Entry Plan into International Market
Revlon’s Entry into Sweden

Chari M. Calhoun
Dr. James J. Ruether
International Marketing
June 13, 2015

Introduction: Company history
In 1932, Charles and Joseph Reveson along with a chemist named Charles Lachman, founded Revlon (Revlon 2014). The company began by making a single product which was a unique type of nail enamel. Revlon is now an international corporation with a multi-million dollar net income. Cosmetics, hair care, skin care fragrances, deodorant/anti-perspirant, and other beauty care products are Revlon’s key products. Its products are sold in approximately 150 countries and six continents (Revlon 2014). The company operates in North America, Asia Pacific, Europe, Middle East and Africa (AMEA), and Latin America. It is headquarted in New York City, New York and employed approximately 6,900 people as of December 31, 2013 (Revlon,Inc. 2014). Market penetration strategies, developing new products, utilizing market development strategies, building its strong brands, expansion by introducing new consumer preferred products, and existing franchise extensions, are all part of the alternative corporate growth strategies used by Revlon. These strategies are the key element of the organization’s success. Sweden is a country in which Revlon could capitalize from strategically entering into the market and continuing its present consistent growth.
Company profile and analysis The current president and chief executive officer of Revlon, Lorenzo Delpani since November 2013, states that “2014 was a year of significant change and transformation, resulting in strong growth for the Revlon business” (Revlon 2014). Highlights of 2014 financial performance consists of its nets sales of $1,941 million. Revlon’s adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were at $375.2 million with free cash flow of $121.9 million. 4.7 % sales increase was experienced as well as an increase in brand support by $38.1 million representing a 10.8% increase over 2013 (Revlon). Revlon optimizes its market penetration strategies for its current markets by offering effective brand communication, appropriate levels of advertising and promotion, superb execution with retail partners and to its customers, innovative high quality consumer preferred brands. The company’s brand portfolio consists of: * Revlon * Revlon Beauty tools * Revlon Color Silk * Almay * Mitchum * Llonguras * Natural Honey * Sinful Colors * Pure Ice * Charlie Fragrances
Revlon also offers targets the professional sector with its Revlon Professional brand. This line of products includes color, styling, hair care and hair treatment products which are distributed exclusively to salon professionals. This popular brand portfolio consists of: * Revlon Professional * CND (Creative Nail Design) * American Crew * Crème of Nature * Orofluido
(Revlon, 2015).
Revlon’s market position In an industry comparison, Revlon experienced a gross margin of 66.15% (Bloomberg Business, 2015). Revlon’s market share in the global cosmetic market expanded from 2.9% in 2012 to 3.2% in 2013. This expansion was due to a rebound in retail gross margins in 2013 and in the global hair care market, Revlon’s hair care market share expanded from 0.44% in 2012 to 0.66% in 2013. Revlon also commands the 2nd largest market share in cosmetics in the U.S. (Trefis, 2015). The company’s recent acquisitions of the Colomer Group in 2013 and CBBeauty, including SAS & Company of the United Kingdom, in 2015 added to market share gain.
Competitive advantages and brief SWOT analysis Revlon enjoyed competitive advantages in three areas. The first is low cost due to low costs of production. The second advantage enjoyed is more product and color variety than most of its competitors. Finally, the strong market penetration is a competitive advantage (Revlon and Maybelline cosmetics, 2012). Strong market penetration is due in part because of the well known name of Revlon worldwide.
Strengths
* Revlon offers classic products. * Recent acquisition of The Colomer Group and CBBeauty * Great promotional marketing campaigns * The global name brand recognition * Revlon offers very high quality. * Revlon experienced high profit margins. * The company’s market position in the industry.
Weaknesses
* Low advertising budget. * Low research and development budget. * Revlon has a high debt ratio to profit. * Wide range of substitutes * Consumers afraid to try new products
Opportunities
* Expand into new global markets such as Sweden * Increase research and development * Increase diversification * Release even more innovative promotional campaigns globally. * Reduce the debt ratio by greater margins.
