Loreal ).docx

1. Introduction L’Oreal international is a group of companies with its branches and subsidiary companies scattered across the globe. L’Oreal is considered to be one of the biggest cosmetic manufacturers in the world today. L’Oreal SA Paris is the world number one cosmetic company specializing in the development and manufacturing process of hair care, hair color, skin care, color cosmetics and fragrance for consumer and professional market. The company was founded in France with the “Because you’re worth it” and has many interesting history attached to it when viewed from a cultural perspective. In the early part of 1910, women in Paris were very obsessed with hair coloring and dye. Given the hypes in such aspects, French chemist “Fugne Schueller” invented the first every hair dye in synthetic. And since then the foundation of L’Oreal happened, and it was a time that the company never looked back. It is also interesting to note that the company was finally incorporated on 1939”. Starting from the year 1907, “today L’Oreal is the world largest cosmetic company marketing 500 brands and more than 2000 products in all areas of the beauty business.” As L’Oréal managers confront those challenges, they must be mindful that their products are much more than chemical mixes. They are global symbols of fashion and sophistication, appealing to the idealized self-image of customers. Technical innovation and responsiveness to local tastes must not undermine the brand. 1.1 Mission  Enabling all individuals to express their personalities, gain sel-confidence &open upto others.  Helping

men and women to realize their aspiration and express their individual

personalities to the full.  Offering all women and men worldwide the best cosmetics innovation in terms of quality, efficacy and safety 1.2 Vision  “Beauty for everyone” L’Oreal is committed to carrying out its mission to make beauty universal in a sustainable and responsible way.

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1.3 Objectives  L’Oreal to further expand, penetrate globally & join the emerging economics with Avon  At the same time, L’Oreal also planning to develop their strategic plan for future.

2. Organization based marketing strategies Marketing

Standardized

Localized

Mix Product

-Hair care

L’Oreal’s portfolio of brands from

-Hair color

many cultures—

-Hair style

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-Skin care

French, of course (L’Oréal Paris, Garnier, Lancôme),

-Skin care cosmetics

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L’Oréal Paris brand is sold in mass markets worldwide.

American (Maybelline, Kiehl’s, SoftSheen-Carson),

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British (The Body Shop),

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Italian (Giorgio Armani),

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Japanese (Shu Uemura)

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Garnier brand name is best suited for local Indian market.

Price

Country basis but they maintain

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In Asia moderate to low

the quality that L’Oreal delivers.

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In USA, pricing is very high compared to Asia

Place

L’Oreal products are available at supermarkets, cosmetics

drug

stores,

own

outlets and even online.

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stores,

The professional products are available at salons worldwide as

brand

they are not priced very high. -

The Luxe division products are available

at

supermarkets,

cosmetics stores, own brand outlets and even online.

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L'Oréal has its own subsidiary in India with a manufacturing plant in Pune with the most efficient distribution channel and workforce

Promotion

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March 2006, L’Oreal

In India, Aishwarya Rai Bacchan,

bought “The body shop”

Sonam Kapoor and Katrina Kaif

by 652 million. &

are L'Oréal brand ambassadors and

promoted themselves

international face for most of their

among various countries.

TV,

These acquisitions

advertisements.

increased the brand value

-

-

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print

and

digital

L'Oréal even use word-of-mouth

of L’Oreal through

marketing

creation of buzz.

become viral especially in India.

L’Oreal has the twelfth largest media budget in

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strategy

which

has

In Africa they use testimonial from customers as promotion.

the world. The global ad spending of L’Oreal was increased to $1.25 billion which was on as par as coca cola.

3. Management orientation Loreal uses “Regiocentric orientation” as a global marketing management orientation. The reason behind this is that it divided its global market into different segment based on “region” L’Oreal is concentrated on a cross cultural arena spanning four market destination. These are-

Asian Market

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European Market

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North America Market

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The African, 3

It also designed and launched different products based on different regional markets. Its management goal is to develop integrated regional strategy because the strategy used in developed countries is not going to work in developing countries. Developed countries have mature market as far as cosmetics consumption is concerned India is an emerging economy with most of the population below 35 years of age and a huge aspiring middle class.

