER
STATEMENT OF AUTHORSHIP ........................................................................................ 1
TABLE OF CONTENTS ........................................................................................................ 3
COMPANY OVERVIEW ....................................................................................................... 4
BUSINESS PORTFOLIO ....................................................................................................... 5
Consumer Division Brands.................................................................................................. 5
Professional Division Brands .............................................................................................. 5
Other Division Brands ......................................................................................................... 6
VISION & MISSION............................................................................................................... 6
SWOT ....................................................................................................................................... 9
EXTERNAL FACTOR EVALUATION MATRIX............................................................ 10
Opportunities ...................................................................................................................... 10
Threats................................................................................................................................. 16
INTERNAL FACTOR EVALUATION MATRIX ............................................................. 21
Strengths ............................................................................................................................. 21
Weaknesses ......................................................................................................................... 23
COMPETITIVE PROFILE MATRIX ................................................................................ 27
SPACE MATRIX ................................................................................................................... 28
BCG MATRIX ....................................................................................................................... 32
THE INTERNAL EXTERNAL (IE) MATRIX .................................................................. 34
THE GRAND STRATEGY .................................................................................................. 36
STRATEGY GENERATING ............................................................................................... 37
QSPM MATRIX .................................................................................................................... 37
STRATEGY IMPLEMENTATION .................................................................................... 41
Marketing............................................................................................................................ 41
Finance ................................................................................................................................ 42
R&D ..................................................................................................................................... 44
THE BALANCED SCORECARD ....................................................................................... 45
CONCLUSION ...................................................................................................................... 48
REFERENCES....................................................................................................................... 49

COMPANY OVERVIEW
Revlon was founded in the midst of the Great Depression, 1932, by Charles
Revson and his brother Joseph along with a chemist, Charles Lachman, who contributed the
"L" in the Revlon name. Starting with a single product a new type of nail enamel the three
founders pooled their resources and developed a unique manufacturing process.
Using pigments instead of dyes, Revlon developed a variety of new shades of opaque nail
enamel. In 1937, Revlon started selling the polishes in department stores and drug stores. In
six years, the company became a multimillion-dollar organization. By 1940, Revlon offered
an entire manicure line, and added lipstick to the collection. In November 1955, Revlon went
public traded at New York Stock Exchange with REV as their ticker. The IPO price was $12
per share, but it reached $30 per share within 8 weeks.
Today Revlon is a global color cosmetic, hair color, beauty tools, fragrances,
skincare, anti-perspirant deodorants and beauty care products company whose vision
is Glamour, Excitement and Innovation through high-quality products at affordable
prices. Revlon is one of the strongest consumer brand franchises in the world. Revlon’s
global brand portfolio includes Revlon color cosmetics, Almay color cosmetics, SinfulColors
color cosmetics, Pure Ice color cosmetics, Revlon ColorSilk hair color, Revlon beauty tools,
Charlie fragrances, Mitchum anti-perspirant deodorants, and Ultima II and Gatineau
skincare. As a result of its acquisition of The Colomer Group in October 2013, Revlon’s
global portfolio also includes: Revlon Professional, Intercosmo, Orofluido and UniqOne™
hair care; CND, CND Shellac and CND Vinylux™ nail polishes; and American Crew men’s
hair care.
In 2016, Revlon announced its decision to acquire premium cosmetics company
Elizabeth Arden for $870 million. Revlon, controlled by billionaire Ron Perelman, sees an
opportunity to revive the fortunes of Elizabeth Arden, an unprofitable company whose
celebrity-branded fragrances have lost favor with consumers. The transaction, expected to be
completed by the end of 2016, will help Revlon enter the premium beauty segment, expand
its offerings portfolio, and further its geographical reach. The merger will bring together the
84-year-old Revlon with the 106-year-old Arden business in the hopes that a combined
distribution network and marketing strategy can broaden their appeal. It brings Revlon into a
prestige business that's been healthier than mass in recent years, and takes the brand deeper
into fragrances and skin care.

BUSINESS PORTFOLIO
Consumer Division Brands

The consumer division brands of Revlon include Revlon brand, Almay, Revlon
Colorsilk, Revlon Beauty Tools, Mitchum, Revlon Natural Honey, Cutex, PureICE, and
Sinful Colors. The Revlon brand is comprised of face makeup, including foundation, powder,
blush and concealers; lip makeup, including lipstick, lip gloss and lip liner; eye makeup,
including mascaras, eyeliners, eye shadows and brow products; and nail color and nail care
lines. Revlon products include innovative formulas and attractive colors that appeal to a wide
range of consumers. Key franchises within the Revlon brand include Revlon ColorStay,
Revlon PhotoReady, Revlon Age Defying and Revlon Super Lustrous. In 2015, Revlon’s
“Love Is On” campaign continued to resonate across the globe, and was incorporated into
every facet of our marketing strategy across markets and platforms. This consumer division
brands is essentials to the success of Revlon because they offer a high quality drugstore brand
with competitive price.

Professional Division Brands

The professional division brands of Revlon include Revlon Professional, CND,

American Crew, d:fi, Orofluido, Crème of Nature, and InTercosmo. The Revlon Professional

brand encompasses color, styling, hair care, nail art, men groom, and salon technical products
and treatments, distributed to salon professionals. Revlon Professional is synonymous with
innovation, fashion and technology to help the most creative salon professionals reveal the
beauty in every woman.

Other Division Brands

The Company’s Other segment primarily includes the distribution of prestige,

designer and celebrity fragrances, cosmetics and skincare products, such as Burberry and
Rihanna branded products.

VISION & MISSION

Here below are Revlon’s current vision and mission statement

Vision:
“Provides bold glamour, Excitement and Innovation through high quality products at
affordable prices.”

Mission Statement:
1. World leader in cosmetics, skin care, fragrance and personal care and a leading mass
market cosmetics brand
2. To emerge as dominant cosmetics and personal care in the twenty-first century by
appealing to young/trendy women, health conscious (skin care), and elder women with
variety of brand

Custom Products Markets Techno Concern for Philoso Self- Concern Concern
ers or logy Survival, phy Concept for for
Services Growth, and public employees
Profitability image

1 Yes Yes Yes No Yes Yes No No No

2 Yes Yes Yes No Yes Yes No No No

In this section, we’ve been trying to evaluate Revlon’s current vision and mission
statement. We think that Revlon current vision and mission statement are still lacking some
objectives and values so that we try to propose new vision and mission statement for Revlon.
Here below are Revlon’s new vision and mission

New Vision:
“Provides bold glamour, Excitement and Innovation Cosmetics through high quality products
at affordable prices.”
In this new vision, we add the word “cosmetics” to make it clear that Revlon want to
be a company that produce high quality cosmetics with full of glamour, excitement, and
innovation with affordable prices. Moreover, after we identified all of the nine components
that should be includes in the mission statement which contains of costumers,
products/services, markets, technology, concern for survival, growth, and profitability,
philosophy, self-concept, concern for public image, and concern for employees, we propose
this new mission statement as shown below that will completed all the elements that missing
in the previous mission statements.

