Organic line for REVLON (Marketing Plan)

Contents
1 2 Introduction: ........................................................................................................................................................ 3 Situation Analysis: ................................................................................................................................................ 3 2.1 Market summary: ......................................................................................................................................... 3 PESTLE: ................................................................................................................................................. 3

2.1.1 2.2 2.3 2.4 2.5 3

SWOT analysis: ............................................................................................................................................. 5 Porters 5 forces: .......................................................................................................................................... 6 Competition: ................................................................................................................................................ 6 Product Offerings: ........................................................................................................................................ 6

Marketing strategy: .............................................................................................................................................. 7 3.1 3.2 3.3 3.4 Objectives: .................................................................................................................................................... 7 Target markets: ............................................................................................................................................ 7 Positioning .................................................................................................................................................... 8 Strategies...................................................................................................................................................... 9 Product: ................................................................................................................................................ 9 Pricing: ................................................................................................................................................ 10 Distribution:........................................................................................................................................ 10 Marketing Communication: ............................................................................................................... 11

3.4.1 3.4.2 3.4.3 3.4.4 3.5 4 5

Marketing mix: ........................................................................................................................................... 11

Financial matters ................................................................................................................................................ 13 Controls .............................................................................................................................................................. 13 5.1 5.2 Implementation:......................................................................................................................................... 13 Marketing organisation: ............................................................................................................................. 14

6 7

Conclusion: ......................................................................................................................................................... 15 References:......................................................................................................................................................... 15

1 Introduction:
The report presents a marketing plan of New York based cosmetics company Revlon launching an organic product line of colour cosmetics in UK and USA. Revlon is a global cosmetic and beauty solution company. Colour cosmetics are their primary focus in beauty and personal care (68% of sales in 2009).The secondary key areas are deodorants, hair care, and fragrances. Revlon is among top 20 player in personal care and global beauty (20th in 2009) and among top position in colour cosmetics focused strongly in facial make-up, lip products and eye make-up. It has a mass position. Despite its debt, Revlon always kept innovation and international growth as priorities. The company is a global top 10 player in every segment, ranked in the top five in eye make-up, lip products and nail products (GMID 2010).

Source: GMID

Natural Vs. Organic cosmetics: Both natural and organic cosmetics consider ingredients based on plants and animals source but in case of organic cosmetics the ingredients had their origin organically. As per COSMOS (UK) standard at least 20% of the total product must be organic (cosmos) whereas as per National Organic Program regulation in US, to use organic in the label of a product at least 70% of the product must be organic.

2 Situation Analysis:
2.1 Market summary:
2.1.1 PESTLE:

Political: Basic raw materials used in the organic cosmetics like cocoa butter, olive oil, jojoba, aloe Vera etc. often imported from different countries like Africa, Mexico, India, Malaysia, Peru etc. (SheaByNature n.d). Political issues and regulations in the importing and exporting countries can affect the availability of these raw materials. For example political instability in Afghanistan can affect the export of rose oil (Katie 2008) . Legal: Currently in UK there are no legal regulations regarding organic .COSMOS established in 2009 identifies certain guidelines for organic cosmetics covering origin and processing of ingredients including manufacturing, labelling, marketing claims, environment management etc.(COSMOS 2008). However organic cosmetics should also adhere to EU REGULATION for COSMETIC PRODUCTS - European Directive 76/768/EEC. REACH which mentions the chemicals to be or not to be used in cosmetics. In USA National Organic Program (NOP) regulation, 7 CFR Part 205 is the regulatory body for organic cosmetics (National organic Program n.d).

