LOREAL Case Study

Presented By: Group No. 7

The company
Headquartered in Paris, founded in 1907 by Eugene Schueller. Started off to sell synthetic hair dye and is currently the world leader in the cosmetics industry, known for its research efforts. Operations span over 50 countries. Company is also involved in dermatology and pharmaceuticals.

Situation
Set up in India in 1991 On reviewing Indian operations of LOreal, it has been found that the company has been losing money and still is in the investment phase. Need for an assurance about future growth and profitability prospects. Key area of concern to evaluate strategies followed to tap the Indian market.

Internationalization
Started exporting since 1910. Expanded beyond France and Europe only after late 1960s Expanded to US markets in 1980 and by 1995, saw immense growth. Now, almost 81% of its revenue comes from outside France.

Strategies for Global Markets

Two fold Strategy used for Geographic Expansion:

Management of Global Operations

Thus, it can be said that they have clear strategies for expansions in the global market and if localization of products is done, India would develop as a market.

Global Marketing
Huge task!! 500 Brands, 2000 products and 80,000 SKUs. 200 product launches every year Prominent position in 3 main channels: 1. Mass market at different levels 2. Professionals through salons 3. Selective channels like department stores and perfumeries

Brand Development
Three critical factors:

Positioning
Followed a hybrid positioning strategy. It is both a corporation as well as a brand signature. Positioning is French, technology, a bit elitist and top of the mass market in terms of pricing. Tagline: LOreal, Because Im worth it Used various brand names Garnier, Maybelline, Ralph Lauren to continue the positioning of LOreal.

Indian Cosmetic Industry 1990s

First Phase of economic liberalization Luxury goods had high customs & excise duties Growth in the sector and removal of cosmetics from the reserved list for small scale sector attracted a host of multinationals like Revlon, Benckiser, LOreal, Oriflame & Avon. Competing mainly with HLL and P&G products.

LOreal in India
Entered in 1991. New sector of TG women in the emerging markets who want more sophisticated mass market products, affluent and sensitive to style and fashion. Started with Hair Care products Garnier introduced. Low penetration initially Expansion of the market

LOreal in India
Dealer penetration increased and expenditures on advertising and promotions also increased. After a gap analysis, conditioners were introduced. Hair colourants came into existence Banking on the factor that hair colourants satisfied customers will trust the brand as a whole and thus consumption of other products would also increase.

LOreal in India
Gradual development of the product. Salons were introduced. New brand Majirel was launched. Skin care products was fast growing. Synergie skin care range was launched. Eight products in its line Positioned as a product with an alliance of science and nature.

Marketing in India
Focused on educating the consumer. Apart from education and communication of product image, retailing was considered. Merchandise specially designed shelf definers, special dispenser unit Advertising focused on reassurance of quality and credibility and not only lifestyle. Diana Hayden, Miss World 1997 Brand Ambassador.

Achieving Expected Turnover

Concern is to achieve turnover of Rs. 1 billion by the year 2000. Marketing strategies well formulated but need to go one step beyond. More testimonials of well known top notch bollywood actresses to feel the relevance of the brand. Since R&D is such an important part of the company, it needs to be communicated to the end consumer in a more strong way. Advertising campaign specially designed to communicate not only the features of the product but also all the research that went in to make the product.

Alternatives for future

Retail branding-encourage point of sale Try to enter into the mass market with a new brand name. Enter into the production of new low cost product catering to larger segment-increase consumption and brand awareness. Reduce production cost by setting up local manufacturing units and import technological expertise.

Alternatives for future

Constant feedback from the consumers to know why the product is not yet picking up to its maximum. Huge popularity of TV soaps- TVCs on GECs and mainline news channels. Communication to be stronger-Use of OOH medium(mall branding). L'Oreal experts comments and beauty tips in women magazines. Brand ambassador: top notch youth icon, more local approach.

Alternatives for future

Participation in events like fashion shows and beauty pageants-reach high end elite class models who act as role models for TG to showcase our makeup. Product and make up training at the point of purchase Direct Marketing Emphasis on distribution network

Strategies for Recovery

Special beauty workshops for women. Conducting focus groups to get insights from the consumers. Developing the product according to the needs of the current and potential consumers. Localization is a good strategy, especially for India since Indians prefer traditional home made products. Advertising to be done with a touch of Indian culture.

Thank You!