New Mission Statement:

1. Become the world leader in cosmetics, skin care, fragrance and personal care and a
leading mass market cosmetics brand
2. To emerge as most trusted and admired cosmetics and personal care in the twenty-
first century by committed to pleasing women of all ages with variety of brand
3. To providing woman with the latest virtual makeover technology to empower them to
find their perfect shade.
4. Embrace professionalism by engaging employees enhances our corporate reputation
and continue our commitment to helping associates achieve their highest potential in a
positive work environment.

Custom Products Markets Techno Concern for Philoso Self- Concern Concern
ers or logy Survival, phy Concept for for
Services Growth, and public employees
Profitability image

1 Yes Yes Yes No Yes Yes No No No

2 Yes Yes Yes No Yes Yes No No No

3 Yes Yes Yes Yes Yes Yes No No No

4 Yes Yes Yes No Yes Yes Yes Yes Yes

SWOT
Strengths Weaknesses

Affordable price Brand Recognition Global market share loss in 2010

Primary customers are large-mass merchandisers

Limited presence in emerging country's market
and drug stores
Relatively small R&D budget among other
Selling through many websites
competitors

Well established U.S Market Relatively small advertising budgets

Less diversified products comparing to

Revlon global expansion
competitors

Celebrities support as spokesperson and

Large debt loan of $1.1 billion in 2011
ambassadors
Not generating a sufficient volume of business
given its total investment

Opportunities Threats

Increasing number of cheap local cosmetics

Middle class growth in emerging market
products

The increasing number of people's consumption in Higher awareness from the society about the
tertiary product importance to support local cosmetics products

The increasing number of drugstore cosmetic

Increase in online retail, online advertising, social
product and cheap Korean product because of free
media presence, and advanced technology
trade.

Women's growing interest in purchasing cosmetic, The emergence of fake Revlon's product in middle
beauty, and fragrance product to lower class society

The increasing number of men that using cosmetic

Economic slowdown and stability problem
product
Two seasons developing nations tend to use less
The increasing number of drugstore as Revlon's
makeup compared to four seasons country due to
distributing channel
the humidity climate

EXTERNAL FACTOR EVALUATION MATRIX

Opportunities Weight Rating Weighted Score

1. Middle class growth in emerging market 0.11 3 0.33
2. The increasing number of people's consumption in tertiary product 0.12 2 0.24
3. Increase in online retail, online advertising, social media presence, and advanced technology 0.12 4 0.48
4. Women's growing interest in purchasing cosmetic, beauty, and fragrance product 0.08 3 0.24
5. The increasing number of men that using cosmetic product 0.06 1 0.06
6. The increasing number of drugstore as Revlon's distributing channel 0.09 4 0.36
Threats Weight Rating Weighted Score
1. Increasing number of cheap local cosmetics products 0.11 4 0.44
2. Higher awareness from the society about the importance to support local cosmetics
0.10 3 0.30
products
3. The increasing number of drugstore cosmetic product and cheap Korean product because of
0.07 2 0.14
free trade
4. The emergence of fake Revlon's product in middle to lower class society 0.05 1 0.05
5. Economic slowdown and stability problem 0.05 2 0.10
6. Two seasons Developing Nations tend to use less makeup compared to four seasons country
0.04 2 0.08
due to the humidity climate
TOTALS 1.00 2.82

The total weighted score of Revlon’s external factor evaluation is 2.82. The score is above
the average or midpoint of 2.50, it means that’s Revlon is doing well on their business. They
able to taking advantages of the existing external opportunities and avoiding or minimizing
the external threats facing the firm. But there is a room for improvement because he highest
total weighted score would be 4.0. The improvement area indicated by ratings of 1, so Revlon
needs to capitalize more or minimizing the threats of “The emergence of fake Revlon’s
product in middle to lower class society” and also taking more advantages of “The increasing
number of men that using cosmetics products.”

Opportunities
Opportunity is a vital aspect for a firm. Opportunity can be the medium for the firm to grow
bigger by exploiting its benefits. Major opportunities are the phenomenon or events that
could big impact for the firm’s growth, meanwhile minor opportunities are available that give
minor impact to the firm or a general impact for the industry.

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Here is the list of Major Opportunities:

1. Middle class growth in emerging market

Since 1800 the world has seen two great middle class expansions, and we are living
through a third. The nineteenth century industrial revolution created a substantial
Western European and American middle class, which grew again after the Second World
War – a spurt which this time included Japan. Today this is happening in the emerging
markets (EMs). In Asia alone, 525 million people can already count themselves middle
class — more than the European Union’s total population. Over the next two decades,
the middle class is expected to expand by another three billion, coming almost
exclusively from the emerging world. By 2030, so many people will have escaped
poverty that the balance of geopolitical power will have changed completely, and global
trade patterns will also be unrecognizable. The twenty years in between will see more
and more people entering the middle classes with new money and demands, and
economists hope these consumers can help rescue the global economy.
Meanwhile, companies used to serve the middle-income brackets of the old Western
democracies need to decide how to supply the new bourgeois of Africa, Asia and
beyond.
Since 1995, the remarkable growth of the EM economies has brought millions out of
abject poverty, but has put far fewer people into the “global middle class”. Only a quarter
of the world’s population (1.8 billion) earns US$10-US$100 — 60% in the developed
world and 20% in the BRIC countries. By this definition, rather than the World Bank’s, a
sobering 70% is poor (i.e., earn less than US$10 per day), and only 2% rich. But it is this

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richer, global middle class that we believe will grow rapidly over the next 20 years. This
growth will completely change global wealth distribution.
By 2030, we believe two-thirds of the global middle class will live in the Asia-
Pacific region, up from just under one-third in 2009. On the other hand, although North
America’s and Europe’s middle class populations will stay roughly constant, their share
of the population will be drastically reduced — Europe’s by more than half, to 14% by
2030. A significant proportion of the new Asian middle class are also expected to be at
the upper end of the income bracket, with impressive spending power. Large populations
and rapid economic growth mean China and India will become the powerhouses of
middle class consumerism over the next two decades Emerging markets growth will
also dramatically redistribute the bourgeois around the world. Today, China has around
150 million people earning between US$10 and US$100 per day. As long as China
continues to grow, and necessary economic reforms are made, we expect as many as 500
million Chinese could enter the global middle class over the next decade. By 2030
around one billion people in China could be middle class — as much as 70% of its
projected population.
India’s global middle class, meanwhile, at around 50 million people, or 5% of the
population, is much smaller. We expect this to grow steadily over the next decade,
reaching 200 million by 2020. After this, we expect growth to really accelerate, reaching
475 million by 2030 and adding more people than the Chinese to the global middle class
worldwide after 2027. China’s middle class will grow quickly earlier because it has more
people on the verge of earning over US$10 per day. Currently, around 25% of China’s
population earns US$5-US$10 per day and 40% earn US$2-US$5.
Source:
http://www.ey.com/gl/en/issues/driving-growth/middle-class-growth-in-emerging-
markets---the-middle-class-effect-and-the-growth-sweet-spot

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2. The increasing number of people’s consumption in tertiary product

In most developed and developing countries, a growing proportion of workers are

devoted to the tertiary sector. Now coming to the contribution part and why there is an
increase or decrease of various sectors in our economy. Economic growth is divided in to
various phases by three-sector theory. The tertiary sector begins to develop, as do the
financial sector and the power of the state. Today the tertiary sector has grown to such an
enormous size that it is sometimes further divided into an information-based quaternary
sector, and even a quinary sector based on non-profit services.
Source:
https://www.quora.com/Which-sector-i-e-primary-secondary-tertiary-contributes-the-
most-to-the-GDP-of-India-Why
3. Increase in online retail, online advertising, social media presence, and advanced
technology
E-commerce websites are no longer just offshoots of retailers' physical stores but
valid alternatives for global expansion. Today's most successful retailers see global
expansion as a crucial platform for growth. Wary of "real estate wars" and long ROI
horizons, many have seized the online retail opportunity to overcome these challenges.
Retailers everywhere are diving into online retail as consumers across the globe in both
developed and developing markets go online to buy products. They are using a variety of
growth strategies, from grassroots websites to acquisitions of smaller online retailers or
expansion of international shipping capabilities. This table below is the 2013 Global
Retail E-Commerce Index that will help retailers devise successful global online retail
strategies and identify market investment opportunities while understanding the tradeoffs
and barriers to success.

