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 come from outside of Europe. L’Oreal has 23 global brands across 130 countries and has 38 factories all over the world (Henderson, R. , & Johnson, R. 010).
The firm has promoted its national brands to the rest of the world as related by Owen-Jones. Owen-Jones promoted the five core businesses into becoming global. These included: hair care, hair color, skin care, color cosmetics and fragrances. If we look at the website of L’Oreal Paris, we can see its presence in five continents and numerous countries (L’Oreal Paris).
It has also targeted emerging economies such as China and India. It has brands targeted for all of these different market segments in the different continents.
Due to its progressive investment in research and development, L’Oreal has been able to cater to the multicultural expectations, tailored to meet the needs through impressive standards. 2. The Global Marketing Environments: Economic Environment Needless to say, there have been numerous economic trends that have changed the way businesses work in today’s global economies. The financial markets have become global today and depend on capital movements. Employment in the manufacturing sector has declined.
The Research paper on Ford Ka: Breaking New Ground In The Small Car Market
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Businesses need to sustain themselves through global competitiveness and markets. Moreover, the advent of information technology has brought out many different perspectives and aspects of doing business. For L’Oreal, its main market was Europe. Half of its sales are generated from this continent and L’Oreal’s own identity has been nurtured by the European appeal, especially that of Paris (L’Oreal Paris).
Europe in itself is a diverse market. European capitalistic economy is more or less led by government intervention at various levels.
Government social spending and taxation relative to national income is high in many European countries and businesses have collaborative relationships with the governments. As can be seen in the case, L’Oreal has actively pursued mergers and acquisitions and confidently carried out global marketing campaigns and launched its brands worldwide (Henderson, R. , & Johnson, R. 2010).
Through this, L’Oreal entered the US market to promote its high quality and localized products. It bought Maybelline in 1996 and revamped the entire brand as fresh and affordable that guarantees as being trendy (Henderson, R. & Johnson, R. 2010).
The US is a huge market when it comes to personal care. It is one of the largest economies in the world with high levels of branding and marketing thus it only seems fitting that L’Oreal cashed in on this opportunity of entering the US market (Henderson, R. , & Johnson, R. 2010).
It is a highly capitalistic country strongly believing in the freedom of economic forces and promoting competition to bring best offerings for the customers and consumers. The company has established a research institute for Ethnic Hair and Skin Research in Chicago.
Since the US has one of the highest purchasing power parities in the world, it allowed for the sale of premium brands because they can be afforded by the Americans and their high living standards (L’Oreal Paris).
The US has 4th ranking on the scale of ease of doing business and ranks 10th on the index of economic freedom. L’Oreal advantageously went ahead for the US because it is a huge market with relatively lesser establishment costs which guaranteed more success because of strong economic disposition.
The Essay on The Effect Of Immigration On The UK Labour Market And Economy
Immigration is defined as the process wherein a person or group of persons leave their original country of residence and move to another in order to work or reside. The UK economy has been one of the fastest growing economies of its period which was one of the reasons why it attracted as many immigrants as it did. Considering that a majority of the immigrants are workers, it is logical to conclude ...
Marketing and advertising has been very strong for L’Oreal in the US and it could sell its brands easily in the department stores, pharmacies and retail outlets. Apart from the US, L’Oreal has invested in emerging economies such as China, India and Brazil (Henderson, R. , & Johnson, R. 2010).
These are some of the emergent leaders of the economics of the world’s landscape. They have a rising middle class with an increased inclination towards better standards of living and westernization.
There have been a high number of FDIs in these countries therefore it only makes sense that L’Oreal should have gone ahead to tap these potential economies with its brands for the various market segments. It has even set up research institutes such as in China. There is a factory in India which has strengthened its presence in Asia. L’Oreal even bought two of China’s top cosmetic brands: Mininurse and Yue-Sai (Henderson, R. , & Johnson, R. 2010).
Maybelline has become the passport to L’Oreal’s success in emerging markets. They are very successful through Maybelline.
This is because India has recently opened its borders for FDI. This is because most Indian consumers are price sensitive, therefore, Maybelline served well as a high quality low price brand (Henderson, R. , & Johnson, R. 2010).
However, in these countries there are a lot of economic differences such as lower purchasing power parity, increasing inflation and high levels of unemployment; therefore, L’Oreal has been one of the strongest advertisers in such economies such as China. It has done pricing to tailor the local needs reflecting the sensitivity towards the purchasing power parities in such emerging economies.
Social and Cultural Environment L’Oreal has shown sensitivity towards the socio-cultural aspects of each of the market it has tapped. For instance, in North America it has cashed out on the diverse cultures and the increased rates of consumerism in their society (Bloomberg BusinessWeek).
