Introduction

L'Oréal Group aims at offering beauty product innovation to 1 billion new women and
men with regards to their diversity. L’Oréal has carefully devised its global marketing
strategy and customized it to the local needs and while developing products, it takes in to
account diverse populations, genders, skin types and ethnic specificities, and that's the
reason people from Africa to Europe and America to Australia are using the L'Oreal
products.

From the initial days it already started catering to the demands of women worldwide. In
order to do that efficiently they were expected to be well aware of the diversities of women
across the globe. Once they knew the diversities their job was to come up with different
line of products suitable to the women from all parts of the world. Innovation has been
the keyword for L'Oreal and this was made possible through constant research and
development over the years. The group has already covered most parts of the world and
still striving to cover more. In order to do so L'Oreal group has to keep respecting other
people’s identity, ideas and culture. L'Oreal has to keep valuing different cultures and
nationalities to get their brand value up and it seems that they have been doing it really
well. According to L’Oreal’s, it had are taken in account in the product design
Analyzing the Marketing Environment of Pakistan through PEST Analysis

It is of utmost importance to analyze the environment while entering the new market. The
demography, political situations, economy, cultural values of any country is vital before
making any marketing decision.
PEST analysis of macro environment of Pakistan is important for L’Oreal. Out of PEST,
we will give more weightage to E (Economy) & S (Socio-cultural & demography). Study of
demography, culture & economy is inevitable before stepping in to the Pakistani market.

Economy
The region is certainly volatile – something’s always happening – but L’Oreal has to stay.
The company strategy should to stay focused and meet the beauty care requirements of
the region’s women. In short, it’s up to the Group to adapt to consumers’ needs and cope
with economic ups and downs across the region. The country has lived through many such
bouts of instability and there are more to come. But, they are always followed by bright
spells. The company prefers to see the constraints as opportunities. It’s what the company
call the ‘lipstick effect’: when an economy is ailing, it’s easier for people to buy a lipstick
than a new house. Which means the company have to adapt the make-up offering in order
to address consumers’ overriding concerns. i.e. products featuring all the Group’s
technologies but are still affordable. Similarly, the group can show its awareness of the
importance of reviewing their formats by offering small sachets of shampoo / creams in
Pakistan for single-use at low cost. The Pakistani population tends to make purchases on
a day-to-day basis given their economic constraints.

Demography
The most important demographic trends in Pakistan are as under:
Increasing Population: With total population of over 200 million, Pakistan is 5th most
populous country in the world, thus providing great opportunity for marketers.
Age: Pakistan has youthful population. About 60% of the total population is below 30
years of age, out of which 32% are below 14 years. So we can say that these are the
millennials. Millennials in Pakistan are just like millennials everywhere. This generation
is totally globalized. The gap is no longer between regions but between generations. What
millennials want are beauty care products that give instant gratification and immediate
benefits. But above all, because they are less responsive to TV advertising, they want
products that are marketed differently. The ultimate weapon for winning over this target
group is digital technology. Digital initiatives have to be tailored to each country. The
company relied on the formula which it relied in every country i.e. teaming up with local
influencers.

Pakistan has youthful population, but consumer profile differ from one area to another.
The first differentiating factor is purchasing power, which, on average, is more in Punjab
& Sindh than KP & Baluchistan. Physical features are another differentiator. People on
north part of the country generally have fine hair and fair complexions. Women in Central
region have thick, straight dark hair and want a glowy complexion.
Cultural
Cultural differences also have to be factored into the strategy because they shape women’s
beauty care routines. Generally, Pakistani women tend to apply soft make-up, influenced
by historical, cultural or religious considerations. Pakistani women’s give preference to
eye make-up. People are mad about getting fair complexion. People are more prone
towards homemade items.
L’Oréal’s aim is to meet the diverse needs of consumers around the world as well as
possible. By establishing research and development centers in five continents, the L’Oréal
group managed to adapt to specific cultural differences in the beauty market. Keeping this
is mind, they can conduct in-store interviews and, in some cases, invite themselves into
with women’s homes so that people can describe their beauty routines and chat about
their ideal products to develop products best suited the requirements. L’Oreal must
modernize a traditional routine.

All four of the Group’s divisions – luxury, active cosmetics, professional products, and
consumer products – have taken up positions in this huge market.
Developing Customer-Driven Marketing Strategy (STP) for Pakistani
Market:

After researching the marketplace, L’Oreal must select customers to serve (Segmentation
& Targeting) and decide for a value proposition (Differentiating & Positioning).