Economic: In general the UK cosmetics industry remained constant with 6.7 billion in 2009 due to financial crisis (Mintel 2010). In UK, growth in natural & organic cosmetics market slowed to 8 %, whereas in U.S growth rate was only 2 %. In UK organic cosmetics sales is only estimated to 0.5% share of all cosmetics sales in 2009 (Mintel 2010).However in coming years huge growth is forecast in organic cosmetics with 11 % the US market (BioFach 2011). In the next five years, the sale is expected sales to increase to 6.3 billion US dollars in Europe and 5.8 billion US dollars in the USA (BioFach 2011). Social: Soil association report shows that in people are continuously attracted towards organic products. Mintel mentions that half of the adults believe that natural cosmetics are better for skincare being free from chemicals whereas 17 million adults consider these cosmetics as environment friendly making them keen towards the use of organic cosmetics. However as most of the time people do not have enough knowledge about the credibility of the ingredients, they often consider organic cosmetics as overpriced which might keep them away from natural cosmetics. In the US, in 2010 as per Data monitor report 44% did not agree or disagree about the effectiveness of organic cosmetics compared to synthetic(Cosmetics Business 2010). Technical: Innovation in organic cosmetics raises questions of health safety for the consumers but its still important. Use of cosmeceuticals where personal care products are fortified with functional ingredients like aromatherapy or the addition of natural proteins and enzymes have been introduced (Reszko, Berson,Lupo 2009). Not only the in product composition but technology is also playing important role in marketing of the cosmetics in general with virtual makeover possibilities, e-business etc. Environmental: Organic cosmetics attract people for its eco-friendly ingredients. COSMOS and other standards are promoting environment and animals welfare by barring the usage of plant raw materials present in the European and international lists of protected species, addressing the use of green chemistry in chemical process etc. Animal testing has been banned both in UK and US. Deforestation should be considered while sourcing the raw materials.

2.2 SWOT analysis:

STRENGTHS Consumer attitude: Consumers are slowly getting attracted towards organic products. Moreover they see organic cosmetics not only safer in terms of health issues but also environment friendly. Regulation: Different regulations force the products to show the ingredients on the label while increasing media focus towards the effects of ingredients can help organic cosmetics industry in gaining importance Brand Value: Revlon has a strong position in mass market with a vision of 'glamour, excitement and innovation at affordable prices. This can help its brand extension of organic product line to be perceived as innovative and affordable. WEAKNESSES: Consumer perceived value: Consumers are usually not ready to pay the prices which are generally higher than the standard substitutes. This is either due to economic volatility or consumers do not perceive the value as they are often confused about the actual quality of the products (Mintel). Demography: The demographic group of men and younger generations often do not care about the ingredients long term effect and might not be targeted easily. Cost: Manufacturing costs can increase in maintaining the standards and while importing the raw materials.

OPPORTUNITIES Market growth: In the next five years, the sale is expected sales to increase to 6.3 billion US dollars in Europe and 5.8 billion US dollars in the USA. Soil association forecasts the industry to be growing in faster rate in future. Demography: As per Mintel research, UK's population is aging and in next 5 yrs cosmetics industry can expect a growth from the 65+ yrs aged population. Similarly in U.S the aged population is growing faster and by 2012, 100 million people will be aged 50 and over(Transgenerational Design Matters 2011).Compared to the babyboomers and younger generation these aging population are more careful about cosmetics ingredients. .

THREATS: Competition: Companies are aware of growing rate of organic cosmetics and continuously entering the market. With the big brands like Neals Yard Remedies, Bodyshop etc several smaller new brands also performed well in 2009(soil). Revlon debt issue: Revlons is facing debt issues which can limit its capabilities to exploit the industry ( GMID 2010).

2.3 Porters 5 forces:

Threat of new entrains LOW Brand value and certification needed

Power of Buyers HIGH Low switching cost

Competition HIGH

Power of suppliers HIGH Buyer face high switching cost regarding quality and price of product

Threat of substitutes HIGH Natural Cosmetics Cosmetic surgery Chemical cosmetics

2.4 Competition:
The competition is growing highly. Competitors include mass personal care companies with some organic products or separate organic product lines and there are niche companies with only organic products. These companies sell through various channels including super markets, online retailers, company websites, approved websites etc. Moreover, as most consumers often neglect the differences between natural cosmetics and organic cosmetics, competition also comes from the natural cosmetics products.

Companies with some organic/natural products or product line LOral : brand- Avon ,Bodyshop, Biotherm etc. Este Laude: product line- Aveda Boots: product line- Botanic organic

Niche organic companies Neals Yard Remedies Dr Hauschka Nvy Eco

2.5 Product Offerings:

With changing nature of market it has been seen to get success in buyers market companies should sale what customers need (Kotler et.al. 2009). So based on the above market research and Revlons brand image as colour cosmetics brand, the first organic cosmetics product line named Organic Glam will be presented by Revlon. All the products are COSMOS and NOP certified and not tested on animals. The product line will have the following 4 products: 1. 2. 3. 4. Organic Glam cream based make up foundation: Organic Glam cream based 24hr lipstick: Organic Glam cream based eye shadow. Organic Glam voluminous mascara.

