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LOREAL : THE BIGGEST COSMETIC COMAPANY

«

Submitted In Partial Fulfillment Of The Requirements For BBA
(GENERAL) Semester VI Programme Of G.G.S Indraprastha University,
Delhi.

Submitted By

(Jatin Sukhija)

(BBA (General) ± Semester ±VI)

Enrl.No:0581241708

DELHI INSTITUTE OF RURAL DEVELOPMENT

NANGLI PUNA, DELHI -36

Declaration

I here by declare that the major project report , entitled ³Loreal: The
biggest cosmetic comapany´, is based on my original study and has not
been submitted earlier for award of ant degree or diploma to any institute
or university.

Place: New Delhi Candidate signature

Date: 4th April 2011 name: Jatin Sukhija

Enrl.no: 0581241708

Countersigned

Name: Ashima Verma Name: Dr. J.P
Varshney

Supervisor Director

Delhi Institute Of Rural Development Delhi Institute
Of Rural Development

PREFACE

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He has taken pain to go through the project and make necessary correction as and when needed.I owe a great many thanks to a great many people who helped and supported me during the writing of this book. Jatin Sukhija Enrolment number: 0581241708 . [Ashima Verma] the Guide of the project for guiding and correcting various documents of mine with attention and care. My deepest thanks to Lecturer.

CONTENTS Title page Declartion PREFACE INTRODUCTION COMPANY PROFILE PROFILE OF THE ORGANIZATION OBJECTIVES & SCOPE OF STUDY METHODOLOGY LIMITATION DATA AND ANALYSIS FINDING AND RECOMMENDATIONS .

BIBLOGRAPHY Introduction .

make- up. the company is active in the dermatological andpharmaceutical fields and is the top nanotechnology patent-holder in the United States. sun protection. perfumes and hair care. a young French chemist. Eugène Schueller. L'Oréal is a listed company. developed a hair dye formula called -. [3] With its registered office in Paris and head office in the Paris suburb of Clichy. France. Hauts-de- Seine. History In 1907. but the founder's daughter Liliane Bettencourt and the Swiss food company Nestlé each control over a quarter of the shares and voting rights.The L'Oréal Group is the world's largest cosmetics and beauty company. skin care. Concentrating on hair colour.[4] it has developed activities in the field of cosmetics.

Schueller formulated and manufactured his own products. . The guiding principles of the company. the research teams were 100 strong. that number reached 1. . Schueller registered his company. the small company employed three chemists. which eventually became L¶Oréal.000 today. the Société Française de Teintures Inoffensives pour Cheveux ("Safe Hair Dye Company of France" literally "French Society of Inoffensive Hair Dyes").000 by 1984 and is nearly 2. which he then sold to Parisianhairdressers. By 1950. In 1909. In 1920. the original L¶Oréal. were research and innovation in the field of beauty.

L¶Oréal got its start in the hair-color business. The company's products are found in a wide variety of distribution channels. pharmacies and direct mail. . health/beauty outlets.and supermarkets. hair styling. L¶Oréal currently markets over 500 brands and many thousands of individual products in all sectors of the beauty business: hair color. but the company soon branched out into other cleansing and beauty products. body and skin care. permanents. from hair salons and perfumeries to hyper . makeup and fragrances. cleansers.

and in 2005. China. Synthélabo merged with Sanofi in 1999 to become Sanofi-Synthélabo. L'Oréal purchased cosmetics company The Body Shop for £652 million. L¶Oréal purchased Synthélabo in 1973 to pursue its ambitions in the pharmaceutical field. Sanofi-Synthélabo merged with Aventis in 2004 to become Sanofi-Aventis. L'Oréal controlled the film company Paravision. one in the U.: Clark. In the UK. On 17 March 2006. published in French as      and in English as    . whose properties included the Filmation and De Laurentiis libraries. L'Oréal has faced widespread condemnation from OFCOM regarding truth in their advertising and marketing campaigns concerning the product performance of one of their mascara brands. StudioCanal acquired the Paravision properties in 1994. New Jersey. one was established in Shanghai. Kanagawa Prefecture. A book by Monica Waitzfelder.S. New Jersey. one in Japan: Kawasaki. A future facility in the US will be in Berkeley Heights. The company has recently faced discrimination lawsuits in France related to the hiring of spokesmodels and Institutional racism.L¶Oréal has five worldwide research and development centers: two in France: Aulnay and Chevilly. From 1988 to 1989.

took over the Waitzfelder home in the German city of Karlsruhe (after the Nazis had engineered the removal of the family) to make it its German headquarters. The shift to "we" was made to create stronger consumer involvement in L'Oréal . the slogan was changed again to "Because we're worth it" following motivation analysis and work into consumer psychology of Dr. this was replaced by "Because you're worth it". [ ] L'Oréal's famous advertising slogan is "Because I'm worth it". details how L'Oréal. a company claimed to be anti-Semitic by the author. In late 2009. In the mid 2000s. Maxim Titorenk o.5.

The Body Shop founder Dame Anita Roddick was forced to defend herself against allegations of abandoning her principles over L'Oréal's track record on animal testing. Cikarang. . L'Oréal also owns a Hair and Body products line for kids called L'Oréal Kids. As a result. calls were made for shoppers to boycott The Body Shop. who continue to be against animal testing. the slogan for which is "Because we're worth it too".philosophy and lifestyle and provide more consumer satisfaction with L'Oréal products. [7] Following L'Oréal's purchase of The Body Shop. February 2011: L'Oreal will has the largest factory in the Jababeka Industrial Park. In 2010 significant growth occurred at Indonesia with 61 percent increase of unit sales or 28 percent of net sales. The production will be absorbed 25 percent by domestic market and the rest will be exported.[8] In 1987. [5] The company states that no animal testing for finished products has taken place since 1989 and that L'Oreal has invested [6] significantly in alternative methods for chemical safety testing. She declared that her belief in the power of cosmetics to enha nce female beauty was greater than any concern over animal testing. Indonesia with total investment of US$50 million and it will be ready in October 2011. [9] [edit]Business . L'Oréal and 3 Suisses founded Le Club des Créateurs de Beauté specializing in mail order sales of cosmetic products. though they implicitly acknowledge that they continue to perform animal testing of ingredients. Protest group Naturewatch states that L'Oréal continues to test new ingredients on animals.

