L’Oreal Case Assignment IB610 Eastern Michigan University

Team 1 Michelle Abd'Elaziz Deana Jackson Anthony Mlynarek Robert Sellers Jeanette Williams

al 1). L’Oreal found its place in the US. The beauty industry is a competitive one and even more so for foreign interests. According to “Jean-Paul Agon. Even as recently as the 1980’s L’Oreal still had yet to really branch out and connect beyond the US. president and CEO of L’Oreal USA.L’Oreal Team 1. Global Expansion The global company that L’Oreal is today is a far leap from where the company was positioned when it first began.To accomplish this there was a major reorganization of the company in the 1960’s that helped to set the stage and design strategic business philosophies that would lead to the successful expansion in to other countries and regions. These products were the stepping stones to taking control of everysegment of the beauty industry. . . L’Oreal conducted much research and development and worked to establish itself as a viable cosmetic and hair care company. but we didn’t have anything that we thought had potential” (Jones. et.al 11). We had a couple in Europe. but struggled in several areas and it prevented its expansion to Asia and other European countries. France and a few other places. The biggest thing holding L’Oreal back from expanding its reach was its lack of affordable products that would be desirable to the middle class consumer. French based L’Oreal’shad a strong regional following as a beauty company but needed to expand into the United States before it was able to boom as a global company. Ralph Lauren. We didn’t have an accessibly priced. and market each item.To meet these needs. L’Oreal’s first big global move was to penetrateUnited States beauty market. In addition. genuinely popular (brand) with a global potential. The now global iconic company began in France with its initial hair color and body wash lines. they could find the least expensive and best way to develop. Europe and Asia. By combining efforts of several different brands in one central location. In the US. L’Oreal recognized that a broader portfolio was needed before further global expansion could be possible. and others all helped to broaden the portfolio and meet the needs in the different spectrums of beauty. L’Oreal became known for its savvy style of streamlining production and investing in research and development. Although. 2 History of L’Oreal L’Oreal is a company that has taken many strides to become a highly recognized beauty resource for consumers of all demographics and economic status. Major purchases of Maybelline. They were even able to transfer many of these processes to their production sites throughout the US and overseas. produce. Kiehl’s. This reorganization led to L’Oreal choosing to produce products internally and to acquire establishedcompanies in order to satisfy consumer needs in all markets. This continuous effort for innovation and efficiencyled to famous industry people saying L’Oreal sold hope in a jar (Jones. it took some time getting there. et. L’Oreal chose to acquire establishedcompanies with product lines that would round out L’Oreal’s portfolio.

There they could have the different companies and divisions work together to streamline processes and act as advocates for the different components of the company. cosmetics. L’Oreal found that its other luxury acquisitions would prove valuable in sales overseas.al 8). L’Oreal sought to gain market share in several other US divisions: fragrances. Later on these decisions would lead to purchases of other companies such as Redken and Cosmair that helped L’Oreal further diversify their product lines. Not having previous relationships with the sales people and stylists put a roadblock up for the company. L’Oreal became a company that was willing to try new things and go after it. They did so. In addition to gaining a large part of the hair care market share. Entering the US Market Just after World War II. L’Oreal made the move to the US and entered the beauty market in mainly the hair care division. They did so by moving many of the brand’s headquartersto New York where L’Oreal’s US headquarters is located. L’Oreal rounded out their portfoliowith the acquisition of Kiehl’s. et. a specialty beauty store originally from New York. From there they placed country managers in each of its international regions which helped to ensure there was a finger on the pulse of that region. There were already many high end French and British products. L’Oreal worked to have all staff members working together with the same understanding of the company’s strategy. “because that was the other great alternative in the beauty industry” (10). 3 L’Orealworked to enter the ethnic beauty market by acquiring Soft Sheen and Carson’s. a move which helpedfurther diversification and provided opportunities for sales in other countries (Jones. L’Oreal needed a way to tie their growing businesses together. and other beauty elements. When L’Oreal chose to go further expand their European market and enter Asia. it chose to do so by promoting the beauty products as American products. Matrix. Helena Rubenstein. To help facilitate this entry they licensed several of their products to Cosmair Inc. One of the biggest challenges L’Oreal faced in the US market for these areas was prime sales space..L’Oreal Team 1. Wanting to create a diversified portfolio. L’Oreal was at a significant disadvantage to their US competitors. After much battling with major department stores. Because of the initial struggles that L’Oreal was having in this new market it chose to reorganize and refocus the company. L’Oreal gained prime locations which helped facilitate larger sales of their high end products. They recognized that to be a major global company they needed to think globally about their decisions and be quick to meet the needs of the new places they invested in. and Kiehl’s (5-10). However. Maybelline L’Oreal made a strategic decision to purchase Maybelline in order to help reach a segment of the market that was more price conscious and to better position itself in . but the American version of becoming hip and chic presenteda new option of beauty possibilities. L’Oreal acquired Ralph Lauren.

