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Stratégie L’Oreal Essay

The purpose of this case study is: Show how important market analysis is in all business areas; Know your competition; To strive and prosper, be an “ABC Organization”; Think outside of the box; Innovation is powerful; Branding is necessary; Global strategy is fundamental; Know Your SWOT; and Much more.

Section One: Statement of the
Marketing Challenge
? Before identifying the primary global marketing challenge, strategic must be understood. Strategic means: “Decisions
or plans designed to impact favorably the key factors on
which the desired outcome of an organization depends”
(Business Dictionary).
? The primary strategic global marketing challenge for
L’Oreal, according to the case study has many areas. Slides four through six outlines some of them.
(Henderson R., Johnson R).

Wednesday, March 13, 2013

Section One: Statement of the
Marketing Challenge (continued)
? According to the case study and Forbes, the primary
strategic global marketing challenges for L’Oreal are:
? Greater competition and growth in countries / developing markets, such as China, Russia, India, Brazil and Mexico;
? L’Oreal expects three-fourths of growth from these countries; ? U.S. and Europe markets have slowed down;
? Competition from Unilever and P&G;
? Most dynamic markets for L’Oreal are Asia (China and India) and Latin America;
?

(Henderson R., Johnson R and Forbes.com).
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Wednesday, March 13, 2013

Section One: Statement of the
Marketing Challenge (continued)
? The primary strategic global marketing challenges
for L’Oreal are:

? Advertising costs – $5 Billion+ (heavily invested and internet); ? Growth goal of 2 billion customers by 2020 and increase share from 30-50% from emerging markets;
? L’Oreal’s marketing approach and challenge is to continue to match each countries and regions consumer’s tastes at the
right price;
? Fight strong domestic incumbents in emerging markets; and ? Develop brands in the low, medium, and high end markets. (Henderson R., Johnson R and Forbes.com).
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Wednesday, March 13, 2013

Section One: Statement of the
Marketing Challenge (continued)
? A very important and true statement about large
companies that can become the largest obstacle, as stated
by the CEO of L’Oreal in 1999:
“Many requirements for survival in the next century are
going to be size related. The most imperative for size is
balanced by the need for genuine innovation, creativity,
flair, imagination, taste, a sense of what is cool and what is not, and those are not qualities that go with huge
companies.”
(Henderson R., Johnson R).

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Wednesday, March 13, 2013

Marketing Challenge Statement
Support & Evidence
? According to the Wall Street Journal, even though Brazilian women spend more on beauty products than anywhere else,
L’Oreal SA has faltered. Why? These women purchase their
products from direct sales, like Avon representatives. L’Oreal is betting that as the market develops, direct sales will become less relevant.
? From 2011 to 2015, the global skin market is expected to grow at 4.4% because of the aging population and popularity of natural and organic skin care products, yet the market growth could be stunted from the intense competition (Reuters).

(Wall Street Journal and Reuters).
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Wednesday, March 13, 2013

Marketing Challenge Statement
Support & Evidence (continued)
? Less expendable income of the middle class in the U.S. has caused the margins to shrink for companies like P&G. The
Consumer Packaged Goods (CPG) industry has avoided price
wars and it is unclear as to the road ahead.
? The Prediction from Adage is: “The U.S., having lost its luster compared to developing markets in recent years, will get
renewed focus from CPG marketers … L’Oreal has shown
there’s plenty of growth to be had in the U.S., and P&G is highly motivated to shore up market shares in its biggest, mostprofitable market.” (Advertising Age).
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Wednesday, March 13, 2013

Marketing Challenge Statement
Support & Evidence (continued)
? Some more facts about L’Oreal that support their global marketing, according to the New York Times are:
?
?
?
?
?

Posted a record 20 billion euros in global sales in 2011;
Conquer their rivals by expanding to 1 billion consumers;
L’Oreal is the number one beauty brand in China;
L’Oreal has six labs and 3,500 researchers around the world; and Posted an operating profit of an estimated $4.35 billion.

(New York Times).

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Wednesday, March 13, 2013

Marketing Challenge Statement
Support & Evidence (continued)
? One of the areas, according to Macedo-Soares and Lyra da Silva, is:
? L’Oreal must engage in more strategic alliances from the opportunities presented to them.
? Also, the dynamic market changes taking place are posing challenges for all competitors.
? In other words, L’Oreal has a global marketing approach and goal to overtake cultures. The CEO of L’Oreal believes that this will overtake the way things have been conducted in the Brazilian market for the cosmetic industry (only time will tell).

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Wednesday, March 13, 2013

Section Two: Analysis of Current
L’Oreal Situation

? Section two is the analysis of the current situation at L’Oreal. ? This includes many areas, as outlined in the slides below this section, with a SWOT and relevant conclusion.
? The slides for this section start with slide 11 and end with slide eighty-five.

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Wednesday, March 13, 2013

Macro-Environmental Factors
Affecting the L’Oreal Case
Before identifying the Macro-Environmental Factors, it is
important to know the meaning. According to Business
Dictionary:

? “The major external and uncontrollable factors that influence an organization’s decision making, and affect its performance and strategies. These factors include the economic factors;
demographics; legal, political, and social conditions;
technological changes; and natural forces.“
? “Specific examples of macro environment influences include competitors, changes in interest rates, changes in cultural tastes, disastrous weather, or government regulations.”
(Business Dictionary)

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Wednesday, March 13, 2013

Macro-Environmental Factors
Affecting L’Oreal Case (continued)
? Competitors – P&G, Unilever, and many local brands around the world. Competition is definitely a factor and will become even more so.
? Cultural Taste Changes – L’Oreal is very strong with designing brands / products that meet what regional and country demands are. They need to continue with this practice for continued
growth.
? Economics – the U.S. and European middle class market decline has caused less profit margins (refer to Exhibit A).
? Supply Chain Disruption – the amount of natural disasters have affected many companies in the last few years. L’Oreal will need to prepare for these potential risks.
(Above the Standard Procurement Group® and HBS Case Study).

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Wednesday, March 13, 2013

Macro-Environmental Factors
Affecting L’Oreal Case (continued)
? Governments – Even though L’Oreal has grown to be the marketing giant in China for cosmetics, there can be risk
depending on Intellectual Property (IP), supportive laws to
protect patents and IP, and ethical policies. It will be important for L’Oreal to cover their risk as they want to be the number one company for consumers by 2020.
? Interest Rates – Interest rates help companies and individual’s have more expendable income. If a credit crisis takes place, as shown in the U.S. and Europe, many middle class people around the globe will not have the same expendable income to

purchase cosmetics and other consumable goods as they have in the past.
(HBS Case Study).

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Wednesday, March 13, 2013

L’Oreal Economic Considerations

What drives L’Oreal?
It is their savvy global marketing. To continue to feed the products that are developed, the manufacturing facilities, the supply chain, the staff that sell, and the infrastructure, marketing must continue to listen in all markets and make correct decisions to keep the global growth plan moving forward. Some of the overhead L’Oreal has that affects their economics as of 2010, are:

? 66,600 Employees
? 23 Global Brands
? 130 Countries
? 38 Factories
? 5.7 Billion Units
(HBS Case Study)

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Wednesday, March 13, 2013

L’Oreal Economic Considerations
(continued)
Some of the economic considerations are:
? Advertising Costs – The amount of funds being spent for advertising ($4.56 Billion in 2009).
? Sustainable Growth – Can L’Oreal sustain their growth of doubling its consumer base to 2 billion by 2020 without affecting economics, their quality, financial stability, and what the
consumer wants in their region?
? Emerging Markets – Can L’Oreal continue increasing sales in emerging markets like India, China, Brazil and so forth? There are major competitors
like P&G and Unilever.
(HBS Case Study)
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Wednesday, March 13, 2013

L’Oreal Economic Considerations
(continued)
Some of the economic considerations are:

? Direct Selling – Avon and similar direct selling (door-to-door) cosmetic organizations provide their products with great success in Latin America because this is the way their culture is. L’Oreal want into the market with their retail products and did not do well. Yet, the CEO of L’Oreal thinks this will change as the global market changes. Is this true? Will the culture change?

