HOLMES INSTITUTE FACULTY OF HIGHER EDUCATION
– MARKETING MANAGEMENT
Student Name: Susham Shrestha
Student Number: ADU8030
Student Name: Lu XING
Student Number: OIN8016
Table of Contents
1: Introduction. 3
by Susham Shrestha.. 3
2: 5Cs of the company. 5
by Susham Shrestha.. 5
3: Collecting information for 5Cs. 12
by Lu XING… 12
4: Developing marketing strategy. 15
by Lu XING… 15
5: Developing marketing tactics. 16
by Susham Shrestha.. 16
Issue 1: Introduction
Allocated by Susham Shrestha
L’Oreal Group is on of the leading major groups in
the cosmetic industry. For more than a century, L’Oreal has been involved in
the adventure of beauty. The small company founded by Eugene Schueller in 1909
has become the number one cosmetic group in the world (L’Oreal History). Since
the day it was launched till now, they have been able to dominate the cosmetic
industry with several other organisations under their roof. The mission
statement of L’Oreal states, Our mission, Beauty for All. Offering all men and
women worldwide the best of cosmetics innovation in terms of quality, efficacy
and safety to satisfy all their desires and all their beauty needs in their
infinite diversity. (L’Oreal annual Report 2016). They strive to provide the
best and excellent product as you can see from their mission statement. It
explains what this company chooses to do along with what purpose they stand
for. This company chose to keep moving forward through out to provide quality,
efficacy and safety towards their consumers at all time. This statement also
shows that their consumers aren’t limited and they cater for all which provides
a great diversity in their consumer target. Their marketing strategy consists
of instead of talking about big brands that they have under L’Oreal or their
target customers, it mainly consists of how they are trying to satisfy their
customers needs. Instead of focusing on their targets, they choose to know what
their customer needs and focus on that then provide their products. L’Oreal
strategy states, L’Oreal has chosen a unique strategy: Universalization. It
means globalization that captures, understands and respects differences.
Differences in desires, needs and traditions. To offer tailor-made beauty and
meet the aspirations of consumers in every part of the world. L’Oreal is driven
by this vision of the world. (L’Oreal annual report 2016). The focus of this
statement is diverse needs of a diverse customer segment which is just as
diverse in its needs as in its composition (Abhijeet Pratap, 2017). The L’Oreal
group now markets over 500 plus brands and more than 2000 products in various
sectors of the beauty business.
Some of the major brands that L’Oreal group offers
L’Oreal group uses a multi-division strategy to
market these brands. Their brands sell it self but are categories into
different divisions which are L’Oreal LUXE, Consumer Products division,
Professional Products Division and Active Cosmetics Division.
L’Oreal LUXE products are available at department
stores, cosmetics stores, travel retail, but also own-brand boutiques and
dedicated e-commerce websites. Consumer products division brands are
distributed in retail channels. Professional products division distributes its
products in salons worldwide. Active cosmetics division brands are sold in
healthcare outlets worldwide, including pharmacies, drugstores, and medi-spas.
This way they are able to branch out specific brands in to specific divisions.
Issue 2: 5Cs of the company
Allocated by Susham Shrestha
Analyse each of the 5Cs for this organisation:
– what are the strengths and key resources, what are some of the weaknesses?
What are the opportunities and threats?
Strength: One of the main strength of the company is the continuing research
and innovation in the interest of beauty which assures that the L’Oreal
Cosmetics offers the best to their consumers. “L’Oreal Chairman and CEO Lindsay
Owen-Jones considers passion as the key to the well-renowned accomplishment of
the said Company.” (L’Oreal, 2008). They have a good dedication towards the
research of their market along with the consumer that are in the market which
makes them one of the leaders in the growing cosmetics industry regardless of
the many competitions that are there. As mentioned earlier, there are different
divisions for this industry that divides different cosmetic sectors. This helps
to ensure the quality that the L’Oreal offers to their consumers. They also
have a good strategy planning towards their advertising and because of this
they keep growing. They adapt the culture of their target market and use that
as their main tool for their advertisement. In this way, they bought L’Oreal
products within reach of other women from different parts of the world.
Weakness: The main weakness for
this organization is that the way their organizational structure is
decentralized. Although the subdivisions of the company help in the market
strategies, it gets difficult for the company to control the overall structure
of L’Oreal. Because of this, they are having difficulties in finding out what
division is accountable for the possible pitfalls of the company. Another
weakness that the company has is that the coordination and the control of
activities and image in the worldwide market. Because of their marketing
strategies that takes places in different countries, there are many
dissimilarities brought into the campaign of L’Oreal products as to what image
they are to project. This company regardless of having profits in different
sectors, their profit margins seems to be lower than other competitors. While
L’Oreal projects certain rise in digits as their profit, the result does not
usually meet the expectations (Sang, 2003).
Opportunities: Being a company
that has a leading market towards cosmetic products, this company focuses on
the products that enhance women of all ages. Growing business means growing
demands through their consumers and this helps the company to expand and take
opportunities in different fields that includes specialization on products of
skincare, cosmetics and perfumeries. Having a well-known image provides them
extra opportunities to look further into these sectors. Not only the products,
but they are able to grab different opportunities in the markets they are in.