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Source:
https://www.atkearney.com/consumer-products-retail/ideas-insights/featured-article/-
/asset_publisher/KQNW4F0xInID/content/online-retail-is-front-and-center-in-the-
quest-for-growth/10192

Here is the list of Minor Opportunities:

1. Women’s growing interest in purchasing cosmetic, beauty, and fragrance
products
For an industry that took in $46.2 billion in 2015 and is projected to rise to $51.8 billion
in 2020 (according to Mintel) bending to millennial whims isn’t just a good idea — it’s
crucial. They’re not only the largest generation in America, but according a 2015 study
done by TABS Analytics, women ages 18 to 34 are also the biggest portion of the $13
billion dollar cosmetics market, and they’re more likely to be heavy buyers, meaning they
purchase more than 10 types of products a year. Plus, today’s shopper isn’t against a

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splurge — the U.S. prestige beauty industry reached $16 billion in 2015, a seven percent
increase over 2014 sales, according to The NPD Group. The biggest gainer: makeup at 13
percent — a jump attributed largely to the generation’s love for the Instagram-driven
trends of contouring, strobing, baking, and color-correcting with dollars going to
concealer, primers, and contour, highlighting, and sculpting kits as well as eyebrow
products.
Source:
http://www.racked.com/2016/5/26/11674106/buying-beauty-sephora-department
2. The increasing number of men that using cosmetic product
The men’s grooming industry is expected to bring in over $21 billion this year.
All of this is indicative of a paradigm shift of sorts in men's overall perception of
grooming and self-care. (Complex Magazine) Companies can capitalize on the growing
market for men’s beauty care, as male baby boomers age and become more conscious of
their appearance. Top markets for men's beauty product growth in recent years include
Brazil, China, the U.S., Germany, India, and the UK. (Hoovers). The market for men's
grooming and personal care products will increase 13% by 2018 compared to 2013.
(Mintel) And, it is just the tip of the iceberg. It is estimated that 75% of men are not using
any sort of facial skin care, but interest continues to grow.
Source:
https://ecrm.marketgate.com/ContentGateway/2016/07/Industry-Trends-Fragrance-Bath-
-Cosmetics.aspx
3. The increasing number of drugstore as Revlon’s distributing channel
Through increasing the number of outlets, chemists/pharmacies continued to be
the biggest distribution channel for consumer health products in 2016. Having the most
comprehensive range of variants is the average consumer’s main reason to shop within
the channel. Furthermore, in order to give better value to consumers and to outperform
other chemists/pharmacies, some chained chemists/pharmacies offer 24 hours opening
hours and product delivery services for certain areas.

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On the trailing twelve months basis, Pharmacy Services & Retail Drugstore
Industry's pace of cumulative 12 months Sales growth in 3 Q 2016 accelerated to 8.7 %
year on year, but remained below Industry average. Sequentially TTM Revenue grew by
1.84 %. Within Retail sector 2 other industries have achieved higher Revenue growth.
Revenue growth total ranking has improved so far to 25, from total ranking in previous
quarter at 75.
Source:
http://www.euromonitor.com/consumer-health-in-indonesia/report
http://csimarket.com/Industry/industry_growth_rates.php?rev&ind=1304

Threats
There are two types of threats that will be discussed here, which are major threat and minor
threat. Major threat is the list of external events that could harm the firm’s profitability or
existence and must be avoid to prevent undesirable situations for the firm, whereas minor
threat is the threat that could affect the firm in a bad way but could be minimized from the
firm’s strategy.

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Here is the list of Major Threat:

1. Increasing number of cheap local cosmetic products

Source:
http://www.markplusinc.com/halal-and-herbal-the-two-emerging-buzzwords-in-
indonesias-cosmetics-market/
2. Higher awareness from the society about the importance to support local
cosmetic products.
The local cosmetics products are growing in the international market. Not
only local cosmetics products in Indonesia, but also in China, Hong Kong, Korea,
Japan, and others. The local manufactures try to increase the variety of products that
they can offer to the tourists, and also eager to cater to the needs of the local
population. local brands mostly concentrated in the mid- to low-end segments, while
foreign-invested enterprises and joint ventures dominated the high-end segment. The
rapid development of domestic cosmetics companies boosted the growth of domestic
brands at a rate of about 10-15% in 2014 and the market share of domestic brands is
growing gradually, posing competition to their foreign counterparts. Then, many
consumers feel loyalty to local producers, and are keen to put money back into their
local economies, which has been a major factor in the recent growth of cosmetics’
markets.

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So with this conditions it will becoming threat to Revlon because as global

manufactures cosmetics that selling their products to many countries that has their
own local cosmetics products, they have to compete more to the local manufactures in
order to win costumer heart that would prefer buy products that have good quality and
also cheaper price.
Source:
http://china-trade-research.hktdc.com/business-news/article/China-Consumer-
Market/China-s-Cosmetics-Market/ccm/en/1/1X000000/1X002L09.htm

Here is the list of Minor Threat:

1. The increasing number of drugstore cosmetic product and cheap Korean
product because of free trade
The variety products and brands of drugstore cosmetics are increasing. These
are the example of drugstore cosmetics products that most popular:

Those products are drugstore makeup brands that are either 100% vegan or
carry some vegan and also no animal testing ingredients. Moreover, Exports of South
Korean cosmetics and beauty products to international market is increasing according
to the latest figures from the Korea International Trade Association. One of the
current export leaders is Innisfree, a beauty brand produced by South Korean
cosmetics group AmorePacific. AmorePacific officials say they aim to become Asia's
top cosmetics producer with global sales of 70 billion yuan ($11.4 billion) by 2020.
Increased use of cross-border e-commerce sites have allowed more access to such
international brands.
So this is also threatening Revlon sales and profit opportunities, because the
increasing number of drugstore cosmetic products that offer some kind of benefits
which is more cruelty-free makes Revlon would lose some consumers and market that