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As at year end 2009: [2]
Breakdown of share ownership: 31.0% by the Bettencourt family, 29.8% by
Nestlé, 2.4% treasury shares, and the remaining 36.8% is public
[edit]Sales, profits, etc.
In 2003, L¶Oréal announced its 19th consecutive year of double -digit growth.
Its consolidated sales was ¼14.029 bn and net profit was ¼1.653 bn. 96.7% of
sales derived from cosmetic activities and 2.5% from dermatological
activities. L¶Oréal has operations in over 130 countries, employing 50,500
people, 24% of which work in France. 3.3% of consolidated sales is invested
in research and development, which accounts for 2,900 of its employees. In
2003, it applied for 515 patents. It operates 42 manufacturing plants
throughout the world, which employ 14,000 people.
Cosmetics sales by division breakdown: 54.8% from consumer products at
¼7.506 bn, 25.1% from luxury products at ¼3.441 bn, 13.9% from
professional products at ¼1.9 bn, and 5.5% from active cosmetics at ¼0.749
bn.
Cosmetic sales by geographic zone breakdown: 52.7% from Western
Europe at ¼7.221 bn, 27.6% from North America at ¼3.784 bn, 19.7% from
rest of the world at ¼2.699 bn.
In 2007, L¶Oréal was ranked 353 in the Fortune Global 500.[10] The company
had earned $2,585 million on sales of $19,811 million. There were 60,850
employees. [10]
[edit]Joint ventures and minority interests
L¶Oréal holds 10.41% of the shares of Sanofi-Aventis, the world's number 3
and Europe's number 1 pharmaceutical company. The Laboratoires Innéov is
a joint venture in nutritional cosmetics between L¶Oréal and Nestlé; they
draw on L¶Oréal's knowledge in the fields of nutrition and food safety.
Galderma is another joint venture in dermatology between L'Oréal and
Nestlé.

[edit]Community involvement and awards
In 2008, L'Oréal was named Europe's top business employer by The
European Student Barometer, [11] a survey conducted by Trendence that
covers 20 European countries and incorporates the responses of over 91,000
students.
The L'Oréal-UNESCO Awards for Women in Science was established to
improve the position of women in science by recognizing outstanding women
researchers who have contributed to scientific progress.
The awards are a result of a partnership between the French cosmetics
company L'Oréal and the United Nations Educational, Scientific and
Cultural Organization (UNESCO) and carry a grant of $100,000 USD for
each laureate. [1]
The same partnership awards the UNESCO-L'Oréal International
Fellowships, providing up to $40,000 USD in funding over two years to
fifteen young women scientists engaged in exemplary and promising research
projects. [12]
L'Oréal organizes every year the L'Oréal Brandstorm, an acknowledged
business game for students in 43 countries. The game is related to marketing
and has a first prize of $10,000, a second prize of $5,000 and a third prize of
$2500.
[edit]Claims of racial discrimination in advertising, and other litigation
On August 11, 2005, the Supreme Court of California ruled that former
L'Oréal sales manager Elyse Yanowitz had adequately pleaded a cause of
action for retaliatory termination under the California Fair Employment and
Housing Act, and remanded the case for trial. [13] The case arose out of a 1997
incident in which Jack Wiswall, then the general manager for designer
fragrances, allegedly told Yanowitz to fire a dark-skinned sales associate
despite the associate's good performance. When Yanowitz refused, Wiswall
pointed to a "sexy" blonde-haired woman and said, "God damn it, get me

 
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[19] The building is often referred to as the "Beauty Factory" by the public. France L'Oréal Group has its head office in the Centre Eugène Schueller in Clichy. and employees moved into the facility in 1978. In 2005 Nils Klawitter of 4$  said "the building. Hauts-de-Seine. students. the customers are used as test subjects for new hair colours. 90 hairdressers served 300 women. The world's largest hair salon is located inside the head office building. replaced the former Monsavon factory. per day. near Paris." Klawitter added that the facility "gives the impression of a high-security zone" due to the CCTV cameras and security equipment. including retirees.400 employees work in the building. [20] L'Oréal USA has its headquarters in New York City. 1. constructed in the 1970s from brick and steel. is every bit as ugly as its neighborhood. and unemployed people. L'Oréal head office. As of 2005.Centre Eugène Schueller. with its brown glazed façade of windows. in Clichy.[18] The building.[21] its New Jersey headquarters is in Berkeley Heights .

´ ³Score: 58. ³Review: 16/22 points. According to my method (see below). . tying for second place among the six companies in the "Household Products" sector reviewed by Climate Counts. These companies still have work to do.9. Climate Counts has found that L¶Oreal has been measuring its companywide impact on global warming since 2001. but they¶re beginning to hit their stride.Review Of Literature L¶Oreal received a score of 58 out of a possible 100 in the latest (2008) Climate Counts Scorecard. Climate Counts has this to say about L¶Oreal: ³STRIDING ± The best Climate Counts choice. Change from 2007 score: +4. L¶Oreal deserves a rating of 58/20 = 2. L¶OREAL¶S PERFORMANCE L¶Oreal has a relatively strong record on climate change. Climate Counts is a non-profit website based in New Hampshire that was founded by Stonyfield Farm Organics (85% owned by Groupe Danone).

My rating = 44/20 = 2.9 Colgate-Palmolive.75 * I include here some major companies that could be considered peers. Climate Counts Score: 15/100. Climate Counts has found that L¶Oreal has made some public information available on its companywide efforts to address global warming.45 The Clorox Company. These honours were not just a 'cosmetic' eulogy. My rating = 15/20 = 0. Climate Counts Score: 58/100. Climate Counts Score: 44/100.³Reduce: 35/56 points. Climate Counts Score: 58/100.e. My rating = 58/20 = 2.75 Procter & Gamble.9 L'Oreal. Climate Counts has found that L¶Oreal has established clear goals to reduce its energy use and has reduced its impact on global warming (i. posted a turnover of ¼ 13. Climate Counts Score: 75/100. Climate Counts has found no public information to suggest that L¶Oreal supports public policy that addresses climate change.45 Kimberly-Clark. ³Policy Stance: 0/10 points. My r ating = 29/20 = 1.2 Avon Products. The company recorded a 19. Climate Counts categorizes Unilever as ³Food Products´ and Procter & Gamble as ³Household Products. . which had operations in 130 countries in the world. L'Oreal.´ PEER PERFORMANCE* Unilever. My rating = 58/20 = 2.7 billion in 2001. Climate Counts Score: 69/100. My rating = 3. ³Report: 6/12 points. My rating = 69/20 = 3.´ while both companies compete directly on personal and household products. not just those that are categorized in the same sector by Climate Counts. respectively. For example.. Commenting on L'Oreal's performance. for it was the only company in its industry to post a double-digit profit for 18 consecutive years (refer Exhibit 1 for L¶Oreal's key financials). Climate Counts Score: 29/100. its greenhouse gas emissions or climate footprint).6% and 26% growth in profit in 2001 and 2002 (half-yearly results). L'Oreal deserved them.

