L'Oral of Paris

Bringing Class to Mass with Plnitude

Edhita Paradevi 29109324 Trisya Kansya Salea 29109329 La Ode M Arief 29109367 Akbar

-BAKEMaria Alfa Raniadita 29109317 syndicate

Case Background

Plenitude line introduced in 1982. Very success in the France skin care market Strong introduction in US Market US sales grow pretty well through 1991 After 9 years introduction in US still not make money

Problem Identification
Many types of products

How to improve further upon Plenitudes current operations in the U.S ?

Premium Pricing Strategy

Brand Utilization Rethink all Aspect

Too French for US

Star System

How to introduce a new product (Revitalift-Eye) into the existing product line

L'Oral

Founded by Eugene Schueller in 1907. Initially develop and market a new hair coloring. 2,000 products with 500 brand names,150 countries. Worldwide presence Consolidated sales: 53.4 billion French Franc in 1995 from over 2,000 products

L'Oral

Beauty, personal and high tech products Cosmetics represent 81% of revenues $300 million on research & 300 new patent worldwide in 1996 Acquires Maybelline to broadened participation in the mass market. Combining Hair care and Cosmetics Division

Plnitude

At 1982 launched in France Positioned as : high end, superior performance, but accessible (class to mass strategy) Strategy :
Firstly introduce moisturizer until it had helped established the technologically advance image and then introduce cleanser Supported by massive advertising (star philosophy)

Result : Achieving sales of one million units in 1983 and continue its success in 1987 Formula for success :
Have technologically Superior Products Concentrate Resources and Support on newest star product to pull the entire line Follow the golden rules of advertising : feature star product, provide technologically superior evidence

The U. S Launch & Early Result

First test marketed in Atalanta and Dallas at 1988 Strategy class to mass Positioning Reduces the Signs of aging Covering 3 products :
Basic moisturizers Treatment moisturizers Cleansers

Before Plenitude entered, L'Oreal had good reputation for its cosmetic and hair product, so the name was critical to sell the products. Used the same formula "star" philosophy in advertising as in France

Market Size and Brand

Market Size and Brand

Market Size and Brand

Increasing Trend in Total Retail Market for Moisturizers and Cleansers. Stagnancy in Plenitude sales for both category.

US Market Analysis
Assumed that advertising spending in all brand used for moisturizers and cleansers Plenitude has poor advertising performance than Olay and Ponds Plenitude brand not strong recognized in US Market study divide consumers into 5 segments:
22% 17% 26% 17% 18%

Unconcerned Ingredient Apathetic Price Conscious Socializers

Acceptor/Rejecter Studies
Motivation for Trial
Brand name cited Brand name meant Department store quality

Respond to Product Formulas

Perception as Full Product Line Respond to Packaging Perceived Target Consumer

Young rejecters found it too heavy and greasy Didnt absorb into skin

Having large number of products but have plus and minus Individual products could be more helpful in through the line

Packaging seemed feminine and expensive look Confusing and have lot to read

Perceived targeted to older women Not for 20s, and maybe not even 30s

Acceptor/Rejecter Studies
Motivation for Trial
Olay dry skin, light and soaked, ads on magazines Ponds staple of life Olay light and reasonable priced Ponds reliable, accessible, and reasonable priced

Product Satisfaction Sources

Brand Imagery Perception of the Plenitude Line and Packaging

Olay traditional & generational brand Ponds older, down to earth

Overwhelming & confusing Need more time to read it

Shelf Shopping Study

Shopping Experience
Competitors Brand Image
+ : Fun, meet the different need of consumers, - : So many selection, its very confusing

Olay: Pink cream, old fashioned, nice packaging Ponds: Really heavy & greasy, for older women LOreal: Really expensive

Product Line Presentation

+ : Very informational, very helpful - : Look complicated, very confusing

Developing the Plnitude Plan

Introduced in 1995 Quickly represented 20% of Plnitude sales with heavy support Attract 40% new users to the Plnitude franchise & younger customers problem: consumers perceptions of the brand (a treatment product for people who have problem) Options: Launch a new product as a Revitalift extension

Star product philosophy high support Bring out the product & not make it ours star