? L’Oreal’s Global Marketing – Even though L’Oreal has an approach to customize each brand as it’s own, market to certain regional and country demands, they still have a global approach of conquering the global cosmetic industry that could put them at risk. Are there marketing channels effective in every market?

(HBS Case Study)

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Wednesday, March 13, 2013

L’Oreal Economic Considerations
(continued)
Some of the economic considerations are:

? Nestle Ownership – Nestle owns the largest percentage share of L’Oreal. Will this affect L’Oreal in 2014 when Nestle has their options to exercise?
Nestles states that L’Oreal does not fit into their branding and core competency of beverage and food. Still, this could pose a risk as to the economics of what economic

resources L’Oreal has.
? Country / Regional Economics – If a countries economics change for the worse, what does this do to the middle class? This means that individuals have less money to spend, which means less
sales for L’Oreal.
(Alderman, L. – New York Times / Above the Standard Procurement Group®)

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Wednesday, March 13, 2013

L’Oreal Economic Considerations
(continued)
Some of the economic considerations for emerging
economies can be a risk because L’Oreal is going after these markets. Yet, some other markets are outdoing some of
them.

? BRICs – According to the Economist, Brazil, Russia, China, India, and China (known as BRICs), did not have a good year in 2012. ? Growth – Most of the forecasts were too much, as growth did not meet the forecasts.

? IMF – The International Monetary Fund (IMF) cut the growth forecast by more than 1.5 percentage points on average for 2012. (Refer to Exhibit B to view the Philippines and Indonesia for how these two countries are performing compared to the BRICs) (Economist).

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Wednesday, March 13, 2013

L’Oreal Political and Regulatory
Considerations
With L’Oreal having many locations and markets in many
countries, there are many political and regulatory areas that L’Oreal must deal with. Some of the political and regulatory considerations are:

? L’Oreal subsidiaries in 68 countries.
? They have “New Markets” Zone (representing 37% of cosmetic sales).
? The economic, political, exchange risk, and compliance,
regulatory, and market turnover is a significant risk and must be managed.
(L’Oreal – Gri Data Sheets)
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Wednesday, March 13, 2013

L’Oreal Political and Regulatory
Considerations (continued)
Some of the political and regulatory considerations are:
? Food and Drug Administration (FDA) – Cosmetics are regulated in the U.S. by the FDA.
? The immense amount of steps that L’Oreal must go through for each of material, process, labeling, document, and so forth to create each product in each country is time consuming and
complex at the least.

? Each Country Product Regulation – Each country has their own government regulation body and procedures for products that
are produced / manufactured by L’Oreal.
(Semet, E. and Grieve, J.)

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Wednesday, March 13, 2013

L’Oreal Cultural and Social
Considerations
According to the Cultural Environment of International
Business, as outlined in Chapter Five, L’Oreal has some
interesting considerations as it relates to cultural and social considerations.
? L’Oreal’s global influence within many countries, combined with world culture and management’s receptiveness to it, has shaped L’Oreal into a unique organization that is distinctive within French culture. Thus, as we review L’Oreal as an international business, to attribute all differences is simple as it relates to their French national culture.

(The Cultural Environment of International Business).

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Wednesday, March 13, 2013

L’Oreal Cultural and Social
Considerations (continued)
Sustainable innovation was boasted about by L’Oreal in their 2012 sustainable development report. Their report outlined
ideas about how they could improve governance
performance, social performance, and environmental
improvement. Some of the changes include:
?
?
?
?
?

Clean energy.
Holistic approach in Brazil.
Reconstructed biological tissue.
Return to plants.
Waste reduction.

(Kaye, L.).

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Wednesday, March 13, 2013

L’Oreal Cultural and Social
Considerations (continued)
As presented in the L’Oreal: Global Brand, Local Knowledge Harvard Business School Case Study, the L’Oreal culture is encapsulated by the Agon, L’Oreal CEO:
? “It is clear that people on different continents have their own specific needs, habits, dreams, and desires – so one product, or even formula, does not fit all.”
? We can conclude the L’Oreal culture and social considerations empowers their product development to each market as they
continue to develop new manufacturing facilities and offices in each market.
(Henderson R., Johnson R.).
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Wednesday, March 13, 2013

L’Oreal Cultural and Social
Considerations (continued)
An important area as it relates to cultural and social
understanding within L’Oreal and their consumers is “Local Consumer Understanding”. This is important in any business success.

? L’Oreal’s focus on emerging markets has driven them to have to understand the cultural and social diversity in that region / country; and
? Their website statement backs these actions with their
statement – “teams enriched by their cultural diversity, a portfolio of international brands present in the different
distribution channels, and research that is capable of grasping the world’s
complexities.”
(Henderson R., Johnson R., p. 113, Above the Standard Procurement Group®). 25

Wednesday, March 13, 2013

L’Oreal Cultural and Social
Considerations (continued)
The summary of L’Oreal’s many different faceted parts of their cultural mission internally and externally are driven by their global products at each local level:

? Understand consumers at local level (e.g., creation of
geocosmetics);
? Emerging markets (e.g., Brazil);
? Different approaches (e.g., Redken);
? Traditional markets (e.g., Inoa);
? Cater to diverse customer base (e.g., ethnic groups, East aspiring customers, and men’s health and care beauty).
As Agon, says “we are in transition.”
(Henderson R., Johnson R., p. 113, p. 115).

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Wednesday, March 13, 2013

L’Oreal Product Review

L’Oreal’s organization is broken down into three major groups, which are dermatology, cosmetics, and the body shop. From this 93% of all revenues came from cosmetics as of 2010. From these three groups, the company has four divisions which are:

? Consumer – Comprised bands distributed through mass market channels.
? Luxury – Prestigious international brands distributed through duty-free shops, perfumeries, and department stores.
? Professional – Hair care products used by professional hairdressers (sold through hair salons exclusively).
? Active Cosmetics – products created and marketed through beauty outlets, pharmacies, and specialty health.
(Henderson R., Johnson R.).
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Wednesday, March 13, 2013

L’Oreal Product Review (continued)

Some information about L’Oreal Product Review is listed below: ? Professional Products Division Sales (page 119) – Western Europe 35.5%, North America 36.2%, and New Markets 28.3%;
? Consumer Products Division Sales (page 119) – Western Europe 38.5%, North America 22.7%, and New Markets 38.8%;
? Luxury Products Division Sales (page 120) – Western Europe 32.9%, North America 22.6%, and New Markets 37.5%;
? Active Cosmetics Division Sales – Western Europe 54.3%, North America 9%, and New Markets 36.6%.
(Henderson R., Johnson R.).

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Wednesday, March 13, 2013

L’Oreal Product Review (continued)

Below is some more information about L’Oreal Products that are tailored to each region of the world (page 120):
?
?
?
?
?

Garnier Men – New men’s skincare range in India;
Caffeine Eye-Roll-on – Asia;
Mineral Deodorant – Eastern Europe;
Ultra Doux – Western Europe; and
Fructis Stop Caida – Mexico.

(Henderson R., Johnson R.).