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are concerned about the benefits. Other than that, Korean cosmetics that growing fast
in the market also become one of the competitors that threaten sales of Revlon.
Source:
http://ethicalelephant.com/vegan-makeup-drugstore-brands/;
http://europe.chinadaily.com.cn/business/2016-01/26/content_23260834.htm.
2. The emergence of fake Revlon’s product in middle to lower class society
The fake Revlon’s products have founded in the international market and
many of the consumers deceived by the fake products. The fake Revlon’s products are
founded in a store in Central Delhi area, India. Not only that, Wholesale market in
Old Delhi where one can get all sorts of fake items, including packaged FMCG and
cosmetic items from selected shops. The price of fake products is 50% cheaper that
the original products. In most cases, people are being cheated as they are not aware
that the products they are buying are fake ones. Once consumed, the result can be
dangerous in case of fake products.
So by emergence of fare Revlon’s products, means that consumer lower class
society that doesn’t know would prefer buy a fake product because of the cheaper
price. It will be threatening the Revlon’s number of sales that will be decreasing if
many consumers prefer to buy those fake products. Not only that, if consumer of fake
Revlon’s products is disappointed it will give an impact to the society that thought
Revlon’s products is not good and have a bad quality.
Sources:
http://www.dailymail.co.uk/indiahome/indianews/article-2342341/Black-market-
Capital-Industry-report-reveals-Delhi-contributes-75-cent-Indias-Rs-45-000-
counterfeit-goods-trade.html#ixzz4QWCptAGh
3. Economic slowdown and stability problem
Risks to the global outlook remain tilted to the downside and relate to ongoing
adjustments in the global economy: a generalized slowdown in emerging market
economies, China’s rebalancing, lower commodity prices, and the gradual exit from
extraordinarily accommodative monetary conditions in the United States. If these key
challenges are not successfully managed, global growth could be derailed.
Manufacturing activity and trade remain weak globally, reflecting not only
developments in China, but also subdued global demand and investment more
broadly—notably a decline in investment in extractive industries. In addition, the

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dramatic decline in imports in a number of emerging market and developing

economies in economic distress is also weighing heavily on global trade.
With this economic slowdown and unstable conditions would threaten Revlon that
export their products globally.
Source:
http://www.imf.org/external/pubs/ft/weo/2016/update/01/
4. Two seasons developing nations tend to use less make up compared to four
seasons country due to the humidity climate
In the two seasons developing nations, the humidity level is relatively higher
than in four seasons country. This humidity level effects the use of makeup. Country
that has low humidity level more likely to experience dryness and flakiness,
especially dry skin conditions. So by living in the dry climate (low humidity level)
people try to used makeup or beauty products that providing more moisture for skin.
Source:
http://www.caringeveryday.co.uk/troubled-skin/how-seasonal-weather-changes-
affect-your-skin

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INTERNAL FACTOR EVALUATION MATRIX

Strengths Weight Rating Weighted Score
1. Affordable price Brand Recognition 0.12 4 0.48
2. Primary customers are large-mass merchandisers and drug stores 0.09 4 0.36
3. Selling through many websites 0.04 3 0.12
4. Well established U.S Market 0.07 4 0.28
5. Revlon global expansion 0.09 3 0.27
6. Celebrities support as spokesperson and ambassadors 0.10 4 0.40
Weaknesses Weight Rating Weighted Score
1. Global market share loss in 2010 0.05 1 0.05
2. Limited presence in emerging country's market 0.06 2 0.12
3. Relatively small R&D budget among other competitors 0.06 1 0.06
4. Relatively small advertising budgets 0.08 1 0.08
5. Less diversified products comparing to competitors 0.07 2 0.14
6. Large debt loan of $1.1 billion in 2011 0.12 1 0.12
7. Not generating a sufficient volume of business given its total investment 0.05 1 0.05
TOTALS 1.00 2.53

The total weighted score of Revlon’s internal factor evaluation is 2.53, that is above the
average or midpoint of 2.50. So the score indicates Revlon is doing well on their business and
have a strong internal position. It means that Revlon able to capitalize their internal strengths
and overcome and improve internal weaknesses. But there are still a room for improvement
because he highest total weighted score would be 4.0. The improvement area indicated by the
least amount on weighted score, so Revlon having major problems on capitalize their strength
especially “Selling through many websites.” Then also trying to overcome and improve on
“Global market share loss” and “Not generating a sufficient volume of business.” so Revlon
be able to continually strive to improve on their weaknesses, turning them into strengths.

Strengths
We will identify the strengths that could help the firm to overcome the opportunities and/or
threats.
Here is the list of Major Strengths:
1. Affordable price brand recognition
Revlon Corporate Profile stated that Revlon is a global color cosmetic, hair color, beauty
tools, fragrances, skincare, anti-perspirant deodorants and beauty care products company
whose vision is Glamour, Excitement and Innovation through high-quality products at
affordable prices. Revlon® is one of the strongest consumer brand franchises in the world.
Source:
http://www.revlon.com/about/fact-sheet

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2. Celebrities support as spokesperson and ambassadors

It was announced on October 2016 that Ciara is Revlon's latest brand ambassador. The
company revealed that the singer would join a slate of celebrities already associated with the
makeup brand, including Olivia Wilde and Halle Berry. It is a good strategy from Revlon
since Ciara has grown from a bona fide hit-maker ("Goodies," "Body Party," and "1, 2 Step,"
to name a few), to a full-on fashion icon (the ethereal Roberto Cavalli dress she wore to this
year’s CFDA Awards was no exception) and model, with the IMG contract to prove it. This
strategy is a high potential movement that can boost the sales of Revlon
Source:
http://fortune.com/2016/10/19/ciara-revlon-brand-ambassador/

Here is the list of Minor Strengths:

1. Primary customers are large-mass merchandisers and drug stores
Revlon products are primarily sold by mass merchandisers and drugstores such as CVS,
Target, Shoppers Drug Mart, A.S. Watson, Boots, and Wal-Mart. Revlon products are
distributed in more than 150 countries, though the US is its largest market, generating more
than half of sales.
Source:
http://www.vault.com/company-profiles/personal-care/revlon,-inc/company-overview.aspx
2. Selling through many websites
Revlon sells its product on variety of websites. In USA, we can buy Revlon’s product in the
website such as,
http://www.revlon.com/about/where-to-buy
http://www.watsons.com.my/
https://www.walgreens.com/
https://www.walmart.com/
http://www.target.com/
http://www.ulta.com/
http://www.boots.com/en/Revlon/
And many others globally accessible website.

22



3. Well established U.S. Market

In 2015, Revlon’s consumer sentiment in the domestic U.S. market has been upbeat,
which could accelerate Revlon’s sales for its consumer product line. Although in the
United States, which is known for the market for prestige and luxury cosmetics is
cannibalizing sales from mass market cosmetics products in developed markets,
Revlon can survive the situations because the company is concentrating on its
marketing efforts, with a stress on its consumer division. The brands in focus are
Revlon Color Cosmetics, Almay, Mitchum, Color Silk, & Beauty Tools. Almay, which
is a core-asset to Revlon’s product portfolio, has been under-performing for a while.
Source:
http://www.forbes.com/sites/greatspeculations/2015/03/10/revlon-marketing-spending-and-
currency-headwinds-might-have-mitigated-q4-sales-growth/#7398ac2c284c
4. Revlon Global expansion
Revlon’s consumer segment includes cosmetics, hair color and hair care, beauty tools, anti-
perspirant deodorants, fragrances and skincare products sold in approximately 130 countries
in large volume retailers, chain drug and food stores, chemist shops, hypermarkets, general
merchandise stores, the Internet/e-commerce, television shopping, department stores, one-
stop shopping beauty retailers, specialty cosmetics stores and perfumeries in the United
States and internationally. Furthermore, the company’s professional brand includes hair
color, hair care and hair treatment products that are distributed to professional salons, salon
professionals and salon distributors, and sold in over 60 countries. This shows that Revlon is
being actively expanding their business throughout the world to achieve their mission, which
is to be the world leader in cosmetics, skin care, fragrance and personal care and a leading
mass market cosmetic brand.
Source: http://www.reuters.com/finance/stocks/companyProfile?symbol=REV

Weaknesses
Each firm has their own weaknesses that they could not avoid at some aspects.
Here is the list of Major Weaknesses:
1. Large debt loan of $1.1 billion in 2011
Revlon's high leverage and smaller scale relative to more diversified and highly
competitive global cosmetic suppliers create vulnerability to changes in the economic

23



environment, shifts in consumer demand and the product, pricing and promotional
activities of competitors.

