1.0 Case Overview
The Dutch market currently carries the Plenitude skincare range, and the Recital hair colourant, which is also a leading seller in Netherlands under the L’Oreal brand name. Meanwhile, Amber Solaire, a sunscreen, is the only product sold under the Garnier Institute brand name. L’Oreal Netherland had been considering whether to introduce the Synergie skincare line and Belle Couleur hair colourants line into the Netherlands. Synergie and Belle Couleur are marketed under the Garnier Institute name in France. Under the Garnier family brand name L’Oreal had successfully launched both the Synergie skin care and Belle Couleur permanent hair colouring lines in France. The Garnier brand name is familiar to the French, but Dutch consumers have little to no awareness of the brand. L’Oreal’s main problem in this case is deciding whether they should try to launch a product line in a market with little brand awareness.
Other challenges which are likely to occur in association with the launching of these two new product lines, includes overcoming brand loyalty and defining a positioning statement that appeals to the female Dutch consumer.
Introducing a new product line successfully into the Dutch market is vital for Garnier because it can determine the success of the brand as it expands into new markets.To create a positive brand image and high brand awareness new products must have a strong concept, high market potential and great positioning with consumers.
The Business plan on Market Segmentation, and Product Positioning
For the purpose of this assignment, I am assuming myself as the owner of a plastic molded toy company in United States that manufacturers, and distributes plastic molded toys through retailers across the country and around the world. The company is capitalizing on the strong growth in the children’s toys segment and planning to expand in an aggressive manner throughout the nation. The company ...
This paper assumes the setting and market environment circa early 1990s when L’Oreal was deciding whether to introduce two new product lines Belle Couleur and Synergie into the Dutch Market.
2.0 The Strategic Marketing Challenge
L’Oreal strategic marketing challenge is to ensure its Garnier line of products will be successfully launched in order to maintain a positive brand image, create consumer awareness and ensure the future success of its products in Netherlands.
Analysing the case study, it appears that the challenges may be due to some of the following factors:-
• Lack of brand awareness. Dutch consumers’ brand awareness and knowledge of Garnier is very limited and they have yet to form a brand image of Garnier.
• Adaptation to local market. Belle Couleur had not been modified to suit the Dutch market.
• Competition. Retailers can quickly develop and introduce their own private labels within four month. Also, they earn a higher percentage profit margin on their own brands. In addition, manufacturers could develop a competing product, complete with an advertising campaign within six months, resulting in product imitation.
• Consumer resistance to change. Most consumers of facial products tend to be loyal to their current brands. This resistance to change increases with the fact that the Dutch consumers have poor product knowledge and were not familiar with the technical products’ descriptions and the ingredients.
• Distribution network. The current L’Oreal distribution network involves many different types of retailers and outlets – forty percent drug chains and 25 percent food stores. This approach was effective for L’Oreal as consumers perceive L’Oreal as offering high-quality, innovative products, supported by good in-store merchandising. However, these outlets need a brand with high consumer awareness, something which Garnier does not possess yet.
The Research paper on Brand and Oreal
The Company is known internationally for its portfolio of beauty and personal care products that are aimed towards catering to each level of market segment. It is an international success with deep rooted commitment and sensitivity towards local consumers’ needs and cultures. 1. Management Orientation: L’Oreal’s management orientation is geocentric. This can be seen in the sales, half of which ...
• Difficult to identify competitive advantage. Both product lines do not have any differential advantage that may set them apart.
• Indirect competition from hair salons. As more women work outside their home, convenience with hair colouring will compel them to visit the hair salons.
• Cannibalisation of brand / product. L’Oreal already offers Recital and Plenitude under its brand name, in the same product lines. This may create unwarranted confusion as to the brand image and perception of both brands.
3.0 The Strategic Marketing Solution
In order to explore for strategic marketing solutions faced by L’Oreal, the SWOT analysis was carried out to determine the Company’s internal strengths and weaknesses, and the external threats and opportunities.