Segmentation & Targeting

L'Oréal can segment its customers into various groups. Firstly, using demographical
segmentation people of different gender (women and men), age (young and older), and
race (diversity) can be attracted by offering a complex product portfolio. This way, a large
number of people could find a suitable cosmetic product to fit their demands. Concerning
the psychographic segmentation, the Group can attract different social classes by offering
products for both the middle class and the upper social class. Additionally, L'Oréal
attracts people of different personalities and lifestyles, which includes travel retail
consumers purchasing in duty- free shops or natural cosmetics lovers. This way,
customers' buying behavior might be stimulated as clients can self-reflect in the beauty
products. Regarding the behavioral segmentation, L'Oréal groups customers based on
the benefits they demand from the products. For example, within the skincare business
segment, these might be people seeking products for anti-aging, cleansers, moisturizers,
anti-imperfections, and others.
After segmenting, the company can use Differentiated Marketing approach to target
several market segments and design separate offers for each. Overall, one can conclude
that the use of multiple customer segmentation bases is due to the actuality that the
customer target group of L'Oréal are a mix of demographic, psychographic, and behavior
segmentations.

Positioning & Differentiation

L’Oreal must actually differentiate its products with that of its competitors. The USP for
L’Oreal is that best caters to the beauty demands of women of different cultures through
constant research and innovation. It is also its competitive advantage as it spend 3% of its
turnover on R&D, 20% more than its competitors. Consequently, in customers' minds the
L'Oréal Group is positioned as a cosmetic leader with products of high quality, care, and
effectiveness among the large brand portfolio. The overall positioning strategy for L’Oreal
must be More for More or More for the Same. They cannot afford Less for Much Less, The
Same for the Less strategies being the innovator company. Even, if the lower middle class
be focused, the positioning strategy must be More for Less, though it can only be viable
for short run, but can attract lower middle class. Overall, the organization should prevent
any confusion of brands by positioning and differentiating clearly the brands in the wide
portfolio. Marketers could manage this, for instance, by the integrated marketing
communication analyzed below.

L’Oreal hired Ms World, Aishwarya Rai in an advertisement to show that beautiful women use L’Oreal,
thus positioning itself as not just a basic shampoo, but one that made women beautiful. This promise
of beauty and benefits positioned L’Oreal higher in the market compared to the home brands which
positioned themselves as cheap, value-for- money products which only served the most basic of
functions of hair cleaning. It thus attempted to capture the loyalty of a new segment of the market by
promising better quality products to the rising middle class.
Plan to Build Customer Relationships through an Integrated Marketing
Mix/Program (4 P’s)
OR
Preparing an Integrated Marketing Program to give intended Value
After developing marketing strategies, L’Oreal must prepare an integrated marketing
program that will actually deliver the intended value to target customers so that
profitable customer relations can be build. The marketing program consists of the
company’s marketing mix (set of tools to implement its marketing strategy). They are
necessary for establishing a strong positioning in target market. They are four as
detailed under:
Product: L’Oreal can offer existing products from its international catalogue or develop
new products meeting the local requirements. But without compromising on quality.
Price: Pakistan is a price conscious society in general, so L’Oreal has to make it
affordable anyhow. Luxury products can cater the needs of specific segment, but for
masses/lower middle class, which is major market, L’Oreal has to price its products
accordingly.
Placement: The products can be distributed through financially sound distributors.
Promotion: Cosmetics are impulse buys, which are not items on a regular shopping list,
and thus customers need to be stimulated. Impulse buys are easily switched for other
products; therefore, companies should ensure for a frequent reminder promotion. L’Oreal
can hire female super stars in advertisement to show that beautiful women use L’Oreal,
thus positioning itself as not just a basic beauty product, but one that made women
beautiful. This promise of beauty and benefits will position L’Oreal higher in the market
compared to the local brands. It thus attempted to capture the loyalty of a new segment
of the market by promising better quality products to the rising middle class.

Product Price

Intended positioning
for target customers
Promotion Place
Developing strategies for Growth in Pakistani Market through Ansoff’s
Product/Market Expansion Grid

Marketing has the main responsibility for achieving profitable growth for the company.
After identifying, evaluating & selecting marketing opportunities, strategies must be lay
down to capture them. Through Ansoff’s model, we see that L’Oreal’s is developing new
products for its existing markets of Europe, Japan, etc. by producing 2000 products every
year. But to enter or expand in to a new market like Pakistan, L’Oreal has to focus on
market development by developing an integrated marketing program that will actually
deliver the intended value to target customer.
Existing Product New Product
Existing Market Penetration Strategy Product Development Strategy
Market L'Oréal is developing new products
as well as product variants, and
complementary products to its
existing product lines in existing
markets through continuous
innovation. This might be due to
the fact that the selection of beauty
products is increasing to satisfy the
consumers' needs, thus for
example, the beauty director
advises that companies may
develop 2-3 shadows darker
choices for their make-up
products.