L’Oreal’s premium brands such as Lancome, Yves St. Laurent, and Ralph Lauren are sold in high-end department stores. This has been important for L’Oreal’s strategy because each brand cannot be sold out of its designated brand channel.
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North American market is more perceptive to the luxury products and they have more inclination to buy exotic things that reflect a country’s luxurious charm. Hence, this cultural aspect of North America has been used wisely by L’Oreal’s product placement at various channels. Maybelline and Garnier are sold at drugstores and pharmacies because they are low-end brands, whereas L’Oreal Paris has been sold at retail outlets with great caution towards product placements and displays. In the emerging economies, L’Oreal has once again used its lacement and pricing strategies effectively to cater to the socio-cultural aspects. For instance, India and Pakistan are known for their rising middle class population. Therefore, there is an increase in standards and more wants to buy western products with better quality that at the same time suit their local needs. This can be seen by L’Oreal’s stance in establishing Garnier as a high-quality low-price brand (Henderson, R. , & Johnson, R. 2010).
These emerging economies like China and Pakistan have collectivistic cultures where consumers spend carefully and have to support their families. Same goes for India.
Due to increased westernization and awareness, these countries have grown to appreciate higher quality products and recognition of brands. However, the majority in such countries is not able to afford the premium products of L’Oreal therefore; Garnier has been there to cater to this market segment and it has been localized to an extent. For instance, Garnier hair color for men was launched in India and then throughout Asia. Similar scenario can be seen for Brazil. The women over there spend a lot on beauty products. However, they make their purchases through direct marketing which is done door to door (Henderson, R. & Johnson, R. 2010).
But instead of going for door to door sales to beat the competition, L’Oreal focused on retail strategy and beauty experts = to advise the ladies in department stores. It even launched its premium brand Redken in Latin America. This highlights the westernization and rising standards of living in emerging economies. Political, Legal and Regulatory Environment L’Oreal has been a company that has always respected the political and regulatory scenario of whichever country it is operating in. The company is truly ambitious and sky is the limit.
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The external environment is highly complex for L’Oreal because it has to adapt its strategies to different countries and their typical government policies. Some of these factors can include new legislations regarding EU laws on specific drugs and chemicals use, testing on animals and advertising. These can be very costly because they require changes in the company strategy (Henderson, R. , & Johnson, R. 2010).
The company has to obey legal requirements in all the countries it does business in. In countries like the emerging economies, it is difficult to maintain licenses and patents.
There are many issues regarding copyrights and L’Oreal has to come around to such issues in the countries. 3. Segmentation, Targeting and Positioning: L’Oreal pursues a differentiated marketing strategy (Keegan & Green).
This is because it has more than one market segments with different marketing mixes. This is why L’Oreal has broader market coverage. L’Oreal has targeted the European countries, North American countries and then the emerging economies such as India, China, Brazil and Pakistan. The North American and European countries have all the L’Oreal brands marketed to them (Henderson, R. & Johnson, R. 2010).
This is because of the socio-cultural and economical environments of these countries. The high-end premium brands are sold at departmental stores, in-between brands were sold at retail stores whereas, and the low-end to middle brands were sold at drugstores and pharmacies. In the emerging economies, there has been greater emphasis on providing brands that L’Oreal is comfortable even selling at kiosks (Henderson, R. , & Johnson, R. 2010).
This is because according to L’Oreal, the placement and shelf-space determines the value of the brand.
In the emerging economies, affordability is big criteria for the consumers to choose a brand hence; the placement is done carefully with regards to the brands. L’Oreal has always focused on understanding the local consumers (Henderson, R. , & Johnson, R. 2010).
It has catered to all segments and none of them are left untapped. It has done strong portfolio branding and none of the space is left. For instance, it has products from high-end high quality to high quality low-end and low-end affordable products. It targets women and men in both the developed economies and the emerging economies.
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Its targeting is done through different brands promising different values. All these values are different ideologies catering to the expectations of the different market segments. It has positioned itself in all the possible segments. Its operations are divided into four divisions: consumer product, luxury product, professional products and active cosmetics. L’Oreal’s mission is to give all customers and consumers around the world the desire to achieve their goals (L’Oreal Paris).
This way they can express themselves with the perfect character they desire through L’Oreal products.
The consumer product division is targeted to young women and teenagers. The professional products are targeted to the hair salons and hairstylists. The luxury products are targeted towards the men and women who have high quality aspirations. The active cosmetic department focuses on the products through selective channels such as the pharmacies, health and beauty outlets. Therefore the products belonging to each of the division have distinct positioning. It portrays the brand’s essence for the products and therefore, all the target market segments are capitalized this way.