3.1 Analysis of Strengths, Weaknesses, Opportunities and Threats
Some of the strengths, weaknesses, opportunities and threats are seen as follows:-
Strengths Opportunities
1. Strong international brand presence.
2. Brand recognition and reputation for quality and value.
3. The continuing research and innovation in the interest of beauty which assures that the L’Oreal Cosmetics offers the best to their consumers.
4. Possesses leading-edge technology, and regularly and successfully introduces new products onto the market.
5. Belle Couleur and Synergie will continue to be manufactured in France.
6. Synergie will be made with natural ingredients and Belle Couleur has been successfully marketed in France for twenty years.
7. L’Oreal has a positive brand image with Dutch consumers.
8. Dedication to their continuous research makes them the leader in the growing cosmetics industry despite the competition in the market.
9. Strong management team.
10. L’Oreal is the largest seller of hair care and beauty products globally and a market leader.
11. L’Oreal has the economies of scale in packaging and advertising.
12. L’Oreal’s advertising strategy also plays a major part to its growth.
13. Strong control over distribution channel.
14. Strong customer base.
15. Strong financial position with minimal long term debts.
16. Leading market share.
1. L’Oreal has concentrated on hair-styling and color, skincare, cosmetics and fragrances, the fastest growing field in the beauty business. It is benefiting from increasingly ageing and affluent population in developed countries.
The Research paper on Emirates Dates And How To Market The Product In (Sweden)
There are various strategies of expanding one’s business. The decision of which strategic move to choose is generally depends on internal conditions of the business in discussion. There are companies that manage to stay in their local markets and continue to harness growth from it, while others discover potential markets in foreign countries that drive them to expand. In the case of business ...
2. Possible opportunity for Synergie’s line of products.
3. Leverage on L’Oreal brand name to market Garnier.
4. Fluctuations in the economy have little impact on this market.
5. Improving market outlook of global beauty products.
6. New technology and innovation to stay on top of market needs
Weaknesses Threats
1. Negligible brand awareness with Dutch consumers.
2. Research for products all done in France.
3. Products not adapted to Dutch market.
4. Profit margins that are slightly below some of its smaller rivals.
5. Decentralised organisational structure that can make control difficult, and the difficulties in coordination and control of activities and image when operating in a global market.
6. Dissimilarities in the campaign of L’Oreal products as to what image they are to project.
1. Intense competition
2. Product imitation
3. Cannibalisation of brand from Garnier.
Table 1: SWOT Analysis for L’Oreal
3.2 Formulating the Strategic Marketing Solution
3.2.1 Using the Ansoff Growth Matrix
Figure 1: Ansoff Matrix
Source: http://www.tutor2u.net/business/strategy/ansoff_matrix.htm
L’ Oreal needed to decide to launch two product lines into the Dutch market. This is a relatively untapped market where the Garnier brand name is concerned. However, L’Oreal has an existing presence in Netherlands through its suncare line, Amber Solaire. L’Oreal headquarters wants to introduce more Garnier products in other areas including the Netherlands over the next few years. There is potential to move into both skin care and hair coloring markets as the annual volume growth rate is twelve percent and fifteen percent respectively.
Based on the SWOT analysis, L’Oreal is known for its strength in quality, value and has strong brand presence and recognition globally. It also possesses leading-edge technology, and regularly and successfully introduces new products onto the market. Its continuing research and innovation in the interest of beauty assures that the L’Oreal offers the best its consumers.
The Essay on Ansoff's Product Market Grid
The Ansoff product-market matrix helps to understand and assess marketing or business development strategy. Any business, or part of a business can choose which strategy to employ, or which mix of strategic options to use. This is one simple way of looking at strategic development options: Each of these strategic options holds different opportunities and downsides for different organizations, so ...