Threats
* Fierce competition is the greatest threat. Major competitors are: * Proctor and Gamble * L’Oreal * Avon * Estee Lauder * Economic conditions globally * Outstanding debt situation
Sweden overview
Sweden’s geographic and historical information in international business Revlon has a very distinct global presence in nearly 150 countries and 6 continents. Sweden offers a great opportunity for market entry for Revlon. Sweden is the largest of the Nordic countries (Sweden, Norway, Denmark, Finland, and Iceland). The Nordic make up the world’s 12th largest economies. This group of countries experienced gross domestic product (GDP) of $1.7 billion in 2013.They are a group of well-run economies and one of the world’s most dynamic, competitive, and innovative regions (Export.gov., 2014). Presently, there are more than 1,300 U.S. based companies operating in Sweden and the most popular location for regional headquarters in the Nordic. U.S. –Swedish trade in goods and services is valued at an estimated $25 billion. With nearly 440,000 visits annually, Sweden is a prime European market for travel to the U.S. Due to strong historical, cultural, ad business ties, over $1 billion U.S. benefit the U.S. economy.
Political and legal environment for conducting international business * Sweden is a constitutional monarchy with King Carl XVI Gustaf as Sweden’s head of state since 1973. King is the head of the state in Sweden and has no political powers. King has only ceremonial duties to perform. The cabinet with its 22 ministers along with the prime minister have the executive authority to run the government and its departments. The head of government is the Prime Minister, elected by the Parliament following legislative elections. John Fredrik Reinfeldt leader of the liberal conservative Moderate Party is the current Prime Minister of Sweden who began his official duties on October 5, 2006 (Encyclopedia, 2015).
Sweden follows a free trade policy and joined the European Union in 1995. The U.S. economic affiliation with the EU is the largest and most multifaceted in the world (U.S. Department of State, 2015). The U.S. and Sweden are working together in an effort to combat corruption and sustain economic and human-rights based development globally. The two countries also work closely together to promote internet freedom in countries emerging from oppressive and autocratic governments to protect freedom of expression.
Foreign trade in Sweden has played a major role in making Sweden a prosperous nation with high living standards. Largest exports market of Sweden is United States and the largest investors in Sweden are also the United States. Half of Sweden’s GDP depends on Sweden’s international trade and U.S.
Business customs and practices With respect to business, Sweden is very comparable to the U.S. There are 5 key factors that must be considered when interacting with the Swedish people during transaction of business.
The first is the consideration of corporate social responsibility (CSR). Issues such as climate control, human rights, and gender must be taken with high regards. Sweden is one of the leading countries in CSR. Secondly, punctuality is a must in business and social settings. To be late is a sign of poor etiquette. Scheduling and for the Swedish is a way of life. Thirdly, much like the U.S., it is rare to give gifts in the beginning of a business relationship; however, it is acceptable to give a gift when closing a transaction. Again, in the fashion of the U.S., the dress code is generally casual in the workplace. A more conservative approach for dressing is recommended for business appointments. Bribery and corruption is the final factor. Sweden is one of the least corrupt countries in the world. Swedish criminal code has sanctions against any person receiving or giving a bribe (Business Etiquettes, 2014). Sweden abides by the EU customs laws and coherent regulations as well as customs tariffs from the U.S. and other non –EU countries. Customs procedures are governed by EU rules. These procedures include the classification and valuation of imported goods. Sweden maintains a duty-free entry on all products originating in other countries (Export.gov, 2014)
Socio economic analysis Sweden is a country with thousands of coastal islands, inland lakes, and forests and mountains. Its capital city is Stockholm. Sweden is the 3rd largest country in the EU by area at 450,295 square kilometers (173,860 square miles. The total population is over 9.7 million and counting (Sweden Population, 2015).Swedish is the national language and is spoken by the vast majority of its citizens.
It is compulsory for everyone living or working in Sweden to pay taxes. Tax rates in Sweden are very high even higher than UK. Permanent residents are required to pay tax on their worldwide gains and capital gains. Temporary residents are required to pay tax on Swedish sources that is Swedish employment or property. Value added tax (VAT) is payable on almost all goods and services in Sweden, construction of buildings etc usually at 25% of the price, and excise duty is payable on some items such as alcohol and tobacco (Taxation, 2015). Being one of the richest countries in the world, Sweden enjoys a high standard of living. It is well-known for its comprehensive social welfare structure. The economy of Sweden is largely based on services, heavy industries and international trade. Sweden is the world's leading producers of iron ore. Major industries include mining, lumbering, steel manufacturing and tourism. The most important export goods are: Machinery and transport equipment, chemicals, plastic, and rubber products, electronics and telecommunications equipment, energy products, industrial machinery, and minerals. The most important imports are: Electronics and telecommunication, machinery, food and beverages, crude oil, textiles and footwear, chemicals, pharmaceuticals and petroleum products.
