STRATEGIES OF L’OREAL

1
TABLE OF CONTENTS
Introduction………………………………………………………………….3
The Business……………………………………………………………………………..5
Corporate strateies…………………………………………………………………….!
The Co"p#ete G#o$a# Chaneo%er…………………………………………………….&'
S(OT Ana#)sis…………………………………………………………………………&*
L’Orea# in India………………………...………………………………………………&+
Conc#usion………………………………………………………………………………&,
2
Introduction
Eugene Schueller a young French chemist developed an innovative hair color formula,
Aureole. He manufactured his on products and sold them to !arisian hairdressers. "he
company as registered in 1#$#. "he guiding principle from the %eginning as research
and innovation in the interest of %eauty.
&y, 1#'$ had ac(uired 1$$ products and today they are 2$$$ product strong. From the
%eginning Eugene as am%itious a%out his company and %y 1#12 the %rands ere found
in Holland, Austria and )taly. )n a fe years the company as distri%uted *S, South
America , +ussia and Far East. "oday, ,-.r/al is present orldide through its
su%sidiaries and agents. ,oreal started out in hair colour %usiness %ut soon %ranched out
into other cleansing0%eauty products.
L’Or-a#’s century long history is mar1ed ith successes. "oday the '$$ %rands of
,-.r/al provide diverse products from hair color, permanents, styling aids, %ody and s1in
care, cleansers and fragrances.
"he distri%ution channels are diverse from hair salons to super mar1ets and
hypermar1ets, health and %eauty outlets and direct mail.
)n 1#33, 2outre %eaute a maga3ine devoted to %eauty and ell %eing of omen as
launched ."he 1#'$s sa the advent of ne and e4citing advertising medium5 the
movies. ,-.real made its onscreen de%ut ith the campaign for Am%re Solaire, hich
as ma1ing a come%ac1 on the mar1et.
The G#o$a# Reach O. L’Orea#
3
The Business
)n the %attle for glo%al %eauty mar1ets, 612.7 %illion ,8.real has developed a inning
formula5 a groing portfolio of international %rands that has transformed the French
company into the *nited 9ations of %eauty. &lin1 an eye, and ,8.real has :ust sold ;'
products around the orld, from +ed1en hair care and +alph ,auren perfumes to Helena
+u%instein cosmetics and 2ichy s1in care. "he report shall cover ,8.real-s presence on
the orld map as ell as its position )ndia since its inception.
,8.real caters to the mar1et %y folloing the underlined categori3ation and has different
strategies for these product segments.
1.<lo%al Strategies
2.Strategies in )ndia
The /roduct Cateories
&. Consu"er products
"he =onsumer !roducts >ivision is dedicated to offering all consumers its high
technology products at competitive prices through mass?mar1et retailing channels. "he
>ivision-s %rands develop haircare, s1incare, ma1e?up and perfume products that meet
the aspirations of all of its customers.
"he >ivision8s ' international %rands are ,8.r/al !aris, <arnier, @ay%elline 9e Aor1,
Softsheen.=arson and ,e =lu% des =r/ateurs de &eaut/.
'. /ro.essiona# products
"he !rofessional !roducts >ivision is at the service of hairdressers orldide. .ur
complementary %rands meet the re(uirements of salon professionals in colorants, hair
care, te4turing and styling formulas and provide salon customers ith a ide range of
innovative, high?performance products. "he !rofessional !roducts >ivision of ,-.r/al is
made up of four different %rands5 ,8.r/al !rofessionnel, B/rastase, +ed1en 'th Avenue
9A= and @atri4.
*. Lu0ur) products
"he prestigious %rands of the ,u4ury !roducts >ivision offer consumers top of the range
products. =lients of selective retail outlets Cdepartment stores, perfumeries, travel retail
outlets, and the %rands on %outi(uesD receive personali3ed advice at the point of sale,
ena%ling them to choose the products %est suited to their needs.