As seen in the Ansoff Matrix, quadrant Product Development, and looking at the technological expertise of L’Oreal, Belle Couleur needs to modify its product to cover gray hair and to appeal to the segment of the market which is more fashion conscious and trendier, if they want to move into the hair-colourant market.
L’Oreal should explore Product Adaptation in view of the changing consumer taste and lifestyle. The trend over the past four years has been towards the semi-permanent colourant, yet nearly seventy-three percent of Dutch women use permanent hair colouring. The potential for this market segment is positive, but of course there are also strong competitors. L’Oreal has its Recital range in this category and smaller brands have entered the market over the past few years too. At present, none of the competitors have a clear positioning statement describing customer benefits; therefore Belle Couleur appears to have a competitive advantage with its current positioning as “natural colors, covers all gray.” This being the case, L’Oreal should explore the narrow into Focus Strategy by targeting specific customer segmentation. Despite rising income, and ranking fourth in the European Union (EU) in per capita income, Dutch women still shopped for value and the Dutch market accounted for only four percent of total EU sales in cosmetics and toiletries. There is a lot or potential in marketing to women in Netherlands.
3.2.2 Using Porter’s Generic Strategies and Creating Differentiation Focus
Figure 2: Porter’s Generic Strategies
Source: http://www.marketingteacher.com/Lessons/lesson_generic_strategies.htm
By employing a Focus Market Segmentation, L’Oreal would possibly have a better chance at competing more effectively. Focus strategy provides a way to compete when resources are limited and bypassing assets and competencies of larger established competitors. L’Oreal would have limited sales force in Netherlands for which to market its new Garnier product lines and in terms of distribution, it would have limited retail shelf space.
L’Oreal should come up with a concept and product that differentiates itself from competitors and provides clear evidence of consumer acceptance. Based on the information researched on the Dutch market, the Garnier name must be carefully positioned and the target market clearly understood as cosmetic life cycles are very short; therefore any new products in the Dutch market need to be breakthrough innovation, which L’Oreal is capable of doing.
The Essay on Sta Green Market Consumer Commercial
SummaryOverviewThe company Hydro Can is planning to launch a new type of lawn car product called "Sta Green." They have hired a consulting group called "Stone Age Marketing Consultants" to create a marketing plan to launch there new product. They can't decide between launching the product to the consumer market or the commercial market. So research is conducted on both markets to determine where ...
As such, Garnier products should be positioned at the middle portion of the mass market. Belle Couleur and Synergie will target at different customer segments. While existing L’Oreal products will focus on the older, more upscale segment of the population. Garnier would be primarily targeted at a younger, trendier, and more fashion-conscious audience.
Brand life cycle for cosmetics could be very short. With its strength in product innovation L’Oreal will introduce at least two new products a year. In the interim, to create positive brand association between Garnier line of products and L’Oreal’s, the life cycle of a particular product line could be extended through product-line stretching. For example, a consumer gained through effective marketing at a young age can continue with Synergie or continue on to the Plenitude line of products. It is vital to capture consumers early and win their loyalty as future consumers as L’Oreal may face challenges, especially in a smaller market with multiple competitors and an aging population that tends to be very brand loyal.
Although the payoff of a small niche may be less than a growing market, the competition may often be less intense. For the Dutch market, an especially fast growing category consists of anti-aging creams but yet, the research results declined after participants used the Synergie anti-aging cream. This may be due to the fact that although Dutch women have more disposable income, they still shop for value. With the fastest growing segment being women over the age of twenty-five, purchasing skin care products at the most, twice per year, and with Dutch women being increasingly interested in products with natural ingredients, L’Oreal could explore this niche and focus on positioning Synergie through a brand personality of a wholesome natural product with effective communication efforts – “The alliance of science and nature to prolong the youth of your skin”. In order to move into the skin care market, L’Oreal could position the Synergie line as a “natural moisturiser”, sold at a reasonable price. It is advisable for L’Oreal to re-test if there is a potential target market for a new brand line up. Higher ad-spend may be necessary to create the market awareness and to gain market share.
