Western Arrogance and the Failures of Revlon in China
An Analysis of Revlon and its Poor Decision Making in the Chinese Cosmetics Market
The Chinese cosmetic industry is the third largest in the world, with an estimated value of nearly $23 billion comprising 5000 brands. Currently, the top three brands in the Chinese market are foreign. However, there is no dominant force in the cosmetics market, with L’Oreal Paris, Proctor and Gamble’s Olay and Mary Kay occupying 12.45% of retail sales. Revlon failed to learn and understand the market, plan for the future, execute strategies and accomplish goals, which led to their inevitable exit from the Chinese market.
Revlon’s problems in its business strategy can be seen in four aspects. First, Revlon failed to innovate for the Chinese market and its consumers’ specific tastes. Second, Revlon was unable to react to China’s changing consumer climate and failed to respond with the new product introductions. Third, Revlon failed to create an effective brand positioning strategy. Fourth, Revlon’s decision to use a single channel of distribution limited their exposure among the Chinese cosmetic users.
1. Product deficiencies
Western cosmetics brands in China can resemble their Western products counterparts but they must cater to Chinese tastes. But Revlon launched the exact same line of products they were using in the West. They failed to realize that skin lightening creams and anti-aging products occupied the lion’s share of the market. This preference differs drastically from Western tastes, where the focus is on enhancing a person’s natural skin tone. This lack of understanding helped to push Chinese consumers towards more local brands that care about Chinese consumers’ unique demands.
2. Product cycle
Customers are evolving quickly from the low-end markets to middle and high-end markets. Since the markets are constantly changing, Chinese consumer tastes change rapidly as well. Revlon did not establish a network to track new trends in China so they were not able to keep up with the evolving market and change their products to meet local demands.
3. Brand position
From the time Revlon entered the China market, they believed that using the branding and marketing strategy they applied in Western markets would be good enough to attract a sizable share of cosmetics business. However, Revlon lost the battle to L’Oreal and Maybelline who were much more aggressive and visible. Revlon failed to create a story, Maybelline had New York, L’Oreal had Paris and Clinique had natural beauty.
From an advertising perspective, Revlon’s choice of spokesperson Olivia Wilde was a misstep. The ideal spokesperson for cosmetics would be an individual that is well known in China, has aged well and could conceivably use the products desired by Chinese consumers. But to start, no one in China knew who she was. Second, Ms. Wilde was in her 20s when she was introduced, and third Ms. Wilde does not appear to have the desired complexion of Chinese consumers.
Moreover, Revlon’s pricing and point of sale strategy created confusion in the marketplace. The company sold its products in both high-end department stores and at mid-tier retailers, which created that it wasn’t a premium brand. The price point was too high for average consumers who are more cost-conscious.
4. Channels of distribution
Lastly Revlon did not understand the channels of distribution in China. When they made the decision to enter China, they chose to put their trust in one distributor. What Revlon and their distributor failed to tackle was the need to maximize channels of distribution. As a result, Revlon only made itself available in 50 of China’s 160 major cities. In addition, Revlon was barely visible on the internet.
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