CASE STUDY:

L’OREAL - BUILDING A GLOBAL COSMETIC BRAND

Presenting By,

Aboozar Karimi

Aravind S

Chandan Kumar Roy

Shantun Beniwal

SYNOPSIS

France based leading global cosmetic company. Founded in 1909. Led by Lindsey Owen Jones, the chairman and

CEO of the Company. Achieved double digit profit for eighteen

consecutive years. Business in 130 countries with a turnover of

around 13.7 billion Euros. Only cosmetic company in the world to own

more than one brand franchisee. Cosmetic industry refers to the cosmetics,

toiletry and perfumery industry brands.

Segmentation on the basis of product usage Luxury Consumers Professional Pharmaceuticals

L’Oreal remained as a global leader in the industry with a market share of 16.8 percent.

Due to increased focus on ‘wellness’, company focused mainly on Cosmecuiticals Neutraceuticals

BRAND AMBASSADORS IN INDIA

STRENGTHS OF L’OREAL

66,600 employees

23 Global brands

130 Countries

38 Factories5.7 billion

units in 2011

Global presence

Focused strategy to become Global brand

Hair color Skin care Hair care

Fragrances Color cosmetics

ROAD TO SUCCESS Company Launched the legendary advertisement

campaign “Because I am worth it” for promotion of a hair color.

Extraordinary distribution channel to the US, South America, Russia and the Far East.

Diversification into wide range of beauty products. Expanded globally by introducing Maybelline in USA. Relationship with its customers- Personal beauty

advisers at department stores.

MAYBELLINE A MILESTONE.

Acquired in 1996, when lost its focus and band equity.

Tagline: “Maybe she’s born with it”. “Maybe its Maybelline”.

Already well known for ordinary color lipsticks and nail polishes in USA.

Promoted the products by adding a tagline “Urban American chic” .

Expanded to Japanese market as well, and captured nearly 56% outside the US.

Celebrities for promoting brands.

BRAND STRATEGY

Maybelline's success proved L'Oreal's philosophy by embracing two different cultures (French and American).

L'Oreal acquired different unknown brands and gave a facelift, repacked and marketed them aggressively.

Promoted brands according to their national culture.

Maintained image with the help of research centers in Paris and New York.

Attained 493 patents registered on the company name in 2001.

PACKAGING

• To keep the different brands in one basket and yet keeping the differenciation.

CHALLENGE

• Good brand management was all about hitting the right target audience with the right product.

STRATEGY

FINDINGS & LEARNING

Brand

Diversity

• Famous for its Huge brand diversity and brand management in different countries and cultures.

Good Researc

h & Development

• Highly efficient R&D department.• Spending 3% revenue on R&D each year.• 2700 researchers. Worldwide.

Modernised approach of advertising

• Celibrities from different cultures are used for advertisements.• Programs and events adds more effect to advertisements.

Target

Market

• Middle aged and working women became the main target of the company.

Awarenes

s

• Established education centers are in many countries.• Conducted programs related to hairdressers.

Mass Marketing

• Opted complete makeover of the companies by providing wide range of products.

Brand

Positioning

• Company has a strong and long-term brand positioning specially within the minds of middle age women and teenage girls.

POP &

POD

• L’Oreal does not appreciate points of parity.• They believe to provide products different from their

competitors (P&G and Kevin care).

Science

Based

Approach

• Known as Scientific beauty company.

Brand

Consistenc

y

• L’Oreal focuses over all to improve and develop the different brands it acquired in different regions.

• Maybelline is the best example of consistency.

Distributio

n Channel

• Distributed is done with respect to its need and is cost effective.

• Used agents and consignments to USA, Japan and other Asian countries.

Understandings

• Company was brilliant in identifying the needs, cultures and aspirations of different kinds of customers in diversified regions.

Region specific products

MEXICO W. EUROPE ASIA

E. EUROPE

INDIA

QUESTIONS

1. Critically comment on L’Oreal’s global brand management strategies. Do you think L’Oreal’s strategies were primarily responsible for its impressive financial performance? What other factors helped the company remain profitable since over two decades?

2. With specific reference to Maybelline, critically comment on Jones strategy of acquiring relatively unknown brands of different cultural origins, giving them a makeover and marketing them globally. What are the merits and demerits of acquiring an existing brand vis-a-vis creating a new brand?

3. L’Oreal maintained a large portfolio of brands and was present in all the four segments of the cosmetic markets. What positioning strategy did the company follow to ensure that the image of its brand did not overlap? How and why L’Oreal did encouraged competition among its brands in particular segments and at the same time prevent the brands from cannibalizing each other?

LORéAL PARIS ADVANCED HAIRCARE TOTAL REPAIR 5