The Business plan on Del Vecchio Brand Product Company
Branding Strategies: From Creation to ExtinctionOutlineI. Introduction II. Choosing the Brand NameA. Take a Stand. Narrow the FocusC. Beware of Brand Inflation. Expand the Business III. Advertising the Brand NameA. Logo Sizes. Attention Getting 1. Research 2. Mention the Product 3. Show the Product 4. Show the Name and Logo 5. Call Attention to the Logo 6. Headline Company Names 7. Use Theme Line ...
3.3.3 Using the Preemptive Move
L’Oreal is one of the largest seller of hair-care and beauty products in the world. L’Oreal, by design is a renowned brand and has innovation advantages. By employing preemptive move, it involves doing something novel. As a leading-edge specialist in the field of cosmetics, L’Oreal could do well to implement this strategy in a new business area that generates an asset or competency that competitors may be unable to duplicate or counter.
The preemptive move would usually involve substantial commitments of resources which may imply high risks. However, it is this very commitment which would set L’Oreal apart from the competition and make the advantage sustainable to L’Oreal. Competition from private-label retailers and product imitation can be efficiently countered by using the preemptive strategy. Competitors often do not want to compete with a committed company like L’Oreal. In addition, L’Oreal has strong financial position with minimal long term debts. L’Oreal also has the economies of scale in packaging and advertising.
Sources of L’Oreal’s preemptive opportunities may be from any of the following:-
Elements: Products / Customers/ Distribution
Opportunities
Develop a dominant “design”
Market Synergie as a “natural” moisturiser / anti-aging and market Belle Couleur as semi-permanent fashion trendy hair colour, with softer shades.
Preempt a position
Fastest growing segment ages 25 and over with high disposable income, shopping for value
Superior product knowledge – Train customers in usage skills and to make them commit to the brand long-term
Bank on the L’Oreal brand name and its training institute to train personnel to convey all usage skills to customers and to make the Belle Couleur and Synergie a familiar brand to the Dutch consumers. Once the consumers are familiar with the brand, they will have a brand preference and display brand loyalty and, cosmetic users generally have stronger brand attachments
Occupy prime location for retail and distribution
L’Oreal has a positive image with Dutch consumers. Place Garnier products at all L’Oreal’s retailers and outlets.
Table 2: Sources of Preemptive Opportunities
4.0 Improving and Creating Brand Awareness
4.1 Using Brand Equity
Table 3: Brand Equity Diagram
What makes sense is to leverage the great name and reputation of L’Oreal and use labeling such as “From the Garnier Institute” on particular products in order to differentiate them and promote them in the Dutch market. By doing so, both product lines could be seen as being associated to the L’Oreal group, thus leveraging on the L’Oreal brand name. The continued use of the L’Oreal brand name will help with the successful launch of the new products into the Dutch market. Brand awareness will serve to differentiate the brands along a recall or familiarity dimension.
One of the goals of introducing a new product line, to a market with little brand awareness, is to create a positive association and/or experience with the Garnier family name. Cosmetic consumers tend to be brand loyal in fear that they will have experience negative results when attempting to use a new or different brand. To create a positive brand image and high brand awareness new products must have a strong concept, high market potential and great positioning with consumers.
Dutch consumers have poor product knowledge and were not familiar with the technical products’ descriptions and the ingredients. As such, there is bound to be a resistance to change. Most consumers of facial products tend to be loyal to their current brands. This is another obstacle L’Oreal must overcome in addition to launching a product line to a market with little brand awareness. Dutch consumers will continue to purchase products that they know, use and trust, because they have had positive outcomes after product usage. Attachment to a certain product only becomes stronger with age. Thus, it is imperative for new products to reach young consumers who will only grow increasingly loyal as they grow older. The only way to convince consumers would be through brand awareness and generally creating lots of activities to produce visibility to the brand.
