The Market Is Calling For Biolage Raw Case

The Market Is Calling for Biolage R.A.W.
Case
Author: Author:
Sandra Maria Correia Loureiro
&
Paulo Anes
Online Pub Date: January 02, 2019 | Original Pub. Date: 2019
Subject: Brand Management & Strategy, Customer Relationship Management, Marketing
Communications
Level: | Type: Direct case | Length: 3429
Copyright: © Sandra Maria Correia Loureiro and Paulo Anes 2019
Organization: L'Oréal| Matrix | Organization size: Medium
Region: Southern Europe | State:
Industry: Retail trade, except of motor vehicles and motorcycles
Originally Published in:
Publisher: SAGE Publications: SAGE Business Cases Originals
DOI: http://dx.doi.org/10.4135/9781526466167 | Online ISBN: 9781526466167
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© Sandra Maria Correia Loureiro and Paulo Anes 2019
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Abstract
Biolage R.A.W. is a professional haircare brand launched in 2017, in Portugal. The brand is
taking its first steps into the Portuguese market and facing a lack of awareness about high-end
natural products along with facing challenges pricing in this segment. This case encourages
students to discuss how Biolage R.A.W. can come up with a launch strategy in a market where
the brand name is unknown, and the price of the products is regarded as high by the target
consumer.
Case
Learning Outcomes
By the end of this case study, students should have gained an understanding of the following:
• segmentation, target and positioning of a new brand of natural and sustainable products;
• strategies a new brand of natural products can initiate to develop a communication strategy in a
market not devoted to buying premium products;
• practical suggestions about future directions for a new brand of natural and sustainable products.
Introduction
Biolage R.A.W. is a professional haircare brand launched in Portugal in 2017. It uses natural ingredients in
the composition of its products, providing a sensorial experience, without neglecting professional treatment.
Although Portuguese citizens—particularly Millennials—have a positive attitude toward natural and
sustainable products, they tend not to purchase such products, particularly within the category of haircare.
Portuguese consumers do not attribute enough value to this product to justify a premium price.
Within a limited budget, Biolage R.A.W. seeks to increase awareness of its brand, encouraging consumers to
pay a premium for a natural and sustainable product while establishing a communication strategy target for
natural products.
Biolage R.A.W.
In 1990 Arnie Miller, hairdresser and founder of Matrix haircare, saw that nature could be harnessed to protect
and nourish hair, which led to the launch of the Biolage brand. The 70–100% natural-origin haircare range
claims to offer a sensorial experience combined with professional results. Biolage R.A.W. (Real, Authentic,
Wholesome) selects as many natural origin ingredients as possible to make up their formula. As a new brand
to the Portuguese market, it offers only 10 products: shampoos, conditioners, masks, and a leave-in (see
Figure 1).
Figure 1. Range of Biolage R.A.W. Products

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Source: Matrix (2017).
Ingredients are sourced from exotic and far-flung locations, such as yucca grown in the Americas by
traditional farmers; lava clay sustainably sourced in Morocco; white beeswax collected from various regions
in Africa; coriander harvested in Bulgaria. Funds earned from the products go towards supporting the local
communities where the ingredients are sourced (L’Oréal, 2017b). In addition, Biolage R.A.W. products were
awarded the Cradle to Cradle (2018) Certified™ Product Standard based on an evaluation of criteria including
material reuse, renewable energy, and social fairness. The brand does not rely on synthetic ingredients.
Conditioners are a good example where the biodegradable surfactant conditioning agent used is from a
natural origin agent derived from the brassica plant.
Biolage R.A.W. products in Portugal are more expensive than direct competitors, where prices vary widely
and there are different prices for distributors, customers (hairdressers), and consumers (see Table 1). It
is always difficult to estimate retail price since the salons are free to offer the price they consider most
appropriate for each product. We can, however, determine a recommended retail price.
Table 1. Biolage R.A.W., Davines, and Lupabiologica Product Prices (in Euros)
Description Capacity (ml) RRP including VAT (€)
R.A.W. Nourish shampoo 325 22
R.A.W. Nourish conditioner 325 30
R.A.W. Recover shampoo 325 22
R.A.W. Recover conditioner 325 30