3 Marketing strategy:
3.1 Objectives:
Objectives of a marketing strategy include profitability, market share improvement, increasing reputation, sales growth, risk mitigation and innovation (Kotler et.al. 2009). They should be realistic and quantitative whenever possible. Considering Revlon is new in the competitive market of organic cosmetics, the targets considering all products together are set as follows: 1. 2. 3. 4. Market share should achieve at least 5% in next 2 years. As the focus is more on market share, profit is limited to achieve break even in each of next 2 years. Revlon should achieve a brand image of average priced good quality organic products. The ROI for each of next two years is set as 10%

3.2 Target markets:

The market of Organic glam is niche market. This because Organic Glam is targeting those customers who prefer organic cosmetics but look for averagely priced cosmetics mainly makes up cosmetics. The target segments have been categorised as follows: Geographic segmentation: Europe: UK North America: USA Both the countries are developed and can afford organic products. Considering the cold weather which prevails most of the part of the year, all the products have been made to hold moisture of the skin and eyelashes. Demographic Gender Age Income Life stage Generation Female 20 yrs to 50 yrs Average income group Any female in targetted age group who likes to put quality make-up in less time. Young to old generation. Young generation have lesser money and time but often sensitive skin whereas older generation are more concerned about the cosmetics effect on skin. Middle class

Social class

Psychographic: Personality traits Women who love to use cosmetics in daily life with or without experimental attitudes as the products are available from basic to vibrant shades. Women with fast lifestyle. This because products being mostly cream based are easy to apply and less time consuming. Women who are ecologically aware.

Lifestyle

Values Behavioural: Occasions Benefits Loyalty status

With both basic and vibrant shades, these products are suitable for both during daytime and night parties Harmless to skin both in short term and long term, averagely priced, long stay, easy to apply. Customers who are loyal to more than one brand and also customers who shift loyalty from one brand to other.

So based on the segmentation, the target segment is young to old middle class women usually having busy schedule but regular make up users. They are ecologically aware and like to use good quality products but conscious about their affordability

3.3 Positioning
Organic Glam needs to design its offering and brand image intelligently so that it can occupy a distinctive position in the organic cosmetics industry in UK and USA. To position itself in the competitive market, a brand needs to understand customers view about the brand and whom customer perceive to be the brands competitors and why (Kotler et al. 2009). Based on this analysis a positioning map is plotted with two dimensions as quality and price:
REVLON brand position
High price

Low quality

High quality

Low price

Fig: Brand position

Differentiation Based on the current position of the brand, the main differentiation strategy of organic glam will be cost leadership. So Organic glam will communicate itself as high quality, glamorous, certified organic colour cosmetics brand but the products are competitively priced aiming towards mass market.

3.4 Strategies
3.4.1 Product:
Each product has a definite life cycle and marketing evolves accordingly. Mostly product life cycle comprises of introduction, growth, maturity and decline but it can differ in different industries (Kotler et al 2009). As Organic glam is in initial stage profits are expected to be low as promotional expenditures will be high and include informing consumers, persuading customers to trial the marketing offer and secure distribution in retail outlets (Kotler et al 2009). Like any organic cosmetics brand, Organic glam might need some time to gain customer confidence as customers need time to get the results of the products. However Revlon has a good reputation in mass market in colour cosmetics. The products currently introduced under Organic glam are all basic colour cosmetics which has a fit with its parent brand Revlon having a perception fit and has the potential of successful brand extension outlets (Kotler et al 2009).

Fig: Product Life Cycle

Source: Kotler et al 2009

3.4.2

Pricing:

The pricing policy can be in the following six steps (Kotler et al 2009): 1. Selecting the pricing objective: The objective is to maximise the market share by considering market-penetration pricing because organic cosmetics is a high priced market. So if customer perceives good quality organic cosmetics in low price it might help Organic glam in reaching the target customers. 2. Determining the Demand: As seen in the SWOT analysis customers perceive the market to be overpriced but still in 2009 both big players and smaller players managed profit showing that the demand is high in the market. 3. Estimating costs: The main costs will include the cost of the ingredients like mango butter, jojoba oil etc . imported from Africa and Spain and the costs related to the marketing. 4. Analysing competitors costs, prices and offer: Organic glam can consider Aveda and Avon as its nearest competitor. As the products have almost similar value, Organic glam will try to compete by lower price. 5. Selecting a pricing method: As the target set earlier of ROI of 10%, the pricing method for next 2 years will be target-return pricing. However based on the performance of second year the pricing method can be changed later.