. because it is not just about business but about a dream we have to realize. Matfix. Armani. Shu Uemura. developed an innovative hair colour formula. Charles Loupot. Biotherm. a French chemist. and Raymond Savignac to promote his company's products. Background In 1907. Vichy. By 1920. "At L¶Oreal. La Roche -Posay. unlike other hair colour products that used relatively harsh chemicals.Jones said. Redken. Maybelline. like L'Oreal Paris. perfection. Kiehl's. L'Oreal was the only cosmetics company in the world to own more than one brand franchise and have a presence in all the distribution channels of the industry (refer Exhibit C. and Asia). Eugene Schueller (Schueller). Schueller used advertising in a major way to market his products." Known for its diverse mix of brands (from Europe. L'Oreal Professionnel.2 for a note on the global cosmetics industry). Schueller formulated and manufactured his products on his own and sold them to Parisian hairdressers. Soft Sheen Carson. in 1909. and Italy. the company employed three in-house chemists and made brisk business selling hair colour in various countries like Holland.000 people who share the same desire. and Ralph Lauren.8. Two years later. America. Garnier. Helena Rubinstein. Schueller gave a lot of importance to research and innovation to develop new and better beauty care products. we are 50. The uniqueness of this formula. Cacharel. Austria. named Aureole. He used promotional posters made by famous graphic artists like Paul Colin. Lancome. Schueller set up a company and named it 'Societe Francaise de Teintures inoffensives pour Cheveux¶. From the very beginning. was that it did not damage hair while colouring it.

During the 1950s. Schueller's daughter and the company's main shareholder. which went on to become one of the most famous jingles in France. which was an adaptation of one of the brands 'L' Aureole' (the halo). In the early 1940s. the company pioneered the concept of advertising products through film commercials screened at movie theaters. the company's name was changed to L'Oreal. The first movie advertisement was for L'Oreal's 'Amber Solaire' (sun care cream) with the tagline. Later. This posed a threat to its existence as it could easily come under the state's control. the Swiss food products giant. The slogan summed . Shueller 's deputy. In 1972. after Schueller's death. while the other half was publicly tra ded. smell good' for Dop shampoo. In 1937. while the remaining 51 % was held by Bettencourt. His efforts bore fruit a decade later in 1973. L'Oreal became a publicly traded company. created and launched a beauty magazine for women named. half of L'Oreal's stock was sold to Gesparal. took over as the company's Chairman and CEO. to dilute her majority stake. Later. a France -based manufacturer of personal care products. Dalle. Votre Beaute. 49% of Gesparal's stock was sold to Nestle. 1 In 1963. began taking steps to internationalize L'Oreal's ownership structure to prevent it from coming under the control of the government.In 1933. he started the 'clean children' campaign and created a jingle 'Be nice and clean. Amber Solaire is back". "Just as it was before the war. therefore.2 which in turn could affect its international growth plans. Schueller. Francois DaIle (DaIle). when he persuaded Liliane Bettencourt (Bettencourt). the company launched the legendry advertisement campaign 'Because I'm worth it' to promote the 'Preference' l ine of hair colour. In 1957.

high -quality. L'Oreal's decision to differentiate its products by attaching an emotional quality to its brands thus worked very well. and advanced products at an affordable price. The campaign was considered as brilliant by many marketing gurus. In the cosmetics business. ''Because I'm worth . profit margins tend to be generally low as there was not much differentiation between the products offered by various companies. The emotional pitch.up the company's philosophy of providing the most innovative. The slogan seemed to cleverly differentiate L'Oreal's products from others and proved to be a 'winning' factor.

L'Oreal's products had become quite popular in many countries outside France. Although the company started as a hair colour manufactur er. Due to his exceptional performance. It started distributing its products through agents and consignments to the U. body and skincare cosmetics. Consumer. L'Oreal soon emerged as the only cosmetics brand in the world that had products in all segments of the Industry. and everyone's happy. Professional. Luxury. Russia. Jones was given the responsibility of looking after L'Oreal's US operations (the company's most important overseas operation) during 1981 -4.S. goes from your pocket right to theirs." Over the next few years. an analyst stated. the company's business expanded considerably. South America. indirectly conveyed the message that ''I'm willing to pay more". that is. styling aids. it conveyed that." This translated directly into profits for the company. and the Far East. According to a article. Commenting on the campaign. and cleansers and fragrances over the decades (refer Table 1 for product launches till the mid -1990s and Table 2 for a segment wise break-up of sales for the year 2002).it". over the decades it had branched out into a wide range of beauty products such as permanents.. During 1978-81 Jones functioned as the head of L'Oreal's Italian business. On The Road To Fame By the 1970s. and Pharmaceutical. "The extra 50% L'Oreal charges for nothing other than your warm glow of sel f-satisfaction. . Genius. "I will prove that I value myself by paying more than I have to. Jones¶ entry in the late-1970s marked the beginning of a new era of growth for the company.

companies did not acquire diverse brands. to give Lancome the same shelf space that it gave to Estee Lauder. He was aware that DaIle had begun the work of internationalizing L'Oreal to prevent it from remaining as 'just a French cosmetics company'. it was difficult to market its brands internationally. succeeded DaIle as L'Oreal's Chairman in 1988. Jones said. a company insider with good management skills. Lancome's sales increased by 25% in the US in 1983. almost 75% of the company's sales were in Europe. one of the leading retail stores in the US. he realized that he had to tackle the situation created by L'Oreal's image. they generally homogenized their brands to make them acceptable across different cultures. Jones. Jones deliberately took L'Oreal down a different road. As he tried to continue Dalle's work. In spite of their doubts and the reluctance of retailers to carry European brands.Managing the company's US operations was not an easy task. By choosing to work with brands from different cultures. Not surprisingly. he decided to acquire brands of different origins. Jones persuaded Macy's. L'Oreal's image was so close ly tied to Parisian sophistication. In what proved to b e a major advantage later on. Commenting on his decision." The rationale for the above decisio n was to 'make the brands . Jones' colleagues argued that European brands such as Lancome (in the luxury cosmetics segment) could never compete with established American brands like Estee Lauder and Revlon. mainly in France. During the late 1980s and early 1990s. Jones thus decided to take a series of concrete steps to make L'Oreal a globally recognized brand and the leading cosmetics company in the world. "We have made a conscious effort to diversify the cultural origins of our brands. In the cosmetics industry.

