L’Oréal - L’Oréal Case Study PDF

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L’Oréal Case Study...

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Summary History: Founded in 1909 by Eugène Schueller, the L’Oréal Group began as a company which produced hair dyes known as Aureole for hairdressers. (Henderson & Johnson 2020, p.1) Loreal aims to meet individual cosmetic need worldwide, whilst also maintaining ethical standards; socially and environmentally (Loreal, 2020). Overall L’Oréal Present in more than 130 countries, and over 66,000 employees. L’Oréal’s main goal and aim was to sell their products as “beauty in a jar”, by doing so they were able to become one of the biggest players in the beauty and skin care market. As stated before L’Oréal’s market offering had initially started with only hair dyes however in 1988 after Lindsay Owen-Jones had become the CEO, she drastically changed the products listings to include various items such as hair colour & care, skin care, colour cosmetics, and fragrances they had achieved this buy purchasing multiple declining companies such as Maybelline and Garnier (Henderson & Johnson 2020, p. 2). They have grouped their many products into 4 divisions shown in Exhibit 1. DIVISIONS CONSUMER PRODUCT

BRANDS A more generic and basic product which is attainable by all

LUXURY PRODUCTS

- Loreal Paris, Garnier and Maybelline New York For individual you want to attain a more expensive and quality item

PROFESSIONAL PRODUCT

- Lancôme Paris, Ralph Lauren For individual such as hairdressers

ACTIVE COSMETICS Exhibit 1.

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The Body Shop Loreal Professional, Kerastase Paris

Target Market Overall, the reason for L’Oréal’s variety of products and sub brands is due to their extremely diverse target market. L’Oréal aims to fulfil beauty needs for both genders, all ages (adolescent to elderly) and also professionals such as hairdressers. In further detail they target individual with such needs: Males: specifically, Metrosexual, this is men who luxuriate in their dress styling, body care, image and looks. (Lertwannawit, A & Gulid, N. 2010 p.85). 1

Women: Young affluent individuals who are searching for skin & hair care, fragrances or styling products. Ageing Populations: Individual struggling with greying hair (hair dye products)

However, it is hard to maintain their consumers as the beauty market is a highly competitive and L’Oréal competes with many different companies. According to IBIS (2020), The overall main competitors in the beauty industry are P&G, L’Oréal USA, Inc., Estee Lauder, Unilever. However, there is another level of the market which is the more luxury and premium products such as Dior, Chanel and Giorgio Armani. In certain situations, L’Oréal has used their competitions to an advantage, as stated before L’Oréal has bought many sub companies which have failed in the market and used their names and products to reach a variety of individuals. Overall, many of the consumers of L’Oréal are loyal and choose their products over other competitors.

Problems Faced The first problem faced by L’Oréal is that their buyers are an ever-growing market whose needs and want are regularly changing thus making it hard for L’Oréal to sustain their market whilst also maintain their level of product quality. As indicated before, The beauty market is highly competitive which creates another issue for L’Oréal as they have to create products which differentiates them from competitions.

Critical Analysis Celebrity Endorsement Celebrity Endorsements allows companies to engage their consumer and also change their brand attitude it is an method used in promotional aspect of the marketing mix. According to Park & Yim (2020) The endorsements increase their viewers interests towards ads, clean any brand image issues and can also boost the introduction of the new products being released by the company. L’Oréal uses this marketing theory to it advantage as they have used this technique multiple times. The first example is by being a major sponsor for the Cannes Film Festival, they had 2

provided make up for multiple celebrities such as Diane Kruger, Gwen Stefani, Aishwarya Rai, Sonam Kapoor and many more (Henderson & Johnson 2020, p.6.). Specifically looking at Aishwarya Rai and Sonam Kapoor, they are both influential and popular actresses based in India. By having them endorse and use products from L’Oréal it allows the company to target a whole different country easily as many followers and fans for the actresses will begin using L’Oréal products. Another example of this is their establishment of a YouTube channel in 2010, “Destination Beauty”. As stated in Henderson & Johnson 2020, the channel allowed them to target audience easily as they created a community. In this practice they had again used celebrity endorsement through Michelle Phan. By having he trial and promote their product it allowed L’Oréal to advertise their product to her large subscriber bases. As social media is mainly used by young adolescent this had specifically targeted them. Acquisition L’Oréal has rapidly increased their company and products available through using research and development to their advantage and finding valuable companies which have failed. L’Oréal has previously acquired companies such as Maybelline, Jade and Unisa, after acquiring Maybelline, L’Oréal has used their knowledge of marketing and advertisement which helped them increase their US sales (Henderson & Johnson 2020, p. 4) L’Oréal and Maybelline were very different companies as L’Oréal had a brand image of being luxury and elegant, and Revlon was seen as a brand which was cheap with high quality. Secondly L’Oréal also maintains the brands name, by this happening L’Oréal is able to use the company’s reputation and consumer loyalty to their advantage and widen their consumer base. Another benefit of acquiring other companies is that L’Oréal may also be able to gain any resources that the secondary company owns such as facilities and buildings. By doing so this allows L’Oréal to easily gain access to many buildings world-wide making manufacturing easier.

