Loreal

L’oréal: Global Brand, Local Knowledge

About L'Oreal

• Since its founding (1909), L'Oreal have been expanding its geographic and consumer base.

• In 2010 L'Oreal spent 3.5% of revenue on R&D (P&G spent 2.7%)

• In 2010 – sales – 19.5€ billion (half outside of Europe)– 66.600 employees– 23 global brands across 130 countries

Selling the Science of Beauty Around the World

• L'Oreal started with an innovation when a French chemist (Schueller) developed a hair-color formula. Products were sold to Parisian hairdressers.

• After Schuller died, Dalle took over and aimed to sell beauty through several channels that corresponded consumers’ psychological profiles in addition to their perceived purchasing power

• However, L'Oreal international reach was hampered by the perception of Parisian beauty products as being expensive and out of reach.


• In 1988 Lindsay Owen-Jones became CEO and focused on 5 core businesses and technologies (hair color, hair care, skin care, color cosmetics, and fragrances) and drove to make them global.

• According to Owen-Jones; to be a truly global company, firm had to promote its various national brands to the rest of the world

• In 1996 L'Oreal acquired several companies (Maybelline-US, Unisa-Chile, Jade-Germany)

• In late 1990s L'Oreal was perceived as supremely elegant, high-priced luxury brand, while Maybelline was viewed as high quality-low priced value brand


• L'Oreal began targeting men in 1999 when it introduced Loreal Feria for men

• Same year L'Oreal acquired two ethnic haircare marketers in US.

• In 2003-2004 acquired several brands in China


• Organization• L'Oreal organized 3 major groups

– Cosmetics – generated %93 of income– The Body Shop– Galderma Laboratories - Dermatology branch (joint venture with Nestle)

• L'Oreal operations consist of 4 divisions– Consumer Product Division – brands such as Garnier, L'Oreal, Maybelline, Soft

Sheen distributed through mass market channels generating over half of company’s cosmetic sales

– Luxury Product Division – prestigious international brands– Professional Products Division – specific hair care products for use by

professional hairdressers– Active Cosmetics Department - distributed through pharmacies, special health

outlets


• Organization (cont.)• Each division has its own marketing team

structured around brands• CEO Agon:• ‘Each brand is a box, each box occupies a very

distinct market position’ • ‘Managers cant play with the position of

brands, we don't play with the boxes, trick is to do innovative things inside of each box’


• Local Customer Understanding• L'Oreal aimed to have a global brand that

could be adapted to regions and markets to address the specific needs of those consumers

• To understand consumers at a local level L'Oreal created ‘geocosmetics’ to study beauty needs, habits and trends around the world (e.g. L'Oreal Institute for Ethnic Hair and Skin Research – Chicago 2005)


• Brand Diversity


• Brand Diversity• L'Oreal developed brands in high-mid-low ends• Has a strict brand policy that did not allow brands to be sold

outside of specific designated channels • Focused on Garnier – its leading low to mid priced brand, in

lower income emerging markets• Developed ‘masstige’ category (combination of mass and

prestige) – defined as ‘premium but attainable’ – aimed to fill the gap between mid market and super premium products

• Lancome – largest, best known premium brand. %5 market share in global premium personal care market


• Maybe It’s Marketing• L'Oreal known with the ability to shift the images

of brands it has acquired – e.g. Maybelline was a sleeping brand and after acquisition its brand image is reinvented by L'Oreal and sales boosted

• From ‘Maybelline, that's my mother pink nail polish’ to ‘ Wow’ is this Maybelline’

• Maybelline became L'Oreal passport to emergent markets


• Regionally Focused Roll Out• In emergent markets firm faced with several difficulties. E.g. Firm

largely missed Brazilian women because Avon was dominated the segment by door-to-door sales reps and L'Oreal did not use direct sale approach. Instead, L'Oreal hired personal beauty advisers at department stores.

• With Redken – a premium American brand, L'Oreal innovated a different kind of marketing approach. L'Oreal combined an education program aimed at top hairdressers with products tailored to Latin Americans. By 2008 4000 luxury salons adopted Redken in Latin America

• Inoa – example for roll out in traditional markets. 36000 salons adopted in 3 months in Western Europe

Telling the Story

• L'Oreal had to cater a diverse customer base: an aging population in the West, ethnic groups around the globe, emerging markets, growing interest in health and beauty among men around the world.

• Agon: ‘We are in transition. We have come from a world where the choices were limited to one where number of options are infinite’

• L'Oreal highly invested in advertising (third after P&G and Unilever) – see Exhibit 5

• 2007: %75 of ad budget went toward TV, %20-print, %2 online, rest billboards

• L'Oreal- one of fastest growing advertiser in China

Telling the Story

• Fame by Association• L'Oreal often used A-list celebrity endorsers• Sarah Jessica Parker, Kate Moss, Scarlet Johansson, Jessica

Alba, Gerard Butler, etc...

• L'Oreal was also sponsor of Cannes Film Festival, prepared actor and actresses with their make up before red carpet

• L'Oreal worked with film producers and studios to place its products into story lines of films and TV

Telling the Story

• Marketing as Recruiting: L'Oreal Brandstorm • L'Oreal Brandstorm – a competition that

challenged students to come up with a new marketing concept for a series of L'Oreal brands. Since first launch (1992) 43.000 students from 285 universities in 43 countries

Telling the Story

• From Print to Digital• Firm believed that print would continue to be important

marketing efforts but also believed to spend on digital advertising (e.g. In 2007 Garnier Fructis hair care brand began using social media to reach out to customers and provide a new type of brand experience. Also a user generated web-site launched for this brand that allow users to submit their own ideas and suggestions, upload how they style their hair by using the product)

• L'Oreal also used digital marketing innovation in retail space (L'Oreal help 4000 salons to build their Facebook pages, display products and how to videos on these pages)

• 2010- L'Oreal YouTube channel launched- how to videos,etc

Reaching the Next Billion Customers

• L'Oreal aimed to double its customer base to 2 billion people in 2020 and increase to %50 from %30 its share of sales from emerging markets during that time

• In 1999, then-CEO Owen-Jones told ‘many requirements for survival in the next century are going to be size related

• A contrast idea - Yet the imperative for size is balanced by the need for innovation, creativity, imagination, taste, a sense of what is cool and what is not, and those are not qualities which go with huge companies.

Thank YouZ. Eren Kocyigit

Loreal

Documents

world brand

global brand

emerging markets

oreal brandstorm

oreal aimed

world organization

oreal acquired

brand