Strategic Management
Table of Contents
Industry
Definition of the Industry The cosmetics industry is dominated by a small number of multinational corporations that originated in the early 20th century. The distribution and sale of cosmetics is spread among a wide range of different businesses. The largest cosmetic companies are The L'Oréal Group, The Procter & Gamble Company, Unilever, Shiseido Company, Limited and Estée Lauder Companies, Inc. Avon, having 72% of their net sales on Beauty products on 2008, is one of the companies that made their names in the cosmetics industry. The demand for cosmetic products normally remains constant and unaffected by economic distress making more and more companies focusing their market on beauty products. Due to Global Warming, companies are now creating products that are environment friendly. A research says that consumers are unlikely to give up their commitments to organic products just to save a little money.
Major Competitors Avon Products Inc. considers Mary Kay, Inc. and Revlon, Inc. as their major competitors. Mary Kay, Inc.’s distribution channel resembles that of Avon which is direct marketing while Revlon, in contrast, sells its products through cosmetic counters in department stores and pharmacies.
Although Mary Kay, Inc. is a major competitor, it is nearly eight times smaller than Avon with only 5,600 employees worldwide as compared to 42, 000 of Avon. The chart below shows the comparison of Avon and Mary Kay for the year 2008.
AVON
MARY KAY
Market Cap
$9.71 Billion
242.84 Million
Employees
42, 000
5, 600
Quarterly Rev. Growth
-12.90%
-2.70%
Revenue
10.37 Billion
1.34 Billion
Gross Margin
63.03%
63.48%
EBITDA
1.44 Billion
171.40 Million
Operating Margins
12.07%
11.42%
Net Income
807.90 Million
28.50 Million
EPS
1.884
1.422
For the year 2008, the revenue of Avon far exceeded its competitors, with Mary Kay selling $2.40 billion and Revlon selling $1.35 billion as compared to
Industry
Definition of the Industry The cosmetics industry is dominated by a small number of multinational corporations that originated in the early 20th century. The distribution and sale of cosmetics is spread among a wide range of different businesses. The largest cosmetic companies are The L'Oréal Group, The Procter & Gamble Company, Unilever, Shiseido Company, Limited and Estée Lauder Companies, Inc. Avon, having 72% of their net sales on Beauty products on 2008, is one of the companies that made their names in the cosmetics industry. The demand for cosmetic products normally remains constant and unaffected by economic distress making more and more companies focusing their market on beauty products. Due to Global Warming, companies are now creating products that are environment friendly. A research says that consumers are unlikely to give up their commitments to organic products just to save a little money.
Major Competitors Avon Products Inc. considers Mary Kay, Inc. and Revlon, Inc. as their major competitors. Mary Kay, Inc.’s distribution channel resembles that of Avon which is direct marketing while Revlon, in contrast, sells its products through cosmetic counters in department stores and pharmacies.
Although Mary Kay, Inc. is a major competitor, it is nearly eight times smaller than Avon with only 5,600 employees worldwide as compared to 42, 000 of Avon. The chart below shows the comparison of Avon and Mary Kay for the year 2008.
AVON
MARY KAY
Market Cap
$9.71 Billion
242.84 Million
Employees
42, 000
5, 600
Quarterly Rev. Growth
-12.90%
-2.70%
Revenue
10.37 Billion
1.34 Billion
Gross Margin
63.03%
63.48%
EBITDA
1.44 Billion
171.40 Million
Operating Margins
12.07%
11.42%
Net Income
807.90 Million
28.50 Million
EPS
1.884
1.422
For the year 2008, the revenue of Avon far exceeded its competitors, with Mary Kay selling $2.40 billion and Revlon selling $1.35 billion as compared to