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Wednesday, March 13, 2013

L’Oreal Product Review (continued)

Below is some more information about L’Oreal Products as it relates to their brands around the world (page 121):

? Professional Channels – L’Oreal PROFESSIONEL PARIS, KERASTASE PARIS, REDKEN, and MATRIX;
? Food, Drug, and Mass – L’OREAL PARIS, GARNIER, MAYBELLINE, and SOFTSHEEN CARSON;
? Perfumeries and Department Stores – LANCOME, BIOTHERM, HR, GIORGIO ARMANE, and Kiehl’s;
? Pharmacies – VICHY, LA-ROCHE-POSAY, SKINCEUTICALS,
SANOFLORE, and inneov; and
? The Body Shop – THE BODY SHOP and dm L’OREAL.
(Henderson R., Johnson R.).
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Wednesday, March 13, 2013

L’Oreal Price Review

One of the most important marketing and pricing methods is
L’Oreal’s brand diversity that drives sales from their low price brand products to their highest price brand products. As
stated on page 113 of the HBS Case Study, L’Oreal: Global
Brand, Local Knowledge.
? They develop brands from the low end to the high end;
? They provide a portfolio of brands / products that cover all distribution channels and price points; and
? Focus on catering to diverse populations which means different products at different prices.
(Henderson R., Johnson R., p. 113).
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Wednesday, March 13, 2013

L’Oreal Price Review (continued)

Below is some more information about how L’Oreal has
conducted and conducts their global Pricing strategies
and methods.
? Masstige – One of their methods is known as “masstige”. This is known as a combination of mass and prestige or prestige to the masses to those at L’Oreal (page 114).
? L’Oreal Premium Products – Known as premium but attainable. ? Price Points – Between mid-market and super premium
products.
(Henderson R., Johnson R.).
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Wednesday, March 13, 2013

L’Oreal Price Review (continued)

Below are some L’Oreal brand examples that identify and
show pricing methodologies within L’Oreal.
? L’Oreal Paris – Leading masstige global brand offered at affordable pricing.
? Lancôme – Best known and largest L’Oreal premium brand. ? Genifique – Youth activating concentrate.

(Henderson R., Johnson R.).
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Wednesday, March 13, 2013

L’Oreal Price Review (continued)

An interesting graph found on page 119 of HBS shows GDP
Growth and Per Capita Cosmetics Consumption in U.S.
Dollars.
? See Exhibit C that mirrors the L’Oreal 2010 Annual Report.

(Henderson R., Johnson R., pg. 119).

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Wednesday, March 13, 2013

L’Oreal Distribution Review

Before reviewing L’Oreal’s distribution abilities, network, and strength, this part of their business is very important to
understand. In other words, distribution is a huge part of
their core competency and success. Business Dictionary
states:
? Commerce: The movement of goods and services from the
source through a distribution channel, right up to the final customer, consumer, or user, and the movement of payment in
the opposite direction, right up to the original producer or supplier.
(BusinessDictionary.com)

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Wednesday, March 13, 2013

L’Oreal Distribution Review

A very important and integral part of L’Oreal’s distribution of products / brands is their supply chain. In fact, they have one of the best outsourced networks in the world.
? As outlined on their website, they directly collaborate with their suppliers to continuously optimize the management of the
supply chain (distribution), from the source to the consumer. ? Some of these areas are listed on the next slide.

(Loreal.com)

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Wednesday, March 13, 2013

L’Oreal Distribution Review
(continued)
Some of these areas of the supply (distribution) chain
mission are :
? Improve responsiveness;
? Optimization of production facilities and logistical means; and ? Cut time-to-market, reduce costs, and stock, in a comprehensive policy by applying international standards.
Their purpose is to meet the needs of distributor clients and consumers.
(Loreal.com)
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Wednesday, March 13, 2013

L’Oreal Distribution Review
(continued)
Distribution is a strong area that L’Oreal has developed over the years within their network. Why?
? They have developed methods to roll out products regionally when appropriate.
? Their global roll out methods have been developed when needed. ? They have innovated to be able to adapt their global products to local markets.
? In other words, they have scalability and flexibility in the market place to meet the global and local need.
? An example of this is their new manufacturing plant in Prune, India, which further secures their Asian market presence.
(Henderson R., Johnson R., p. 113, p. 112).

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Wednesday, March 13, 2013

L’Oreal Distribution Review

L’Oreal’s Distribution approach involves many areas, such as the Environment, Sustainable Development, Management, and 0f
course Distribution.
L’Oreal’s overall management approach in regards to Distribution is outlined very well by L’Oreal’s Gri-Data Sheets from 2011. ? To manufacture and distribute products while respecting the environment and people is an essential element of the vision of L’Oreal’s sustainable development (this involves their

environmental standards). The group’s environmental policy relies on strict compliance and regulation, internal standards applicable to each location, preventive business processes, and reduction and reuse.

(2011 L’Oreal Gri-Data Sheets)

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Wednesday, March 13, 2013

L’Oreal Distribution Review
(continued)
L’Oreal’s policy is accompanied by a detailed monthly report of indicators which monitor the development of the results.
In addition, L’Oreal managers are responsible for
implementing environmental policy, practical activity, and
achievement of objectives.

(2011 L’Oreal Gri-Data Sheets)

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Wednesday, March 13, 2013

L’Oreal Distribution Review
(continued)
L’Oreal has 41 factories and 74 distribution centers globally. In 2011, the group manufactured and distributed more than
5.78 billion products. The factories and distribution centers have environmental targets, such as:
?
?
?
?

50% absolute reduction in greenhouse gas emissions;
50% reduction in waste generated per finished product;
50% reduction in water consumption per finished product; and Reductions are calculated on a like-for-like basis for their 20052015 period.

(2011 L’Oreal Gri-Data Sheets)

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Wednesday, March 13, 2013

L’Oreal Marketing and
Communications Review
You cannot have effective marketing without
communications. To understand L’Oreal’s success, both
terms are defined in this slide and the next slide.
? Merriam-Webster defines marketing as:
? The act or process of selling or purchasing in a market and the process or technique of promoting, selling, and distributing a product or service. Secondarily, as an aggregate of functions involved in moving goods from producer to consumer.

(Merriam-Webster.com)

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Wednesday, March 13, 2013

L’Oreal Marketing and
Communications Review (continued)
Effective marketing starts with founded communications.
Communications can only happen with the right internal
business and cultural environment.
? Merriam-Webster defines communication as:

? 1-an act or instance of transmitting;
? 2-information transmitted or conveyed (a verbal or written message);
? 3-a process by which information is exchanged between individuals through a common system of symbols, signs, or behavior; also: exchange of information – personal rapport; and
? 4-technique for expressing ideas effectively; the technology of the transmission of information (as by print or telecommunication).

(Merriam-Webster.com, ATSPG.com)

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Wednesday, March 13, 2013

L’Oreal Marketing and
Communications Review (continued)
How does L’Oreal market and communicate? With any
effective marketing, you must have effective
communications. L’Oreal has both.
L’Oreal’s communications are divided into four areas. They are:
?
?
?
?

Brand Communication;
External Communication;
Corporate Communication and Information; and
Philanthropy.

(Loreal.com)
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Wednesday, March 13, 2013

L’Oreal Marketing and
Communications Review (continued)
A L’Oreal statement shows their strength with their
communications and marketing and how they work these
two areas to benefit all their stakeholders.
? “In each of these fields you will be part of an environment which changes rapidly due to the number of information sources,
changing priority in the media, stiff competition with other brands, and
consumers who are better informed and more demanding.“ ? L’Oreal Consumer Products President: “… tailoring product performance and price to local needs.”

(Loreal.com, Henderson R., Johnson R., p. 115)

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Wednesday, March 13, 2013

L’Oreal Marketing and
Communications Review (continued)
Ernst and Young (E&Y) conducted an interview with JeanClaude Le Grand, L’Oreal’s Consumer Products and Corporate Diversity Director. E&Y asked the question and the answer
summarizes how L’Oreal communicates and markets from
their core belief:
? “Why are diversity and inclusiveness such important issues for L’Oreal?”
? “We’re in the beauty business, and the concepts of beauty and diversity are intertwined. There is no single global standard of beauty; instead, there are different perspectives and different histories. The beauty market is diverse by definition. To lead in that market, L’Oreal has to be diverse from within.”

(Ernst and Young)
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Wednesday, March 13, 2013

L’Oreal Marketing and
Communications Review (continued)
As L’Oreal’s marketing and communications methodologies
are further reviewed, some very relevant processes come to
surface as to why they are a global success.

