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L'Oreal

and

the

Globalization

Hamed Nasrollahi G1512619


of
American
Beauty

10 Nov 2016

Company Background
LOreal is the largest beauty company in the world and in the past 100 years
that it has expanded, it has supplied to 130 countries with offices in 58
different countries.
This global company is the number one premium cosmetic product in the
world today and has taken the core and beauty of peoples everyday lives
since 1907, the beginning of LOreal. The superior leadership of a guy named
Eugene Schueller started this strategic company with basic products such as
hair care and also the first man-made hair color product.
In 1934 Eugene invented the first mass market of soap less shampoo and
this led the success of LOreal in the country of Europe which soon
recognized them as the leader in body care and hair coloring products.
LOreal realized they needed to expand in other fields of the beauty market
and target markets in order to stay alive and successful. This would mean
that LOreal would need to acquire other companies as part of their
expansion and through this they have kept the constancy of the leading
company with acquisitions of many small companies.
In the 1980s they started their globalization into new markets all around the
globe by acquiring new companies that would form the cosmetics that we
know today. The main strategy was to adopt new companies and expand it
from within believing that the brand could be taken globally and benefit their
overall brand portfolio. The main role of acquisitions was to increase and
lengthen the internal growth rate. LOreal started acquiring companies from
the beginning of their name. They started with the basics of their own brands
such as LOreal Professional, LOreal Paris, Kerastase, and Club des Createurs
de Beaute.
In the 1960s LOreal consumed some other companies such as Garnier,
Lancome Paris, and Biotherm. In the 1980s LOreal took full possession of

L'Oreal

and

the

Globalization

Hamed Nasrollahi G1512619


of
American
Beauty

10 Nov 2016

two companies, Ralph Lauren Fragrances and Helena Rubinstein which was a
cosmetic maker that distributed internationally. Maybelline is another brand
that LOreal consumed because they were in need to be restored. LOreals
research and development teams came in and work miracles within
Maybelline.
LOreal made its biggest acquisition by purchasing Redken which allowed
them to reassess the whole hair care division. Redken was well known for its
extensive network of salon educators. LOreal soon realized that Redken had
global potential as an American brand of American origin.
The last acquisition that stands out above all the others is the purchase of
Kiehls. They are a New York based specialty store that sells high end
cosmetics which gives LOreal a new advantage into another market of the
luxury division with the goal of selling in higher end stores. As you can see all
these acquisitions play an important role in the growth LOreal and how they
became the worlds largest beauty company.
Today, L'Oreal Group is the world's largest cosmetics and Beauty Company
with activities in the field of cosmetics concentrating on hair color, skin care,
sun protection, make-up, perfumes and hair care
SWOT ANALYSIS
STRENGTHS
-

The primary strength of the Company is the continuing research and


innovation in the interest of beauty which assures that the LOreal

Cosmetics offers the best to their consumers.


LOreal Groups is the developed activities in the field of cosmetics as
well as in the dermatological and pharmaceutical fields in order to put

more concentration in their particular activities.


LOreals advertising strategy also plays a major part to its growth.
Through adapting to the culture of their target market as the main tool

L'Oreal

and

the

Globalization

Hamed Nasrollahi G1512619


of
American
Beauty

10 Nov 2016

of their advertisement, the Company brought LOreal products within


reach of other women from different parts of the world.
WEAKNESSES
-

The company has a decentralized organizational structure.


Due to the many subdivisions of the Company, there is also the

difficulty in the control of LOreal.


The profit margin of LOreal is comparably low than that of the other

smaller rivals.
Due to its worldwide marketing strategy, there are also dissimilarities
brought about in the campaign of LOreal products as to what image
they are to project.

OPPORTUNITIES
-

The growing demand for beauty products gives LOreal the opportunity
to focus in their field of specialization, particularly on hair styling and

color, skincare, cosmetics and perfumeries.


The market is growing that ranges from the affluent, the aging and also

the masses of the developed countries.


It has greater market share because of the numerous patents
registered by the Company. This enables them to have the top of the
line products only to their name.

THREATS
-

Due to the ongoing addition to the field of cosmetics, there is still the

danger that other brands could surpass the profit of LOreal.


The economic downturn that is quite evident in other countries. Such

could thus hurt the possibility of higher profit for the company.
While the LOreal Group may be producing the best of its line, people
may find that their products are not of their basic needs and would skip
buying LOreal products.

Main product lines

L'Oreal

and

the

Globalization

Hamed Nasrollahi G1512619


of
American
Beauty

10 Nov 2016

Consumer Products Division: Sold hair-care, skin-care, makeup, and


perfume

products

through

mass

market

retailing

channels

at

competitive prices.
The Professional Products Division: Sold colorants and hair-care,
texture, and styling products to hairdressers and salon professionals

worldwide.
Luxury Products Division: Housed LOreals prestige cosmetics and
perfume brands.

Why US market is targetted?

Most popular Hollywood celebrities


American users of cosmetic are high
Big market share

Steps to saturate the US market

Acquiring Maybelline
Accessible and affordable for the Americans
International presence with great sales
Maybelline has become L'Oreal's passport to the conquest of

new, emerging markets.


Acquiring Matrix
The leading U.S. hair-care and hair color in the professional

market
Matrix has an outstanding reputation among hairdressers
Strengthens L'Oreal's position in the hair products market
Acquiring Kiehls
High end brand for exclusive (products prestige)
Strong brand image
Advantage of the luxury division with the goal of selling in higher
end stores

Penetrate the world market

L'Oreal

and

the

Globalization

Hamed Nasrollahi G1512619


of
American
Beauty

10 Nov 2016

After acquiring Kiehls they saturated the U.S market, and then L'Oreal can
penetrate Asia, Africa, Middle East, Japan, Latin America and etc.
Recommendation
The company should maintain their strategy of focusing on internal growth;
Loreal should be more actively participative in fashion as will increase the
market presence of the brand.
It is still considered as a product for youth so it needs to target the people in
the age group 35 and above. The supply must be properly fulfilled so the
needs of the customer satisfies, Loreal must concern to the satisfaction of
customer demand.
Finally, the company should try to build their own brand rather than rely on
acquisitions to promote their own brand instead of other brands.

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