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L’Oreal:

BIOTHERM
CASE
STUDY
ANALYSIS
Submitted to:-
Dr. Joy Mukhopadhyay
Adjunct Faculty
International Advertising
BMA- ECU

Submitted by:
Pranay Oswal
ECU Id:- 10193528
BMA Id:-BLR0911034002
International Advertising L’Oreal: BIOTHERM Dr. Joy Mukhopadhyay

Table of Contents
INTRODUCTION ....................................................................................................................................... 3
SNAPSHOT OF THE CASE ...................................................................................................................... 5
VISION AND BRANDING STRATEGY FOR BIOTHERM ................................................................................. 8
NEED APPEAL ........................................................................................................................................ 12
POSITIONING OF BIOTHERM AND CLINIQUE .......................................................................................... 14
RELATIONSHIP BETWEEN THE CULTURAL CHARACTERISTICS OF THE COUNTRIES ................................... 16
POSITIONING OF BIOTHERM HOMME ................................................................................................... 18
MARKETING COMMUNICATION IMPLICATIONS OF THE GERMAN BIOTHERM HOMME .......................... 20
Conclusion............................................................................................................................................. 22
Recommendations: ............................................................................................................................... 24
Bibliography .......................................................................................................................................... 26

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International Advertising L’Oreal: BIOTHERM Dr. Joy Mukhopadhyay

INTRODUCTION
The L’Oreal Group is the world’s largest and the most popular cosmetics and beauty products
company. It was founded by Mr. Eugene Schueller in the year 1909 with its registered office in
Paris and head quarters in the Paris suburb of Clichy, Hauts-de-Siene, France. It has consistently
been a trend setter and a revolutionary business group in the field of cosmetics. Focusing mainly
on hair colour, skin care, make-up, perfumes, serums, sun protection creams, face wash,
shampoos, conditioners, lipsticks, L’Oreal is aggressively spreading its arms in dermatology and
pharmaceutical fields by being the leading nano- technology patents holders in the United States
of America.

An organization with a century of expertise in the diversified fields of cosmetics, its consolidated
sales until the year end of 2009 was reported to be € 17.5 billion. It is present in 130 countries as
on September 2010, with a headcount of 64,600 employees, and 674 patents filed in 2009.
L’Oreal also claims that the brands annual sales are superious to 50 million Euros. L’Oreal has
recently been selected for inclusion in the Dow Jones Sustainability Stock index that lists the
companies with the best performance in terms of its social and environmental responsibility in
Europe and in the Euro zone. It is listed under the ticker symbol “OR” with its share price of €
82.62 as on 1st October, 3.26 p.m. IST. The L’Oreal share was introduced to the Paris Stock
Market on October 8th, 1963. As on Dec. 31, 2009, the Market capitalization of L’Oreal was
€46.72 billion with the total number of shares in the market over 5, 98,972,410.

Mrs. Liliane Bettencourt a French heiress, daughter and the only child of the founder Mr. Eugene
Schueller is a socialite, businesswoman and philanthropist and one of the principal shareholders
of L’Oreal with a fortune estimated at US$20 billion, and also one of the wealthiest people in the
world. She holds the maximum share that accounts to 31% stake, along with the Nestle’s holding
29.8% stake and the remaining other individual shareholders (5.4%), French institutional
investors (9.4%), international holders (21.3%), treasury stock holders (2.4%) and the employees
holding 0.7% of the Employee Stock Options Plan.

(sustainabledevelopment.loreal, 2010)

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Bangalore Management Academy
International Advertising L’Oreal: BIOTHERM Dr. Joy Mukhopadhyay

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Bangalore Management Academy
International Advertising L’Oreal: BIOTHERM Dr. Joy Mukhopadhyay

SNAPSHOT OF THE CASE


The succeeding case discussed on L’Oreal mainly emphasizes on the promotion strategies that it
has practiced mainly in Europe and other parts of the world taking into thorough consideration
the diverse culture and different countries Low Context and High Context elements and also
giving adequate amount of understanding on Geert Hofstede’s Cultural dimensions, viz; – Power
Distance, Individualism V/s Collectivism, Masculinity V/s Femininity, Uncertainty Avoidance
and Long Term Avoidance along with the vital importance of Abraham Maslow’s Theory on
Hierarchy of Needs with pertinent reference to doing business locally and on a global scale.

In the case presented below, L’Oreal claims to put all of their expertise and research resources to
work for the well being of men and women in all their diversity, around the world keeping into
mind the power of culture and value predominantly. Consequently, in this case the company’s
center of focus revolves around the following three main beliefs:

1) Unfailing attention to consumers, understanding and anticipating their individual needs


and aspirations.
2) Respect for personal diversity; the company striving hard to match the personal diversity
with the diversity of their products and brands with reference to age, type of skin, over
time, values and culture.
3) Effectiveness of products being built upon in-depth research and a dedication to invest in
innovation, product safety and the highest standards of reliability and product quality.