? They have a strict brand policy where they cannot sell outside of specific designated channels.
? L’Oreal is very good at acquiring brands, providing them a makeover with a shifted image, and launching these brands
globally with success (e.g., Maybelline).
? One L’Oreal executive stated, “we can apply our expertise and technology to improve Maybelline’s products, its marketing, its brand image, and increase its share of U.S. sales.”
(Henderson R., Johnson R., p. 113, p.114)

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Wednesday, March 13, 2013

L’Oreal Marketing and
Communications Review (continued)
L’Oreal has many ways of marketing their brands to the global and local market place. Behind Unilever and P&G, L’Oreal is third in global advertising spend. L’Oreal is going more towards digital as the world is changing. Some of the areas they utilize are:

?
?
?
?

Television, Print, Retail, and Billboards (e.g., magazines); Celebrity Endorsers (spokespeople);
Sponsors, Films and Media (e.g., Cannes Film Festival);
Digital and Internet (e.g., YouTube / Destination Beauty, Facebook / How to Videos filmed by Beauty Bloggers, User Generated Websites, and Utilization of Web Personalities); and
? Brandstorm (competition between students for new marketing concepts); and ? Grassroots Campaigns (e.g., provide help to salons).
(Henderson R., Johnson R., p. 116, p. 117, p. 118)

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Wednesday, March 13, 2013

Competitive Analysis – Direct
Competitor Analysis
L’Oreal has an interesting view about competition which
states with Agon, the CEO. He states, “The more the market develops, the less relevant direct sales will be”. He said this in regards to how Brazil makes purchases from direct sales.
Agon’s belief is that this will change, even though many Latin countries do business this way.
? He also goes onto say, “… the number of options is infinite … people will become used to this new world … right tools of communications for the right purpose.”
? In other words, Agon believes the world is changing and will change, there will be more choices, and those companies that are there to offer these choices will come out ahead if they are positioned right. (Henderson R., Johnson R., p. 115, p.116)

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Wednesday, March 13, 2013

Competitive Analysis – Direct
Competitor Analysis (continued)
One of the foundational pieces that continues to drive
L’Oreal to new achievement heights, profitability, and market share are the global products, sold at the local level, through all types of markets to meet the local consumer diversity.
Some of the L’Oreal competitive ways are:
?
?
?
?

Department Stores;
Other Retail Locations;
The Internet;
Director Marketing (beauty industry professionals); and dutyfree shops.

(Henderson R., Johnson R., p. 111)

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Wednesday, March 13, 2013

Competitive Analysis – Direct
Competitor Analysis (continued)
Jean-Paul Agon, L’Oreal’s CEO, made a statement in 2010. His words outline L’Oreal, their marketing, global business, and competition.
? “You need a global brand, which is then adapted to the key markets on the key continents in order to offer consumers the right and relevant products, which is what universalization is all about.”

(Henderson R., Johnson R., p. 111)

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Wednesday, March 13, 2013

Competitive Analysis – Direct
Competitor Analysis (continued)
Who are L’Oreal’s competitors?
L’Oreal competes with companies like Avon, Revlon, Estee Lauder, and Proctor & Gamble (P&G). As of 2011, Forbes estimates their current market price above the $22.74. L’Oreal’s broad portfolio and global presence of brands makes them well positioned. Some of their brands range from:

? Professional Salon Brands – such as Redken and Kerastase; ? Retail Brands – such as Garnier, L’Oreal Paris and Maybelline; and ? Luxury Brands – such as Lancôme and Biotherm.
(Forbes.com)
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Wednesday, March 13, 2013

Competitive Analysis – Direct
Competitor Analysis (continued)
L’Oreal’s Brands – Broad Portfolio & Global Presence
? This has helped L’Oreal benefit from the gradual recovery in macroeconomic conditions. And, they are positioned to gain
from rising income levels and double-digit growth rates in
emerging economies such as India and China .
? Another area that benefits the bottom line and future success of L’Oreal is their 9% stake in Sanofi-Aventis, which contributes for 10% more to L’Oreal’s stock.
? One of the potential actions that could take place is from Nestle, who owns close to 30% of L’Oreal. The reason: L’Oreal’s
promising business outlook, a healthy balance sheet, and
business fundamentals that are sound.
(Forbes.com)
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Wednesday, March 13, 2013

Competitive Analysis – Direct
Competitor Analysis (continued)
L’Oreal’s Competition: Leader in Several Market Segments
? L’Oreal’s skin care accounts for 12% of the market share, a growing share in the beauty care area which accounts for $90 Billion globally, 9% of the fragrance and 19% of makeup segment which makes L’Oreal the leader in these two areas, and a 22% market share in hair care, which places them in second behind P&G and double the share over Unilever, who is third.

(Forbes.com)

54

Wednesday, March 13, 2013

Product Analysis – Market Analysis
(country and consumer markets)
L’Oreal Market Summary (April, 2012)
Forbes L’Oreal’s Market Share, Numbers, and Information:
? Industry: Household/Personal Care;
? Founded: 1907;
? Country: France;
? CEO: Jean-Paul Agon;
? Website: www.loreal.com;
? Employees: 68,886; and
? Sales: $26.35 Billion.
(Forbes.com)

55

Wednesday, March 13, 2013

Product Analysis – Market Analysis
(country and consumer markets)
L’Oreal Market Summary (April, 2012)
Forbes Lists L’Oreal as:
? #25 World’s Most Powerful Brands;
? #34 Innovative Companies (#26 in 2011);
? #209 Global 2000;
? #341 in Sales;
? #185 in Profit;
? #670 in Assets; and
? #92 in Market value.
(Forbes.com)

56

Wednesday, March 13, 2013

Product Analysis – Market Analysis
(country and consumer markets)
What is L’Oreal’s country markets and consumers markets?
L’Oreal’s China CEO is committed to the Chinese market.

? In 2011, L’Oreal’s Annual Report stated the following their target is: “to conquer one billion new customers in the next decade”. In forecast and planning, this means L’Oreal will double their numbers if they accomplish this.

? They believe that China will play a vital role in accomplishing their numbers and goals. L’Oreal’s CEO for China, Alexis PerakisValat, said: “Right now, China is the third-largest market for L’Oreal worldwide.” Also, he says, “we are sure that China will be number 1 one day. There is no doubt about it.”

(Jing, Y., China Daily)

57

Wednesday, March 13, 2013

Product Analysis – Market Analysis
(country & consumer) (continued)
What is L’Oreal’s country markets and consumers markets?
L’Oreal’s sales in the Asia-Pacific region rose more than last year (12.5%, $1.7 Billion), while European sales rose by a
meager 1.9 percent.

What are the main areas propelling the Chinese market?
? The upmarket shift of its consumers; and
? The potential for geographic expansion.
(Jing, Y., China Daily)

58

Wednesday, March 13, 2013

Product Analysis – Market Analysis
(country & consumer) (continued)
What is L’Oreal’s country markets and consumers markets?
L’Oreal’s markets include the following:
?
?
?
?
?

Understand Consumers at Local Level (globally);
Emerging Markets (Brazil, China, etc.);
Different Approaches (U.S., Europe, etc.);
Traditional Markets; and
Cater to Diverse Customers (Ethnic groups, East Aspiring
Customers, and Men’s).

(Henderson R., Johnson R., p. 113, p. 115).

59

Wednesday, March 13, 2013

Product Analysis – Market Analysis
(country & consumer) (continued)
What is L’Oreal’s country markets, consumer markets, and
products?
L’Oreal’s products include the following:
?
?
?
?

Consumer;
Luxury;
Professional; and
Active Cosmetics.

(Henderson R., Johnson R., p. 113, p. 115).