Here is the list of Minor Weaknesses:

1. Global market share loss in 2010
In 2010, Revlon had been losing their market share until now Revlon’s market share
is relatively low compare to their competitor. This fact was affecting Revlon’s
performance in the past five years, which they haven’t found a way to make the
company right again.
Source:
http://www.cosmeticsdesign.com/Business-Financial/Revlon-profit-turns-to-loss-on-
costs-and-currency-headwinds
2. Limited presence in emerging country’s market
Growth of make-up product in the emerging market is currently high with the other
make-up company trying their best to enter and grab large market share in the
emerging markets. The limited presence of Revlon in emerging market is hold up
Revlon to obtain those opportunities.
Source:
http://www.forbes.com/sites/greatspeculations/2014/06/10/heres-what-estee-lauder-
has-done-to-boost-its-share-in-emerging-markets/#122ded3b28c8
3. Relatively small R&D budget among other competitors
R&D is an important thing in this rapid and dynamic condition. Shifting trends and
preference is a common thing this days, therefore accurate R&D would be an
important thing for a company to predict the trends and the markets. Small amount of

24



R&D Budget means the less information the company could gather about their
market.

4. Relatively small advertising budgets

As the producer of stuff with less diversified product, advertising is the way a
company to sell the product and to acknowledge people with the benefits of their
product, therefore a massive advertising and marketing is needed especially in this
rapid technology changes.

25



5. Less diversified products comparing to competitors

Revlon is up against tough competition in the beauty industry. Both L’Oreal and Estee
Lauder being much larger companies as compared to Revlon, also possess greater
resources for research and marketing, which gives them the scope to explore newer
products and expand into newer geographies and channels. For example, recently
L’Oreal has introduced the first wearable to detect ultraviolet ray exposure on the
user’s skin. L’Oreal has spent around $1 billion in research and development in 2014.
Estee Lauder has recently introduced a wide portfolio of new products under its travel
retail channel. To put things into perspective, L’Oreal’s revenues for 2014 was ~$30
billion and Estee Lauder’s was ~$10 billion. Revlon on the other hand registered
revenues of around $2 billion
Source:
http://www.forbes.com/sites/greatspeculations/2016/02/01/is-revlon-on-the-verge-of-
some-major-strategic-restructuring/#ea70b3a3b4b4
6. Not generating a sufficient volume
This fact shows the deficiency in Revlon’s operation because the return that Revlon’s
get is not comparable to Revlon’s total investment in the company.

ROE
0.1

0.0
2012 2013 2014 2015 2016 2017
-0.1

-0.1

-0.2

-0.2

-0.3

Revlon

26



COMPETITIVE PROFILE MATRIX

REVLON L'OREAL MAYBELLINE

Critical Success Factors Weight
Rating Score Rating Score Rating Score
Advertising 0.10 3 0.30 4 0.40 3 0.30
Market Penetration 0.06 2 0.12 4 0.24 4 0.24
Customer Service 0.10 4 0.40 3 0.30 3 0.30
Store Locations 0.10 4 0.40 4 0.40 4 0.40
R&D 0.06 2 0.12 2 0.12 3 0.18
Employee Dedication 0.04 2 0.08 4 0.16 2 0.08
Financial Profit 0.07 1 0.07 2 0.14 2 0.14
Customer Loyalty 0.09 3 0.27 4 0.36 4 0.36
Market Share 0.07 3 0.21 4 0.28 4 0.28
Product Quality 0.13 4 0.52 4 0.52 4 0.52
Top Management 0.08 3 0.24 3 0.24 3 0.24
Price Competitiveness 0.10 4 0.40 3 0.30 3 0.30
Totals 1.00 3.13 3.46 3.34

In the CPM, the main competitors of Revlon are L’Oreal and Maybelline because both of the
company providing consumer with variety of products that similar to Revlon. Other than that,
L’Oreal and Maybelline has the same market segmentation with Revlon which is women
aged in their early teens and older. Revlon receives a 3.13 overall rating and another receives
a 3.46 (L’Oreal) and 3.34 (Maybelline) in a CPM. So Revlon receives the lowest score in the
CPM and L’Oreal become the main competitor or rival because it receives the highest score.
But it does not necessarily follow that L’Oreal is precisely 3.6 percent better than Revlon, but
it does suggest that L’Oreal is better in some areas.

27



SPACE MATRIX
Its four-quadrant framework indicates whether aggressive, conservative, defensive, or
competitive strategies are most appropriate for a given organization. The axes of the SPACE
Matrix represent two internal dimensions (financial position [FP] and competitive position
[CP]) and two external dimensions (stability position [SP] and industry position [IP]). These
four factors are perhaps the most important determinants of an organization’s overall strategic
position.
FP
Conservative Aggressive
7

CP IP
-7 -6 -5 -4 -3 -2 -1 1 2 3 4 5 6 7
-1

-2

-3

-4

-5

-6

-7
Defensive Competitive
SP

Financial Position Ratings

Operating income 1.0
Net income 1.0
Working capital 1.0
Leverage 1.0
Inventory turn over 2.0
7.0
Industry Position
Growth potential 4.0
Profit potential 3.0
Ease of entry into the market 3.0
Resource utilization 4.0
Financial Stability 3.0
17.0

28


Stability Position
Price elasticity of demand -5.0
Competitive pressure -4.0
Demand variability -4.0
Price range of competing firms -5.0
Risk involved in business -2.0
-20.0
Competitive Position
Control over supplier and distributors -3.0
Market share -4.0
Customer loyalty -3.0
Product life cycle -4.0
Product price -3.0
-17.0

Conclusion,
SP average is -20/5 = -4.0
IP average is 17/5 = 3.4
CP average is -17/5 = -3.4
FP average is 7/5 = 1.12
X-axes: -3.4 + 3.4 = 0.0 Y-axes: -4.0 + 1.17 = -2.8

In Revlon case, the directional vector located in the lower-right or competitive quadrant of
the SPACE Matrix, indicating competitive strategies. So we can conclude that the best
strategy for Revlon is competitive strategy which contains backward, forward, and horizontal
integrations, market penetration, market development, and product development.