L’Oreal had an interconnected organization that helped to serve each component of its portfolio. To do so they determined that they wanted to promote their products as American Brands.L’Oreal Team 1. they knew Maybelline would be a strategic asset in the long run. or region. line. The tagline was catchy and consumers recognized it. There were teams of staff. 6). Not only did this make them successful in the US. et. As an organization there was a sense of responsibility to both the American brand and the countries they served. et. and encouraged consumers to keep coming back. that could analyze the markets and seek out innovative ideas to meet the local needs. We tried to put our [American] brands everywhere” (Jones. But to reach those consumers Maybelline needed help. L’Oreal wanted to create differentiated productlinesat an affordable. Maybe It’s Maybelline” (Jones. We didn’t just accept to have local brands. moderate and luxury price point. As Ketan Patel said. they brought back their original tagline of “Maybe She’s Born With It. The Maybelline acquisition met the demographic of the consumer seeking affordable products. Some of the key issues that Maybelline faced were customer connections with the company. In addition. and luxury markets. . and lack of focus. Global Brand Strategy L’Oreal chose to position itself as a company that was going to be successful in each dimension of beauty in the affordable. but also in other countries such as Japan. Maybelline had a large variety of cosmetic products that were appealing because there was something for everyone. From there they needed to help consumers reconnect with the tagline and feel like it was a product for them. Although L’Oreal recognized that Maybelline needed to be refocused. That move was gutsy and helped define the type of company L’Oreal strived to be. helped keep the company fresh. it was often duplicated in other places. resources. They weren’t afraid to try new things and find ways to make better products and make them more efficiently. “Consumers were unable to define what Maybelline was” (Jones. “We did something that was basically unthinkable for most multi-national companies. To help revitalize the brand. Maybelline as a successful part of the L’Oreal brand line because it appealed to a vast market spectrum and was easily accessible in stores in several countries. technology. located in each country served. 4 other countries.al.al 6). et.they created a color collection theme that changed with the seasons. Maybelline became focused on ways to connect with consumers over time. This move allowed the company to share staff. If a process worked better in one brand. 10). finding ways to compete with other major companies. This is also seen in their marketing department where there is a “strong relationship . R&D was what helped drive L’Oreal’s success in fulfilling the needs of consumers. moderately priced.al. First. To solve these problemsL’OrealmovedMaybelline’s offices to New York in order to join forces and share R&D resources with other L’Oreal brands. the openness helped to build up each facet. and marketing.

To do so they configured products that were constantly evolving to meet the changing looks. 5 between L’Oreal’s marketers and its R&D teams” (Jones. However. Some may want a more neutral color collection. et. Matrix. L’Oreal was able to accomplish these regional changes due to its involvement in the development. while other regions prefer a bold.al 11). It is common to also see completely different departments working together to fulfill unmet needs. They also fought to gain competitive advantage in product placement in stores. L’Oreal filled in the different beauty divisions. L’Oreal’s decision to have a more wheel and spoke design helped to facilitate organizational goals and allow for empowerment of the various teams. they wanted to make sure that they had significant sales for each brand in each division. production. L’Oreal’s global headquarters remained in Clichy. While much of their high end products were produced in-house.L’Oreal Team 1. 12). vibrant collection. By acquiring brands like Redken. France and served as the central decision making hub and from there individual zone and country teams were created (Jones. The color collection or makeup of a particular product may need to be altered to meet the preferences of consumers in different areas.al. ThisNew York location continued to bevaluable L’Oreal’s strategic planning processes. To be successful in beauty it is all about consumers seeing the products and sales people being educated enough to sell them. and distribution of the products. Competitive Strategy L’Oreal’s competitive strategy was to be a top contender in each of the various beauty divisions. The teams had to follow the strategy designed by the chiefs but they had more freedom to make decisions on products that would meet the needs of the consumer. as it chose to become a global organization it had to create a presence in the countries where they weresetting up shop. Also the textures and consistencies may need to be changed. . Maybelline. et. They were able be successful with this approach because L’Oreal invested intheir employees and made sure everyone understood and promoted what the company represented and where it wanted to go. and Kiehl’s. Ralph Lauren. Having brands that met the consumer needs in each beauty division wasn’t enough for L’Oreal. and preferences of consumers. Reorganization When L’Oreal moved to the United States and started acquiring companies to enhance its beauty portfolio it was helpful to have all the key players brought to the same location. The needs are different in each region and that is where the individual country divisions play a role with keeping track of the evolving consumer. needs. many of the other specialty products and widely accessible products needed to be acquired from other brands.