4. PESTEL Analysis of L’Oreal Political -

Changes in Govt. & its policies like in

Economic -

L’Oreal’s product categories are all

socialist countries, L’Oreal need to

highly sensitive to global economic

publicly align itself with communism.

scale & scope.

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Export-import policies, Import tariff

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Conforming all the different govt.

economic environments & problems

leadership styles in various countries

in all countries it operates in.

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Should adapt to all the different

Obligated to produce product that do not

For example: In 2004 L’Oreal was

contain harmful ingredients

affected by the continued weakness of the dollar & other currencies.

Social -

L’Oreal recognized by foundation for

Technological -

social change as “leader of change” -

Recognized for approach to sustainable,

Active

ingredients,

formulation

procedure & evaluation technologies -

Scientific knowledge of the skin &

responsible & inclusive growth and for

hair accumulated by L’Oreal over a

creating positive social impacts while

century has opened the way to great

reducing environmental footprint.

innovations.

Environmental

Legal

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Reduction the carbon emission

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Consumption tax at 30% for eleven

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Manage programmed of internal audits &

types of beauty products such as eye

establish indicators for measuring &

and lip make-up preparation.

reporting on group performance. 4

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Has to follow the rules set by advertising standard authority

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Restriction in using certain kinds of chemicals.

Factors that L’Oreal consider to enter a new market are described in the following

Culture: L’Oreal consider whether the country is agriculture based or industry based because it has a direct impact on the survival of the company in the targeted country.



Purchasing power of the peoples: L’Oreal is having a different pricing structure for different country and also the product specification changes according to the culture.

For example: The product used in England may be of no use in Asian country and vice-versa. Therefore, before making a trade with any organization or country it is very important for L’Oreal to check out the feasibility of the product in that country and the end user. 

Technological advancement: The project manager who is working on to check the feasibility and the trade chances with the country should also see if the country have enough technological advancement so that they can store and produce their goods at the place itself.

For example: constructing a manufacturing unit rather than importing the product from the head manufacturing unit in the parent company. 

Effect of geography while doing any trade within any country like checking out the feasibility of the transportation and goods to places like-

Countries which are very rocky and full of mountains, it is very hard for L’Oreal to transport its products by road

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Though it is easy for the storage of cream and related products in such type of areas in which the temperature are low. But in a tropical region where the temperature is very high, it is very difficult for the company to have a proper storage at a low temperature.



Economic condition: economic condition of western European countries like-

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France and England and in the United States where the economy is very solid and established it is very easy to L’Oreal to have a better customer base.

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L’Oreal can invest much money in the developing countries like India, china or Latin American countries where the lifestyle of peoples is enhancing and peoples are keen to use a very high quality product.



Political economy: United States is having a very open trade policy which allows any company to trade within the country without having much restrictions of trading, but some countries are having so much restriction like-

The China and

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Japan who is not so open in terms of open trading

Therefore it would be very difficult for L’Oreal to have a business base in these countries.

5. Brand Extensions L’Oreal realized the need for caution in case of brand extensions. The company extended its brands after doing a thorough research. When L’Oreal decided to enter the kids shampoo category in 1998, it debated whether to launch a new brand or go for an extension. The company realized the L’Oreal name, long associated with women’s hair care, would capture instant credibility with moms. But Kids was really a child-oriented product. When L’Oreal first unveiled its L’Oreal Kids shampoo line early 1998, retailers were skeptical. “Retailers say the value isn’t there. We say it is that the child establishes value. We were pretty tenacious.” – mentioned Carol Hamilton, 45, senior VP-marketing for the L’Oreal retail division of Cosmair. L’Oreal professionals mechanizes with L’Oreal professional salons in order to not only promote their product but also to help hairdressers to have a vision, excel and accomplish. L’Oreal has divided their product range in five different categories to focus its marketing activities exclusively designed for the targeted market audience. i.

Professional products for the service sector business holders like hair salons.

ii.

Consumer Products for mass consumption of local people.

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iii.

Luxury Products for those who want to pay a little more extra and who are cautious about how they look.

iv.