The reason Jones had so much conviction in this philosophy was his own multicultural background (he was born in Wale. studied at Oxford and Paris. In 1995-6. Many analysts were of the opinion that Jones had turned what many marketing gurus had considered a 'narrowing factor' into a 'marketing virtue'. Buying Maybelline was a risky decision because the brand was well known for bringing out ordinary. Maybelline was not a well-known brand outside the US. In 1996. May Be? No. L'Oreal decided to overcome this problem by giving Maybelline a complete mak eover and turning it into a global mass-market brand while retaining its American image. staid colour lipsticks and nail polishes. and had a French -born daughter). only 7% of its revenues ($350 million) came from outside the US. married an Italian.3 The company acquired Maybelline in 1996 for $ 758 million. . It 'Is' Maybelline One of the first brands that L'Oreal bought in line with the above strategy was the Memphis (US) based Maybelline.embody their country of origin'. Maybelline had a 3% share in the US nail enamel market.

a city known for fast and sophisticated lifestyles. "Memphis just did not quite fit the sort of profile for . Commenting on this decision.The first thing that L'Oreal did was to move Maybelline's headquarters to New York. Jones said.

The new Japanese version of 'Moisture Whip' was given a new name -'Water Shine Diamond'. L'Oreal acquired the Maybelline brand in Japan from Kose Corporation." .finding some of the key people we needed. However. This gave the brand a new look and targeted it at spirited and lively teenagers and middle -aged women. buoyed by the success of Maybelline in the US. Yoshitsugu Kaketa. It also renamed Maybelline's 'Great Finish' line of nail polish 'Express Finish. In 1999. In addition. Water Shine-Diamonds became a runaway success in Japan. thus gaining world rights to Maybelline. The company positioned it as a product used by the 'urban woman on the go'. L'Oreal's Consumer-Products General Manager (Japan). said. L'Oreal gave the lipstick a makeover by adding more moisturizers to it. Commenting on the success of the brand. L'Oreal introduced its new line of Maybelline lipsticks and nail polishes in the Japanese market. This revamp was very successful: Maybelline's market share in the US increased to 15% in 1997 from just 3% in 1996." Then L'Oreal aggressiveness promoted the US origins of Maybelline by attaching the tagline 'Urban American Chic' to it.' because the nail enamel dried within one minute of application. Maybelline's 'Moisture Whip' (a wet look lipstick) did not do well in Japanese markets as it dried quickly after application. In 1997. the company launched Maybelline's new make -up line called 'Miami Chill' with bold colours like yellow and green. Maybelline's sales rose steeply from just over $320 million in 1996 to $ 600 million in 1999. the brand¶s Japanese distributor. The company also attached 'New York' to the brand name in order to associate Maybelline with 'American street smart' . "It was so successful in Japan that we started to sell Water Shine in Asia and then around t he world.

gave them a face lift." L'Oreal followed this strategy for the other brands it acquired over the years.By the end of 1999. such as Redken (hair care). expanding into key international markets. "L'Oreal achieved sales growth of nearly 20% by developing new products. The US -based hair care firms Soft Sheen and Carson were acquired in 1998 and 2000 respectively. Caron (skin care and cosmetics). mos t of it from South . the brand derived over 30% of its $ 200 million revenues in 2002 from outside the US.specifically Africa. Helena Rubenstein (luxury cosmetics). SoftSheen (skincare and cosmetics). 4 US Division. "It is a cross-fertilization. all the while concentrating on increasing the reach of the group's top 10 brands. and investing in new facilities. Cosmair Inc. Maybelline became the leading brand in the medium priced makeup segment in Western Europe with a 20% market share. Jones merged these two brands as SoftSheen-Carson and used them as a launch pad to aggressively promote itself outside the US . Ralph Lauren (fragrances). Maybelline was being sold in more than 70 countries around the world. Both these brands catered to African-American women. an August 2000 article stated. and Kheil's (skin care) (refer Table 3).. L'Oreal acquired the above relatively unknown brands." Cashing in on the Maybelline Formula Maynelline's success proved Jones' philosophy of creating successful cosm etic brands by embracing two different yet prominent beauty cultures (French and American). While in 1999 50% of the brand's total revenues came from outside the US. Commenting on this. and repackaged and marketed them aggressively. said. by 2000 the figure increased to 56%. Guy Peyrelongue. As a result. Commenting on the company's superior brand management framework. head of Maybelline.

Thus. L'Oreal promoted Maybelline. Jones said.Africa. These centres helped . For instance. Commenting on this. L'Oreal promoted o nly one brand aggressively in a country. the L'Oreal brand was promoted. However. he argued that the competition would inspire both the Redken and Preference marketing teams to work harder. a US -based hair care brand in 1998. L'Oreal operated two research centres . Since self-competition was encouraged at L'Oreal. Jones took a different point of view. Analysts were skeptical of this move as they thought introducing new brands in the same category would cannibalize L'Oreal's own established brands. it sold all its different lines in all countries." To encourage competition and nurture creativity. for people who preferred 'American products. and introduced it in the French market.one in Paris and the other in New York. and for those who preferred 'French' products. Similarly. "The only way to favour creativity in large corporations is to favour multiple brands in different places which compete with each other. However. teams had ample freedom t o innovate and develop better products. L'Oreal firmly believed in the strategy of promoting all its brands in different nations. This kind of competitive spirit from within allowed L'Oreal to beat competition from other players in the market. The brand to be promoted was selected on the basis of the local culture. the company promoted Asian and Italian brands for customers who preferred them. L'Oreal acquired Redken. Even though it had brands originating in different cultures. Jones also encouraged competition between the different brands of the company. where it would have to compete with L'Oreal's Preference line of hair care products.

the largest ever for any cosmetic company in one year.Jones maintain L'Oreal's image as the 'scientific' beauty company. Originally position ed in the luxury segment. said. and Tokyo. Many analysts even thought that such advertising for a tra ditional luxury brand was incoherent. which was more than the industry average of less than 2%. Now. In 1999. In one of its advertisements. The company spent around 3% of its revenues on research every year. L'Oreal relaunched the brand and targeted it at a much younger and trendier audience than the brand's typical luxury customers (middle-aged women). "That is a big challenge for this company-to add brands. L'Oreal employed 2700 researchers from all over the world and had 493 patents registered in its nam e in 2001. Helena Rubinstein had the image of a product used by middle aged-women. New York. L'Oreal also made use of 'dramatic' advertisements to promote the brand. Paris. the model sported a green lipstick and white eye shadow. "Is it incoherent for younger people to buy luxury cosmetics? Why? Perhaps it was 10 years ago when luxury was equated to the middle -aged . living in urban centres like London. However. Jones argued that industry observers who held this opinion had not taken into account how fast the market was changing. L'Oreal made sure that each of its brands had its own image and took care that the image of one product did not overlap with the image of another product. A cosmetics industry analyst. the target users were women aged between 20 -30 years. The company also opened a Spa 5 in New York to promote the brand (the first instance of a company attempting to run a retail operatio n as part of a promotional package). He said. yet keep the differentiation." One of L'Oreal's most radical experiments was the makeover and re -launch of the Helena Rubinstein skin care and cosmetics brand. Marlene Eskin.