Although the availability of L’Oreal products is there in super markets, hair salons, chemist
shops, boutiques and other dedicated company outlets it also ensures to reach its users through
online and mail order distribution. Their availability of L’Oreal brands broadly depends upon the
category they fall into. They are mainly segregated into the following 4 categories:

1) Consumer Products
2) Professional Products
3) Luxury Products
4) Active Cosmetics(Dermo Cosmetics)

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International Advertising L’Oreal: BIOTHERM Dr. Joy Mukhopadhyay

In the following case “BIOTHERM” that falls into the category of Luxury brands is elaborately
discussed to study, understand and analyze against its competitors, its market share, its
positioning into the minds of the customer, its brand image especially in France, Spain and
Germany. It also helps in doing a comprehensive SWOT analysis of the brand – BIOTHERM in
these three countries especially on the grounds of Brand Image, Brand Positioning on these
Focused groups. Although the tabulation of the data that has been shared in the case below stand
quite obsolete i.e. way back to 2002 and hence the arguments and the views presented might
differ than the ones projected in the case drastically.

This case mainly deals with the promotion strategy used by L’Oreal in marketing its product
BIOTHERM in diverse culture and different countries. BIOTHERM is one of the luxury
products of L’Oreal. The study conducted highlights some of the area where L’Oreal lacks in
understanding the perception of the people of different country and their view about the product.
Because different culture sees the same product in different ways and also the same product
satisfy their different needs.

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VISION AND BRANDING STRATEGY FOR BIOTHERM


L’Oreal pays great attention to the layout of relying on sales and distribution channels to
implement the brand portfolio strategy in order to integrate heterogeneous systems of the brand.
This helps them gain a high degree of intensification effect. This is also accomplished though
placing these high end luxury cosmetics brands along with its extended brands – Lancome,
Helena Rubinstein, Kiehl’s, She Uemura, Giorgio Armani, Ralph Lauren, Cacharel and Viktor
& Rolf, by carefully placing them in selected high-end departmental stores and through online
channel only. This has so far become successful for BIOTHERM and its sister brands like
Garnier and Maybelline are also following the same channels of supermarkets a high end
departmental store sales. They are not limited only to pharmacies like Vichy and La Roche-
Posay.

BIOTHERM follows a multi-brand strategy because each brand is independent of each other and
is also corresponding to services market segments. It is difficult to see the brand from the surface
of the main and auxiliary relations. On the other hand, businesses want to foster their own brands
to grow and do inputs may be more human, material and also through financial resources. The
result is the limited resources of some companies have "equal distribution," and finally each
brand, due to lack of adequate resources to support doesn’t really grow up the ladder. However,
the business-to-one brand for each of equal treatment does not mean that the success of brand
management stand alone. According to the 80/20 principle, 80% of corporate profits pump in
from 20% of the brand contribution. Therefore, multi-brand management is the strategy that is
taken in to focus on the brand – BIOTHERM with due respect to all its category management
strategies, focusing on management of the market attractiveness and market size of the brand.

BIOTHERM spend it major marketing budget on “Direct Mailing”. Usually, as per the industry
reports, cosmetic company spend their marketing budget at the ratio of 4:1, but BIOTHERM’s
Direct Mailing Vs marketing ratio is 1:1. They surveyed department store loyal card holder’s age
group between 20-29 and achieved certain spending target for 3 consistent months. BIOTHERM
gave their brochure to those department's store loyal card holders. These target members
received at least 3 brochures every year from BIOTHERM which ultimately attracted them to
request sample product. Usually, cosmetic product's sample sets are 5ml but BIOTHERM being

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generous, gives full sets of its product completely in kind. As BIOTHERM gives a lot of its
sample sets. It immediately builds up its customer database and right after one week a person
receives a sample set he gets a follow up call for feedback. This quickly creates a buzz amongst
young people. Survey has shown that majority of BIOTHERM's new customers are
recommended by friend, and this is the first time they buy skin care product. Thus, they have
successfully attracts first timers and they also bring in new customer to the department stores.
After this incident, department stores start allowing them to set up counter in their premises.
Later, BIOTHERM launched body care product and men's care product. Unexpected the market
trend has changed and slimming become a fashion. Sales of slimming products have ever since
been escalated. Even today, slimming product comprises 1% of its turnover. In Hong Kong,
BIOTHERM breakeven just in its first year. It became a top department store's brand in second
year. In Korea, where people are loyal to their home brands it ranks 7 in the category of loyal
brands today.

