Revlon Case Study

Internal rivalry in the cosmetic industry is high, with a lot of existing cosmetic companies competing in the market. By the end of 2004, over a thousand companies manufactured and marketed more than 20,000 cosmetics and toiletry brands. The ten leading companies, including the Revlon, occupied roughly 62% of the total industry sales. The larger companies compete with their rivals by technical innovation, advertisement campaigns, and promotions, making cosmetics industry one of the most competitive industry worldwide.

Threat of entry is high. To build a cosmetic company requires a significant amount of capital investments, associated with research and development and marketing expenditures. Regulations and requirements imposed by the government to launch a single product are numerous, due to the direct contact between cosmetics products and human body. However, the cosmetics industry is recession-proof and has high-margin products. It is a $30 billion industry worldwide with an annual growth rate of 20%, which drive investors globally to enter this lucrative market.

The cosmetics industry is a constantly changing industry that greatly depends on product and technical innovations. Products substitutes are not available in the market, however product complements are high. Beauty tools (brush, mirror, cottons ball, etc.) are needed to complement most of cosmetics products therefore more cosmetic companies involve in producing not only the cosmetics products itself, but also complements. This strategy will benefit many cosmetic companies in terms of increasing its sales and profit margin.

Consumer buyer power is high, since there are a variety of cosmetics products available in the markets, ranging in price. All firms are competing to attract consumer's attention by providing the best quality, most stylish, at affordable prices. Consumers buying behavior will bring a significant impact for the products pricing and sales.

Supplier power ranges from low to medium. Owing...