Each division offers its unique idea and hence, the target market associates the product quality to desired quality. This is how L’Oreal does its positioning for different target markets through its different divisions carrying multiple brands. 4. Modes of Entry: L’Oreal has entered new markets through foreign direct investments (FDIs).
This refers to direct investment by a company in production located in another country by either buying a company in that country or by expanding operations of an existing business in the new country.
Hence, in the case study it can be seen that L’Oreal has expanded itself in the international markets through direct investments (L’Oreal Paris).
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Your group assignment is to pick a brand from the list of brands(attached) and conduct a thorough brand audit. Each group must study and analyze a different brand. Brands will be assigned on a “first come, first serve” basis. Post your group’s choice of brand and gp number on the “questions for Prof/TA” board so that everyone can see your group’s choice. This way, the other gps will ...
These have been through acquisitions of different companies in different countries. In the US, L’Oreal acquired Maybelline, Soft Sheen Products and Carson Products Co. In China, L’Oreal acquired Mininurse and Yue-Sai. In India, it established a manufacturing plant in order to stabilize its presence in Asia (Henderson, R. , & Johnson, R. 2010).
L’Oreal acquired Ralph Lauren Fragrances, Kiehl’s, Redken and other brands as well.
This is because L’Oreal believes this is the way to conquer the different markets in different countries. This way, L’Oreal can revamp the brand that is already known and cherish their distinct association to that country. Global products were also localized, such as Garnier products for men were made in India and L’Oreal gave the licensing permissions. 5. Product and Branding Decisions: The global products of L’Oreal range from luxury products to low involvement products that are available at drugstores and pharmacies (L’Oreal Paris).
It has products in beauty and skin care segment which are a part of personal care. Each brand of L’Oreal is positioned globally in the exact same way through similar distribution channels. This implies that no matter in which country L’Oreal sells, its brands would deliver the same brand promise and carry the same brand essence and no compromise would be done in any of the brand characteristics. L’Oreal follows multiple branding strategies due to its various global products. For instance, in its market of the emerging economies where brands such as Maybelline and Garnier are famous, it employs product line branding.
In this way, multiple products are promoted using one brand name and similar products are sold belonging to different lines. Multiple lines are sold (L’Oreal Paris).
Such as Garnier hair dyes, shampoos, skin care products etc. as well as Maybelline cosmetics ranging from eye makeup to nail polishes and mascara. L’Oreal Paris in itself follows corporate branding strategy (Keegan & Green 2011).
The entire product offering of hair dyes and hair care products has been built upon the corporate name. This is advantageous because one advertising and sales promotion targets the entire product offering.
The entire portfolio is marketed this way. Lancome and other luxury brands such as Redken follow the product line branding strategy (Henderson, R. , & Johnson, R. 2010).
There are multiple products in these brands and they’re advertised using the name of the product line. Most of the consumers do not link these luxury and premium brands with L’Oreal. These brands have attained their own names on the brand relationship spectrum and have no association whatsoever with the parent or the corporate name when it comes to marketing and advertising. These brand names have been established for the idea behind them and have strong brand equity.
Ralph Lauren Fragrances and other fragrances can be known as a specific branding strategy. This is because it is one product with a unique brand name and caters to one idea and promise (Keegan & Green 2011).
Since it is a luxury brand, costs are associated in maintaining the brand image and advertising it uniquely. The role of innovation is the key to L’Oreal’s success in the international arena. This can be seen through its strong belief in launching new and innovative products regularly. L’Oreal spent 3. 5% of its revenue on research and development in 2010 compared to 2. 7% of P&G and 1. % of Revlon (Henderson, R. , & Johnson, R. 2010).
Even in its acquisitions across the world, L’Oreal has been known to revamp the image of the brand and re-establish it. Its purchase of Maybelline and then launching the advanced products like Express Finish nail polish and Great Wear makeup and bright color collection called Miami Chill are strong examples. Also its launch of Genifique in order to revive Lancome is a good example how the company is continuously innovating and investing in its products by acquiring numerous patents (Henderson, R. , & Johnson, R. 2010).
6. Pricing Decisions:
The three alternative pricing policies that L’Oreal can adopt globally are: polycentric pricing, geocentric pricing and ethnocentric pricing. Each division of L’Oreal has its own marketing team that caters to the individual brand (L’Oreal Paris).
At the same time, there is a regional team that has significant responsibility when it comes to marketing and development. Therefore, pricing decisions at L’Oreal vary according to the divisions. In polycentric pricing, L’Oreal would leave the decision of making margins to the local managements in the countries where the company has expanded.