60

Wednesday, March 13, 2013

Product Analysis – Market Analysis
(country & consumer) (continued)
What is L’Oreal’s country markets, consumers markets, and
products?
L’Oreal’s product review percentages, include the following:

? Professional Products Division Sales (page 119) – Western Europe 35.5%, North America 36.2%, and New Markets 28.3%;
? Consumer Products Division Sales (page 119) – Western Europe 38.5%, North America 22.7%, and New Markets 38.8%;
? Luxury Products Division Sales (page 120) – Western Europe 32.9%, North America 22.6%, and New Markets 37.5%;
? Active Cosmetics Division Sales – Western Europe 54.3%, North America 9%, and New Markets 36.6%.
(Henderson R., Johnson R.).
61

Wednesday, March 13, 2013

Product Analysis – Market Analysis
(country & consumer) (continued)
What is L’Oreal’s country markets, consumers markets, and
products?
L’Oreal’s products and consumer markets review, as it relates to what is sold in certain countries and regions around the world are: ?
?
?
?
?

Garnier Men – New men’s skincare range in India;
Caffeine Eye-Roll-on – Asia;
Mineral Deodorant – Eastern Europe;
Ultra Doux – Western Europe; and
Fructis Stop Caida – Mexico.

(Henderson R., Johnson R., p. 120).

62

Wednesday, March 13, 2013

Product Analysis – Market Analysis
(country & consumer) (continued)
What is L’Oreal’s country markets, consumers markets, and
products?
L’Oreal’s global brand mission, as it relates to products and consumer markets review, are:
? Develop brands from the low end to the high end;
? Provide a portfolio of brands / products that cover all
distribution channels and price points; and
? Focus on catering to diverse populations which means different products at
different prices.
(Henderson R., Johnson R., p. 113).
63

Wednesday, March 13, 2013

SWOT Analysis

What is the SWOT for L’Oreal?
A SWOT analysis, according to business dictionary is defined as: “Situation analysis in which internal strengths and weaknesses of an organization, and external opportunities and threats faced by it are closely examined to chart a strategy. SWOT stands for

strengths, weaknesses, opportunities, and threats.
In other words, L’Oreal’s SWOT can be broken down into:
?
?
?
?

Strengths;
Weaknesses;
Opportunities; and
Threats.

(Business Dictionary)

64

Wednesday, March 13, 2013

SWOT Analysis (continued)

What are some of the L’Oreal strengths?

? Ability to create proprietary products patented and owned by L’Oreal (cutting edge);
? Advertising Budget;
? Brand Development from Low to High End Markets;
? Communication Practices that Build Trust;
? Continued Expansion in New Markets (South East Asia, China, and India);
? Diversity Driver (Strengthen L’Oreal’s Performance);
? Ethics and Trust for Financial Health;
? Formula and Packaging Renewal for Certain Products;
(2011 L’Oreal Annual Report, Case Study Bibliography)

65

Wednesday, March 13, 2013

SWOT Analysis (continued)

What are some of the L’Oreal strengths?

? Global / International Brands (Three Business Segments: Fragrances, Make-up, and Skincare. Selective distribution, through Department Stores, Perfumeries, Travel Retail Outlets, Free-Standing Stores, and E-commerce);

? Global Growth and Sales with Profitability (Strengthening their Core Products – Refer to Exhibit D);
? Hairdresser Partnership Development and Enhancement
(Continuation of Current Relationships and Strengthening of New Partner’s, like Salonworld in France);
? Increased and Interactive Training (Cosmetic and Hair Care Professionals);
(2011 L’Oreal Annual Report, Case Study Bibliography)

66

Wednesday, March 13, 2013

SWOT Analysis (continued)

What are some of the L’Oreal strengths?

? Internet and Digital World (L’Oreal has Implemented Successful Practices through Websites, Twitter, Social Networks, Facebook, and the Combination of their Entire Social Media Plan);
? ISO Certified Locations;
? Leader in Several Market Segments;
? Local Supplier Development (L’Oreal Initiated a Local EcoSystem / Close to Consumer Needs for Each Market) / L’Oreal’s Group
Divisions provides an expert platform in each distribution channel (provides the needs to each consumer as it relates to their lifestyle, behavior, local market, and purchasing power);
(2011 L’Oreal Annual Report, Case Study Bibliography)

67

Wednesday, March 13, 2013

SWOT Analysis (continued)

What are some of the L’Oreal strengths?

? Market Leader (continues to strengthen);
? Marketing, Cultural, and Social Abilities;
? Mature Market Strengthened due to Innovative Retailer
Partnerships (Germany, United States, and France);
? New Markets (Emerging Markets – South East Asia, China, India, Russia, and Latin America / Refer to Exhibit E)
? New Market Industrial Facilities (Be Close to Consumer Needs and the Growth of Each Market);
? No More Clinical Trials Potentially (L’Oreal Prediction
Evaluation);
(2011 L’Oreal Annual Report, Case Study Bibliography)

68

Wednesday, March 13, 2013

SWOT Analysis (continued)

What are some of the L’Oreal strengths?

? Offerings to all women and men beauty opportunity in all markets (emerging, developed, niche, and so forth);
? Open Research Development (L’Oreal is Open to Local Scientific Expertise);
? Profitable growth with sustainability;
? Research (Creativity and Innovation / Rated 100 Most Innovative Companies in 2011 by Reuter’s);
? Successful Acquisition Methodologies and Processes of
Companies;
(2011 L’Oreal Annual Report, Case Study Bibliography)

69

Wednesday, March 13, 2013

SWOT Analysis (continued)

What are some of the L’Oreal strengths?

? Supply Chain / Distribution Global and Local Ability;
? Sustainable and Environmental Practices (Monitor
Environmental Targets);
? Thorough Knowledge of Latest Trends and Customers; and
? Trust Relationship for the Administration, Controlling, and Finance Teams (partners: bankers, suppliers, customers, market authorities, shareholders, and rating).

(2011 L’Oreal Annual Report, Case Study Bibliography)

70

Wednesday, March 13, 2013

SWOT Analysis (continued)

What are some of the L’Oreal weaknesses?
?
?
?
?

Accountability of Divisions because L’Oreal is Large;
Control Difficulty;
Decentralized organizational Structure (Many Sub Divisions); Ethical Advertising Issues (use of beautiful woman and product testing policies);
? Handling Local Cultural Markets (Brazil / Direct Selling Provided by Avon);
? High-End Cost of Advertising and Large Budget Amount;
(SWOT Analysis L’Oreal, Premium Beauty News, Bloomberg, Case Study Bibliography)

71

Wednesday, March 13, 2013

SWOT Analysis (continued)

What are some of the L’Oreal weaknesses?

? L’Oreal Product Campaigns (can affect project image);
? Lower Sales from Developed Markets in 2011 (the U.S. and Europe);
? Negative Results / China Slowdown and Trading Conditions in Taiwan and
South Korea (2012);
? Nestle Ownership (2014 Decision of Takeover?);
? Possible Future Global Economic Slowdown for Cosmetics and Luxury Items;
? Production Slowdown (Due to Reference and Decision by
Directors and Board Members);
(SWOT Analysis L’Oreal, Premium Beauty News, Bloomberg, Case Study Bibliography)

72

Wednesday, March 13, 2013

SWOT Analysis (continued)

What are some of the L’Oreal weaknesses?
? Profit Margins are Lower Compared to Smaller Sized Rivals; ? Size (Lose the Communication, Trust, Innovation, and Marketing Internally);
? Slow Growth of Kiehl’s Product (Decelerated Revenue in
Western Europe and Asia / L’Oreal cut Prices in 21 Markets in the past two years);
? Stiff Competition from Unilever, P&G, and Revlon;
(SWOT Analysis L’Oreal, Premium Beauty News, Bloomberg, Case Study Bibliography)

73

Wednesday, March 13, 2013

SWOT Analysis (continued)

What are some of the L’Oreal weaknesses?
? Volatile Currency in the Markets;
? Vulnerable to Global Demand Weakness (Last Quarter 2012); and ? Worldwide Market Image (due to worldwide marketing strategy where coordination and control of activities can be more
difficult).

