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LOreal nds worthwhile approaches to marketing

Cosmetics leader has proved highly adaptable for more than a century

Make it new
Companies operating in mass markets have to ask themselves lots of questions about the importance of innovation. Innovation is a key factor in encouraging growth but this always has to be balanced with the importance of satisfying existing consumer needs. In other words, a rm sometimes has to concentrate on adapting to market conditions, but sometimes it will seek to change those conditions. Running parallel to the issue of satisfying current and future customer needs is the question of two opposing management strategies. The history of LOreal, the worlds leading cosmetics and beauty company, has always reected the need to address both approaches offensive or defensive. In 2009 LOreal celebrated a century of leadership in the cosmetics industry, due largely to its conquest and domination of various market segments across Frances hygiene and beauty markets. The vehicle for this journey has been the companys consumer products division (CPD). For the past century the CPD has practiced offensive management by trying to drive market changes, and defensive management by adapting to those market changes. A scientic spirit has always been a key part of the companys ethos, true to the spirit of its founder, Eugene Schueller. Schueller, a chemist, scientist and inventor, described an early version of LOreal as a large dye university rather than a commercial enterprise. He understood that the pursuit of youth was a universal quest across all social classes.

Dyeing breed
At the beginning of the twentieth century dyed hair was only for unrened women. By focusing on non-consumers Schueller identied the principal deterrents to using hair dye and managed to convince reluctant women through advertising that revealed the benets of dyeing white hair to look younger. In recommending hair dye for white hair it offered a straightforward message: You are too old, and Would your husband still marry you? This was clearly an offensive (perhaps in more ways than one) management effort through which the company aimed to inuence consumers views of the product in a way that improved its own competitive position. The market-oriented strategy within LOreals CPD, then, has played a crucial role in widening the consumer base by continually reinforcing the attraction of its brands for the past century.

DOI 10.1108/02580541311316596

VOL. 29 NO. 5 2013, pp. 29-31, Q Emerald Group Publishing Limited, ISSN 0258-0543

STRATEGIC DIRECTION

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Until the mid-1990s, the hygiene and beauty market experienced growth across all the segments. Factors such as the spread of technology, growth of competitors and the growing number of consumers concerned about their cosmetic appearance all played their part. The story from this period is mainly one of adapting to market changes with the CPD aiming to satisfy the expressed needs of customers and to cover the entire cosmetics market with a ner segmentation of its offerings. Effectively, the CPD was a problem solver inuenced mainly by the scientic progress that improved the quality of skin care products.

Turning point
Market changes in the later 1990s required LOreal to consider different management approaches. A turning point was the arrival in June 1997 of a new competitor. Procter & Gamble relaunched its Pantene Pro-V conditioning shampoo and quickly became a major player, briey topping the table in terms of demand a few months later. LOreal needed to nd a more offensive form of attack and did so by proposing an emotional and emotional benet from the use of its products, in the form of the Because Im worth it campaign. Elseves focus was on elegance and glamorous beauty, an approach which was unlike anything offered by competitors at that time. The supermodel Claudia Schiffer was chosen as a spokeswoman for the brand helping it become synonymous with seduction and success rather than focusing on specic issues of cosmetic appearance. It embodied the need for self-esteem among consumers, something on which all brands bearing the signature LOreal Paris have played. Because Im worth it, (later changed to the more inclusive were worth it), then, was a rallying theme which targeted female consumers who were both concerned about their appearance and ready to pay a mid-market price for a product that offered greater perceived quality than its competitors. During this period the brand became rmly associated with celebrities through the presence of famous names from the lm and fashion world promoting LOreal.

Trade-offs required
Management at LOreal, playing the emotional card, could generally be described as taking a strong offensive approach, although defensive tactics have also played their part over the last decade or so of the previous century. Both market-oriented strategies entail a trade-off based on market conditions. The challenge is to achieve the most favorable combination at the right times to conquer a market and achieve a dominant position. It was drastic drops in the Elseve brands market share during the 1990s which led the company to the view that widely accepted strategies had to change. Instinct lay behind the creation of LOreal. Schueller, then a pharmacists assistant, was told by his boss that hair color is a market with a limited future; you are going to have a hard time. Schueller believed that he was wrong; without that instinct LOreal would never have been born. LOreal needs now to pursue a successful market-oriented strategy in order to identify needs not currently addressed by competitors. The companys CPD can play its part by branding almost every competitive advantage obtained through advanced technology. Opportunities lie in rapidly growing countries where growing levels of afuence mean that far more of the population are in the happy position of being able to think beyond their immediate needs towards the luxury of cosmetics. A key assumption here is that beauty aspirations are universal. LOreal has addressed the threat of a company rift between R&D and international development through more trade-offs: accepting that a trans-national image overrides individual identities around the world, while still protecting the brands identity as rmly rooted in France, with the rich cultural heritage that implies.

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Instinct lay behind the creation of LOreal. [Eugene] Schueller, then a pharmacists assistant, was told by his boss that hair color is a market with a limited future; you are going to have a hard time. Schueller believed that he was wrong . . .

There are new sources of innovation with those emerging markets playing an important, creative role. The global laboratories of Brazil and China have helped to develop new products. Some of these innovations might point to an offensive management strategy, although much depends on the extent to which they have truly shaped preferences. Finally, current market conditions do not favor perceived luxury industries such as cosmetics. Competitiveness of brands and companies is paramount but so is survival, and that is the ultimate defensive strategy. Keywords: Brands, Cosmetics industry, Leadership, Offensive and defensive management

Comment
This review is based on Mass market leadership and shampoo wars: the LOreal strategy, by Laurent Tournois (2013). Some of the marketing speak occasionally intrudes but this account of a cosmetics rms strategy and growth over a century raises many interesting wider issues about innovation and growth.

Reference
Tournois, L. (2013), Mass market leadership and shampoo wars: the LOreal strategy, Journal of Business Strategy, Vol. 34 No. 1, pp. 4-14, ISSN: 0275-6668.

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