29


SWOT MATRIX
Opportunities
1. Middle class growth in
emerging market
2. Increase in online retail,
online advertising, social media
presence, and advanced
technology
3. The increasing number of
people’s consumption in tertiary
product
4. The Increasing number of
drugstore as Revlon
Distribution Channel
5. Women’s growing interest in
purchasing cosmetic, beauty,
and fragrance product
6. increasing number of men
that using cosmetic product
Strengths
1. Affordable price Brand
Recognition
2. Primary customers are large-
mass merchandisers and drug
stores.
3. Selling through many
websites
4. Well established U.S Market
5. Revlon global expansion
6. Celebrities support as
spokesperson and ambassadors
SO Strategies
1. Maintaining website online-
sales system to boost Revlon’s
sales (O2, S3)
2. Making contract agreement
to all drugstores in global to
expand the markets (S1, O4)
3. Prioritizing on cheap
customer segment with high
quality product(S1, O1, O3)
Weaknesses
1. Global market share loss in
2010
2. Limited presence in emerging
country's market
3. Relatively small R&D budget
among other competitors
4. Relatively small advertising
budgets
5. Less diversified products
comparing to competitors
6. Large debt loan of $1.1
billion in 2011
WO Strategies
1. Making low-cost online
advertising campaign in social
media (W4, O2)
2. Increase R&D budget to
develop new competitive
product line (W3, W5, O3, O5)
30


Threats ST Strategies WT Strategies

1. Increasing number of cheap 1. Using local well-known 1. Developing restructuring plan
local cosmetic products celebrity to do its campaign to to increase company’s
2. Higher awareness from the compete with local product (S6, effectivity and efficiency (W6,
society about the importance to T1, T2) T4)
support local cosmetics
products
3. The increasing number of
drugstore cosmetic product and
cheap Korean product because
of free trade
4. Economic slowdown and
stability product
5. The emergence of fake
Revlon's product in middle to
lower class society
6. Two seasons developing
nations tend to use less makeup
compared to four seasons
country due to the humidity
climate.

31



BCG MATRIX
When a firm’s divisions compete in different industries, a separate strategy often must
be developed for each business. The Boston Consulting Group (BCG) Matrix and the
Internal-External (IE) Matrix are designed specifically to enhance a multidivisional firm’s
efforts to formulate strategies. The BCG Matrix allows a multidivisional organization to
manage its portfolio of businesses by examining the relative market share position and the
industry growth rate of each division relative to all other divisions in the organization. The x
axes represent relative market share, and the y axes represent industry growth rate.
The size of the circle corresponds to the proportion of corporate revenue generated by
that business unit, and the pie slice indicates the proportion of corporate profits generated by
that division. Divisions located in Quadrant I of the BCG Matrix are called “Question
Marks,” those located in Quadrant II are called “Stars,” those located in Quadrant III are
called “Cash Cows,” and those divisions located in Quadrant IV are called “Dogs.”

Revlon has 3 main divisions such as Consumer, Professional, and Others.

Division Profit (in million Revenue/ Sales (in million

Dollar) Dollar)

Consumer 360.2 1414.8

Professional 103.9 471.1

Other 1.4 28.4

32


Relative Market Share Position
High Medium Low
1.0 .50 0.0
High +20 Star Question Mark

Professional

Industry
Sales
Growth Medium 0 Cash Cow Dog
Rate
(Percentage) Consumer

Other

Low -20

According to BCG Matrix, Professional Division is in quadrant 2 represent as Star.

This division represent the organization’s best long-run opportunities for growth and
profitability. Divisions with a high relative market share and a high industry growth rate
should receive substantial investment to maintain or strengthen their dominant positions.
Forward, backward, and horizontal integration; market penetration; market development; and
product development are appropriate strategies for these Professional Divisions. Consumer
and Other Divisions are in quadrant 3 represent as Cash Cow. These divisions have a high
relative market share position but compete in a low-growth industry. Called cash cows
because they generate cash in excess of their needs, they are often milked. Many of today’s
cash cows were yesterday’s stars. Consumer and Other divisions should be managed to
maintain their strong position for as long as possible. Product development or diversification
may be attractive strategies for strong cash cows. However, as a cash cow division becomes
weak, retrenchment or divestiture can become more appropriate.

33



THE INTERNAL EXTERNAL (IE) MATRIX

34


From the table above, we can see that Revlon’s position on the IE matrix is,

Group Regions Strategies

Professional Grow and Build • Integration

• Market Penetration
• Market Development
• Product
Development

Grow and Build Hold and Maintain • Market Penetration

• Product
Development

Others Hold and Maintain • Market Penetration

• Product
Development

Looking at the table above, we can see the significant differences between the sizes of the
circles. That the percentage profits that was generated by the professional on quadrant IV is
22,3% (green area), and for the consumer group on quadrant V the profit is 77.39% (green
area) and for other group on quadrant VII is 0.3%. We can see that in order to increase the
profits in the Professional group, Revlon needs to do integration, market penetration, market
development, and product development.

35



THE GRAND STRATEGY

The Internal and External Strategic Position and Action Evaluation show that Revlon has a
weak competitive position and a rapid growth in a growing industry, which is in the Quadrant
II. The Quadrant II characteristics itself are:
• Market development
• Market penetration
• Product development
• Horizontal integration
It means that Revlon needs to re-evaluate their current strategy in the market because Revlon
is unable to compete effectively, thus Revlon needs to examine on how the company can best
change to improve its competitiveness on the market. Because of the rapid growth in the
industry, an intensive strategy should become the first option.

36



STRATEGY GENERATING
Matrix Strategies Generated

Integrations Market Market Product

Penetration Development Development

Space V V V V

BCG V V V VV

IE V VVV V VVV

TOTAL 3 5 3 5

Based on the analysis we already made using the matrices above, we can see that Market
Penetration and Product Development are the strategies that is the most appropriate for
Revlon’s current position.

QSPM MATRIX
From all the strategy generated by each matrix, we could find that most of the matrix
recommends intensive strategy for Revlon Indonesia, which consist of market penetration,
market development, and product development. From those three strategies, we choose to
include two of them the QSPM matrix to choose the best strategy for Revlon. Those two
strategies are Market Penetration and Product Development.

Market Development was not chosen because currently, Revlon already entering a lot of
market in the world with the total of 130 countries including Indonesia. Geographically, the
presence of Revlon is already really broad but their market share is relatively small with such
large market with 130 countries and also relatively small compare to their competitor.
Therefore, market development is not applicable for Revlon.

37


Market Penetration

In the past three years, the emergence of local cosmetic such as Wardah and strong
positioning of Revlon’s main competitor L’Oreal had been decreasing Revlon’s market share
and position in Indonesia.

PRODUCT 2015 position 2016 position

Lipstick TOP 2 TOP 2

Lip gloss TOP 2 TOP 3
Mascara Rank 4 Rank 4
Blush On TOP 1 TOP 2
Eye Liner TOP 1 TOP 3
Brow Pencil Rank 2 Rank 4
BB Cream Rank 5 Not in the top 7

Foundation TOP 1 TOP 2

Translucent Powder Not in the top 7 Not in the top 7
Compact Powder Not in the top 7 Not in the top 7

Brand Awareness of Revlon 2015 – 2016. Source: processed by author from www.topbrand-
award.com

As seen from the table above, Revlon’s brand awareness in each of their product mostly
decreasing and has been defeated by Wardah or L’Oreal. It shows that the cosmetic industry
in Indonesia is really competitive and rapid market growth, while Revlon’s position is
currently weakening, could also be seen from the sales data.