which is one of the strongest luxury markets in the world. On the contrary. Commenting on the company's brand portfolio management strategies." Jones also said. This is why the Guccis and Pradas have taken the l uxury-goods market by storm.customer. and Natalie Imbruglia. are between 20 and 25. "It is a very carefully crafted portfolio. the biggest luxury consumers in all of Asia. L'Oreal attached a tinge of glamour to its brands to make them more appealing to customers. Jones said. But she can also be young and trendy. original positioning for Helena Rubinstein to be the coolest of the traditional luxury brands. Andie MacDowell." Thus. and Shu Umeura. it is very good. L'Oreal¶s brand management strategists believed that goo d brand management was all about hitting the right audience with the right product. Noemie Lenoir. Kate Moss. The company liberally used celebr ities from various fields of life. Catherine Deneuve. Lancome. Laeticia Casta. Heather Locklear. Each brand is positioned on a very precise segment . Diana Hayden." Future Prospects . for promoting its brands. But sorry. which overlaps as little as possible with the others. L'Oreal cleverly positioned Helena Rubinstein as a luxury brand for a younger audience without overlapping its image with that of other luxury brands like Biotherm. She can be. Dayle Haddon. Gong Li. Va nessa Williams. "The worldwide luxury consumer no longer equates to a middle - aged lady. Milla Jovovich. So the whole idea that it is incongruous for Helena Rubinstein to be cutting edge in terms of image and makeup is out of date by about 10 years. Jennifer Aniston. Jessica Alba. Some of the well -known personalities featured in L'Oreal's promotional campaigns included Claudia Schiffer. Beyonce Knowles. Virginie Ledoyen. from all parts of the world.

Not all competitors were in such bad shape though. and much of this increase was attributed to impressive growth rates achieved in emerging markets like Asia (of the 21 % increase in sales volume. rival companies like Beiersdmf (a Germany based company that owns the globally popular brand Nivea). China contributed 61 %). had reportedly posted a 22% drop in profits in August 2002. Latin America (sales grew by 22% with sales in Brazil increasing to 50%). Industry observers noted that L'Oreal was much ahead of its competitors in terms of profitability and growth rate. "The Inneov business will draw on both the growing demand for . L'Oreal entered the market of cosmetic nutritional supplements. had posted nine consecutive quarterly losses since late-2001. However.L'Oreal's efforts paid off handsomely. One such initiative was Laboratoires Inneov. Through Inneov. The company had also announced a cost-cutting programme. global reach. Analysts observed that this would mark the beginning of 'neutraceutical6 development. Avon. Estee Lauder. L'Oreal's competitor in the mass-market segment. commented. as against ¼ 1236 million for the financial year 2001. L'Oreal ventured into new businesses that were closely related to its core activities. L'Oreal's rival in the luxury segment. L' Oreal's joint venture with Nestle. and narrow product focus'. A research analyst at Frost and Sullivan (US based leading provider of strategic market and technical information). Its overall sales grew by 10% in 2002. The company posted a profit of ¼ 1464 million for the financial year 2002. and Procter & Gamble had been performing quite well. and Eastern Europe (sales grew by 30% with sales in Russia increasing by 61 %). industry analysts agreed that no other cosmetics player matched L'Oreal's combination of 'strong brands. Even Revlon. In March 2003.

In March 2003. Jones said. The prospects for the next three to four years seem promising to me. This was yet another indicator of the fact that L'Oreal seemed to be going from strength to strength each year. Fortune. "No other consumer products group has grown as quickly as we have.skin products designed to retain youthfulness and the growing market for dietary supplements. but you will still buy a tube of lipstick that lets you 'take a different sort of trip' for a much smaller price. you might put off buying a new car. Looking at the future with optimism. the economic climate is bleak. When. the company entered the prestigious list of the world's fifty most admired companies compiled by leading business magazine." L'Oreal expected the cosmetics market to grow at 4-5% per annum in the future. for the first time. L'Oreal has the g ood fortune of being involved in a business that is a bit less sensitive than others to economic cycles. . If the strategists at the helm of affairs continued focusing on enhancing stakeholder value year after year. the future would continue to be rosy for the company that sold millions of women the dream of living a 'beautiful' life.

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COMPANY PROFILE

L'Oréal's success is built on a strong foundation. The world's largest beauty
products company, it creates makeup, perfume, and hair and skin care items. Its
brands include L'Oréal and Maybelline (mass -market), Lancôme (upscale), and
Redken and SoftSheen/Carson (retail and salon). L'Oréal, which owns Dallas-
based SkinCeuticals, also conducts cosmetology and dermatology research. With
more than 50% of sales generated outside Europe, L'Oréal has focused on
acquiring brands in those markets. L'Oréal also owns the UK -based natural
cosmetics retailer The Body Shop International, which numbers some 2,550
stores worldwide. The firm's dermatology branchGalderma is a joint venture
between L'Oréal and Nestlé.

Before the facial cosmetics, L¶Oreal was known as a hair-colorformula
developed by French chemist Eugene Schueller in 1907. It was then known

as"Aureole". Schueller formulated and manufactured his own productswhich
were sold to Parisian hairdressers. It was only in 1909 thatSchuellerregistered
his company as "Societe Francaise de Teintures Inoffensives pourCheveus,"the
future L¶Oreal. Scheuller began exporting his products, which was then limited
to hair-coloring products. There were 3 chemists employed in 1920. In 1950, the
research teams increased to 100 and reached 1,000 by 1984. Today, research
teams are numbered to 2,000 and are still expected to increase in the near
future. Through agents and consignments, Scheuller further distributed his
products in the United States of America, South America, Russia and the Far
East. The L¶Oreal Group is present worldwide through its subsidiaries and
agents. L¶Oreal started to expand its products from hair-color to other cleansing
and beauty products. The L¶Oreal Group today markets over 500 brands and
more than 2,000 products in the various sectors of the beauty business. Such
includes hair colors, permanents, styling aids, body and skincare, cleansers and
fragrances. Indeed, the L¶Oreal Group have reached the peak that all cosmetic
brands sought after. Many factors contribute to the success of the Company.
These will be discussed further in the proceeding parts of this study.