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R.A.W. Uplift shampoo 325 22
R.A.W. Uplift conditioner 325 30
R.A.W. Re-Hydrate clay mask 400 55
R.A.W. Re-Bodify clay mask 400 55
R.A.W. Re-Hab clay mask 400 55
R.A.W. Replenish oil 125 44
Davines Momo shampoo 250 16
Davines Momo condicionador 250 22
Davines Melu shampoo 250 16
Davines Melu condicionador 250 22
LB Bioseivas shampoo nutritivo 300 13.9
LB Bioseivas condicionador nutritivo 200 18.5
LB Bioseivas shampoo reconstrutor 300 13.9
LB Bioseivas máscara reconstrutora 200 22.5
Source: L’Oréal internal source, 2017.
Matrix
Matrix was founded in 1980 by Arnie and Sydell Miller, two U.S. hairdressers. After 20 years of working as
a hairdresser, Mr. Miller began exploring other business areas, entering the eyelash business, which began
to market to retailers and salons creating the company Ardell. The company that was already established in
the salons began to produce and commercialize hair color and haircare products. “I felt that in order to be
successful, I needed more focus. I chose the professional end because I knew the business and I liked it
better,” Mr. Miller said (Matrix, 2017).

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The Millers aimed to provide hairdressers with a vast product range to help them grow their business and
to provide the tools to get the most out of their talent and creativity. They focused on two strategic pillars:
affordable products that really work and high investment in professional education and marketing in the salon.
Matrix currently positions itself as the leading hair care brand in the world. Present in 57 countries around
the globe, Matrix appears in more than 1,600 salons in Portugal and is the professional brand that has grown
the most in Europe. Like all other brands of the Professional Product Division of the L’Oréal Group, Matrix
has an exclusive presence in hairdressing salons, such as shops for professionals. After 20 years, the brand
has expanded its portfolio and is now present in four pillars: haircare, hair color, styling and shape including:
Biolage, Total Results, SoColor, Color Sync, Style Link, and Opti.Smooth.
In the haircare category, Matrix has two major haircare sub-brands: Biolage and Total Results. Total Results
is a low-cost brand that claims good price and quality. The tag line for Biolage is “the secret of nature decoded
by science.” It has a medium-high price in the market.
Biolage R.A.W. Product Distribution

In Portugal, Biolage R.A.W. products are sold to distributors who in turn distribute through salons. At the
moment, the brand has only five distributors that ensure salons in Portugal have access to its products. There
is no direct distribution, nor are products present at large professional retail outlets. Although distribution is
broad and reaches all points in the country, the Biolage R.A.W. brand is commercialized only in salons with
the size and quality for premium products. Evaluation of salons is done through an internal L’Oréal tool, called
MAG, that classifies salons through the cost of its services and number of hairdressers (see Table 2). Through
this system, Biolage R.A.W. is present in salon types A and B.
Table 2. Salon Potential Evaluation Tool—MAG
1 2 3
No. of employees
1 or 2 3 or 4 5 or more
A ≥27 A1 A2 A3
B 22–27 B1 B2 B3
Hair color price (€)
C 17–22 C1 C2 C3
D ≤17 D1 D2 D3
Source: Internal material of L’Oréal Portugal, 2017.
The market for organic professional products for the hair is still very small in Portugal. As direct competitors,
there are brands like Davines and Lupabiológica. Indirect competitors include L’Oréal Professionnel, Wella,
Kerastase, Redken, Schwarzkopf, and Revlon.

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Davines focuses on handcrafted products that are scientifically engineered, using natural ingredients and
applying scientific rigor to each product to ensure safety. This company is also known for social responsibility,
such as using only renewable energy resources. This also means quality of life for their employees, partners,
and consumers. Prices of their haircare products are lower than Biolage R.A.W.
Lupabiológica is a Portuguese brand created in 1977 by a Portuguese hairdresser. Products are only
available in hairdressing salons. The company dedicates a lot of effort to finding high-quality raw materials
that meet standards of rigor and safety to comply with all national and international legislation and regulations
relating to the cosmetics industry. Lupabiológica is considered the top brand in Portugal for natural products.
Bioseivas (Haircare) is the flagship brand of Lupabiológica and has higher market share than Davines.
Bioseivas hair care products are more affordable than those from Biolage R.A.W., and the brand targets
mainly salons of type B and C.
Sustainable, Organic and Natural Markets