(SWOT Analysis L’Oreal, Premium Beauty News, Bloomberg, Case Study Bibliography)

74

Wednesday, March 13, 2013

SWOT Analysis (continued)

What are some of the L’Oreal opportunities?
? 6% Growth in 2012 Beat 4.5% Forecast;
? Acquire One Billion New Consumers;
? Baby Boomers are Working Longer (Active Consumers with
Expendable Income);
? Consumers Driven by Health and Well-Being More as Their
Objectives;
(PR News Wire, CPP-Luxury, L’Oreal, Daneshkhu S., and Brummelhuis S.)

75

Wednesday, March 13, 2013

SWOT Analysis (continued)

What are some of the L’Oreal opportunities?
? Corporate Responsibility (Underprivileged Children, Support of Ailing Individuals, Assistance Provided to Vulnerable
Populations, and Science Promotion);
? Diversify Into New Product Categories;
? Driving Growth (Emerging Markets);
? Effective Distribution and Supply Chain (L’Oreal is Best in Class); (PR News Wire, CPP-Luxury, L’Oreal, Daneshkhu S., and Brummelhuis S.)

76

Wednesday, March 13, 2013

SWOT Analysis (continued)

What are some of the L’Oreal opportunities?

? Electronic Beauty (Product Synergies);
? Emerging and New Markets;
? Global Branding that Applies to Local Knowledge (Global Brands Adapt to Key Markets);
? Global Citizen Projects (Different Projects that Help Young People from Underprivileged backgrounds in such places as
Vietnam, Germany, Israel, Lebanon, Korea, Switzerland, Turkey, Norway, and Morocco);

(PR News Wire, CPP-Luxury, L’Oreal, Daneshkhu S., and Brummelhuis S.)

77

Wednesday, March 13, 2013

SWOT Analysis (continued)

What are some of the L’Oreal opportunities?
? Global Skin Market Expected to Grow 4.4% through 2015;
? Grants ($10,000 to $100,000 Funding by L’Oreal for Women who are accepted in “The Next Lab”, an Experimental Testing Fund for Digital Innovation);
? L’Oreal Global Corporate Office Moving to a New Location (New Sports Center, Restaurant… Everything);

(PR News Wire, CPP-Luxury, L’Oreal, Daneshkhu S., and Brummelhuis S.)

78

Wednesday, March 13, 2013

SWOT Analysis (continued)

What are some of the L’Oreal opportunities?

? L’Oreal has Best in Practice Communications, Marketing, and Channels;
? L’Oreal Knows How to Compete (Stay with or Ahead of
Competition);
? L’Oreal Owns 8.8% Holding of Sanofi;
? L’Oreal Provides Products that Provides New Strength to the Skin;
? Market Position (Low End to High End Products);

(PR News Wire, CPP-Luxury, L’Oreal, Daneshkhu S., and Brummelhuis S.) 79

Wednesday, March 13, 2013

SWOT Analysis (continued)

What are some of the L’Oreal opportunities?
? Net Debt has turned into Net Cash in Four Years (Agon, L’Oreal’s CEO, Wants to Use Cash for Acquisitions);
? People are Living Longer (Market Increase 50+); and
? Sustainable Clean Energy and Strong Environmental Policy is Driving L’Oreal (More Demand in the Marketplace).

(PR News Wire, CPP-Luxury, L’Oreal, Daneshkhu S., and Brummelhuis S.)

80

Wednesday, March 13, 2013

SWOT Analysis (continued)

What are some of the L’Oreal threats?
? Acquisition of the Right Companies and Brands (Fit L’Oreal’s Brand, Mission, and Market);
? Advertising Budget (More than $5 Billion Per Year);
? Consumer Spending Habits (Directed by Economics);
? Cultures (e.g., Brazil – Local Culture Enforces Avon Direct Selling Method / L’Oreal’s Performance Did Not Meet Expectations);
? Economic Downturn in Some Countries in 2012;
(L’Oreal, China Daily, AFP Relax News / NY Daily News)

81

Wednesday, March 13, 2013

SWOT Analysis (continued)

What are some of the L’Oreal threats?
?
?
?
?

Growing Competition (Cosmetic Brands);
Keeping up with Research and Innovation;
Local Brand Growth;
L’Oreal Become Too Large (Lose Internal Communications,
Marketing, Innovation, and Creativity As Many Large Companies Do);

(L’Oreal, China Daily, AFP Relax News / NY Daily News)

82

Wednesday, March 13, 2013

SWOT Analysis (continued)

What are some of the L’Oreal threats?
? L’Oreal Lower Profit Margin (Compared to Local Brands);
? L’Oreal may Face Problems Reaching Average People in
Underdeveloped Countries (Distribution and Cost);
? Nestle (2014); and
? Worldwide Global Changes (Raw Material Demand,
Manufacturing Location, Natural Disasters, Supply Chain
Disruption, Compliance, etc.).
(L’Oreal, China Daily, AFP Relax News / NY Daily News)

83

Wednesday, March 13, 2013

Current Situation Conclusions

Below are some overall conclusions as it relates to the data and information collected about L’Oreal.

? L’Oreal has done a brilliant job creating a global system, supply chain, distribution, marketing, and communication platform
where they can deliver local products and brands desired by the local market.
? L’Oreal, from a financial stand-point, has a lot of cash. ? L’Oreal is acquiring a lot of companies around the globe that fits their global model.
? L’Oreal practice an environmental standard and eco-friendly foundation in their practices that are actually audited and
tracked.
84

Wednesday, March 13, 2013

Current Situation Conclusions
(continued)
Below are some overall conclusions as it relates to the data and information
collected about L’Oreal.

? L’Oreal is one of the largest cosmetic companies in the world, behind P&G and Unilever.
? L’Oreal has stopped conducting testing on animals.
? L’Oreal is going more towards digital and away from print. ? Nestle has a large part of L’Oreal stock and in 2014, Nestle will be able to decide how they exercise this ownership.
? L’Oreal has incredible talent, spends a lot of money on research, development, and innovation.
? L’Oreal is very innovative in their thinking, teams, and outreach for market development, marketing, and consumer brands.
85

Wednesday, March 13, 2013

Section Three: Alternative Strategic
Marketing Solutions
? Section three identifies three strategic alternative
solutions that L’Oreal can take to enhance their global
marketing.
? Section three starts with slide eighty-six and goes
through slide ninety-nine.

86

Wednesday, March 13, 2013

Section Three: Alternative Strategic
Marketing Solutions
Marketing Strategy Recommendation One: Direct Sales

? Pricing is a big problem based on how markets fluctuate, how an economy does, and how much of a luxury item is purchased or
not (L’Oreal products, even on the low end, are considered
luxury for many consumers).
? L’Oreal’s budget for advertising is massive. Even though they are trying to go more digital and provide an environment of
word-of-mouth, this area needs to be developed more, as this would help not only grow their business, but for less advertising dollars. Avon has done an incredible job and L’Oreal could
create a division hybrid of this.
87

Wednesday, March 13, 2013

Section Three: Alternative Strategic
Marketing Solutions
Marketing Strategy Recommendation One: Direct Sales
? Products/Markets

? Offer products that could be manufactured in the region/country, in those cultures where direct selling is a part of the culture (e.g., Brazil), and grow one area at a time.

? Mode of Entry

? Start with Direct Selling. Learn from other companies, like Avon and Coca-Cola. Avon has done great in Brazil and Coca Cola did some amazing things in India. Avon utilized the Brazilian culture and Coca Cola saw a marketing opportunity to reach the rural areas they could not reach otherwise – Coca Cola set helped women to own their own Coca Cola business to sell Coca-Cola to the distant areas in India outside of their distribution abilities bringing great success.

88

Wednesday, March 13, 2013

Section Three: Alternative Strategic
Marketing Solutions
Marketing Strategy Recommendation One: Direct Sales
? Country Markets

? Start with Brazil

? Price and Distribution Strategies

? The product needs to be priced at a range where the masses can access L’Oreal without jeopardizing quality and profit margin. Also, the product needs to be able to be manufactured in the country market being developed for this new strategy.