7
,ancEme, Helena +u%instein, &iotherm, Shu uemura and Biehl-s offer premium products
1non for their innovation, performance and (uality. "he ,u4ury !roducts division
houses also some of the orld8s top perfume %rands5 <iorgio Armani, +alph ,auren,
=acharel, !aloma !icasso and <uy ,aroche.
+. Acti%e cos"etics
"he Active =osmetics >epartment designs and mar1ets dermo?cosmetic s1in care
products that are sold in pharmacies and specialist retailers. "hese products offer
consumers proven safety and effectiveness supported %y advice from pharmacists and
dermatologists.
"he >epartment-s three %rands, 2ichy, ,a +oche !osay and )nn/ov, offer s1in care, sun
care, and hair care and ma1e?up products.
'
=onsumer
products
,-.real
!rofessional
products
Active cosmetics
department
2ichy @ay%elline 9e Aor1,
,-.real !aris, <arnier.
,-.real
!rofesionnel
Corporate Strateies
"rue enough, it-s tough to succeed in a demanding economy.
)t ta1es %rea1through innovation, %rea1nec1 speed, and naturally, the very %est talent to
outthin1 and outmaneuver your competitors.
,8.real thus or1s on a three point guide for meeting ith competition5
 Innovate %y successfully conceiving of and launching a ne concept or
technology
 Differentiate their products and services through pragmatic mar1eting strategies
 Dominate in their mar1et and %uild %rand e(uity and profita%le groth

The Strateist
For the first time this year, ")@E, the American maga3ine, pu%lished a ran1ing of the 1$$
most influential people in the orld, in a range of categories Cpolitics, economics,
science, arts, etcD. Among them1 2r. O3en45ones, ,-.r/al-s =E., is part of the orld-s
2$ F&uilders and titansG.
Hhen (uestioned on the possi%le ris1s of mar1et saturation in a %usiness li1e %eauty care,
@r. .en?Iones replied, FHhen ) %egan, e sold to omen from 2$ to '$. "oday, e sell
to omen from 1' to J'. "omorro, e ill undou%tedly have customers from 13 to #3.G
,indsay .en?Iones feels that the cosmetics industry has a promising future, and not
only %ecause of its constant (uest for innovation and (uality. F...considering that the
men8s mar1et is :ust %eginning to develop and that emerging countries represent a
gigantic reservoir of potential consumers, the mar1et is far from saturated.G
Initia# Strate)
.ne of .en?Iones-s first moves at ,-.r/al as to %ring more focus to the company
through a huge pruning of %rands and activities. "he company focused on five core
%usinesses and technologies ?? hair color, hair care, s1in care, color cosmetics, and
fragrances. "hen e concentrated on 1$ glo%al %rands, hich no ma1e up ;'K of sales.
A hole list of %rands has disappeared. )t8s focus and then e4treme drive on the
remaining products to ta1e them glo%al.
L
2erers And Ac6uisitions
,-.r/al, the orld-s largest %eauty company, announced that it has signed an agreement
to ac(uire S1in=euticals, a professional s1in care company. Founded in 1##7 and
head(uartered in >allas, "e4as, S1in=euticals, a privately held company, is one of the
largest and fastest groing %rands in the professional premium s1in care mar1et in the
*.S. "hrough a strong and speciali3ed distri%ution netor1, the company sells to
dermatologists, plastic surgeons, and high end spas. S1in=euticals sales in 2$$7
amounted to 3'6@.
F"he ac(uisition of S1in=euticals allos ,-.r/al to strengthen its position in high?
performance professional s1in care,G said ,indsay .en?Iones, =hairman and =E. of
,-.r/al. F"his mar1et, in hich S1in=euticals is a leading player, is a particularly
promising one ith high international potential.G
"he company entered the =hinese mar1et %y ac(uiring the =hinese %rand @ininurse in
>ecem%er 2$$3."his as folloed %y an agreement to ac(uire the =hinese ma1e?up and
s1incare %rand Aue?Sai on 2Lth Ianuary 2$$7. "After Mininurse at the end of last year,
this new acquisition confirms our determination to step up the pace of our growth on this
strategic market", commented @r. ,indsay .en?Iones, =hairman and =hief E4ecutive
.fficer of ,8.r/al.