Cosmetics general cosmetics.

v.

Body Shop a new sector of product range said to have based its products after getting inspired from the nature. The body shop was founded in 1976 in the United Kingdom well known for its strong product base of natural ingredients and having a network of over 2550 stores in 63 countries.

6. Marketing strategies in different market 6.1 Asian market L’Oreal is very famous in Asia and their products in Asia are very cheaper than the other companies and are used by majority of people in china, Thailand, Japan etc. L’Oreal is famous and very successful because of their global marketing strategies which are very helpful and also distinct from the strategies used by other companies in this field. 

India is an emerging economy with most of the population below 35 years of age and a huge aspiring middle class. The great Indian middle class is aspiring but still has the community driven cultural values intact. L’Oreal entered India with the hair color product, they changed the way consumers viewed the product. From being a product for the old-age to turn grey hair into shining black, L’Oreal targeted the young market for whom looking stylish and to the modern mark was important, The strategies includesProduct: Garnier fructis shampoo Promotion: “word of mouth” or network marketing. Positioning: Initially it was positioned as product for young and teenagers. L’Oréal has engaged in the industry with an entire line named “White Perfect”. This line

is sold in India, where the quest for fairer skin is deeply rooted in the country’s history, including British colonization period. Companies such as L’Oréal take advantage of people’s

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desire for fair skin to make a profit. This industry is fueled by the concept that fairer skin is superior to darker skin. Once the product was established in the market it tried to change & increase the target base by shifting gears. 

Chinese women are spending on an average 10 to 15% of their income on cosmetics products, an urban Chinese lady would use 2.2 cosmetics products on an average every morning. Evidently most of them want to be fashionable. Product: Chinese women are very concerned about the ingesting of lipsticks. For this reason L’Oreal developed lipsticks containing vitamins L’Oreal punch line: If you want to be fashionable, just choose Maybelline-, really seems to work. Segmentation: Masses are made to believe that this is something that represents America and it ought to be trendy. Maybelline is the product line for the masses. Product displaying: Maybelline products are displayed against the backdrop of shiny skyline of New York City as Chinese women prefer skincare and beauty products. Distribution network: L’Oréal has put in place a multi-brand strategy in order to cover the mass market in China. In fact, 95% of the L’Oréal workforce is local employees and most managers as well as marketing and sales executives are Chinese. The strategy of hiring local employees is essential for doing business abroad since local employees have a better understanding of the market, of the culture, of the language, of the way of doing business and of the consumer’s needs. On top of that, the cost of the workforce is quite cheaper when hiring natives.

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In Thailand: L’Oreal in Asia aims at the management of the global brands with the local variations and this means that their main aim is of becoming a local and not the foreign company in Asia. For this reason L’Oreal in Thailand has given local names to their stores and most of the employees present in this company, are local people of Thailand.

Problem faced in Asia: Competition given by the other companies dealing with the cosmetic products. 8

Strategy to overcome problem -

Selling good quality products at the cheaper rates than the other companies.

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Diversification of the brand and the main reason behind this strategy by L’Oreal is to make them palatable in the local cultures.

6.2 European Market L’Oreal is the only company which uses the strategies which also supports the people in many ways and not only in providing good quality products at cheaper rates. In European countries L’Oreal used the marketing strategies not only for the beauty or the fashion purpose but also for nurturing self-esteem of the people with beauty and France and Italy are considered as fashion capital of the world. 

In France:

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In France they deliver best quality product with premium price category.

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In France L’Oreal created the programs like “Beauty from the heart” for helping the helpless people faced illness or any kind of negative life experiences.

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Launches the “free skincare and make-up workshops” for the women suffering from cancer.

For example: In France a program named as “La Vie, de Plus Belle” offers the free skincare and makeup for the cancer suffering women in all over the France. This helps them to cope with the treatment’s side effects and it also helps them to retain their self-esteem which is very important for a patient. -

L’Oreal had made a large amount of brands which are rooted in the local culture and which all appeals to the various segments of the global market.

By using these social types of strategies for the people of Europe has helped L’Oreal in expanding their business in the whole Europe.