? Product/Marketing Communication Strategy

? Continue with L’Oreal’s marketing and communication strategy of Luxury and Quality and Image at a price that everyone can afford. 89

Wednesday, March 13, 2013

Section Three: Alternative Strategic
Marketing Solutions
Marketing Strategy Recommendation One: Direct Sales

? Advantage
? L’Oreal will increase more market share, increased consumers, and some of the populations in these countries that they would not have reached any other way.
? Disadvantages
? Might hinder the image of L’Oreal’s Luxury Image if not
conducted right as well as what L’Oreal’s CEO has said about Direct Selling in Brazil (the market will change the way people buy). There is not as much quality control and training in how products are used with Direct Selling Representatives as with Hair and Cosmetics Professionals.

90

Wednesday, March 13, 2013

Section Three: Alternative Strategic
Marketing Solutions
Marketing Strategy Recommendation Two: Acquire
Companies that Fit L’Oreal’s Culture, Distribution, and
Mission
? Products/Markets
? Through acquisitions of companies by L’Oreal, ensure that any products these companies provide fit within the
guidelines, high standards, and regulatory compliance.
? Also, ensure that the products of these acquired companies are in-demand or have the potential of consumer demand within the portfolio of L’Oreal.
91

Wednesday, March 13, 2013

Section Three: Alternative Strategic
Marketing Solutions
Marketing Strategy Recommendation Two: Acquire
Companies that Fit L’Oreal’s Culture, Distribution, and
Mission
? Mode of Entry

? Purchase only those companies that fit the product, market, regulatory, and mission guidelines of L’Oreal. After the country/region has been analyzed, ensure that the company being analyzed is sound and meets these L’Oreal guidelines.

? Country Markets

? Entrance of country markets should only take place where L’Oreal can support the new acquired company, as well as production of the brand.

92

Wednesday, March 13, 2013

Section Three: Alternative Strategic
Marketing Solutions
Marketing Strategy Recommendation Two: Acquire
Companies that Fit L’Oreal’s Culture, Distribution, and
Mission
? Price and Distribution Strategies

? The price and distribution of the company being analyzed would be thoroughly reviewed as to the viability, soundness, and consumer feedback realities of the product, the brand, future growth, how the local economy effects the buying decision of the product, and whether the product price is low, medium, or high priced valued. As far as distribution strategies, if the acquisition analysis is conducted correctly, the distribution of the product will work well. ? L’Oreal likes to be self-sustaining so they will need to ensure one of two things: (1) Does the company they are reviewing manufacture their own product; or (2) Does the company own the proprietary rights, patents, and formula for the product so that L’Oreal can manufacture in their own facilities and distribute?

93

Wednesday, March 13, 2013

Section Three: Alternative Strategic
Marketing Solutions
Marketing Strategy Recommendation Two: Acquire
Companies that Fit L’Oreal’s Culture, Distribution, and
Mission
? Product/Marketing Communication Strategy

? Upon successful acquisition of the company L’Oreal has purchased, ensure proper press release, news, and strength of the company becoming a part of the global L’Oreal Local Family. Create news that shows how L’Oreal creates jobs, provides plants, R&D, and local opportunities to the local area, with a show of all their operations in each specific market and how they will do the same. In other words, guide current consumers and prospective consumers into the understanding that L’Oreal is not this huge company that only will take jobs, cares only about profits, and so forth.

94

Wednesday, March 13, 2013

Section Three: Alternative Strategic
Marketing Solutions
Marketing Strategy Recommendation Two: Acquire
Companies that Fit L’Oreal’s Culture, Distribution, and
Mission
? Advantage

? L’Oreal will be able to bring on new products, enter new markets, and grow into areas they may not have been able to access before.

? Disadvantages

? If L’Oreal does not take their time and conduct a complete analysis of the companies they endeavor to acquire, this would end in L’Oreal acquiring more problems and could harm their brand.

95

Wednesday, March 13, 2013

Section Three: Alternative Strategic
Marketing Solutions
Marketing Strategy Recommendation Three: Franchise
Ownership
? Products/Markets

? Provide products that meet the masses, from low to high end, with stores that are located in upscale malls

? Mode of Entry

? Test the Franchise Ownership model where franchising is in demand (e.g., U.S.). Set up all of the legal documents, structure, and create a division just for this that will protect the L’Oreal brand during the test phase of this marketing strategy. Research the areas and find three malls that are upscale in locations where cosmetics are in great demand and would not compete with L’Oreal’s other marketing channels of their products.

96

Wednesday, March 13, 2013

Section Three: Alternative Strategic
Marketing Solutions
Marketing Strategy Recommendation Three: Franchise
Ownership
? Country Markets
? United States

? Price and Distribution Strategies

? Utilize current pricing and distribution strategies for the three selected Franchise Owners. Once the model proves itself, the infrastructure for distribution and pricing methodologies can be customized and changed in accordance to the Franchise

Model results.
97

Wednesday, March 13, 2013

Section Three: Alternative Strategic
Marketing Solutions
Marketing Strategy Recommendation Three: Franchise
Ownership

? Product/Marketing Communication Strategy
? In the initial phase of this division, one person will oversee the process that understands cosmetics, knows franchising, takes ownership of this new program, and can communicate with
management about what is working and what is not.
Marketing will take place to recruit the three Franchise
Owners and through advertising dollars that the Franchise
Owners have agreed to, L’Oreal will bring community
awareness to the new stores in these three upscale mall
locations.
98

Wednesday, March 13, 2013

Section Three: Alternative Strategic
Marketing Solutions
Marketing Strategy Recommendation Three: Franchise
Ownership
? Advantage

? Most of the cost will be the responsibility of each Franchise Owner. If the model works, more and more Franchise Owners will have the opportunity to open stores that they own, representing L’Oreal, while carrying most of the costs. In other words, L’Oreal will not have to spend as much money over the long-term for the advertising, promotion, and sales of products. There is a lot more control with quality control, training, requirements, and goals
than any other sales models.

? Disadvantages

? If L’Oreal does not position the stores and markets in the right place to begin with (by doing their due diligence), the model will not work as well which could hurt L’Oreal’s image. Also, L’Oreal will lose some of their control, as they will allow the Franchise Owner to take some of the control in owning their business with L’Oreal. 99

Wednesday, March 13, 2013

Section Four: Recommendation

The Recommendation from the Three Alternative
Marketing Solutions is:
? Franchising.
Section four goes from this slide through slide onehundred and eight.

100

Wednesday, March 13, 2013

Section Four: Recommendation

Why Franchising?

? Greater Quality Control;
? Tighter Grasp on Entire L’Oreal Branding;
? Franchise Owner of the L’Oreal Shop Pays for Most Costs (Training, Shop/Building, Products, Insurance, Employees,
Expansion, Etc.);
? Franchising is a Proven Model Over Traditional Business
Models (Turnkey System and Company Support);
? With the L’Oreal Franchise Division, More Revenue Will be Generated;
? Profit Margins are typically Higher with most Franchise
Models (as compared to other models);
101

Wednesday, March 13, 2013

Section Four: Recommendation
(continued)
Why Franchising?
?
?
?
?
?