.n #th @ay 2$$1 "he ,8.r/al <roup and the =os@edic =oncepts =ompany have :ust
signed an agreement. According to the terms of the agreement, the =os@edic =oncepts
=ompany yields its &io@edic %rand and range of products to ,8.r/al.
"This acquisition will strengthen L'Oréal's product portfolio in the dermocosmetics and
will accelerate our epansion in this rapid growth market," indicated <uy !eyrelongue,
!resident and =E. of ,8.r/al *.S.A.
"The acquisition of the leading American !rand of cosmetics designed for use !y
dermatologists and plastic surgeons, in association with L'Oréal research, will pro"ide
L'Oréal with a powerful position in this potentially strong market throughout the world,"
stated ,aurent Attal, managing director of ,8.r/al8s Active =osmetics department
As the competition intensifies, .en?Iones is li1ely to continue ma1ing ac(uisitions. He
has purchased five companies in si4 years. "he company is actively e4ploring ac(uisition
targets elsehere in Asia. Already huge in esta%lished mar1ets such as Europe and the
*.S., ,8.real is venturing further afield. ,ast year, the company ac(uired Soft Sheen, a
*.S. line of hair?care products aimed at African?American omen. .en?Iones intends
eventually to use it as a spring%oard for e4panding into Africa. ,8.real is e4panding
rapidly in )ndia since it introduced its ,8.real E4cellence line of hair color in 1##J??the
first time a company dared sell any color other than %lac1. )n @e4ico, ,8.real ran1s 9o.
1, ith a 2;K spurt in sales last year.
J
Cross4.erti#i7ation8
,8.real8s or1 ith @ay%elline is a prime e4ample. )n 1##L, ,8.real ac(uired
@ay%elline for J'; million and %egan a complete ma1eover of the %rand, including
moving the head(uarters from @emphis, "enn., to 9e Aor1 =ity. "he 1ey5 figuratively
stamping 88ur%an American chic88 all over @ay%elline products to promote their *.S.
origins. )n 1##J, for e4ample, @ay%elline rolled out a radical ne ma1eup line, heavy on
ris1y colors such as yello and green, du%%ing it @iami =hill. And hen ,8.real
mar1eters discovered that the moderately successful <reat Finish nail enamel dried in one
minute, they changed the name to E4press Finish??and sold it heavily as a product used
%y ur%an omen on the go. "he ma1eover as a hit. @ay%elline8s share of the nail?
enamel mar1et in the *.S. has clim%ed from 3K to 1'K since 1##L. Altogether, over the
past three years, .en?Iones has almost dou%led @ay%elline8s sales, from 632$ million
to 6L$$ million, and pushed the %rand into more than J$ countries. Sales outside the *.S.
mar1et no ma1e up '$K of total revenues.
Ne3 Georaphic Areas
)n the %attle for glo%al %eauty mar1ets, 612.7 %illion ,8.real has developed a inning
formula5 a groing portfolio of international %rands that has transformed the French
company into the *nited 9ations of %eauty. &lin1 an eye, and ,8.real has :ust sold ;'
products around the orld, from +ed1en hair care and +alph ,auren perfumes to Helena
+u%instein cosmetics and 2ichy s1in care.
)ndia is one of ,-.r/al-s fastest groing mar1ets. "o meet ever?rising demand, the <roup
opened a ne manufacturing plant near the city of !une, a state?of?the?art facility ith a
production capacity of up to 1$$ million units per year.
2$$3 sa ,-.r/al gro %y 33.7K in )ndia, and the ne factory in !une is the latest step
in the <roup-s rapid development on the su%continent. "he high?tech plant ill
manufacture hair careM hair color and s1in care products for the )ndian mar1et as ell as
for e4port to neigh%oring countries. )t shall practice Horld =lass Standards in Hygiene.
"he !une site is one of the first ithin the <roup to implement ,-.r/al-s neest <H! or
<ood Hygiene !ractices.