Revlon’s entry into Sweden
Market structure Revlon Sweden will utilize an intensive structure where the products will be retailed and stocked in as many outlets as possible. Just as with Revlon in America, consumers encounter the product virtually everywhere they go: supermarkets, drug stores, malls, authorized retail stores, kiosks, and etcetera. A combination of direct and indirect distribution channels, also known as mixed channels, will be utilized. Revlon will also have its own stores, which will offer customer service specialists educated and trained in the use of cosmetic products and beauty tools. Currency considerations Sweden joined the EU in 1995, but did not adopt the euro as its currency. The monetary unit in Sweden is the krona (plural “kronor”) and equals 100 ore. Bank notes are printed in values of 20, 50, 100, 500, and 1,000 kronor. Coins are 1, 5, and 10 kronor. 1 krona is equivalent to .12 U.S. dollars (XE, 2015). In response to changes in currency values, Revlon’s financial team will attempt to lessen currency risk by purchasing various financial instruments which make it possible to offset some of the risks of currency movement.
E-commerce
Sweden is a very innovative and tech savvy country. In response to that face, e-commerce is common. Revlon already has in operation individual web sites for most of its brand offerings. Websites featuring current product and promotional information can be reached at: www.revlon.com, www.almay.com, www.mitchum.com, www.revlonprofessional.com, www.americancrew.com and www.cnd.com. The websites, with some modifications and regional customization, can be fully operational in Sweden as well.
Marketing mix Revlon is a well established company and has been around for a long time. Its product offerings are very well known globally. For this reason, the product offering should remain the same when entering the Swedish market. Price, which has been identified as a competitive advantage, should remain low in order to sustain the advantage in Sweden as well. Distribution of products will consist of a combination of direct and indirect channels. The consumer line of products will be retailed in as many locations as possible, from grocery stores to drug stores. However, Revlon Professional will have its own retail store with product educated and trained specialists to explain, assist, and demonstrate proper use of the product to the professional customer. The professional products may also be retailed in salons as well. Promotion of Revlon’s production will be aggressive. The strategy is to bombard the Swedes with product information to create product awareness. This will be accomplished using the following methods: * Print * Television * Internet Advertising * Point-of-Sale Advertising * Uniform Global Images for Core Brands * Trial Size products and coupons for new products * Social media * Any other methods permitted by Swedish regulations
This use of the marketing mix should be as successful in Sweden as it has in the U.S. especially because of the likenesses of both cultures.
Key factors for Revlon’s entry into Swedish market The U.S. economic affiliation with the EU is the largest and most complex in the world and Sweden is a member of the EU and practices a free trade policy. This makes the atmosphere conducive for international business between Revlon (U.S. based) and Sweden. Revlon presently has a promotional campaign that states “Revlon Cares.” The company is highly involved in philanthropy. The company has donated and raised tens of millions of dollars for women’s health initiatives, in its markets of operation, including the U.S., Canada, the U.K, Australia, and New Zealand. (Revlon, 2015). CSR is extremely important to Revlon and is practiced on 5 primary levels: 1. Safety - Providing consumers with high-quality, safe and efficacious products and valued employees with a safe workplace 2. Social - Enhancing women’s lives through products and philanthropic efforts 3. Ethical - Conducting business in an ethical manner 4. Environmental - Reducing the environmental impact of operations 5. Regulatory - Ensuring that products and operating facilities meet or exceed all applicable regulatory standards, globally (Revlon, 2015).