Globalisation – Geographically segmenting

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With 23 global brands in over 130 countries, one of the biggest strategies used by L’Oréal is their realise of global products and aim to globalise their company (Henderson & Johnson 2020, p.1). Globalisation has many benefits for L’Oréal as it allows them to provide and produce products for a variety of different individuals. However, it is important for the company to understand the certain lifestyles and cultural details of where they are targeting. This concept is Glocalization which relates to makes a product/brand which is global however also has feature which adapts to the taste and preference of the locals. If a company wants to successfully globalize, they should be able to create a product which a large number of individuals will use in that country and create a loyal consumer base. The first example of how L’Oréal successfully glocalized is through Garnier in India, through research and development L’Oréal was able to find the locals in India preferred to shop at kiosks rather then retailers. As L’Oréal is a luxury and a higher end brand, they did not want to destroy brand image in kiosk, so they had used Garnier instead and sold their products at kiosks in India and Pakistan.

C) Remedies/solutions Remedy 1: Retail Stores Finally, another way for L’Oréal to expand and improve is through having retail store. Specifically, females regularly require the need for makeup artist for events such as formals, wedding and etc. L’Oréal can use this to their advantage and create popup shops or collaboration similar to Mac and Myer. Through these retail stores it’ll not only allow consumers to take advantage of the makeup artist, but they may like and develop preference for the quality and brand of L’Oréal. Furthermore, at such retail stores they can also provide sample, samples often draw the attention of consumers and allow them to trial the product without having any disadvantages. L’Oréal is a product of high quality and if they provide samples the consumer and test the quality out a similar to the make-up artist this can build a new consumer base.

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Since they are big on r&d – study on how men shop, their behaviours - Could use more resources – social media – focus more on marketing advertising spending. Reallocate spending. - Diversity – don’t do much of mass marketing– not cater for all o See countries that are doing well and push from there. 5

o Right amount of variations and costs o Sticking with values – innovation, creativity. Since they are big on r&d – study on how men shop, their behaviours - Could use more resources – social media – focus more on marketing advertising spending. Reallocate spending. - Diversity – don’t do much of mass 6

marketing– not cater for all o See countries that are doing well and push from there. o Right amount of variations and costs o Sticking with values – innovation, creativity. Since they are big on r&d – study on how men shop, their behaviours - Could use more resources – social media – focus more on marketing advertising 7

spending. Reallocate spending. - Diversity – don’t do much of mass marketing– not cater for all o See countries that are doing well and push from there. o Right amount of variations and costs o Sticking with values – innovation, creativity. Remedy 2: Research and Development It is important for L’Oréal to further use Research and Development. Instead of targeting a large variety of different global countries they should instead sources out which country are working in their favour and where they are making loses. As seen in Exhibit 2, it clearly seen that countries such as India do not have that high of consumer of cosmetics. Through this knowledge L’Oréal should use this to their advantage 8

and stop targeting India and start targeting countries such as Norway or Switzerland who have a much high consumer of beauty product’s.

GDP growth and per capita Cosmetic Consumption. Exhibit 2: source: L’Oréal 2010 annual report “Henderson & Johnson 2020” Remedy 3: Targeting African Market (globalising further) A market which has not been targeted by L’Oréal in-depth is the African market, as seen in Henderson & Johnson 2020, L’Oréal has mainly targeted the Asian and European market. However, the African market is a very broad and large target, with more than 1 billion people. If L’Oréal begins to make products and target them to the African market similar to how they did with India. It is important for L’Oréal to do clear and indepth research about what will work and what the market demands in that location. In one way it’ll be even more beneficial for them to target men in Africa which has not been done by many other companies. By doing the they will be able to create and target a large mass market and provide options for a variety of different individuals.

The case study analysis provided an in-depth view of L’Oréal looking at their history and brand, the problems occurring within the company and how they can resolves such issues successfully through marketing.

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Reference: Lertwannawit, Aurathai, and Nak Gulid. “Metrosexual Identification: Gender Identity and Beauty-Related Behaviors.” International Business & Economics Research Journal (IBER), vol. 9, no. 11. 2010 pp. 85-92.

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Henderson, Rebecca, and Johnson, Ryan. L’Oréal: Global Brand, Local Knowledge., 21 May 2012. pp. 1-14.

Ibisworld.com. 2020. IBISWorld - Industry Market Research, Reports, and Statistics. [online] Available at: < https://www.ibisworld.com/united-states/market-research-reports/cosmeticbeauty-products-manufacturing-industry/> [Accessed 28 March 2021].

The World Bank. 2021. The World Bank In Africa [online] [Accessed 22 March 2021].

Sun-Young Park & Mark Yi-Cheon Yim, Do Celebrity Endorsements Benefit Familiar Luxury Brands? A Perspective From Social Adaptation Theory, 2018 p. 1-17

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