LO’REAL

Submitted By: Team 1 (Brand Management B)

MANAYA BAGGA F007

NATASHA BANERJEE G008
ARNAV PARIMOO G042
YASH SRIVASTAVA G063
KALPITA NIMJE H039
PARAS DHAMA I016
SAMEER DHURI I017
 L’Oreal
Q1. Initial focus of L’oreal? 

L’Oreal was formed in 1909 and aimed to be known for innovation and
speed to market. It spends about 3.5% of its revenue on R&D which is
higher than its competitors and is usually considered to be one of the
best brands/ products in the market. They believed launching new
innovative products was key to the success of the company. This is an
illustration of their focus on performance.

They also focused on the imagery part of the CBBE pyramid and wanted
to sell the ‘science of beauty in a jar’. One of the first major problems the
company solved was of the perception that it sold expensive products.
To change this the CEO in 1957, Francois Dalle, decided to sell products
through multiple channels and thus, creating something for everyone.
They later decided to bring national brands to the rest of the world,
thereby strengthening their image as a global, quality focused brand.

Q2. Focus in the long run to establish the brand?

According to us, in order to survive in the long run, L’Oreal focused on 3
major areas - 

1. Communication: 
In this case, communication is important as L’Oreal has that as its
USP. Looking at the transformation it did with Maybelline
increasing the sales by 93% with the usage of proper
communication messages directed towards certain target groups.
In the cosmetics industry, the product’s sales depends largely on
how consumers perceive the brand as the segmentations between
the low, mid and premium brands are very clearly defined.
Moreover the positions of each of the sub brands is distinct in itself
and requires a different marketing communication strategy.

2. Expansion: 
Expansion is an important strategy to survive in the long run
because it provides the brand an entry gate into the untapped
markets. Knowledge of different cultures that the company obtains
by expanding into new countries enables the laboratory experts to
develop new and innovative products which are fit for the local
market. 
Loreal has already displayed its capability to expand through
acquisition and customisation geographically (ex: Mini-nurse and
 Yue Sai in China), across product segment (ex: Redken in
premium, Maybelline in affordable) and across cultures and gender
(ex: L’Oreal Feria for men and Soft sheen for African ethnicity).
Further they have built strong research capabilities (ex: Ethnic Hair
and Skin Research in Chicago, and Pudong, China) adapting local
brand to roll-out globally.

“One Product or even one formula, does not fit all”

3. Channel:
L’Oreal used several different channels for its products which
include both offline traditional and online channels. The important
thing is that each of the sub-brand has its own channel depending
on the geography and the market segment that they cater to. In the
long run, L’Oreal should maintain the distinction between the
channels of premium brands, masstige brands and low price
brands as that will enable the company to maintain market share in
all the segments. 
For eg: If the company uses the same channel for premium brands
and low price brands, then customers of low price brands will not
buy the premium product due to price gap but the customers of
premium brands will churn due to dilution of brand image. Hence it
is important to maintain distinction in channels.

Q3. What are the trade-offs associated?

L’Oreal aimed at creating a global brand that could be regionally

focussed to address the psychographic needs of customers while giving
equal importance to innovation, quality and performance of their
products.

L’Oreal has consistently placed itself in 5 product categories – hair

color, hair care, skin care, color cosmetics and fragrances.

In case of L’Oreal’s brand structure, it is necessary to note that the

corporate brand is also a commercial brand – L’Oreal Paris, L’Oreal
Professional, etc.

However, L’Oreal ensured that it communicated each brand under its

umbrella differently and also used various distribution channels to keep
them segregated from one another.

Each brand, be it Maybelline or The Body Shop, is treated as a different

box and communicated to the customers uniquely to maintain their brand
positioning and brand identity. The brand language used in the medium
of communication also differs largely.

Without much research, it is difficult for a customer to know that both

L’Oreal Paris and Garnier products, which are available via mass-market
channels, belonged to the same parent organization. The same stands
for a person walking into a hair salon which houses both L’Oreal
Professional and Kerastase hair care products, Kerastase being more
premium.

Hence, while the parent body might be reaching its objectives, the
brands within it suffer.

Thus, while the global branding strategy does not lead to product
inconsistency or brand dilution, it does lead to cannibalization of
sales which leads to competition amongst the various brands
owned by L’Oreal, in their individual segments