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6.3 North American Market The reason for this much success is that L’Oreal uses very good global marketing strategies in North America and the other countries like Canada etc. 

In USA: One of the successful strategies of L’Oreal in US market is brand extensions which includes the extensions of the brands after doing a complete research.

For example when L’Oreal launched a shampoo for kids they firstly made a complete research and also debated about the new launch or for an extension. The people of countries like Canada like to use new products that mean they like changes in their product after some interval of time. So by keeping this thing in mind L’Oreal uses the strategies of modifications which mean they modify their existing products according to the latest tastes and fashion of the local people. 6.4 African Region Like other countries in the world L’Oreal is also very successful and equally famous in Africa -

Product: In Africa, skin lightening products that are too harsh are often used to lighten the skin.

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By carrying out a study on the gap between actual skin color and desired skin color, L'Oréal set out to develop skin care products and makeup that achieve this goal with no risk.

7. Customer Driven marketing strategies L’Oreal has five worldwide research and development centres. These are as follows-

Two in France,

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One in the U.S. one in Japan, China.

In 1920 the company has only 3 chemists and now it is reaching the peak with a sum of 2000 chemists. Five worldwide research and development centre shows how much dedicated team is of 10

L’Oreal to fulfill customer’s satisfaction and make sure what should be the product variations according to the countries. Marketing strategies Segmentation

Worldwide -

Maybelline segmented market using lifestyle

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Garnier segmented market using income level & gender

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L’Oreal segmented market using all income level & distribution channel.

Targeting

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Consumer goods: For teenagers & young women

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Professional Products: For hair salon & hair stylist

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Luxury products: For men & women with high quality products

For example: L’Oreal Paris targeted “masstige segment” in India. Differentiation

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Pricing as a strategy to differentiate itself from competition.

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Focused differentiation

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Obtaining greater shelf space & leaving little for competitor’s product.

Positioning

The brand has positioned itself as most ethical cosmetics and beauty Care Company focusing on Universalisation. -

Maybelline has positioned itself as a lifestyle product

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Lancome has positioned itself as a luxury brand for premium skincare & makeup.

8. Social & Cultural environments of L’Oreal 8.1 Attitude of different country people toward beauty 

In Brazil: For Brazilian women, hair, body, and nails are the most important elements. For most Brazilian women, it is inconceivable to not polish their nails at least once a week. L'Oréal offered alternatives for hair straightening with optimal safety.Brazilian women

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with the darkest skin do not want to change the color but just to correct imperfections (darker or lighter spots). 

In Mexico: The attitude of Mexican women shows just how heterogeneous Hispanic populations are. Every opinion regarding skin tone can be found there, with contradictory expectations depending on the natural skin color. In Mexico, men are perhaps the largest daily consumer group for hair gels, and they expect it to provide shine and all-day hold.

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In Great Britain: Great Britain is an ideal region to observe consumer behavior related to hair. Techniques for applying hair products are very diverse there: one study has shown that a hair spray could be used there in 12 radically different ways.

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In India: In India hygiene and personal care are very important for men. To avoid having clammy skin and in order to smell fresh, many Indian men use talcum powder. Young people also use exfoliating products to remove dead skin and prevent acne.

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In Japan: Translucent skin is a standard of beauty for the Japanese, which means that the pigments contained in makeup products (foundation) must not be trapped by downy facial hair. In the time of the Japanese geisha, some women would discretely shave their facial hair to obtain this very light porcelain appearance.

8.2 Aesthetics 

Packaging’s beauty: More than 20,000 online readers chose L’Oréal as 2009’s Beauty Company of the Year: Excellence in Packaging. From new delivery systems to PCR bottles to adventurous shapes and ingenious patents, here’s how the century-old, Frenchbased beauty firm combines innovation and science to keep consumers coming back for more.

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Advertising: L’Oreal uses different appeals in advertisement using in different countries. L’Oreal uses combination of both information based & emotion & feelings based appeal. But in some cases they focus on one of the two appeals like-

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In North America L’Oreal use “factual appeal” from information based appeal

i.

in advertising because they present detail information about product & usage of products. In Africa L’Oreal uses “musical appeal” from emotion & feelings based appeal

ii.

using bold music. iii. 