3.4.3

Distribution:

The marketing channels are a set of interdependent organisations through which a product is distributed to the customers. The channels are chosen based on segment targeting and positioning (Kotler et al 2009). To design a marketing channel the following steps need to follow (Kotler et al 2009): 1. 2. 3. 4. 5. Customers need analysis Channel objectives and constraints establishment Decision on number of channel intermediaries. Analysis of channel member responsibilities Selection of channel members based on evaluation.

Organic Glam distribution channel

Merchandise shops

Manufacturer

Whole saler

Retailer (Online / super market / cosmetic)

Health & Beauty shops (boots)

Customer

3.4.4

Marketing Communication:

Marketing communications is the process of informing, persuading and reminding customers about the brand value of a company. The steps of developing marketing communications includes as follows: identifying target audience determining communications objectives and designing them selecting channels establishing budget deciding on media mix measuring results Managing integrated marketing communications.

The marketing communications mix for Organic glam is as follows:

Television media with and without celebrities as this this will focus both the average prize and brand value; Online media like social networking sites, web banner, video on Advertising demand etc. Print media like Magazines, newspapers, brochures. Billboards. Holding beauty related quiz contests with selected product as prizes in Sales promotion the malls, high street, retails. Distributing discount coupon on selected products. Free make-up events where consumers will be involved. Events and Sponsoring college level fashion shows which will attract young experiences generations. Direct Marketing Emails, SMS, Post Encouraging customers to give feedback in the website and also Interactive marketing option to chat online Word of mouth and Encouraging the customers to spread the awareness both online and Viral marketing offline that organic colour cosmetics are now affordable. Personal selling will be considered in second year where sale Personal selling assistances in the shops will try to build up relationships to sell products.
Fig: Communication mix

3.5 Marketing mix:

Marketing mix are the activities used to create, communicate and deliver value to the customer (Kotler et al 2009). In case of product the four variables are product, price, place and promotion which can be explained as follows: Product: The differentiation in product is the features that the customers will consider as benefit against the rivals product. The feature differentiation of the products of Organic glam is the ingredients, moistening effect along with different shade options. Revlon has always added perfection in packaging. So the packaging of the product will have all the ingredients mentioned clearly with a luxury look. Initially a service will be given where customers can return the product within 15 days if they are not satisfied.

Products Organic glam foundation

Features Organic ingredients like cucumber, sandal, calendula gently protects the skin with moisturising effect. Cream based formula from cocoa butter and jojoba oil smoothly spreads on the skin giving a bright clarified effect. No paraffin used. Comes in 3 skin tone-wheat, dark and beige. Organic ingredients like mango butter and virgin coconut oil keeps the lip moistened and stays for long Mild strawberry flavour Comes in 3 colours- light brown, sober pink, naughty red Organic beeswax and cocoa butter moisturise and nourishes eye are Comes in stick for easy apply Plant and flower based 4 colours-light pink, dark pink, light green, dark green Organic Shea butter moisturises eyelashes and beeswax gives defined look. Sweet almond oil nourishes the lashes Comes in two shades- black and deep brown

Organic glam lipstick

Organic glam eye shadow

Organic glam mascara

Fig: Product features

Price: The price differentiation involves offering of a price based on the products value and market price sensitivity. As customer perceives, organic cosmetics to be highly priced, Organic glam offering quality organic cosmetics in lower price with respect to competitors.

Brands Organic glam

Foundation Price:14 pound/30 ml Price:36 pound

Lipstick Price:8 pond/3 gm

Eye shadow Price:14 pound/4X1g

Mascara Price:10 pound/8gm

Nvey Eco

Price:19 pound/4 gm

Price:14.5pound/1.5 g

Price:17 pound/8 gm

Lip Gloss Neals Yard Remedies 9.50 /15ml tube Lip Gloss Dr Hauschka Price:19.95 pound/30 ml Price: Aveda .24 oz/ 7g - 21.00 14.95 /4.5ml tube Price: 3.4g - 11.00 Price: 34.75 pound/4X1.8 g Price: .08 oz/2.5 g - 20.50 Price: 17.95 pound/6 ml Price: .28 oz/8 g - 13.50 pound Price: 11.25 Pound/ 1g pot of each color

Fig: Competitive prices:

Place: Distribution differentiation depends on how easily product can reach the customers. Revlon sells its products through chemist shops like Walgreens, super markets, cosmetics retailers, general merchandise stores, speciality shops like perfumeries and so will Organic glam products (GMID 2010). Walmart Stores is Revlons largest customer in USA while Boots is the most important customer in UK (GMID 2010). Like all Revlon products, Organic glam products will also be sold through Revlons website and in other online retailers like drugstore.