Flanking the brand is also known as a combatant brand, whose main role is to create more
similarities with the competing brands in order to maintain the ideal position of the main brand.
It should not be too cheap, or they could damage the image of the entire brand portfolio; also
should not be too attractive, or they will be considered to be the main consumer brand of cheap
alternatives to the main brand of the market away.

High-end brands and low-end brands are "trading makers" that these brands may not make much
money for the enterprise, but help sales of other brands. Low-end brands priced relatively low
profit margins small, but able to attract customers to products, point of sale so that they could use
the opportunity to persuade the purchase of higher-priced brands. A higher premium brand
positioning, it may make the majority of consumers are far too low, they can improve the image
and prestige of the brand portfolio.

Hence, the vision and branding strategy of BIOTHERM is global where it follows the product
branding strategy since the products are transnational products. Most of their advertisements are
globally advertised as the range of product and its positioning is almost similar in almost the
countries. However the skin color of the models, the language and the cultural aspects of some of
the advertisements are reasonably distinguished as this can send a wrong message and sometimes

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International Advertising L’Oreal: BIOTHERM Dr. Joy Mukhopadhyay

also go against the sentiments of the mass and the existing customers. This also makes it cost
effective as it is backed up by large economies of scale. One important thing that shouldn’t be
left unspecified is the official website of BIOTHERM. They have designed a portico that is quick
enough to open unlike the parent company – L’Oreal’s home page. There are limited sessions of
graphics and hence the user doesn’t need to hold his/her patience for a longer period to have
access to it. They are mainly directed towards the 3 different regions for its users in Europe, Asia
and North America from where they can shop online. It is again dedicated for both the sexes.
BIOTHERM and BIOTHERM HOMME websites portray a picture of a young beautiful and a
sensational female model and a handsome looking sporty male model respectively, displaying
freshness, seductiveness, happiness, courage pride and a positive attitude with white color
remaining at the backdrop.

(investing.businessweek, 2010)

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Worldwide models of L’Oreal

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NEED APPEAL
L’Oreal products have a wide range of products that are positioned for all levels except the base
level or first level i.e. the Physiological needs level in Abraham Maslow’s theory of needs
hierarchy. Holistically speaking, L’Oreal products are classified mainly in two categories. They
are consumer products and professional products that are positioned at various levels of
Maslow’s theory. The level of needs differ from one country to another country significantly on
the income levels. In European countries, the income levels are much more than the level of
incomes in Asian countries therefore the global products are positioned at different levels in the
pyramid of Maslow’s theory in different countries. In the USA L’Oreal consumer products are
servicing for the needs of people in the Safety level i.e. the second echelon in Maslow’s theory
ladder, as the people use this product for providing safety for skin, face etc, and L’Oreal
professional is fulfilling the needs of people in Social level i.e. the third stage in Maslow’s theory
ladder. But in countries like India and China the needs will be totally different. There L’Oreal
consumer products are satisfying the needs of people in Social level in the ladder of Maslow’s
theory and L’Oreal Professional is positioned for fulfilling the needs of people in Esteem level
i.e. the fourth altitude in Maslow’s theory ladder. It shows the shift in the needs for product in
different countries.

BIOTHERM is positioned as a luxury product and hence it satisfies the needs of the people in
the Esteem level in Maslow’s theory. This product is positioned as it signifies the physical and
mental abilities of a person such as youth, freshness, assertiveness with positive attitude and
simplicity. BIOTHERM HOMME products, which are for men are focusing the needs of the
people in Esteem level in Maslow’s theory of needs. BIOTHERM HOMME is the market leader
for men care.

(Geert-hofstede, 2010)

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POSITIONING OF BIOTHERM AND CLINIQUE


From the plotted positioning map in the case, it was found that the main competitor of BIOTHERM is
CLINIQUE. BIOTHERM is positioned in the first quadrant of the positioning map i.e., the serious – new
luxury area where its competitor Clinique is positioned in between the first and fourth quadrant. Even
though Clinique is positioned as the closest competitor, it is not a competitor in terms of the market share
except in Spain where its market share is slightly more than BIOTHERM. In the UK websites of both
products it was found that the product width is almost common which include sun care, body care, make
up etc. Both the brands target the same set of customer groups which includes both male and female
customers. The brand statement of BIOTHERM speaks about problems that men and women are facing
and hence use of this product is to overcome the problems of BIOTHERM where Clinique in its website
is speaks about its quality and also its shows the promotional offers they are offering.