Based on a study by L’Oréal Portugal, the Portuguese population has awakened to the theme of sustainability:
80% of customers say they are informed about sustainable development, considering themselves well and
reasonably informed (C-LAB, 2017). The target customer, between 20 and 34 years old, is more informed on
this subject while customers between 45 years and 54 years are less so (Figure 2).
Figure 2. Percentage of Portuguese Population Well-Informed Regarding

Sustainable Development
Source: C-LAB (2017).
The survey revealed that, for the Portuguese population, nonprofit organizations related to food and to
schools are the entities that contribute most to informing and educating young people. Media and
municipalities are also relevant through promoting events. In fifth place, 30% of respondents consider the
citizens, or each one of us, as influencers in this realm. But it should be noted that this notion of self-
accountability is greater for the target consumer between 20 and 24 years, who proves to be a more active
target in contributing to sustainability (C-LAB, 2017). On the other hand, only 20% of respondents consider
sustainability a theme where companies are significant contributors (Table 3).
Table 3 shows the entities that contribute most to sustainable development within society and to an overall
improved environment. The table also demonstrates how participants in the survey view the level of
responsibility for the sustainable development.
Table 3. 2017 Contribution of Each Entity to Improve the Environment and Society (%)
Low Some Much A lot of

Entity
responsibility responsibility responsibility responsibility

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Citizens 5.30 64.50 27.50 2.80
ONGs (nonprofit
3.30 23.50 54.50 18.80
organizations)
Authorities and local

8.50 60.00 28.00 3.50
authorities
Government 10.00 62.00 25.30 2.80
Companies 14.80 65.50 17.80 2.00
Social media 10.30 57.80 28.30 3.80
Church 32.00 52.30 14.50 1.30
Schools 3.80 39.30 50.30 6.80
Source: C-LAB (2017).
Although companies are mentioned less as contributors, 61% of the Portuguese population considers
corporate actions important to help society and the environment. However, 32% of respondents tell us that
these actions generally have a small impact or are implemented on a small scale (C-LAB, 2017).
Looking at their day-to-day life, 58% of the Portuguese say that they have sustainable behavior in their daily
lives, not only in purchases but also in consumption of water, electricity, and other areas. The vast majority
(73%) have adopted these behaviors recently, which proves a growing concern with sustainability (C-LAB,
2017). Regarding receptivity to different types of communication about sustainability and natural products,
consumers mentioned being more receptive to three different types: certification labels on packaging (52.5%);
media (33.0%); friends, and family and co-workers (30.9%). We cannot forget the relevance of blogs, social
networks, and sharing forums (in fourth place, with a high percentage). Indeed, although past research has
demonstrated that consumers tend to have a positive attitude toward sustainability and natural products,
they do not tend to purchase such products in a way we may have expected (e.g., Banbury, Stinerock, &
Subrahmanyan, 2012; Loureiro, 2017; Loureiro & Kaufmann, 2014; Portwood-Stacer, 2012).
The Natural and Organic Products Market

In Portugal, consumers who most identify with the healthy lifestyle are female, and they focus on nutrition,
sport, fashion, and leisure, especially showing concern for a green lifestyle. Millennials are a crucial target
group for natural and organic brands, and influencer marketing can help to educate a brand’s audience on
core ideals and beliefs. In fact, worldwide, 50% of Millennials (18–34 years) intend to spend more on natural
products in the next two years (Nielsen, 2017; Skininc, 2015).
Globally, natural products are those that are minimally processed without artificial ingredients. Cosmetics
that claim to be natural, however, do not always use natural ingredients. The definition of organic, according
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to the U.S. Department of Agriculture (USDA), is as follows: “a labeling term that indicates that the food
or other agricultural product has been produced through approved methods. These methods integrate
cultural, biological, and mechanical practices that foster cycling of resources, promote ecological balance,
and conserve biodiversity. Synthetic fertilizers, sewage sludge, irradiation, and genetic engineering may not
be used.” For cosmetics to be certified organic they must contain at least 95% of ingredients of a natural
origin (USDA, 2016). The European Commission similarly defines this category with “organic products range
from fresh fruits and vegetables straight from the farm to wines and cheeses aged over several years. Sales
channels are equally diverse, including: local organic markets, organic shops in rural or urban areas, direct
sales at the farm, online ordering of organic boxes” (European Commission, 2018).
The natural and organic market in 2014 represented almost double the billing compared to 2008. In recent
years, this market has grown more than 10% (see Figure 3).
Figure 3. Sales Natural Personal Care Market—Worldwide
Source: Adapted from Kline Natural Personal Care Market, 2014.
Skincare stands out as the leading segment regarding natural personal care products, representing 41% of
the market. Following is the haircare segment with a market share of 18%. However, the scenario changes
as we look at growth, where haircare records the highest growth at 22%, followed closely by fragrances. We
can, therefore, conclude that the haircare sector represents €5 billion worldwide and is the fastest growing
sector (see Figure 4).
Figure 4. Natural Personal Care Market Share of Market/Registered