Promotion: Unique promotional differentiation can boost the products sale by increasing customer appeal. Revlons promotional strategies are always celebrity focused like Selma Hayek, Cindy Crawford (Marketing management 2000). So in case of Organic glam label, glamorous female celebrity who is well known for environment awareness promotion will be selected. However considering the segmentation, non-celebrity promotions will also be considered to focus the mass market.

4 Financial matters
The marketing budget of Organic glam is projected as follows: Projected heads Manufacturing cost R&D cost Marketing cost Anticipated loss 1st year 2,00,00,000 11,35,000 10,00,000 50,00,000

So considering the average price of the products as 11.5 pound per unit, by break even calculations it can be seen that in second year sales need to cross (20000000+1135000+1000000+5000000/11.5=)2359565 units to recover the loss.

5 Controls
5.1 Implementation:
A control mechanism is needed to take corrective action if the results of the marketing plan deviate from the objectives. Revlon has considered a balance score card approach to monitor the performance of Organic Glam. The performance metrics will be considered as financial, internal business process, customer and learning and growth. Based on the performance in the first year, the plan will be revisited in the second year.

5.2 Marketing organisation:

For Organic glam the marketing team has been organised on country basis with one team handling the activities in USA and other in UK. As an organic product line, Revlon needs to increase its brand image as ecologically aware brand by taking part in environment and sustainability related activities and should also The marketing organisation also has to consider the importance of ethical marketing in the promotion of the organic products,y clearly mentioning the ingredients of the products.

6 Conclusion:
The plan has been developed based on Revlons capability and marketing research. Proper monitoring of the plan is needed to launch Organic glam successfully in the market.

7 References:
BioFach (2011) Trade show almost booked up and good mood in the market *Online+ <http://oneco.biofach.de/en/news/?focus=a7ce6f3f-287c-49fd-926e-37c94a3c9d13> [20 June 2011] Bird,Katie (2008) Afghan rose oil in cosmetics could help rural development *Online+ available from <http://www.cosmeticsdesign.com/Formulation-Science/Afghan-rose-oil-in-cosmetics-could-help-ruraldevelopment> [20 June 2011] Cosmetics business (2010) Year in review 2010 *Online+ available from <http://www.cosmeticsbusiness.com/technical/article_page/Year_in_review_2010/58921> [20 June 2011] COSMOS (2008) Cosmetic s organic and natural standard*Online+ available from <http://www.cosmosstandard.org/docs/Cosmetics_Organic_Standard_Consultation.pdf>[20 June 2011] GMID (2010) Revlon PLC *Online+ available from <https://www.portal.euromonitor.com/Portal/Pages/Analysis/AnalysisPage.aspx > Kotler et. al (2009) Marketing Management Edinburgh:Pearson Marketing management (2000) Revlon and Maybelline cosmetics*online+available from<http://docs.google.com/viewera=v&q=cache:MdP1H0U3V9EJ:www.theuniversitypapers.com/uploads/Revlon
_and_Maybelline.ppt+revlon+promotional+strategy&hl=en&gl=uk&pid=bl&srcid=ADGEESikrJoLjy7lojsewkHMhNrH XqMUczD6CqqJQQWXl59ktO48t_veI0RsDWkiXGdAXIV7vy9iJco1a2jcb_EVLjnWteAfbqV9czHTCT0qQhxLxqZEK O2sho2yUbl4BtMrZuSZ2o&sig=AHIEtbRMatgxhgxyIWjV3299BRNTssWGig> [20 June 2011]

Mintel (2010) Natural and Organic Beauty - UK*Online+ available from

http://academic.mintel.com/sinatra/oxygen_academic/search_results/show&/display/id=479857/display/id= 508299?select_section=508302 [20 June 2011]

National Organic Program n.d Cosmetics, Body Care Products, and Personal Care Products *Online+ available from <http://www.ams.usda.gov/AMSv1.0/getfile?dDocName=STELPRDC5068442> [20 June 2011] SheaByNature n.d Common Cosmetics Raw material *Online+ available from <http://www.sheabynature.co.uk/common-cosmetics-raw-material-86-c.asp> [20 June 2011]