Brand Development
Taken from Exhibit 11

Brand

Aware

Ever Tried

Conversation Ratio

Currently Retention User Ratio

Oil of Olay Ponds

Avon Revlon Plenitude Nivea

96% 93%
91% 90% 78% 76%

77% 52%
68% 35% 23% 26%

80 56
75 39 29 34

34% 16%
23% 10% 7% 6%

44 31
34 29 30 23

Low Consumers Ever Tried Low Conversation Ratio Low Current Used Low Retention Ratio

Poor Plenitude Sales Performance

Competitor Analysis
Aspects Motivation for Trial Product Satisfaction Sources LOreal (Plenitude) Oil of Olay Ponds

Premium and Expensive

Good quality product

Generated by information / advertisement

Light and reasonably priced Traditional, generational brand

Seen as a staple of life

Reliable, accessible and reasonably priced Older and down-to-earth

Hard to Brand Imagery understand

France vs. US

Unknown US consumer behavior In France, successive product launch, but, in US product launch simultaneously. It May confused consumer. Benefit Positioning in France of Aging perception succeed while in US not succeed. France consumer have more high concern regarding beauty perception than US consumer US consumer more pragmatism than France consumer regarding beauty knowledge

France vs. US
FRENCH Sophisticated in using a skin care (technology advanced product) High-end market (not price sensitive) Premium quality UNITED STATES Didnt much know about skin care need to educated them at the pointof-purchase Price sensitive Need effective product

Revitalift
Introduced in September 1995 Product innovation incorporating pro-retinol A & E Treatment product for people who have problem Supported by $5 Million in TV advertising Quickly represent 20% plenitude sales Target Younger Consumer Bring new buyer

Revitalift Key Success

Keep superiority in Research & Development Increase U.S. consumers knowledge on skin care products Creating demand a in younger consumer market Improving global LOreal the Brand Increase sales nd a market hare s

SWOT Analysis
STRENGHTS Known with good quality Great Research & Development department Have a good experience in handling cosmetic product WEAKNESSES Unknown about consumer behavior in US The product cover unattractive LOreal need to upgrade awareness of US consumer

SWOT
OPPORTUNITIES Big market in US Young consumer felt local product is old fashioned Us maker has many channel for LOreal product THREATS Expensive product Image Consumers loyalty to competitor product Local product known about US consumer behavior

Recommendation

Increase consumer knowledge by advertising and at the point of purchase Packaging modifications simple information, change the Plenitude name Launch Revitalift Eye with star product Use premium price to maintain product prestigious Step by step Product Line Extensions. Target a younger executive woman to create consumers base

thanks for your attention

Exhibit 7. Market Size & Brand Shares on $ Basis (91-95)

Moisturizer - All Mass Outlets Dollar vol. (Retail $) Plnitude Olay Almay Nivea Pond's Alpha-Hydrox Neutrogena Cleansers - All Mass Outlets Dollar vol. (Retail $) Plnitude Olay Almay Noxzema Pond's Neutrogena Sea Breeze Clean and Clear 1991 1992 1993 1994 1995 $309MM $338MM $375MM $440MM $471MM 11,7 13,6 14,1 13,8 14,0 38,3 36,1 32,3 29,7 28,2 5,4 6,0 5,6 4,4 4,6 4,8 5,5 6,0 6,2 6,2 5,0 4,6 9,1 13,9 15,1 1,0 3,8 5,7 5,4 7,0 6,5 5,7 4,8 5,2 1991 1992 1993 1994 1995 $252MM $288MM $308MM $308MM $328MM 3,2 3,2 3,1 3,1 3,4 11,0 9,9 7,6 6,4 7,9 4,8 4,8 4,9 4,4 4,1 22,9 24,4 23,8 22,9 21,6 11,7 12,6 11,6 12,2 11,2 4,9 4,9 6,0 6,3 6,2 9,4 8,9 4,9 6,7