From our observation, Revlon is doing really small amount of marketing effort while L’Oreal
(Maybelline) doing really great with their new brand ambassador and also advertising
campaign while Wardah doing really great with their “Halal Cosmetic” campaign, so doing
some marketing effort to gain more market share in Indonesia is one strategy that could be
the best option for Revlon.

38


Product Development

As the position of Revlon in is weakening, product development could also be the best option
for Revlon. It’s because nowadays, every cosmetics product really competitive to come up
with the newest product, especially the current most enthused liquid lipstick. And also
currently, Revlon didn’t have any product leading in the market. A few years back, their
foundation is a top notch in the market, but nowadays it’s already been beaten by their
competitor. Developing a new top notch product could be a way for Revlon to take back their
position.

Enhancing Developing
marketing new line
efforts product
according to
current
marketing
trend to
grab larger
marketshare
Opportunities Weight AS TAS AS TAS
1. Middle class growth in emerging market 0,11 4 0,44 3 0,33
2. The increasing number of people's consumption in tertiary 0,12 3 0,36 4 0,48
product
3. Increase in online retail, online advertising, social media 0,12 4 0,48 2 0,24
presence, and advanced technology
4. Women's growing interest in purchasing cosmetic, beauty, and 0,08 3 0,24 4 0,32
fragrance product
5. The increasing number of men that using cosmetic product 0,06 3 0,18 4 0,24
6. The increasing number of drugstore as Revlon's distributing 0,09 4 0,36 3 0,27
channel

Threats Weight AS TAS AS TAS

1. Increasing number of organic cosmetics products 0,11 3 0,33 4 0,44
2. Higher awareness from the society about the importance to 0,10 4 0,40 2 0,20
support local cosmetics products
3. The increasing number of drugstore cosmetic product and 0,07 4 0,28 3 0,21
cheap Korean product because of free trade
4. The emergence of fake Revlon's product in middle to lower 0,05 0 0,00 0 0,00
class society
5. Economic slowdown and stability problem 0,05 0 0,00 0 0,00
6. Two seasons Developing Nations tend to use less makeup 0,04 1 0,04 3 0,12
compared to four seasons country due to the humidity climate

39



Enhancing Developing
marketing new line
efforts product
according to
current
marketing
trend to
grab larger
marketshare
Strengths Weight AS TAS AS TAS
1. Affordable price Brand Recognition 0,12 4 0,48 3 0,36
2. Primary customers are large-mass merchandisers and drug 0,09 0 0,00 0 0,00
stores
3. Selling through many websites 0,04 4 0,16 2 0,08
4. Well established U.S Market 0,07 0 0,00 0 0,00
5. Revlon global expansion 0,09 4 0,36 4 0,36
6. Celebrities support as spokesperson and ambassadors 0,10 4 0,40 4 0,40

Weaknesses Weight AS TAS AS TAS

1. Global market share loss in 2010 0,05 2 0,10 2 0,10
2. Limited presence in emerging country's market 0,06 4 0,24 1 0,06
3. Relatively small R&D budget among other competitors 0,06 4 0,24 1 0,06
4. Relatively small advertising budgets 0,08 1 0,08 4 0,32
5. Less diversified products comparing to competitors 0,07 1 0,07 4 0,28
6. Large debt loan of $1.1 billion in 2011 0,12 4 0,48 1 0,12
7. Not generating a sufficient volume of business given its total 0,05 4 0,20 1 0,05
investment
TOTALS 5,92 5,04

From the QSPM Matrix, we get the total score for the enhancing marketing efforts according
to marketing trend to grab larger market share (Market Penetration) 5.92 and Developing new
line product (Product Development) 5.04. Therefore, from this QSPM Matrix, the market
penetration strategy was chosen.

40



STRATEGY IMPLEMENTATION
To implement the strategy chosen (Market Penetration), there’s some action that Revlon
needs to take. In this discussion, we will divide the strategy implementation into three
aspects: Marketing, Finance, Operation, and R&D.

Marketing

In order to implement market penetration strategy, Revlon must do some unordinary and
special marketing effort to market their current product in their current market, in this case
Indonesia. Currently, Revlon’s product is categorized as affordable product with high quality
and has segmented their market in Indonesia into all Indonesian female, from teenage to
adult. But as said before, Revlon market share in Indonesia is relatively low compare to their
competitor. In Indonesia, the growth of make-up user is really high with average 15% per
year, not only in the big city like Jakarta, but there’s 40% growth of make-up users in
Indonesia’s rural area. Therefore, it’s a big opportunity for Revlon to penetrate their market.

Here are some marketing strategies that Revlon may do to take advantage of the existing
opportunities:
1. Do cheap social media advertising and campaign in Revlon’s Indonesia official page
in Instagram, Facebook, Twitter, etc.
2. Endorsing famous beauty blogger and beauty vlogger in Indonesia such as Sarah Ayu,
Lizzie Parra, Nadya Aqila, and Suhay Salim to review Revlon’s product or do make
up tutorial using Revlon’s product in their blog or YouTube channel. By sending them
Revlon’s product periodically, they will talk a lot about Revlon’s product, and as said
in Fred David Strategic Management Book, currently the most effective way to do
marketing is by doing the product review from the expert.
3. Having famous local celebrity as Revlon’s brand ambassador. Currently, Revlon’s
Global Brand Ambassador, Emma Stone, is really attracting people around the world.
But in Indonesia, local celebrity is more known and adored by people, and also
because of the ‘100% Indonesia’ campaign. Therefore, having local celebrity with
great image, such as Maudy Ayunda, Raisa, Chelsea Olivia, and Raline Syah, would
attract Indonesia’s people to buy Revlon’s product. This could also be Revlon’s
resistance to local product which attract more people because of the nationalism

41



factor. By using local celebrities would make Indonesian people feel more closer with
its products.
4. Doing beauty class with famous beauty blogger or beauty vlogger, especially in rural
area to introduce Revlon’s product. The rapid growth of make-up use in rural area in
Indonesia could be the biggest opportunity for Revlon to reach deeply on those
market.
5. Do advertising in YouTube by putting Revlon’s video advertising in the YouTube
headline or in the one that showed before beauty video in YouTube. Currently
YouTube is the new television channel which is the most effective advertising media.
6. Product placing in famous movie. This strategy had been done by L’Oreal that gather
partnership with Ada Apa dengan Cinta 2 by placing their product in the movie and
releasing a product line according to each of the character in the film. Such of
gimmick is really attract Indonesian people.
Furthermore, in global scope Revlon could also extend their global campaign #LoveIsOn into
some extended area because currently, the hype of this campaign is already fading. Revlon
could do Global Challenge campaign to all the countries with Revlon presence. We
recommend the challenge should be about marketing challenge so it could be a way for
Revlon to do another marketing effort in each country, or make up challenge so it could be a
way for Revlon to introduce their line of products in each country. This kind of campaign
encourage people to involve directly with Revlon’s product which will increase Revlon’s
brand awareness.