New Market Development Strategy Diversification

Market In order to growth in business and
expansion in sales, L’Oreal has to go
for market development strategy.
There can be many ways to do this. i.e.
developing new distribution channels
to reach target customers, developing
a new brand to reach target market,
etc.

From the analysis above, it is clear that there are various opportunities for the Group to
accomplish significant growth, and thus to obtain sufficient market share by adopting
developing market first, and then penetrate it through product development. Yet, to
choose, the least risky way, L'Oréal might consider market penetration.
Applying SWOT Analysis on L’Oreal:

L’Oreal has also to analyze its market and marketing environment to find attractive
opportunities and intimidate threats.
Strengths Weaknesses
 World leader in beauty care market  High R&D cost
 Innovative i.e. spending 3% of its total  Too many products launch confuse
turnover on R&D. continuous R&D customers sometimes
 2000 new products launch every year
 R&D – Marketing coordination


Opportunities
 New geographical market of Pakistan
having youthful population
 Demand for organic products / eco-
friendly customer demand
 L'Oréal can tap the growing market
that ranges from the affluent, the aging
and also the masses of the developed
countries
Threats
 Political & economic instability
 Tough competition. Existence of their
competitors (Unilever and P&G) in
Pakistani market
 Presence of home brands
 Cheaper products
 Strong sense of loyalty

The goal of L’Oreal must be to match its strengths to attractive opportunities in the
environment by eliminating or overcoming the weaknesses and minimizing the threats.
So
Using Maslow’s Hierarchy for appealing the needs of Pakistani Consumers:

Marketers design clever promotions to appeal to all levels of needs in Maslow’s hierarchy
of need.
When L’Oreal says that I’m worth it, it actually focuses on peoples’ esteems need because
the products are more expensive, but it make realize the people that they are more worth
than the expenses associated with the product. However, this fits more in European or
Japanese market where standard of living is high and people can spend more on luxury
beauty care items. However, in Pakistan, where majority of people do not purchase high
priced beauty products, L’Oreal has to introduce affordable products which women can
purchase easily as all women tend to worry about their appearance when socializing in the
community and their desire to look better and prettier encouraged them to buy beauty
products that they believe can improve their appearance. (Social need)
To enhance their appearance or fragrance – so meet their social needs of belongingness
and love.

Pressured by an increasingly hectic schedule, many busy, stressed-out members of the

middle class are allowing themselves the indulgence of small “affordable luxuries.
L’Oreal’s famous ad slogan “because I AM worth it!” is an example of an attempt that
invokes the notion of “affordable luxury.”
Roger’s Theory of Diffusion

The driving force of L’Oreal is innovation and so that the innovators of any market must
be the focus of such innovating company. The innovators are venturesome and like to try
some new ideas or products at some risk. Usually, innovators are relatively younger,
which in the case of Pakistan, more than 64% people are between 14-25. They are better
educated, higher in income and are more receptive to unfamiliar things. As they are less
brand loyal therefore marketers try to bring their new products to the attention of
potential early adopters, especially those who are opinion leaders.
Conclusion

Being a global organization L'Oreal certainly needs to understand the cultural differences
and beliefs and position its products accordingly otherwise the results may be far more
different than they are at this moment. It has to design products which meets cultural
expectations and make traditional routine modernize. The thrust has to be on hitting the
right customer with the right product. This can be possible only if one has a deep
knowledge of local culture. From a business point of view, companies have to adapt
themselves to the culture of each country in which they want to have business. The most
important part of the L'Oreal's strategic plan is opportunity hunting or the marketing of
their products worldwide. Innovation is in the heart of the company and this was made
possible through constant research and development over the years so that the products
reflect “the best of cosmetics innovation in terms of quality, efficacy and safety. In the vast
majority of cases, it can meet local needs from its international catalogue. When it can’t,
it develops a tailor-made offering. However, the organization should prevent any
confusion of brands by positioning and differentiating clearly the brands in the wide
portfolio through integrated marketing communication. The success story can continue
further if L’Oreal rightly prepare an integrated marketing mix program that will actually
deliver the intended value to target customers in order to build profitable customer
relations.