Exhibit 8A. Plnitude Product Line Pricing of Chain Drug Stores

Size (oz) Trade Price Moisturizers-Daily Active Daily Moisturizer-Regular Active Daily Moisturizer-Oil Free Active Daily Moisturizer- SPF 15 Hydra - Renewal Jar Hydra - Renewal Tube Moisturizers - Treatment Advanced Wrinkle Defence Crme - Jar Advanced Wrinkle Defence Crme - Tube Advanced Overnight Eye Defense Excell Cream Excell Lotion Serum Revitalift - Face Cleansers Deep Cleansing Gel Hydrating Clenasing Cream Hydrating Floral Toner Clarifying Foaming Gel Clarifying Mask Clarifying Toner 4,00 4,00 4,00 1,70 1,60 1,70 1,20 1,40 0,50 1,40 4,00 1,00 1,70 5,00 6,00 8,50 4,00 2,80 8,50 4,72 4,72 4,72 6,83 6,09 8,87 7,07 8,87 8,87 8,42 8,42 10,43 8,87 5,50 5,50 5,50 6,25 6,25 6,25 Everyday Average Retail 7,11 7,17 7,21 10,17 9,13 12,15 10,30 12,26 12,07 11,36 11,51 15,19 12,31 6,97 7,07 6,94 8,06 8,09 8,26 ? 2,39 2,45 2,49 3,34 3,04 3,28 3,23 3,39 3,2 2,94 3,09 4,76 3,44 1,47 1,57 1,44 1,81 1,84 2,01

Exhibit 8B. Competitive Cleansers Pricing of Retail Drug Stores

Size (oz) Trade Price Procter & Gamble - Olay Foaming Face Wash Facial Cleansing Lotion Refreshing Toner Age Defying Daily Renewal Pond's Cold Cream Self Foaming Cleanser 2 in 1 Cleanser - Tube 2 in 1 Cleanser - Pump Neutrogena Facial Cleanser Deep Clean Deep Pore Noxzema Medicated Skin Care 6,78 6,78 7,20 6,78 2,12 3,09 2,69 N/A Everyday Average Retail 3,17 4,56 3,98 4,76 ? 1,05 1,47 1,29 -

3,50 4,00 4,00 7,00

2,78 5,03 2,79 3,88

7,44 4,22 5,60

2,41 1,43 1,72

8,00 6,00 2,00

5,91 4,10 5,50

8,33 6,07 8,06

2,42 1,97 2,56

10,00

2,68

3,71

1,03

Exhibit 8C. Competitive Daily Moisturizer Pricing of Chain Drug Stores

Size (oz) Trade Price Procter & Gamble - Olay Original Beauty Fluid Oil Free Beauty Fluid Sensitive Skin Beauty Fluid U/V Protectant Beauty Fluid Original Beauty Fluid (Larger Size) U/V Protectant Beauty Fluid (Larger Size) Pond's Dry Skin Cream Nivea Shine Control Mattifying Fluid Facial Nourishing Lotion Neutrogena Combination Skin 4,00 4,00 4,00 3,50 6,00 5,25 5,86 5,86 5,86 5,86 7,53 7,53

Everyday Average Retail 6,59 6,65 6,66 6,74 8,76 9,60

? 0,73 0,79 0,80 0,88 1,23 2,07

11,00

5,50

8,19

2,69

3,00 3,00

4,84 4,58

7,15 6,87

2,31 2,29

4,00

7,50

10,43

2,93

Exhibit 8D. Competitive Treatment Moisturizers Pricing

Size (oz) Trade Price Procter & Gamble - Olay Night of Olay Replenishing Cream Age Defying Protective Renewal Cream Age Defying Protective Renewal Lotion Pond's Age Defying Lotion Age Defying Lotion Prevent and Correct Lotion Prevent and Correct Cream Nivea Anti-Wrinkle Cream Optimale Neutrogena Healhty Skin Oil Free Bottle 2,00 2,00 2,00 4,00 4,49 4,58 N/A N/A

Everyday Average Retail 6,45 8,73 7,31 7,36

? 1,96 4,15 -

3,00 2,00 4,25 2,50

7,80 7,80 10,80 10,80

10,99 11,23 14,94 15,20

3,19 3,43 4,14 4,40

1,70 1,70

4,84 4,58

9,22 10,52

4,38 5,94

2,50

7,50

10,55

3,05