,8.real is surging in mar1ets stretching from =hina to @e4ico. )ts secret5 conveying the
allure of different cultures through its many products. Hhether it8s selling )talian
elegance, 9e Aor1 street smarts, or French %eauty through its %rands, ,8.real is
reaching out to more people across a %igger range of incomes and cultures than :ust a%out
any other %eauty?products company in the orld. "hat sets ,8.real apart from one?note
mar1eters such as =oca?=ola =o., hich has :ust one %rand to sell glo%ally.
&ut ,8.real is surging in mar1ets stretching from =hina to @e4ico. )ts secret5 conveying
the allure of different cultures through its many products. Hhether it8s selling )talian
;
elegance, 9e Aor1 street smarts, or French %eauty through its %rands, ,8.real is
reaching out to more people each day.
Research and 9e%e#op"ent
Since it as founded in 1#$J %y the chemist Eugene Schueller, the ,8.r/al <roup has
continued to invest in cosmetic research ith one clear aim5 to improve the (uality and
efficacy of its products through scientific innovation. Each year the <roup devotes more
than 3K of its turnover to +esearch and >evelopment.
,a%oratories in France, the *nited States and Iapan employ over 2,#$$ scientists and
support staff from over 3$ disciplines5 chemistry, %iology, medicine, physics, to4icology,
etc. +esearch findings are pu%lished in numerous international scientific :ournals and in
2$$7 ,-.real applied for ';L patents. ,-.real %elieves in the strength for long term
groth and sustenance.
Enterin Ne3 Business
,-.real has announced the first men8s anti?aging product line to hit mass mar1et retailers
across America. *p to no, men8s cosmetic has %een a small niche mar1et, %ut ,8.real8s
lead could start the %all rolling.
E0p#orin Ne3 Opportunities
"o sell the ne Helena +u%instein line, ,8.real has opened a 9e Aor1 spa??the first
time ,8.real has tried to run a retail operation. And the target mar1et is younger and
trendier than ,8.real8s typical lu4ury customers. )t8s not clear ho ell the company ill
%e a%le to manage its ever?groing sta%le of upscale %eauty %rands hile mi4ing it ith
street?ise ne products. &ut that8s the thrill of %eing in the %eauty %usiness??hat8s hot
is alays changing, and only the savviest of sellers can 1eep up ith the trends.
Corporate Socia# Responsi$i#it)
*9ES=. and ,-.real !rofessional !roducts signed an agreement under hich they ill
or1 together on an H)20A)>S prevention education programme.
Another e4ample of ,-.real-s commitment to philanthropy and serving disadvantaged
communities is the <roup8s continued support over the past 1' years, to the ,oo1 <ood
Feel &etter programme. "his initiative helps put a smile %ac1 on the faces of cancer
patients through s1in care and ma1e up or1shops. ,<F& is an original pro:ect from the
cosmetic industry, hich demonstrates :ust ho %eneficial cosmetics can %e to
individual-s ell %eing.
#
"his programme ill offer courses adapted to the cultures of the countries concerned. )t
ill %e part of the programme already put in place %y ,-.real in Africa, hich has thus
far provided for 1J$,$$$ training days. "he hairdressers serve to further the campaign %y
relaying their 1noledge to clients in their salons, verita%le places of e4change and
dialogue across the continent.
After the mass scale destruction due to tsunami in )ndia ,-.real participated in the
international relief effort, ,-.real contri%uted N 1 million.
,-.real reali3ed the need of omen in science and in 1##;, the ,-.+OA,?*9ES=.
F.+ H.@E9 )9 S=)E9=E Aard as designed "his colla%oration, illustrates ho the
private sector and an intergovernmental institution can pursue :oint pro:ects to support
omen of science, encourage the advancement of 1noledge and enhance development
on a glo%al scale. Five remar1a%le omen physicists receive the ,-.real?*9ES=. for
omen in science aard for 2$$', the orld year of physics.
Achie%e"ents
,-.r/al ran1s first in the 2$$' survey of the reputation of France-s =A= 7$ companies.