Sweden is one of the world’s leading countries in CSR. Topics such as climate control, human rights, and gender must be taken with highest regards when dealing with Swedes. Ethics and integrity are fundamentals for businesses in Sweden. Sweden is one of the least corrupt countries in the world. Swedish criminal code has sanctions against any person receiving or giving a bribe. As stated before, the U.S. and Sweden are working together in an effort to combat corruption and sustain economic and human-rights based development globally. The two countries also work closely together to promote internet freedom in countries emerging from oppressive and autocratic governments to protect freedom of expression. These dynamics delineate how Revlon’s culture is a great fit for Sweden. Also, Sweden and the U.S. have a long history of connections. Sweden was one of the 1st countries to recognize U.S. independence in 1783 and the two countries have maintained a strong bilateral friendship since then, based on shared values and mutual interests (U.S., 2015).
Risks of entry When entering into new markets, regardless of what studies, research, and forecasts state, there is a great risk taken. Entering a new market can also raise many external issues for companies that could cause complications. Examples of external issues are strength of potential competitors, the market potential and growth of the host country, cultural differences, political issues, law and financial factors. In depth marketing research using surveys, focus groups, data collection, and other introductory campaigns prior to entry are method to determine if the market is a fit for Revlon’s offerings. The product(s) offered may be embraced and well accepted in one market, but fails in another market. It is important to take into consideration that other competitor’s have been established far longer in Sweden. Therefore, brand loyalty may have already been established. The risk is that with a crowded cosmetic and beauty industry market, competitors have developed competitive advantages that will make it hard for Revlon to compete. This risk can be diminished through aggressive promotional campaigns to establish and increase brand and product awareness/recognition and eventually product/brand loyalty. The best way to introduce a product to a new market is through free trial sized products and buzz advertising in order to promulgate the promotional campaign message to as many people as possible with the hope that consumers will become interested.
Benefits of entry Expansion into a new market can be an effective way for Revlon to leverage its core business for growth. Revlon has the potential to benefit from market entry to Sweden by growth in global market share. Sweden is one of the world wealthiest countries. With a high ranking in individualism according to the Hofstede model (Hofstede, 2011), which indicates that for Revlon’s brands across the board, the main target markets of females ages 18-75 and Revlon’s brand American Crew, young men would possibly be enthusiastic about experiencing new beauty products. Swedes are considered early adaptors and are quick to start or follow trends. Sweden is a world leader in telecom, computers, electronics, robotics, pharmaceuticals and medical products, and biotech. The country is often listed as top in the world in terms of high-tech readiness and receptiveness. Revlon can capitalize on this potential benefit especially in the areas of R&D and e-commerce. By building a state of the art R&D facility and investing in hiring the best people to create and enhance its products, the company would benefit greatly with all of its operations and ventures.
Recommendations
With so many popular brands in Revlon’s portfolio and now even more after recent acquisitions, a periodic magazine created by and for Revlon brands exclusively, featuring product users both professional and average consumers would be a great promotional campaign to increase brand recognition. Building retail stores for professional products that also offer a limited amount of Revlon’s other best selling consumer products is another recommendation. In this retail store, the professional stylist, make-up artist, or beauty advisor can be educated by actual creators and developers of the professional product in the product’s proper use and benefits. This will help the end-user gain profit which will lead to customer retention.

References
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Encyclopedia Britannica. (2015). Fredrick Reinfeldt. Retrieved from http:// www.britannica. com/biography/Fredrik-Reinfeldt

Export.gov. (2014, Mar.6). Country Commercial Guide. Doing Business in Sweden. Retrieved http://export.gov/Sweden/build/groups/public/@eg_se/documents/webcontent/eg_se_028802.pdf Hofstede, G. (2011). Dimensionalizing Cultures: The Hofstede Model in Context. Online
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Revlon. (2014). Retrieved from: http://www.revlon.com/about/fact-sheet
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Sweden Population. (2015). Country Meters. Retrieved from http://countrymeters.info/ en/Sweden

Taxation in Sweden. (2015). European Spallation Source. Retrieved from http://europeanspallationsource.se/taxes-sweden Trefis. (2015). Base Case: Trefis. Revlon (REV). Retrieved from http://trefis.com/stock/REV/ model/trefis?easyAccessToken=PROVIDER_78596d18bcd1aaf3111405ce24959babd4299913 U.S. Department of State Diplomacy in Action. (2014, Feb. 19). U.S. Relations with Sweden. Retrieved from http://www.state.gov/r/pa/ei/bgn/2880.htm
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