Threats of New Entry

With technology advancing at a rapid pace, new entrants may bring different innovations to the
industry, putting Revlon in an awkward position between the company and its customers. Revlon would
have to implement different strategies to entice its customers to keep purchasing their products like
lower pricing strategies or reducing the cost of making the products. The company will have to manage
all these different challenges and build effective barriers to safeguard its competitive edge over its old
and new rivals.

OR

With technology advancing at a rapid pace, more and more money is needed to bring new and unique
products to the table. This would mean that new entrants in the industry would highly be unlikely; thus,
the threat of new entry would be deemed low. For new entrants, they would have to face many barriers
and these barriers are dependent on how existing competition will react. Existing companies in the
industry will react to whatever changes there are in the industry as their market share may decrease,
possibly to new entries in the market.

Bargaining Power of Suppliers

Revlon works with numerous suppliers all over the world. The cost of switching from one supplier to
another is low since most of them offer similar products and services to the company. Also, if they lose
one supplier, they can find another one without affecting their production process. Considering all
these circumstances, the bargaining power of suppliers is low.

Bargaining Power of Buyers

There is a high customer bargaining power in the cosmetics industry. Because there is a high
competition in this industry, with many different rival companies producing the same products, meaning
many product substitutes, the customers can greatly affect the prices of the products. As consumers
usually buy the best offerings available by paying the minimum price possible, this will cause the
suppliers and manufacturers to reduce their prices, as well as the price of the final product. This would
ultimately reduce the profitability of Revlon.

Product Substitute

The Cosmetics Industry is huge and various products are developed by many large and small companies.
Therefore, the threat of substitute products is high when other developers offer other value
propositions that is uniquely different from the current products of the industry. This means that when
other companies offer the practically the same product but of a lower price and of a higher quality,
product substitution is likely. Aside from this, more and more consumers are delving into the “natural-
look” craze or using natural products because of their concern about the chemicals they apply onto their
faces.
Intensity of Rivalry

There is a high degree of rivalry in the cosmetics industry. A lot of companies are competing in the
industry however 70% of the total sales are concentrated on the top companies. These top companies
are relatively similar in size and capability which makes the competition more intense. It is difficult to
sustain competitive advantage in the industry because companies continue to innovate and differentiate
their products to secure a larger share in a market where customers switch brands easily. Mergers and
acquisitions are also common in the cosmetics industry as more companies acquire brands to gain more
consumers. This is also a condition that causes high rivalry among competing firms.