(CLINIQUE)

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RELATIONSHIP BETWEEN THE CULTURAL CHARACTERISTICS OF THE


COUNTRIES
BIOTHERM’s focused group results and discussions after conducting the survey in these three
countries - France, Spain and Germany shows that the brand image is varying according to their
features and perceptions. But there are also some similarities observed in it. The similarities
found are that the people in these countries find this brand as natural, pure and fresh i.e. in terms
of the image value. The target segment is almost identical in Germany and Spain. The
advertisements of BIOTHERM in these countries show that they are lacking in some qualities
like sensuality, consistency etc. The differences found here are that they have weakness in their
product offering but the qualities they lack are different. E.g. People of Germany find this
product lacking in benefits whereas French customers find the brand too pharmaceutical.

There are some relationships found between the cultural aspects with that of the attitudes and
perception of those people. Almost all the European countries are low context countries since the
relationship amongst the people is less effective and so the people here in these countries are
individualist i.e., they don’t depend on others and can take own decisions without much
influence and they give importance to self esteem. In almost all Asian countries and mainly in
China and India it is found that it has high context culture where they give importance to Guanxi
(esp. in China) and relationships and the power of autonomy is accumulated to a single person in
a family where a person takes a decision according to the benefits and the needs of the family
members. The way of transmitting the message through the communication is also dependent on
culture. Based on the above mentioned factors, it shows that culture influences the way of
advertisement is made.

(biotherm-usa, 2010)

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POSITIONING OF BIOTHERM HOMME


Positioning of BIOTHERM HOMME is almost same in countries like United Kingdom, United
States of America and Singapore. It is positioned as it is a better and more useful product for
men than any other products in that league. The websites of above mentioned countries
communicates the same message regarding the benefits of the product and the product width in
these countries remaining same. This brand is exclusively for men and this product is used as
anti shaving, anti aging, anti wrinkle products. The models used in the advertisements are young,
handsome, energetic and masculine in nature and it is common in all the countries.

(BIOTHERM)

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International Advertising L’Oreal: BIOTHERM Dr. Joy Mukhopadhyay

MARKETING COMMUNICATION IMPLICATIONS OF THE GERMAN


BIOTHERM HOMME
The marketing communications by BIOTHERM HOMME in Germany is implicated differently
i.e., it was not implied the way it was to be communicated and this has been established in
Germany through a study, that is factual. Initially, when the marketing communication was
launched in Germany it was positioned as a skincare product which is an aftershave lotion. The
target market of this product is generally men who want the immediate result and it must be
effective. But the conclusion of this communication i.e., decoded message was different, as the
German people thought that the word “coach” which is used in their advertising statement
signified to be of more business sense and they also found that this product lack in pleasure,
character, sensuality and emotionality. Even the non-selective packing strategy for this product
also ended in negative result. There are also some positive results in terms of advertising effects
such as the advertisements are identifiable, attractive, contains aesthetics and it resembles the
masculine spirit. The advertisements are simple and understandable and also give information
regarding the products and its benefits. It also concluded that this product needs brand building
by conducting fashion shows and other public relation events, in order to convey the brand image
properly and effectively.

Yes, the communication strategy for BIOTHERM HOMME in Germany must be changed i.e.
they can use Pattern Standardization Advertising which is one form of global advertising, where
the execution of the advertising is localized but the positioning and brand identity choosing is
controlled by Top Management. The other things that are to be modified or changed are that they
can exclude the words like coach which are not suitable for them and the advertisements must be
localized that they can use the brand statement which contains the words that suits the German
society and their likings. The brand statement should contain the message which tells about their
latest technologies they used for the production, the benefits of this product; so on and so forth

(campaignasia, 2010)

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Conclusion

 L’ORÉAL is the world market leader in cosmetics and related products.


 They are exceptionally innovative and invest a lot of money in research and development.
 Products deserve to be positioned in the high-priced segment because of their high quality.
 They offer well coordinated products for almost all the target groups.
 To keep their strength alive they have to observe their Competitors
 They are trend setters.
 They have an experience curve.
 As per the Ansoff Matrix they should focus on Market Penetration by aggressively entering
into potential markets like India where the presence of BIOTHERM is relatively very low.
 They are an environment friendly company.
 The contributions in the various fields through Corporate Social responsibility have been
appreciable and this has also helped them gain several awards under various categories.

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Recommendations:

 Sincere observation of the market.


 Though Competition analysis.
 Beware of latent competition.
 Using competitive intelligence to achieve strategically.
 Gain Sustainable Competitive Advantages
 Early market entry
 Be prepared for the growing competition
 Diversify their expertise also into the untapped field of clinical research through medical
foundations.
 Ensure that the products that have been utilized are recycled responsibly.
 Dropping the level of wastage from the current 2% and narrow it down even further.

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http://adage.com/results?endeca=1&return=endeca&search_offset=0&search_order_by=score&x=0&y
=0&search_phrase=biotherm

28
Edith Cowan University
Bangalore Management Academy

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