Growth—Worldwide

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Source: Adapted from Kline Natural Personal Care Market, 2014.
Looking to Portugal, within products with a high environmental and social concern, consumers tend to prefer
those that are natural, followed by those that are environmentally friendly. By 2015, 66% of consumers
worldwide were willing to pay more for these types of products, while in 2013 only 50% had this will (Nielsen,
2017). Buying natural products online is considered unreliable. Specialized shops, however, are trusted for
their helpful professional advice.
L’Oréal Group
L’Oréal, the parent company of Matrix Biolage, has become the number one cosmetic group in the world.
Today, L’Oréal is present in 130 countries on five continents. In 2016 it registered one of the best years of the
last decade, allowing L’Oréal Group to strengthen its leading position in the market (see Figure 5).
Figure 5. Growth of the Worldwide Cosmetics Market Over 10 Years
Source: Adapted from L’Oréal Annual Report, 2016.
Sustainability at L’Oréal
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With regard to sustainability, however, the general public shares different perspectives on the position of the
world ’s largest cosmetics company. Subjects such as animal testing or ad manipulation to promote non-
existent product benefits have led to controversies about the company’s social and ethical responsibility. In
2014, however, L’Oréal structured a sustainable program called Sharing Beauty with All. In Portugal, the
L’Oréal Group organized an event called “Mercado de Beleza Natural (Natural Beauty Market),” which was
attended by influencers, media, and suppliers (see Figure 6).
Figure 6. L’Oréal Corporate Event “Mercado Beleza Natural”
Source: Developed by the authors, 2017.
Professional Products Division

L’Oréal Group is divided into four divisions: Consumer Products, Professional Products, Active Cosmetics,
and L’Oréal Luxe. Hairdressers receive products from these brands developed with advanced technologies,
as well as professional training. In 2016, the Professional Products division registered sales growth of +1.8%
with hair color as the main contributor (L’Oréal, 2017a).
As far as retail products are concerned, the objective with L’Oréal is always the same: to reach the consumer.
Currently, the professional products division has three distribution channels for retail products. Since some of
them involve too many intermediaries, sometimes negotiated conditions are not the most advantageous for a
business because every intermediary gets its margin (see Figure 7).
Figure 7. Retail Products Sales Circuit

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On the other hand, there are technical products that are circulated through only two distribution channels
and represent fewer intermediaries conceding higher margins to the brands (Figure 8). The direct distribution
channel represents a higher fixed cost mainly with sales representatives, when compared with indirect
distribution channels.
In addition, the professional products market is a very dynamic market and high promotional discounts are
granted to wholesalers, retailers and consumers.
Figure 8. Technical Products Sales Circuit
Conclusion
Understanding the profile and behavior of target consumers is crucial to the success of a campaign devoted
to launching a new product. Information about the characteristics of the product, price, process of distribution
and communication of the new brand and the main competitors are needed to define the segmentation,
target, and positioning, as well as to develop a dynamic SWOT analysis. Finally, to launch a new product
with an unknown brand in the target market, companies must strategically prepare an integrating marketing
communication.
Discussion Questions
• 1.