L¶Oreal SWOT Analysis

A. Internal Analysis
1. Strengths
The ongoing success of the L¶Oreal Group is without if not for the
ingenuity of the concept of their vision as a team. L¶Oreal Chairman and CEO
Lindsay Owen-Jones considers passion as the key to the well-renowned
accomplishment of the said Company. The primary strength of the Company is
the continuing research and innovation in the interest of beauty which assures
that the L¶Oreal Cosmetics offers the best to their consumers. Their dedication
to their continuous research makes them the leader in the growing cosmetics

industry despite the competition in the market.
Another strength of the L¶Oreal Groups is the developed activities in the
field of cosmetics as well as in the dermatological and pharmaceutical fields in
order to put more concentration in their particular activities. The cosmetics
activities of L¶Oreal are divided to five groups. First is the Consumer Product
Division which encompasses all the brands distributed through mass-market
channels, ensuring that L¶Oreal quality is available to the maximum number of
consumers. The Luxury Products Division includes the prestigious international
brands selectively distributed through perfumeries, department stores and duty-
free shops. The Professional Products Division offers specific haircare products
for use by professional hairdressers and products sold exclusively through hair
salons. The Active Cosmetics Department creates and markets products for
selective distribution through pharmacies and specialist health and beauty
outlets. The L¶Oreal Group¶s dermatological activities are linked with
Galderma, which is basically a dermatological firm that contributes to the
innovation of the L¶Oreal Group¶s products. The pharmaceutical activities of
L¶Oreal are also handled by Sanofi-Aventis. These divisions and subdivisions
ensure the quality that the L¶Oreal Group offers to its customers. To further
add to the enumerated strengths of the company, L¶Oreal¶s advertising strategy
also plays a major part to its growth. Through adapting to the culture of their
target market as the main tool of their advertisement, the Company brought
L¶Oreal products within reach of other women from different parts of the
world.
2. Weaknesses
Perhaps one of the weaknesses that a big company faces is the
decentralized organizational structure. This is also part of the difficulties that
L¶Oreal is facing. Due to the many subdivisions of the Company, there is also
the difficulty in the control of L¶Oreal. This slows down the production of the
Company because of the need of giving reference to the other Board members
and directors of the Company. L¶Oreal will also have a difficulty in finding out
what division is accountable for the possible pitfalls of the Company. Another
weakness that L¶Oreal faces is their profit. The profit margin of L¶Oreal is
comparably low than that of the other smaller rivals. While L¶Oreal projects
certain rise in digits as their profit, the result does not usually meet the
expectations (Sang, 2003). Perhaps, this is also due to the high-end advertising
and marketing as well as the width of the Company. Finally, the coordination
and the control of the activities and image in the worldwide market are also
viewed as a weakness in the part of L¶Oreal. Due to its worldwide marketing
strategy, there are also dissimilarities brought about in the campaign of L¶Oreal
products as to what image they are to project.

B. External Analysis

Also a threat to the L¶Oreal Group is the spending habits of consumer and the economic crunch that most countries are experiencing as of present. set the trend in the market as to attract more consumers. Another threat to the Company is the economic downturn that is quite evident in other countries. Through constant research and passion for innovation. Such could thus hurt the possibility of higher profit for the company. the L¶Oreal Group best caters to the demands of women of different cultures. B. in other words. from the affluent to those with lower budget for cosmetic products. The growing demand for beauty products gives L¶Oreal the opportunity to focus in their field of specialization. While the L¶Oreal Group may be producing the best of its line. Control of the Company . the aging and also the masses of the developed countries. cosmetics andperfumeries. with the growth of the market. particularly on hair styling and color. However. people may find that their products are not of their basic needs and would skip buying L¶Oreal products. 2. Customer Satisfaction (Product. Due to the ongoing addition to the field of cosmetics. Being the leading cosmetic brand gives them the edge for their well-known image. Another opportunity that L¶Oreal must take advantage of is their greater market share because of the numerous patents registered by the Company. Through giving a wide variety of products. the damage could be far from taking place. Part of their strategic plan is to cater to the best interest of their costumers. from the younger ones to the aging. Opportunity also emanates from their growing market that ranges from the affluent. Threats A threat to the L¶Oreal group is also the growing competition within the field of cosmetic brands.1. or better yet. but L¶Oreal may have problems reaching out even to the average people from the underdeveloped countries. there is still the danger that other brands could surpass the profit of L¶Oreal. This enables them to have the top of the line products only to their name and therefore would lead costumers only to them for they could not find any of the said cosmetics in other brands. Company Marketing Strategies A. skincare. The range of their prices caters to the demands of women. The Company also sees to it that they know the latest trend. costumer satisfaction. consumers have a whole gamut of products and services that they can choose from and which best serves their preference. Price) The L¶Oreal Group is known for their continuous innovation in order to improve the quality of their products and the services they have to offer to their consumers. Opportunities The L¶Oreal Company concentrates on cosmetic products that enhance women of all ages. Most products of L¶Oreal are within the reach of the citizens of developed countries.

L¶Oreal made its on-screen debut during this period and in 1953 won an award advertising Oscar. Ethical Issues There are two ethical issues that will be the particular concern of this . C. In fact. L¶Oreal commissioned promotional posters from various graphic artists to publicize the Company¶s products. Today. A very vital aspect in the success of a company is how their leaders handle and run the business. the L¶Oreal group has already covered most parts of the globe and still got high approval ratings from their clients. Impeccable Advertising (Promotion) During the early days of advertising. not only in their employees. and so ensures higher sales. they are also well aware of the diversities of women around the world. From the bloom of L¶Oreal during its primary stage. Famous personalities enable average individuals to relate to their personal lives. 2004). particularly the movies. In line with this. Any transaction of the Board Members may directly affect the L¶Oreal groups and so they are expected to act according to what¶s expected of them. Just recently. particularly that of the white Caucasian women. L¶Oreal takes on actresses or different personalities of all ages that best exudes the vision of the Company. The Board members are also obliged to act with due care and attention to their duties in order to carry out their responsibilities. Through research and development of their products. Worldwide Marketing (Place of Distribution. that they can look as good. the employees and the Company. D. The Board directors and the Board members are well aware of all of their duties required by their respective functions and of their collective mission. the L¶Oreal Groups received the Diversity Best Practices 2004 Global Leadership Award for embracing diversity. The Company¶s taking consideration of women of color is especially appreciated by its consumers for they are also being given the chance to enhance their features and embrace their diversity without having to conform with the traditional concept of beauty. such as the women and people of color. in order to best serve the interest of the consumers. the L¶Oreal Group is very particular in the governance of the Company. Valuing of the people¶s culture and ideas is important to the L¶Oreal Group. The 1950s brought about a new advertising medium. Also expected from the Board is the strategic orientation of the control and correct running of the Company. for it is in their hands that the Company¶s future depends on. the first in a long series of awards. but also in their consumers (Anonymous. Promotion) Part of the L¶Oreal Group¶s strategic plan is the marketing of their products worldwide. The L¶Oreal Group also has employees who are considered minorities. Part of this strategy is to formulate products that suit other women from other parts of the world. the Company already catered to the demands of women worldwide.