Finance
Current EBIT (2015) $ 215.800.000
Current Operating Countries 130 countries
Revlon Indonesia EBIT $3.320.000
(Assumption: Revlon’s EBIT didn’t come
equally from 130 countries, we assume
Revlon Indonesia proportion is 2/120=0.02
from its current position)

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EBIT Growth 25%

(Assumption: Indonesia’s cosmetic average
cosmetic growth is 15%, with market
penetration strategy and also rapid growth in
rural area, Revlon could achieve 25%
growth)
Normal EBIT $215.800.000 + ($3.320.000 – [1.25% X
$3.320.000]) = $216.630.000

Recession and Boom condition +-10%

Tax Rate 35%

Interest Rate 4%

Marketing Strategy Note Amount Needed

Social Media Advertising Content design and $3.500
official account expense
Beauty blogger and Sending product to 20 $6.500
Vlogger endorsement beauty influencer 4 times
a year ( 15 x 4 x @$100),
which 10 of them was
paid (@$50)
Revlon Local Brand $100.000
Ambassador
Beauty Class with Four times a year in four $80.000
Beauty Blogger or different city. ( 4 x @
Vlogger $20000 include product
sample, transportation
and accommodation,
beauty influencer fee,
and venue fee)
Youtube Advertising Include non-skippable $30.000
instream ads, home page
advertising, bumper, and
picture advertising
Unique Marketing $80.000
Gimmick
Total Amount Needed $300.000

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Common Stock Financing Debt Financing

Recession Normal Boom Recession Normal Boom
EBIT $194,967,000 $216,630,000 $238,293,000 $194,967,000 $216,630,000 $238,293,000
Interest 0 0 0 10,500 10,500 10,500
EBT 194,967,000 216,630,000 238,293,000 194,956,500 216,619,500 238,282,500
Taxes 68,238,450 75,820,500 83,402,550 68,234,775 75,816,825 83,398,875
EAT 126,728,550 140,809,500 154,890,450 126,721,725 140,802,675 154,883,625
# Shares 54,096,395 54,096,395 54,096,395 54,088,174 54,088,174 54,088,174
EPS 2.34 2.60 2.86 2.34 2.60 2.86

Percent
50 Percent Debt 50 Stock
Recession Normal Boom Recession Normal Boom
EBIT $194,967,000 $216,630,000 $238,293,000 $194,967,000 $216,630,000 $238,293,000
Interest 5,250 5,250 5,250 5,250 5,250 5,250
EBT 194,961,750 216,624,750 238,287,750 194,961,750 216,624,750 238,287,750
Taxes 68,236,613 75,818,663 83,400,713 68,236,613 75,818,663 83,400,713
EAT 126,725,138 140,806,088 154,887,038 126,725,138 140,806,088 154,887,038
# Shares 54,092,285 54,092,285 54,092,285 54,092,285 54,092,285 54,092,285
EPS 2.34 2.60 2.86 2.34 2.60 2.86

From the table above, we could see that there’s no difference for Revlon to use common
stock financing or debt financing to finance this strategy. But we would recommend the
common stock financing in fact that Revlon’s debt is really large and its stock value is
currently up again.

Long Term Debt to Equity Ratio

0.0
2012 2013 2014 2015 2016 2017
-1.0

-2.0

-3.0

-4.0

-5.0

-6.0

Revlon

R&D

44



Currently, Revlon doesn’t have any company or factory in Indonesia. Therefore, Revlon
Indonesia couldn’t compete with their competitor by their line of product because those
products come from Revlon’s head office, and Revlon Indonesia just imports those products.
And to keep their price affordable, they had to minimize the R&D budget.
So we recommend Revlon to implement in-house R&D in order to do research about
Indonesian market and preference. For example, they could do research about Indonesian
people preference about dupe product which could be a suggestion for the head office to be
an innovative imitator of successful products similar to but less expensive than products
recently introduced. To research and develop a new line of product is too expensive, so
instead Revlon could just imitate the high-end make-up product that really attract the market.
That way Revlon could attract their market, which is a different segment from the high-end
product, by the products called ‘dupe’. This already happened in Revlon 24hr Foundation
which is a dupe for MAC foundation and really is a hit in the market. To be known as a dupe
product is a great opportunity for a brand because they can grab larger market with smaller
amount of salaries.

THE BALANCED SCORECARD

Revlon’s balance scorecard below is based on the previous chosen strategy which is market
penetration. This balances scorecard shows all aspects to be monitor in order to achieve
Revlon’s objective, not only in financial matter but also customers, production, etc.
Area of Objectives Target or Time Primary Necessary
Measured Expectation Responsibility Respond
Customers
1. Revlon as leading Market Share Growing by Maximizing Evaluating the
drugstore make-up in in Indonesia more than marketing implementation
Indonesia 15% in a efforts of marketing
year efforts, make
sure every related
person already
did their
responsibility
2. Effective Marketing Return on Increased Do the right Doing specific

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Effort Marketing marketing method of R&D about

Investment investment marketing by marketing
followed by researching the method to find
higher market first. the source of
return in Effective failure
each year number of
salesperson.
Management/Employees
1. Management System Accomplishm Minimum Specific Decreasing
ent of annual 90% of objectives/target incentives
objectives targets are and high
achieved monitoring
from
management
2. Accounting System The Audited Discipline in Evaluating the
trustworthines financial each financial auditor and
s and statement transactions change the
dependable published in auditor if
financial the first necessary
statement week of
every
months
Operation/Process
1. Effectivity of operation Production More than Minimizing the Evaluate the
effectivity 100% in number of production
(output/input each year wasted raw process to know
x 100%) materials the source of
failure

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2. Number of Production Maximization Increased in Maximizing Evaluate the

of Firm’s capacity by worker’s production
production 10% each effectivity by process to know
capacity year increasing the source of
incentives. failure
Maintain
production
machine
gradually
Community/CSR
1. Right on target CSR Firm Solve a Do research to Evaluating CSR
contribution social know the right Budget
in related problem in problem to
problem one needed solved
district each
year
Business Ethics/Natural
Environment
1. Policies about the No Animal 100% no Do chemical Creating serious
product and environment Testing in animal testing, not policy in the firm
product testing in animal testing about animal
product testing
Finance
1. Cost Efficiency Over budget Maximum Finance Tighten the
item in 10% department management
spending must do high monitoring to
monitoring finance
department

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2. Cost Effectivity Conformity to 95% Finance Tighten the

budget spending are department management
according must do high monitoring to
budget monitoring finance
department
3. Growth in Income Net Income Growth by Maximizing in R&D about
10% each marketing and marketing
year research of method and
products product to find
the source of
failure

CONCLUSION
The strategy that Revlon should implemented is market penetration which related to current
Revlon weakening condition and small market share. From our analysis, we find that
Revlon’s marketing effort is not as much as their competitor, so market penetration is the
right strategy to implement. The Implementation of marketing penetration strategy in
Indonesia wouldn’t be as easy as doing the strategy listed ahead. The rapid change of
marketing trend in this days could hinder the implementation strategy. Market Penetration
strategy really depends on the marketing efforts the company did. Advanced technology
makes the rapid change in enthused social media. Currently YouTube is a hit and product
placement and endorsement is really effective in marketing a product, but that trend shifts
rapidly and it could be a challenge for Revlon to adapt their marketing strategy to the trend’s
change.

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