"he study as conducted %y the .%servatoire de la +/putation and the European strategic
intelligence leader, >atops.
According to the survey, F,-.r/al-s outstanding reputation is largely due to its
attractiveness as a company and its good financial health.G ,-.r/al as the company
most often mentioned under the headings Fgood financial health,G F(uality of products,G
Fdesira%le products,G Fattractiveness,G Fdesira%le place to or1,G and Fdesira%le company
to invest in.G
,-.r/al decided to lin1 up ith the =it/ des Sciences @useum in !aris to launch the
orld-s first e4hi%ition on hair in 2$$1. After a highly successful three?year European
tour, ,-.r/al-s F>ecoding HairG e4hi%ition heads to =entral America and opens in
@e4ico on >ecem%er #
th
, 2$$7.
,-.r/al-s firm commitment to promoting diversity among its employees, customers and
suppliers, and the <roup-s overall culture of inclusiveness has earned it the very first
>iversity &est !ractices- <lo%al ,eadership Aard. ,-.r/al-s =E., @r. ,indsay .en?
Iones has long %een a fervent proponent of diversity and feels his company-s success is in
large part due to the culture of inclusion he and his teams have or1ed hard to promote.
,-.r/al *SA as recently chosen %y the *S maga3ine .ccupational Ha3ards as one of
the si4teen safest companies in the *nited States. "he distinction reards the <roup-s *S
su%sidiary-s commitment to and achievements in occupational safety.
,-.r/al as named F!ac1ager of the AearG in 2$$3 %y =!= !ac1aging, an American
trade :ournal for the cosmetics and personal care industry. An aard that underlines the
<roup-s capacities in meeting the consumer-s needs %y using the most sophisticated
technologies in pac1aging.
1$
A Co"p#ete G#o$a# Chaneo%er
)n :ust a decade, ,-.r/al has undergone a complete changeover. "en years ago, J'K of
,-.r/al-s 6'.' %illion annual sales came from Europe, mostly on the French mar1et.
,-.r/al-s image seemed to %e indeli%ly lin1ed to !arisian sophistication. ,ast year, the
European mar1et represented only 7#K of the <roup-s 13.J %illion dollar revenues, hile
the American mar1et accounted for 32K of sales Ca dou%ling of the American mar1et
share the company had in the early ninetiesD. ,-.r/al !aris, the <roup-s leading %rand, is
no sold the orld over ithout having lost one iota of its image of French chic.
Ho ere these important changes %rought a%outP "he first important reason highlighted
%y Fortune @aga3ine as the <roup-s %rand development strategy, %rilliantly formulated
and led to fruition %y an international e4pert. .ne such outstanding success story is
@ay%elline. "his formerly Q@iddle AmericaQ %rand as %ought in 1##L. )n :ust a fe
years, its image has no %ecome trendy in such far aay places as Iapan or =hina. )ts
ne Qinternational and se4yQ loo1 has on over the orld-s most stylish teenagers.
Adding Q9e Aor1Q to the %rand-s name has made it a huge international success.
"oday, Hater Shine >iamonds lipstic1 %y @ay%elline is a sym%ol of ho glo%al ,-.r/al
has %ecome. "his successful product is the result of an initial set%ac15 @oisture Hhip
lipstic1 felt too dry to Iapanese lips. "hus, the product as sent %ac1 to the la%oratory,
,indsay .en?Iones insisted on giving it a ne name and Hater Shine lipstic1 as %orn.
After having con(uered the Iapanese mar1et, it as e4ported everyhere in Asia and,
eventually, throughout the orld. "oday, it is so popular in +ussia that certain colors are
out of stoc1
. the tric1 ill %e staying ahead in the game as his poerful rivals see1 to play the glo%al
%randing game. From giant !R< to niche players such as ,os Angeles?%ased cosmetics
ma1er Stila, ,8.real8s competitors are hustling to catch up. in the emerging mar1ets li1e
Iapan ,8.real still trails %ehind.
.