L’Oreal has taken many initiatives to expand their market presence in Asia.
They are able to do this by acquiring Magic Holdings International Limited, a
skincare product manufacturing company based in China. Focus towards Asian
market may strengthen the company’s top line performance (L’Oreal S.A, 2015).
With the growth of e-commerce, internet, they have taken this initiative and
provide all of their products range to be available online through www.loreal.com and
also have different e-commerce portal for different part / countries.
Threats: One of the major threats
towards L’Oreal would be the ever growing competition among different cosmetic
brands. As mentioned earlier, L’Oreal are making profits but these profits
compared to other relative rivals in the cosmetic industry are substantially
low and it is shown that other cosmetic brands could surpass the profit of
L’Oreal. While L’Oreal turnovers are greater in major developed countries, the
turnovers for developing countries is not so much. And this generally effects
the overall profit for the company.
Customers – who is the company serving and
what type of behaviour is ‘typical’ from them?
The L’Oreal group focus on consumers of all ages and genders. They have
gathered different brands which focuses on skincare products, hair care
products, make-up, perfumes and luxury products to cater for their diverse
consumers. Having a vast product line in different categories of cosmetic
supplies, they are able to serve almost all types of consumers. “L’Oreal
consumers are generally very low income, Asian, and adolescent age. L’Oreal
consumers are more likely to purchase L’Oreal during larger pantry stocking
Figure 1: L’Oreal Consumer Demographics
Collaborators – describe their suppliers,
distributors or other partners that help the company to deliver their products
to the market? If company doesn’t have any – explain why it is not necessary.
L’Oreal, being a big organization having a lot of different brands under their
belt, these brands are generally their collaborators. Each brands are allocated
a division to which they fall under and are marketed through those divisions. A
total number of 34 major brands are under L’Oreal and these brands supply and
distributes their products through the divisions they are allocated in. These
divisions are Consumer Products, L’Oreal LUXE, Professional Products, Active
Cosmetics and The Body Shop. “Our strategy is to be a pioneer in
nature-inspired products, personalised service and ethical business.”- Jeremy
Schwartz, Chairman and CEO of The Body Shop.
L’Oreal LUXE products are available at department stores, cosmetics stores,
travel retail, but also own-brand boutiques and dedicated e-commerce websites.
Consumer products division brands are distributed in retail channels.
Professional products division distributes its products in salons worldwide.
Active cosmetics division brands are sold in healthcare outlets worldwide,
including pharmacies, drugstores, and medi-spas.
Source: L’Oreal Annual Report 2016
Competitors – who are the current main
competitors, are there any potential new threats or new entrants to the
Being a large successful organizations always comes with different competitors
that put our similar products to those organizations. Regardless of having major
brands being the collaboration and distributors, L’Oreal still have a good
competition for the market. According to Hoovers, L’Oreal have 2 major
competitors, The Procter & Gamble Company and The Estee Lauder Companies
Inc. The Procter & Gamble Company consists of similar product lines that
L’Oreal provides and have huge brands including Always, Braun, Crest, Fusion,
Gillette, Head & Shoulders, Olay, Oral-B, Pantene. These all products also
have the same Asian Country focused market base as well. The Estee Lauder Companies Inc. being a
cosmetics, fragrances and skin and hair care products, the major brands they have to compete with
L’Oreal are Estee Lauder, Clinique, Origins, Bobbi Brown and Tom Ford beauty
and fragrance lines.
Because L’Oreal has different branches and divisions, there are different
competitors for different divisions as well. The table below shows the
competitors lists obtained from Hoovers for L’Oreal Canada.
Context – what other factors affect this
organisation (e.g., legal, political, technological, etc.)?
documented against L’Oreal and its divisions might sway its bottom-line
execution. The organization need been a litigant. On a few lawsuits and
documented lawsuits once other gatherings will shield its showcase position.
Though the Conclusion about whatever claim dives. Against the company, it might
sway those company’s fiscal position. To instance, to April 2013, Rorie
Weisberg documented a. Claim against L’Oreal over a us locale court to false
ad. Done September 2012, a class movement claim viewing. False notice might
have been documented in elected court to Massachusetts, those us against L’Oreal
to its Matrix, Kerastase, Reskin Furthermore. Pureologiy mark Also later for
might 2013, the organization made a settlement. Earlier, for February 2011, two
about its clients. Documented a class movement claim against L’Oreal USA Inc.
As stated by those suit, L’Oreal business sectors garnier Fructis smooth &
sparkle. Anti-Frizz serum as a leave-in styling product, which camwood be
connected should hair in the recent past utilizing a warmed machine for
example, such that An. Twisting or straightening iron. Yet the agency didn’t
alert its customers that those thing will be perilous when utilized for heat.
Styling instruments. Seeking after Also protecting lawsuits might expand its
expenditures, furthermore impacting brand picture.