To remain the leader in the industry. and put its hair care educators to work in selling their brands. This demand will come from the aging population for products that repair damage as well as from the younger population to prevent aging. Recommendations L’Oreal’s well designed global growth strategy has positioned it as the #1 cosmetics producer in the world. During the time that L’Oreal began to expand. When L’Oreal determined that it wanted to become a beauty industry powerhouse it saw the US market as its way of getting there. 15). Growth Strategy L’Oreal was a company that wanted to be successful in a few areas of beauty prior to expanding or acquiring new components. This showed that it was strategic in what companies they acquired and did so to benefit the main brand. L’Oreal took advantage of this opportunity and refocused Maybelline. et. 6 The competition in each of the beauty divisions varied and included companies like P&G. Once in the US they chose to acquire existing companies to meet the needs lacking in its portfolio. Maybelline had lost its focus and subsequently dropped . and Estee Lauder (Jones. Demographic trends in 2004 provide significant opportunities for L’Oreal to continue its successful global growth strategy. “Our priority is internal growth. LVMH. L’Oreal must continue its diverse global vision and market approach.al. At the time. and a growing interest in beauty products among males all over the world” (Jones. 13). These trends include: “an aging population in the Western Hemisphere. L’Oreal wanted to be the top contender in each division of beauty and each price point. et. L’Oreal has tried to penetrate this market in the past with Maybelline’s Revitalizing brand. When they had the momentum on their side they took those American companies and started expanding in to other European and Asian countries. In the early phases of focusing on hair care and soaps it spent several decades in those divisions before realizing that it wanted to be more. aspiring consumers in emerging markets. As the baby boomer population ages. Revlon. much of the competition was struggling. the demand for anti-aging skin care and other age related products will continue to increase. Unilever. During the 1990’s – 2000’s L’Oreal made many acquisitions in the US that were quickly turned in to assets. et. The aging population in the Western Hemisphere presents a significant opportunity for L’Oreal. L’Oreal. found prime shelf space for its luxury products. L’Oreal’s goal was to be the premier beauty organizationand they succeeded at thisby producing revolutionary products that met the needs of consumers. but we’ll make acquisitions if we think they’ll add internal growth over a number of years” (Jones.al. 15).al.L’Oreal Team 1. The things that they learned to become a strong company in the US helped them enter new markets overseas.

This strategy could also fall in line with the growing demand of emerging markets. This strategy will also serve to increase market share in the skin care market where Estee Lauder currently leads. Boost to L’Oreal’s skin care market can also be possible with the growing demand of men’s skin care. it has yet to bring the more moderately priced Maybelline. L’Oreal is in an excellent market position. Maybelline’s accessibly priced products will appeal to this emerging market and further L’Oreal’s strategy of promoting American brands around the world. advanced skin care and anti-aging products to draw in this growing segment. Emerging markets present significant growth opportunities with their growing middle class and increase in disposable income. emerging markets. L’Oreal can continue its strategic international growth strategy and build a new international brand. The demographic trends of an aging population.While L’Oreal has successfully introduced L’Oreal Paris. Since this demand is growing world-wide. Lancôme and Garnier into the market. By following demographic trends and capitalizing on their previous successes. Eastern Europe is a logical region for expansion focus. . 7 the brand which was being overshadowed by Revlon’s Age-Defying products. and international demand for male oriented beauty products fit well within L’Oreal’s current diversification strategy.L’Oreal Team 1. L’Oreal’s commitment to R&D will aid in identifying products targeted at all levels of the demand demographic. L’Oreal will further its position as the global cosmetics leader. L’Oreal can go beyond traditional skin care such as shaving lotion and razors to hair care. This market is not as saturated as female cosmetics so L’Oreal will face minimal competition at first. L’Oreal is in a much better position now with Maybelline New York’s strong international presence as well and its successful luxury brands including Lancôme and Kiehl’s. Their current presence in every distribution channel provides an advantage over the competition.

Harvard Business Review. L’Oreal and the Globalization of American Beauty. 9-805-086. Dessain. V. D. 8 Works Cited Jones. . (2005). G. Sjoman. Kiron. A.L’Oreal Team 1.

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