Brand awareness is generally viewed to be one of the two most important drivers of strong brands. The other being relevant differentiation. According to past research, brand awareness is seen to have a high correlation with purchase intent, market share and other important brand equity and business metrics. In addition to advertising, any form of repeated exposure to the brand with strong brand identity consistently presented could improve awareness. The following are some avenues for brand exposures:-
Avenues for Brand Exposure
Extensive distribution.
Brand-related stories/articles.
Print ads.
Publicity launches.
Product placements.
Strategic Alliance with famous personalities.
Celebrity endorsements.
Product endorsements.
A strong web presence, including social networks sites like FaceBook, MySpace.
Word of mouth marketing.
Loyalty programmes.
Online and other viral marketing techniques.
Beauty & Trade expositions.
Trade magazines.
Table 4: Avenues for Brand Exposure
4.2 Packaging
Packaging is a key element of brand development. Distinctive packaging helps consumers recognise a brand makes the brand message conveyed effectively and instantly. Without a doubt, cosmetic consumers research products to become familiar with the items they want to buy. Therefore, both product packaging and advertising of the new product lines needs to be informative, to ensure the cosmetic consumer understand that the Garnier brand will fulfill their wants and needs. The more familiar a consumer is with the brand, the more they will be willing and able to relate to a concept presented by that brand. This will then reduce perceived consumer risk, trial of the product, and finally increasing brand and family loyalty.
5.0 Using Channel Management to improve Distribution Network
The channel of distribution is a network of value chain organisations performing functions that connect goods and services with the end-users. Developing a channel of distribution strategy would include:-
(1) Determining the type of channel arrangement
(2) Deciding on the distribution concentration
(3) Selecting the channel design
In terms of distribution, L’Oreal has a positive image with Dutch retailers. L’Oreal just need to make sure all new products offered are of high quality and innovative, with strong consumer acceptance. The challenge with the new product launch is that it is from a relatively unknown company like Garnier. Thus, to improve the efficiency of distribution, L’Oreal could simplify its administrative processes by establishing more effective collaboration with retail stores. By introducing new business processes, improving visibility into customers’ inventory while streamlining production planning and distribution process, L’Oreal will be in a better position to control its supply chain logistics and thus improve customer satisfaction. A Vendor Managed Inventory could be employed to assist in the distribution process. This vendor driven replenishment process reduces costs, increases utilisation and improves customer service.
Additionally, as the same sales force would be used for both L’Oreal and Garnier brands in Netherlands, the advantage would be that the sales team may already be conversant with the current market situation and would require minimal market orientation for the distribution networks.
6.0 Using Value Disciplines to create Differential Advantage
According to Treacy & Wiersema (1994), marketing strategy is typically focused to leverage one of three value disciplines:-
(1) Product leadership through constant innovation
(2) Customer intimacy that is achieved by understanding, anticipating, and
meeting specific customer needs
(3) Operations effectiveness that delivers high quality (of product and service)
and low cost (that provides the flexibility for profitable low prices)
Figure 3: Value Disciplines
Source:
Current L’Oreal situation is that there is difficulty in identifying the differential advantage to both new product lines. L’Oreal may opt for Product Leadership, a strategy that focuses on producing a continuous stream of new innovative products and services. L’Oreal is a company known for its strength in innovation and in its effort to be a market leader, L’Oreal tries to introduce two new products each year. In view of this, L’Oreal has the option to focus on an especially fast growing category the market segment, women over twenty-five, who uses natural ingredients, who shop for value and for which the anti-aging cream category could be differentiated to the rest of the competitors, via a more competitive price versus the Plenitude range and other competitors. Meanwhile, with Belle Couleur, L’Oreal could focus on the semi-permanent hair colourant segment as over the past four years, the trend had been shifting towards this category, with an increase of twenty-seven percent of market growth. Currently none of the competitors have a clear positioning statement, thus, Belle Couleur appears to have a competitive advantage with its current positioning as “natural colors, covers all gray.”