While it is inevitable that the Company use the concept of the beautiful women. There is greater possibility that a female consumer will respond to an ad with an attractive model because." An analysis of advertisements for and about women shows that femininity continues to be one of consumer capitalism's most marketable commodities. The more beautiful the woman is. most especially by the opposite sex. selling as well as cars. women will gain more love. this is shown in one of their ads where they depicted women of all age to pose for their products. though certainly the image of the female body is used to sell these products as well. the belief that at some point she will achieve the same glowing skin or flawless complexion just like the celebrity or model in the ad. affect the purchaser¶s view of beauty and what he/she must do to achieve this level of beauty. The ad then serves as an image of the positive response to her beauty. the female viewer is continually forced to look at herself through traditionally male eyes.L¶Oreal could be said to be making effort in defying . and alcohol. From this view. just like the advertisement. as mentioned earlier. Perhaps. the more people will respond to the ad. while it does attract many consumers. The issue here is whether or not the advertisements of L¶Oreal groups. This poses as a possible problem for the L¶Oreal Group. to fit her personal history and her body into that money-making construct known as "woman.analysis. Blair (1994) stated that in the context of advertising. cigarettes. respect and power. Through achieving a beautiful physical appearance. The first to be addressed is the advertisements and promotion of the L¶Oreal Group using the image of the traditionally beautiful women. they should also start thinking about being more ethically responsible for what they are coming up with.

L¶Oreal is the fifth to cosmetics company that has decided to halt animal experimentation. L¶Oreal must then place more effort in being able to reach out to their consumers. It¶s how we feel about things. It ceased this practice in October 1993 (Emert. instead conceptualizing beauty as ageless. Despite high regard for quality. The Company has shown endurance and perhaps it would be risky but rewarding to try a more diverse approach in their advertising. demonstrations and advertisements aimed at the company. a decentralized organizational structure and even the growing competition in the cosmetic market. That¶s what makes it interesting. . Another ethical issue that may be raised is on animal testing. There are a few fall backs that have been mentioned such as the low profit margins. L¶Oreal¶s shot on giving women more place in the field dominated by men is clearly an effort on their part to change the image of women as more than objects of beauty. 1994). Perhaps. Also.the concept of beauty as young. It would thus be helpful to quote Moore (2004) as a reminder to advertisers: "Advertising is not just about the things we buy. L¶Oreal makes an effort to avoid common view on women by awarding women in the field of science. L¶Oreal has indeed been a successful company. the L¶Oreal Group¶s decision would uplift their image and even attract more consumers. it would be helpful to widen their advocacies for the minorities and oppressed group of people. This shows the influence of L¶Oreal on the ethical decision of other companies. Five women were awarded by L¶Oreal-UNESCO for Women in Science Awards whose distinguished careers in the material sciences have contributed greatly to advancing our understanding of the world and how it works. Also. People for Ethical Treatment of Animals (PETA) is locked in quiet negotiations with a number of companies that may be rethinking their testing policies since Paris-based cosmetics giant L'Oreal agreed to an animal test ban in October. L'Oreal abandoned animal testing after four years of letter-writing. showing real women in their promotions. including ourselves." Also.

L¶ORÉAL brands Consumer Brands: ‡ L'ORÉAL Paris ‡ Garnier ‡ SoftSheen-Carson ‡ Maybelline New York ‡ Le Club de Createurs Professional Products: ‡ Kérastase ‡ L'ORÉAL Professional ‡ Matrix ‡ Redken .

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couple with the external andinternal audit information. and selecting strategies to pursue. objectives and mission. They will also prevent competitors to have an advantage over L¶Oreal.Strategy Analysis of L'Oreal Strategy analysis focuses on the long-term objective generating alternative strategies. Theexternal opportunities and threats were identified earlier (see part 1) by developing the ³External Factor Evaluation Matrix´ and ³Competitive Pro .This report will be based upon the effectiveness of current strategies of L¶Oreal. To have an advantage on competition. a real global leader in every segment of the industry.L¶Oreal encounters threats and opportunities and they have weaknesses and strengths. ST Strategies and WT Strategies. The firm¶s present strategies. It is known as the TOWS matrix. provide a basis for generating and evaluating feasible alternative strategies (David 200).L¶Oreal has numerous competitors. WO Strategies. It is an important matching tool that helps managers develop four types of strategies: SO Strategies. L¶Oreal has to apply some strat egies that include internal audit information and external opportunities that will make the company stronger.

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INPLEMENTATIONL"tmOreal has opened the last door to the world. ST StrategiesST strategies use a firm"tms strengths to avoid or reduce the impact of external threats. the group made two acquisitions: BioMedic. That makes L"tmOreal competitors more hustling to catch up. With the global expansion. still positive at 0. It has adapted to every particular environment. new innovations and the Internet strategy. it will definitely increase the sales and automatically more profits. they provide training for employees throughout the world that joins them. EFFECTIVENESS OF STRATEGIESL"tmOreal capitalize on opportunities in the global market. file Matrix" is important for the current strategies development. In 2001."LtmOreal: The Beauty of Global Branding" Business Week. Exchange rate fluctuations. which specializes in skin care products to accompany . To achieve that.

PROFILE OF THE ORGANIZATION .dermatological and plastic surgery treatments. a Brazilian mass - market make-up brand. and Colorama.

Schueller's timing had been singularly fortunate. including the United States. Brazil. L'Oréal was quick to make use of both old and new media to promote its products. when short hairstyles became fashionable. In 1933. In 1928 the company made its first move toward diversification. the company extended its sales to Austria. Schueller commissioned famous artists of the time to design posters and also launched his own women's magazine. By the end of the 1920s.L'Oréal. At this stage. and Coloral captured the growing market. and the Soviet Union. In the 1930s and 1940s. and in the Far East. The end of World War I was celebrated by the Jazz Age. purchasing the soap company Monsavon. platinum-haired screen idols such as Jean Harlow and Mae West made blond hair especially popular and bleaches such as L'Oréal Blanc sold well. with a new emphasis on shape and color. there were 40.000 hair salons in France alone and L'Oréal's new products O'Cap. Imédia Liquide. Chile. Bolivia. In 1912. °  *. Equador. L'Oréal consisted of three research chemists and ten sales representatives. Holland and Italy and by 1920 its products were available in a total of 17 countries. Peru.