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&rand confusion
!ositioning in the myriad %rands
!resence remains underdeveloped in
emerging mar1ets.
12
Strengths
&rand imageSHorld 9o.1
+esearch R development?';L patents
)nnovation on )9 products
+ange of portfolioSdiversity of products
<lo%al %randSpresence in 13$ countries
Strong =orporate Social +esponsi%ility policy
Emerging mar1ets of developing
countries
<roing cosmetic and grooming
mar1et
9eer ac(uisitionsSmore range of
products
9e channels on the electronic media
,ocal players in the ne mar1et e4pansions
&rand canni%ali3ation
(ea:ness
Opportunities
Strenths
Threats
L;Orea#’s 5ourne) in India
Hith li%erali3ation ,8.real sensed the opportunity in the )ndian mar1et and came to )ndia
ith the hopes of a groing mar1et. .ne of the early players the company had to ta1e the
agency route for selling their products.
Folloing its glo%al strategy of %ringing the Fcountry?of?originG formula to ne mar1ets,
,8.real came to )ndia ith GARNIER range of products from the lo?end %rand of their
international portfolio. <A+9)E+ %ecame a holly oned su%sidiary in 1##7.
E4pansion of the product line started early ith the introduction of s1in care range of
S<NERGIE.
L;Orea# entered )ndia ith E4cellence crTme in 1##L, the first %rand signed as ,8.real
!aris.
"ransiting from the F=onsumer !roductG segment to their F!rofessional !roductsG range,
,-.real set up the !rofessional !roduct division in 1##J. "his division re(uired a
different handling and ,8.real set to development centers in 9e >elhi and @um%ai to
train the salon oners and professional hairdressers. "his also mar1ed the entry of
@a:irel Hair =olor in )ndia.
@ar1et gre and ,8.real also introduced their s1in care and ma1e up offerings in )ndia.
"he rise as also reflected in the change of the su%sidiary in )ndia from )ndelor to
F,-.r/al )ndia !rivate ,imitedG.
,8.real in )ndia as loo1ing at idening their portfolio along ith deepening the product
lines. )n 2$$2, a significant development as the launch of 2)=HA that mar1ed the
introduction of FActive =osmetics >epartmentG. "his is a very niche, premium product
from ,8.real. )n fact, over the three years of its presence its coverage is :ust ;$ chemists
all over )ndia.
"he latest from the ,8.real (uiver are the %rands?F@A"+)UG and FBE+AS"ASEG. "hese
are also part of the Fprofessional divisionG. Hoever, hile BE+AS"ASE is a super
premium product, @A"+)U caters to the loer segment demand.
"hus e see that ,8.real in )ndia has folloed a to?pronged strategy5
having aide portfolio ith the range of products for %oth premium and middle
and loer segments in each of their product divisions
reinforcing their %rand image through promotion of the premium %rands even at
lo demand.
13
"he main threat that ,8.real face s in )ndia comes from not :ust its direct competitors li1e
+evlon, !R<, 9ivea etc. %ut also from the traditional isdom prevailing. So ,8.real is
fighting to %ring in a hole ne lifestyle here that re(uires a change in the ay the
)ndian omen thin1 of grooming and also a%out the e4penditure on it.
,8.real products in )ndia are mar1eted in a variety of distri%ution channels namely 5 mass
mar1et, pharmacies and salons.
"he efforts have paid off and ,8.real today is present in over 3$$ )ndian cities accessing
J international portfolio %rands. +egistering a %listerin dou%le digit groth ,8.real loo1s
set to capture the )ndian mar1et in the coming years.
.
17
Conc#usion
,-.r/al-s core %usiness is people-s ell %eing, and their am%itions go far %eyond
financial performance.
"he <roup has confirmed its determination to #in: econo"ic ro3th 3ith stron ethica#
princip#es and a real aareness of its responsi$i#ities to the community.
"heir mar1ets can %e represented as follos5

"hus, an immense mar1et to cater to ith a mind?%loing range of products spells hard
or1 fro ,8.real.

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