Riding on the L’Oreal name, Customer Intimacy, a strategy which focuses on tailoring and shaping products and services to fit an increasingly fine definition of the customer, would be ideal to add a differential advantage to the two Garnier line of products. As more women work outside their homes, the indirect competition from hair salons may relatively dilute L’Oreal’s market share. This is due to the fact that visiting a hair-stylist to get their hair coloured is much more convenient, though may be relatively costlier. L’Oreal could then develop effective campaigns to educate consumers on the added benefits associated to the Garnier brand name.
The objective is to enhance long-term customer loyalty and long-term customer profitability. In the cosmetics business, profit margins tend to be generally low as there was not much differentiation between the products offered by various companies. L’Oreal’s decision to differentiate its products by attaching an emotional quality to its brands thus would work well.
The L’Oreal Group is known for their continuous innovation in order to improve the quality of their products and the services they have to offer to their consumers. Part of their strategic plan is to cater to the best interest of their costumers, in other words, costumer satisfaction. The range of their prices caters to the demands of women, from the younger ones to the aging, from the affluent to those with lower budget for cosmetic products. Through constant research and passion for innovation, the L’Oreal Group best caters to the demands of women.
7.0 Using Strategy Alignment to counter Cannibalisation
Cannibalisation of brand / product. There may be a danger of cannibalisation as L’Oreal already offers Recital and Plenitude under its brand name, in the same product lines. This may create unwarranted confusion as to the brand image and perception of both brands. However, leveraging benefits from buyers’ familiarity with its existing brand name would greatly shorten the gestation period, lowers the financial requirements of launching and marketing the product and increase its rate of success.
The heart of a corporate image management effort is a positioning statement, and it provides the underlying platform for all corporate brand communications by addressing three critical issues:-
i) First, a positioning statement provides a definition that states how the company defines its business and how the company defines its competitive set, who it is, and what it does.
ii) Second, a positioning statement provides differentiation and explains what makes the company or brand special.
iii) Third, the positioning defines the benefits the company delivers to the customer and it will identify the core image attributes that brand should always project.
By being cohesive in its positioning, L’Oreal could ensure both brands are equally independent, prominent and identifiable to its total consumers:-
Cohesiveness – ensuring brand’s positioning and core attributes are experienced and communicated in a consistent manner. Every aspect of the company’s product and service offerings, business practices, employee behavior and communications practices are in perfect alignment each other.
Cohesiveness – heart of brand management. It helps make sure that a brand never confuses a customer about what it is and what it stands for, thus, both L’Oreal and Garnier customers would know the difference.
The risk associated with this strategy would be that it would tarnish the L’Oreal name should the launch not be successful. But due to the fact that L’Oreal already has a positive brand image in the Dutch market, this risk could very much be reduced.
Figure 4: Origins of Brand Image
Source:
8.0 Conclusion
The decision that the L’Oreal Netherlands face is challenging. This is amplified especially in a smaller market with multiple competitors and an aging population that tends to be very brand loyal. It is more effective if L’Oreal launch both Synergie and Belle Couleur after developing a concept and product that differentiates itself from competitors and provides clear evidence of consumer acceptance. Based on the case information on the Dutch market, it is vital that the Garnier lines are successfully launched. Both the target market and product positioning needs to be more clearly understood.
Finally, in an established market such as the Netherlands, a new product line would have to be financed by the current operations within that company and L’Oreal already markets both skin care and hair colouring product lines in the Netherlands. So not only would Garnier be competing against L’Oreal in a smaller market, but the Dutch L’Oreal sales force would have to sell both product lines. Dutch consumers have very little awareness of Garnier and they have not formed a brand image; this makes it very difficult to break into a market where consumers tend to be brand loyal.
It is critical that the Garnier product line launch is successful so that they can build a positive brand image, create consumer value and ensure future success of its products in the Netherlands.
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http://www.marketingteacher.com/Lessons/lesson_generic_strategies.htm
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