Franchise Owners – Not Employees (No Overhead);
Franchising Can Be Scalable and Flexible;
Franchising is Globally Accepted;
More and More Companies are Adapting to this Model;
By 2020, 50% Sales Through Franchising (Estimated at Current Growth Rates that 50% of Business will take place through
Franchising); and
? Seamless Marketing and Branding with the Franchise Model from L’Oreal Corporate.
102

Wednesday, March 13, 2013

Section Four: Recommendation
(continued)
Suggested Marketing Mix Tactics for Implementing the Strategy: ? Franchise Division Head and Team Identified and Empowered; ? Marketing, Expansion, Distribution, and Compliance Goals Outlined; ? Business Plan Outlined, Created, Finalized, and Implemented for Each Area of the NEW Franchising Model for L’Oreal –

? What Market Area in the U.S.
? The Franchise Team – Who is Responsible for What?
? Available Resources – Timelines, Goals, Revenues, Product Distribution, Available Brands, Accountability, etc.
? Legal – Finalize Franchise Disclosure Document (FDD) and Franchise Agreement (FA)
? Implement Franchise Owners – Identify Three Top Candidates (fit profile) ? Store Openings – After Three Join, Train, Develop, and Build

103

Wednesday, March 13, 2013

Section Four: Recommendation
(continued)
Suggested Marketing Mix Tactics for Implementing the
Strategy:

? Ensure that Each Franchise Owner Opens their Store with
L’Oreal’s Entire Support for Success;
? L’Oreal Franchise Team – Know Exact Responsibilities (throughout the entire process to L’Oreal Corporate, the
Franchise Owner, and to the L’Oreal Consumer at the
Franchise Owner’s Store); and
? Scalable / Flexible – Understand and Change Any Area
through the Development Stage of the New Franchise
Owners (make any changes that are better for all L’Oreal
Stakeholders).
104

Wednesday, March 13, 2013

Section Four: Recommendation
(continued)
Product Suggestions:

? Because of the immense research conducted by L’Oreal with current consumers, different L’Oreal marketing and
advertising channels, L’Oreal would know and understand the product offerings.
? From this understanding, we would recommend the products that are available to the three Franchise Owners in the region that could be marketed.
? From the initial sales of each brand, we would monitor
numbers, outcomes, and what consumers want.
? Then, changes would be made based on the updated
information to meet the desires of the local area.
105

Wednesday, March 13, 2013

Section Four: Recommendation
(continued)
Pricing Suggestions:
? The same methodologies would be utilized as the product
suggestions.
? Even though L’Oreal has some great data about each market, the continuation of feedback data, consumer need, and new
product availability would contribute to pricing and outcome. ? Because the Franchise Owners would establish their stores in upscale malls, not only would the consumer profile have
already been analyzed by L’Oreal, but the spend habits during a good economy and a slow economy would be taken into
account (for the impact of how luxury items are purchased).
106

Wednesday, March 13, 2013

Section Four: Recommendation
(continued)
Marketing and Communication Suggestions:
? It will be important that L’Oreal Corporate and the Franchise Division Team Communicate Seamlessly;
? Marketing Will Need to Be Standalone from Corporate
? The Franchise Division and the Franchise Owners will Market as a Team that meets the Local Consumers;

? The Stores / Franchise Owners will Have their Own Store, with L’Oreal as the Brand, and Unique Branding that Focuses on
the Entire Package (Store, Brand, Products, Consumer Need,
Area, Marketing, and Communications).
107

Wednesday, March 13, 2013

Section Four: Recommendation
(continued)
On Going Issues (to Monitor in the Implementation):

? Franchise Division Team Communicates Regularly and
Understands L’Oreal Corporate Directives;
? Franchise Division Team Communicates Consumer Feedback
from Franchise Owners / Stores;
? Stores Set-up to Compliance, Regulation, and Blue Prints; ? Constant Feedback from Franchise Owners to Franchise
Division Team (so that any changes that need to be changed
for the better takes place);
? Operations Manual Followed;
? Regular Audits to Ensure Cleanliness, Customer Service,
Upselling, Proper Retailing, Professionalism, Etc.
108

Wednesday, March 13, 2013

Bibliography
? Above the Standard Procurement Group®, Inc. 2013. Retrieved from:
http://www.ATSPG.com
? Advertising Age. 2013. Look Ahead 2013: What to Expect in the Ad and Marketing World by Category. Retrieved from: http://adage.com/article/news/ahead-2013challenges-predictions-marketers/239008 ? AFP Relax News. 2012. L’Oreal buys beauty brand Urban Decay in a deal estimated at $300 to $400 million. NY Daily News. Retrieved from:

http://www.nydailynews.com/life-style/fashion/oreal-buys-beauty-brand-urban-decayarticle-1.1208049 ? Alderman, L. 2012. Le Petit Prince of L’Oreal. New York Times. Retrieved from: http://www.nytimes.com/2012/05/06/business/jean-victor-meyers-the-new-prince-ofloreal.html?pagewanted=all&_r=0 ? Brummelhuis, S. 2012. L’ Oreal Supports Women in Digital with up to $100.000 in Grants. The Next Women Business Magazine. Retrieved from:

http://www.thenextwomen.com/2012/04/27/l-oreal-supports-women-digital-100000grants

109

Wednesday, March 13, 2013

Bibliography (continued)
? Business Dictionary. 2013. Definition of Distribution. Retrieved from: http://www.businessdictionary.com/definition/distribution.html ? Business Dictionary. 2013. Definition of SWOT Analysis. Retrieved from: http://www.businessdictionary.com/definition/SWOT-analysis.html ? Business Dictionary. 2013. Definitions of words. Retrieved from: http://www.businessdictionary.com

? CPP-Luxury.com. 2012. L’Oreal affected by the slowdown in China. CPP Luxury. Retrieved from: http://www.cpp-luxury.com/loreal-affected-by-the-slowdown-in-china ? Daneshkhu, S. 2012. Glamorous and rich, L’Oreal goes shopping. FT.com. Retrieved from:
http://www.ft.com/cms/s/0/694bd05c-07ec-11e2-9df200144feabdc0.html#axzz2NGNXNQZW ? Daneshkhu, S. 2012. Glamorous and rich, L’Oreal goes shopping. FT.com. Retrieved from: http://www.ft.com/cms/s/0/694bd05c-07ec-11e2-9df200144feabdc0.html#axzz2NGNXNQZW

110

Wednesday, March 13, 2013

Bibliography (continued)
? Ernst and Young. 2013. Leading across borders: inclusive thinking in an interconnected world. The eye of the beholder: where L’Oreal finds beauty. Retrieved from: http://www.ey.com/GL/en/Issues/Business-environment/Leading-across-borders-inclusive-thinking-in-an-nterconnected-world—The-eye-of-the-beholder–where-LOrealfinds-beauty ? Forbes. 2012. L’Oreal Group. Retrieved from:

http://www.forbes.com/companies/loreal-group
? Grieve, J. 2010. L’Oreal USA. Submitted Letter and Document to the Food and Drug Administration – Process, Materials, Tasks, Time. Jean Grieve, Assistant V.P., Drug Approval Group. Retrieved from:

http://www.elsevierbi.com/~/media/Images/Publications/Archive/The%20Rose%20Sheet /32/3/02110117002/110117lorealteaestimatecomment.pdf
? Henderson R., Johnson R (HBS). 2012. L’Oreal: Global Brand, Local Knowledge. Harvard Business School (HBS). University of Maryland University College. MRKT 454 – Global Marketing. Articles and Cases. Pearson Custom Business Resources.

111

Wednesday, March 13, 2013

Bibliography (continued)
? Jing, Y. 2012. L’Oreal’s Alluring Number: 1 Billion. Retrieved from: http://usa.chinadaily.com.cn/weekly/2012-11/23/content_15952435.htm ? Kaye, L. 2012. L’Oreal’s “Reconstructed Biologic Tissue” May Make Animal Testing Obsolete. Retrieved from: http://www.triplepundit.com/2012/04/loreal-csr-report-2011sustainability ? L’Oreal – Gri Data Sheets. 2011. Environment, Sustainable Development, Management, and Distribution. Retrieved from:

http://www.sustainabledevelopment.loreal.com/DD/media/pdf/LOrealRDD2011_GRI_E nvironment.pdf
? L’Oreal – Gri Data Sheets. 2011. Organizational Strategy. Retrieved from: http://www.sustainabledevelopment.loreal.com/DD/media/pdf/LOrealRDD2011_GRI_D ataSheets_GB.pdf
? L’Oreal. 2008. SWOT Analysis L’Oreal. Retrieved from:
http://loreal.exteen.com/20080805/swot-analysis-l-oreal
? L’Oreal. 2009. L’Oreal Celebrates 100 Years. PR Newswire. Retrieved from: http://www.prnewswire.com/news-releases/loreal-celebrates-100-years-62005542.html

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