For instance, this is being done in Garnier because a manufacturing plant has been set up in India and there it caters to the Asian market. Since the manufacturing costs are different in India, the products are priced differently than what they would be priced had it been the US or Europe. The luxury product division whose products are sold internationally at duty free shops, perfumeries and departmental stores, employ ethnocentric pricing. This implies that the price of the product anywhere else in the world would be more or less the same.
This is done so as to maintain the value and image of the luxury brand. Perceived quality is very important when it comes to making pricing decisions. As for its professional products sold at the salons and parlors across European and North American countries, L’Oreal has done geocentric pricing (L’Oreal Paris).
In this, the company charges a basic price plus a cost that is variable across the countries or regions wherever the markets are. The markup depends on the competition. If the competition is high, the markup would be low and if the competition is low, markup would be high.
Therefore, in these exclusive sales of products to the salons and hairstylists, L’Oreal sells its products based on geocentric pricing that ensure that the product line has similar markups. For active cosmetics section, the pricing is once again ethnocentric (Keegan & Green 2011).
This is because the products are placed exclusively based on their demand in health stores and pharmacies. Therefore, it would make sense that they are priced similarly all across the globe. Once again, price establishes the value of the brand and the image associated with it. 7. Channel Decisions:
L’Oreal has been very confident and to-the-point about its channel decisions. In fact, the key to doing business for L’Oreal has been a strong and implementable channel policy. L’Oreal brands cannot be sold outside their designated channels and it is a strict policy that is followed effectively. Positioning of the brand is not changed at all costs. It is compared to a closed box and the inside of the closed box can be experimented and innovated with. This way, the positioning of L’Oreal brands remains strong and is able to cater to the diverse market segments.
The consumer brands are sold at most stores like pharmacies, supermarkets and drugstores. These brands as said before include Garnier, Maybelline, L’Oreal, Soft Sheen/Carson. The high end luxury division brands are sold at duty free shops, departmental stores and other high end stores. The professional products are sold exclusively to the salons and hairstylists. Lastly, the active consumer brands are sold at specialty stores and places with special shelf area such as The Body Shop brand. The key to targeting customers is through the particular distribution channel.
As said in the case, L’Oreal was comfortable selling its brand Garnier in the emerging economies at their kiosks. Therefore, the entire game for L’Oreal is based on channels and how specifically they are designated to each brand. The channels are representative of the brand essence of each brand and target the required segment. 8. Marketing Communications Decisions: L’Oreal’s marketing strategy is adaptive (Keegan & Green 2011).
This is because the company has realized the shift away from traditional media and towards online advertising. However, it is doing so carefully so that it maintains efficiency.
But there is no denying the fact that L’Oreal is prepared to attract the largest customer base in the world like the US and the emerging markets and it is willing to be adaptive despite its global brands. The company has huge advertising budgets just like P&G and Unilever. China is the largest and fastest growing advertisers and L’Oreal is keeping up with the trend and willing to invest more every year by 10% (Henderson, R. , & Johnson, R. 2010).
Moreover, the company has always used strong and prominent brand ambassadors that stay true to the ore of the brand. The famous YSL Fragrance was promoted by supermodel Kate Moss. To promote Garnier Nutrisse, Sarah Jessica Parker was used so that she would appeal to the target market of lively and trendy young and middle-aged women (Henderson, R. , & Johnson, R. 2010).
Since the brands are targeted to all ethnicities and age brackets, numerous actors have been used as the spokesperson for the brands. In India, it had taken Indian spokespersons. For men products the Expert line of L’Oreal Paris, it used Gerard Butler and Patrick Dempsey.
L’Oreal has also sponsored Cannes Film Festival and promoted the products by providing makeup to the actors and actresses as they walked onto the red carpet (Henderson, R. , & Johnson, R. 2010).
L’Oreal is known for using brand ambassadors from all ages, races and sex. It has promoted itself by a competition in universities all across the world since 1992. In that, the students have to come up with a marketing concept for series of L’Oreal brands. The company has already involved itself in social media campaigns.
Garnier Fructis website could tell the users to input their data and accordingly they would be given an output on what styles and products they should use. Digital marketing innovations have been used in many instances such as the virtual personal stylist in collaboration with ELLE and Bloomingdale’s. L’Oreal has also helped numerous salons establish their Facebook pages (Henderson, R. , & Johnson, R. 2010).
It even has a channel on YouTube where people post about makeup tips and guidelines. References: Bloomberg BusinessWeek. (1999).
L’Oreal: The Beauty of Global Branding (int’l edition).