In Asia L’Oreal use combination of “factual appeal” & emotional appeal.

Color & music i.

In case of “shampoo or hair color” L’Oreal uses women dressed in Black color

ii.

In case of “lipstick” L’Oreal uses women dressed in Black color

iii.

In Africa L’Oreal uses “hip hop” music

iv.

In America “instrumental music” is used in advertisement

v.

In India rock music is used in advertisement

8.3 Language & communication It is a crucial tool for L’Oreal to communicate with its customers, suppliers, channel intermediaries & others. So, they different language in communicating their products in different country markets such as

Labelling & advertising of products are based on different country languages

8.4 Environment and Health 

Human health: The human body, whether admitted or not, is extremely apt to taking in the chemicals that are commonly used in cosmetics, including those produced by L’Oreal. Many of the chemicals known to be detrimental to human health, such as lead, mercury, and formaldehyde, are still allowed in personal care products with little to no restrictions

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For In 2009, the Food and Drug Administration (FDA) released a study that L'Oréal was one of among the highest offenders, holding five out of the ten most lead-contaminated brands. 8.5 Rules & regulation by culture Another challenge that has emerged from the globalization of L'Oréal’s cosmetic regime is the differing regulation policies between and amongst countries. Some countries are not as stringent in their chemical ingredient restrictions, including the U.S. whose regulatory system is much more relaxed than the European counterpart. For example: The use of parabens however are much more restrictive in places like the European Union, where certain parabens are banned and their concentrations regulated (“EU to ban”, 2013). Parabens are preservatives added to products that have been found to be linked to cancer, breast cancer. Despite the clear concerns of the EU, L'Oréal has many products that still contain parabens, including those that have been banned (Hauge, 2004).

9. Protest from different cultural groups 

In India: Child labor issues are a symptomatic experience of companies like L’Oréal as they become increasingly global and as their supply chains span across more countries. This issue is especially prominent in less developed countries like India, amongst many others (UNICEF, 2014). The illegal mica mining performed by children is fueled by soaring consumer demand for “natural” makeup, driven by findings which linked synthetic makeup to illness such as cancer (Pandey, 2014).

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In France: On July 5, 2007, Garnier Fructis, a hair care line division of L’Oréal, was fined 30,000 Euros for systematic racism (Chrisafis, 2007). Garnier reportedly only recruited white women of a certain build to promote their products outside of grocery stores in and around Paris, France. L’Oréal was the first major company to be charged and fined for systematic racism in France.

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In America group of protestors from the NGO nature watch protested to Company that it continues to test new ingredients on animals without proper measures. So there should be research in proper manner so there should be no protest as it deviates the consumer mind. 14

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In Asia L’Oreal’s “accessible luxury brand” strategy was not successful in Asia. The reason is that the image of the texture or packaging is still stuck in the “open-shelf quality”. Texture and packaging in Asia is more delicate than the required standard in Europe.

10.Conclusion L’Oreal in spite of the growing competition has become a giant in its domain. It’s success rest on the four pillars of their entire business portfolio, namely Consumer Products, Luxury Products, Professional Products and Active Cosmetics. And the main reason of it success are strength of R&D team, effective organization structure, strong distribution channels, Brand portfolio management, Acquisitions & Branding strategy. From the initial days it already started catering to the demands of women worldwide. In order to do that efficiently they were expected to be well aware of the diversities of women across the globe. Innovation has been the keyword for L’Oreal and this was made possible through constant research and development over the years. The group has already covered most parts of the world and still striving to cover more. In order to do so L’Oreal group has to keep respecting other people’s identity, ideas and culture. L’Oreal has to keep valuing different cultures and nationalities to get their brand value up. The success story can continue further because even today products of L’Oreal touches the cultural values instilled in potential customers mind. It has carefully devised its global marketing strategy and customized it to the local needs, and that’s the reason people from Africa to Europe and America to Australia are using the L’Oreal products. L’Oreal has been doing pretty well in terms of global presence and monetary growth.

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