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Considering the given data about the sustainable/natural markets and the main competitors, define
the segmentation, target, and positioning for Biolage R.A.W.
• 2.
Develop a dynamic SWOT analysis and use its conclusions for a plan of action to implement Biolage
R.A.W. in the Portuguese market. Then, use the Ansoff Matrix to give practical examples of where
the brand should go next.
• 3.
When a brand is launched, communication is always decisive, especially when it competes in an
unexplored market.
◦ a.
Define and analyze a communication strategy for Biolage R.A.W. in Portugal. Explain using
communication platforms and the main communication outcomes/objectives expected.
◦ b.
Construct a timeline of implementation with hypothetical dates. Justify your choices.
• 4.
Considering the conclusions drawn in the analysis of the dynamic SWOT and using the Ansoff Matrix,
define the strategy for the brands’ future growth and give practical examples.
Further Reading
Batra, R. , & Keller, K. L. (2016). Integrating marketing communications: New findings, new lessons, and new
ideas. Journal of Marketing, 80, 122–145.
Davines MOMO Shampoo 250ml. (2017). Retrieved from https://www.shampoo.pt/product/davines-momo-
shampoo-250ml
L’Oréal. (2017). Who we are. Retrieved from http://www.loreal.com/group/who-we-are
Lupabiológica. (2017). Home. Retrieved from http://www.lupabiologica.pt
Lyer, G. (1999). Business, customers and sustainable living in an interconnected world: a multilateral
ecocentric approach. Journal of Business Ethics, 20, 273–288.
Nature Chemical Biology. (2007). All natural. Retrieved from http://www.nature.com/nchembio/journal/v3/n7/
full/nchembio0707-351.html
New Comers Week. (2017). Brands. Retrieved from http://www.newcomersweek.exponor.pt/
Schoolman, E. D. , Guest. J. S. , Bush, K. F. , & Bell, A. R. (2012). How interdisciplinary is sustainability
research? Analyzing the structure of an emerging scientific field. Sustainability Science, 7, 67–80
The Ecologist. (2018). Behind the brand: L’Oréal. Retrieved from https://theecologist.org/2011/aug/10/behind-
brand-loreal
References
Banbury, C. , Stinerock, R. , & Subrahmanyan, S. (2012). Sustainable consumption: Introspecting across
multiple lived cultures. Journal of Business Research, 65, 497–503.
C-LAB. (2017). The consumer intelligence lab. Retrieved from http://www.clab.com.pt/
Cradle to Cradle. (2018). Material health certificate – Cradle to Cradle products innovation institute. Retrieved
from https://www.c2ccertified.org/products/mhcertificate/biolage-r.a.w.-nourish-shampoo
European Commission. (2018). Organic products. Retrieved from https://ec.europa.eu/agriculture/organic/
organic-farming/what-is-organic-farming/organic-certification_pt
L’Oréal. (2017a). Brands. In 2016 annual report (pp. 34–37). Paris, France: L’Oréal.
L’Oréal. (2017b). 2016 progress report. Retrieved from https://sharingbeautywithall.loreal.com/sites/default/
files/cms/sbwa-progress-report-2016_english.pdf
Loureiro, S. M. C. (2017). Consumption and well-being: collecting experiences rather than material
possessions. In H. R. Kaufmann and M. F. A. Khan Panni (Eds.), Socio-economic perspectives on consumer
engagement and buying behavior (pp. 247–277). Hershey, PA: IGI Global.
Loureiro, S. M. C. , & Kaufmann, H. R. (2014). Intentions towards the sustainability of young adults: a cross-
cultural comparison. World Review of Entrepreneurship, Management and Sustainable Development, 10,
247–266.
Matrix. (2017). We are Matrix. Retrieved from https://www.matrix.com/we-are-matrix
Nielsen. (2017). The sustainability imperative: New insights on consumer expectations. Retrieved from

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http://www.nielsen.com/content/dam/nielsenglobal/dk/docs/global-sustainability-report-oct-2015.pdf
Portwood-Stacer, L. (2012). Anti-consumption as tactical resistance: Anarchists, subculture, and activist
strategy. Journal of Consumer Culture, 12, 87–105.
Skininc. (2015). Survey: 54% of women want skin care to be ‘all natural’. Retrieved from
http://www.skininc.com/skinscience/ingredients/Survey-54-Percent-of-Women-Want-All-Natural-
Products-321263321.html
USDA. (2016). Organic production and handling standards. Retrieved from https://www.ams.usda.gov/
publications/content/organic-production-handling-standards
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© Sandra Maria Correia Loureiro and Paulo Anes 2019