Issue 3: Collecting information for 5Cs
Allocated by Lu XING
How does the firm go about collecting information
(e.g., market research, market intelligence, etc.) about the 5Cs? For example,
how does it learn about?x
a. What customers want?
L’Oreal Group focuses on all age and gender groups. As figure 1, L’Oreal consumer
demographics, showed that males are not spending as much attention caring their
skin as female do. Even though, there is a wide range of products for men to
select for their needs. L’Oreal strengthen relationship with consumers by using
customer relationship management (CRM) database. As Homewood (2015) states that
“it’s important for beauty brands to have personal conversations with their
consumers and bringing in a CRM director to this market is a way for the brand
to align with what the business is doing globally”. As my personal shopping
experience at Shu Uenura, one of the luxe brands of L’Oreal Group from Japan,
the sales assistants consults with their customer face to face to know the
detail of consumers’ purposes. After purchasing, customers would leave some
customer detail about name, age, contact detail and skin type. Also, some luxe brands of L’Oreal Group, such
as Shu Uenura and YSL, invite their loyalty customers to attend Master class to
have a view of new launched products and learn how to do makeups.
b. Which competitors pose a threat?
major competition is from Estée Lauder Group. Due to the very similar sigments
of its sub-brand in cosmetic market and skincare market, the brand name is as
famous as L’Oreal, where the majority percent of the skincare market is
occupied by the sub-brands from these two companies. Recently, the trend of
cosmetic market turned super fast because of the social media, customer is
tired with these one-stop brands. As the raise of Sephora, the trend of this
market turned to be more specialised and personal. “It is easier to see a
correlation between L’Oreal’s acquisition of its first niche prestige fragrance
Atelier Cologne, for about $16 million in June 2016, and Estée Lauder’s
acquisitions of Le Labo, Frederic Malle and By Killian between 2014
and 2016″(FERNANDEZ, 2017). Both of these two companies are aware of modifying
their sub-brand segments in this market, where the competition is still high
intense. On the other hand, in recent years, the new competition is from some
small quick-fashion makeup brands, like Color Pop and Kylie, which they
advertised on social media and update their product as quickly as the fashion
c. How the context of business is changing, if at
the French government politics would effect the company. Also the importing
policies around the world would be affecting L’Oreal’s business. Within the
globalization trend, political factor would be a positive influence on
movement exchange rate would be the main issue under economic factor, which
causes the different pricing and arbitrage. These could negative affect on
sales of some regions of business.
reaction of fashion trend should be concerned under the social factor. Also
there are some ethical issue, like animal test, should also be concerned.
factor is concerned with the capacity of the companies R&D department. L’Oreal
certainly has the ability to attribute to the innovation of products.
factor is very important for the company like L’Oreal. Under globalization,
consumers around the world turn to be more sensitive about the legal aspect
of products and brands.
protecting the environment our world, more and more international companies
are taking the social responsibility and rolling as a model to protect the
d. What role collaborators play in the process?
collaborators play as primary information collectors by consulting with
consumers and recording personal information. According to these information,
company could provide more “enthusiasm, pleasure, appreciation, and stimulation
for its customers, which could eventually lead to un-substitutable products” (Šírová,
2015) to its consumers.
Issue 4: Developing marketing strategy
Allocated by Lu XING
the improvement of acceptance ability of fashion trends, “younger consumers of
cosmetics do seek trends and advice on the Internet, the Group is increasing
its social media (Facebook, Twitter, YouTube, Instagram), which allows
customers to stay updated, informed about the news, and raise their viewpoints”
(Šírová, 2015). This suggested that the demographic characters are aged before
30, female, educated and entertained, high level acceptance of new technology,
middle of higher level of income.
– a value proposition for the target market(/s).
Quick-fashion, high acceptance of technology,
reasonable price, designed appearance, good quality and easy to use.
– a positioning statement for the target market(/s).
Company like L’Oreal could put significant
contribution to digital marketing to take the lead in this market.
Issue 5: Developing marketing tactics
Allocated by Susham Shrestha
Push the existing brand: The brand itself
has a good name for it. L’Oreal having many huge brands that are already established
in the market, pushing the brands sales/advertisement would help in general to
get the already established market to a wider range. Living in the internet
age, pushing this through the social media would be a good way to source the
marketing and reach the wider consumer market.
New customers / market: With the push of
the existing brands, the company can also gain new customers. The company can
have target goals set for each month period to hit/gain a new consumer market.
Increase sales: The L’Oreal focuses on
providing their products to the market on reasonable price, hence why they have
a low profit turnover. But this can still be an advantage as the company and
the brands can focus on the market range of all types of income earners.
Keeping the prices reasonable will lead to boost in sales.
Engaging the current customers: If the
company gives to their consumers, there are higher chances of them staying
loyal towards the company. Promotions, sales and give-aways are few examples of
getting the customers to engage with the company. This way customers keep
buying along with recommending as well. This way it the market cap also grows.
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L’Oreal Annual Report Mission and Strategy 2016,
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L’Oreal S.A.: Consumer packaged goods – company profile, SWOT &
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Retrieved from https://infoscout.co/brand/loreal
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Accessed 25 Jan. 2018.
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