L'Oréal's Ambre Solaire was ready to capture the new market for suntan lotions. During this period L'Oréal demonstrated its ability to meet new consumer demands. the first mass-market shampoo. Even the outbreak of World War II in 1939 failed to curb the company's growth. and Danish subsidiaries were established between 1936 and 1937. At a time of strict rationing. When the Front Populaire won the 1936 elections and introduced the first paid holidays for French workers. was promoted through children's hair-lathering competitions at the highly popular French circuses and by 1938 L'Oréal was advertising its hair products with radio jingles. Dop. Meanwhile the company's sales network was expanding on both a national and an international scale. women permed their hair and bought . Products began to be sold through pharmacies and perfumers and new Italian. Belgian.

Schueller died in 1957 and Francois Dalle took over as chairman and CEO at 39 years of age. and the first coloring shampoo. Eugène Schueller's promotional talents were recognized in 1953 when he was awarded an advertising Oscar. L'Oréal made a growing commitment to capital investment. Colorelle. During this period. Both men would play an important role in the company's future. Francois Dalle and Charles Zviak joined the group. introduced in 1955. Oréol. At the same time hundreds of new boutiques. and chain stores sprang up to supply this rapidly growing market. L'Oréal launched the first cold permanent wave product. The 1960s were years of revolution. there was a growing interest in conserving--or simulating--youthful looks. Dalle had already been appointed joint general manager of L'Oréal. In 1963 and 1964 the company opened new cosmetological and bacteriological facilities.cosmetics to boost their morale. The consumer boom of the 1950s and the arrival of new blond screen idols Marilyn Monroe and Brigitte Bardot (originally a brunette) meant further expansion for L'Oréal. Imédia D. and Algeria. By 1950. both recruited by Monsavon at a time when the cosme tics industry held far less attraction for graduate chemical engineers than the atomic -energy or oil industries. The company advanced further into the field of skin care. As music and fashion became increasingly teen-oriented. evidence of a . in 1954. Vichy was to become part of the L'Oréal group in 1980. Argentina. In 1960 a new research-and-production center was established in Aulnay -sous- Bois. bringing the number of research staff up to 300. At the same time the company continued to expand. by the end of the war there were 25 research chemists and distribution had been extended to the United Kingdom. introduced in 1951. including the first lightening tint. entering in to technological agreements with the company Vichy. by 1948. both cultural and commercial. which answered an increasing demand for subtlety. supermarkets. in 1945. a research -and-development team of 100 chemists had created further innovative pro ducts.

Algeria. In the same year.highly scientific approach to skin care. many of which are market leaders to this day. Quentin in 1965. In 1969. Fidji was launched under the Guy Laroche brand name. In 1968 the company took major stakes in Golden in the United Kingdom and in Ruby. At the age of 25 he became general manager of L'Oréal's public - products division in Belgium and turned around unprofitable subsidiaries in France and Italy. owing to the boom in hair-product sales. André Courrèges. At the same time it bought the hair-hygiene specialist Cadoricin. L'Oréal's earnings outstripped those of any other French blue chip and grew twice as fast as the cosmetics-industry average. and the perfume Fidji. and Laboratoires d'Anglas were also added to the group. Canada. L'Oréal recruited a young Welshman. and Peru. a hair -product company. From this time onwards. With increased resources and expertise. before going to the United States to take charge of L'Oréal's distributor. thereby gaining a significant entr y into the high-quality skin-care. opened in St. and over the decade new distribution outlets were established in Uruguay.. These included the hair spray Elnett. Récital hair dyes. a personal hygiene and household products manufacturer. Garnier. the . make-up. An Oxford languages graduate. L'Oréal bought the fashion and perfumes house. L'Oréal was listed on the French stock exchange in 1963. Lindsay Owen -Jones. Soprocos. In 1964 L'Oréal bought Jacques Fath perfumes and a year later Lancôme. L'Oréal launched a number of successful products. Cosmair Inc. during a period of restructuring within the group. and perfume market and gaining increased access to perfumery outlets. Another production unit. he would go on to become the fourth chairman and managing director of L'Oréal. L'Oréal sold Monsavon in order to concentrate on its core business. in 1980. L'Oréal benefited from the emphasis on health and fitness in the 1970s. In 1962. Mexico. from the prestigious Fontainebleau business school INSEAD. L'Oréal's success permitted further commitment to research and development.

a specialist in the production of cardiovascular drugs and hospital materials. which is 51 percent-owned by Bettencourt and 49 percent-owned by Nestlé. . cosmetic. L'Oréal continued to make purchases within the cosmetics and hair-care industry: Biotherm in 1970. structural and tactical changes were made within the group. the company began to s peed up the process of internationalization. Expansion into overseas markets--particularly Japan--was aided greatly by the company's new alliance with the Swiss foods giant Nestlé. magazine publishing. New production facilities were opened in France and in 1979 the International Centre for Dermatological Research was established at Sofia-Antipolis. Madame Liliane Bettencourt. and Hong Kong. followed in 1979 by the purchase of Metabio-Joullie. Ricils. and dietary items. Gemey. in the South of France.number of research staff rose from 500 in 1970 to 750 in 1974. Australia. for the treatment of skin disorders and aging. Throughout the 1970s. The two allies established a French holding company. Metabio -Joullie and Synthélabo were merged in 1980 under the latter's name. sold nearly half of her L'Oréal stock in 1974. manufacturer of aspirins.4 percent in the pharmaceutical company Synthélabo. Over the decade. over -the-counter drugs. Japan. with particular emphasis on New Zealand. taking stakes in Marie - Claire Album and Interedi-Cosmopolitan. This was also a time for diversification for L'Oréal. In 1976 L'Oréal signed a technical -assistance contract with the Soviet Union. and Jeanne Piaubert in 1973. Bettencourt is the largest individual shareholder of Nestlé. In 1977 L'Oréal ventured into another complementary field. The latter merged with Garnier in 1978. Gesparal. holding roughly five percent. Gesparal controls 72 percent of L'Oréal's voting rights. based on the findings of the 1969 management study done by McKinsey & Co. veterinary. In 1973 it took a controlling stake of 53. The year 1970 saw the establishment of new operational divisions and management structure. to whom Eugène Schueller's daughter. and Roja in 1975. A few years later.

several of L'Oréal's most successful products were launched--Vichy's moisturizer Equalia and the Cacharel perfume Anaïs Anaïs. Francois Dalle won the post of first vice president on Nestlé's administrative council. and title of Manager of the Year from the + . now reckoned to be the world's best - selling perfume.Meanwhile in the new division Parfums et Beauté International. the title of Man of the Year in the chemicals and cosmetics sector from the Fragrance Foundation of the United States. The 1980s were particularly favorable for L'Oréal. the well-known Kérastase hair products were redesigned. In addition.

offering new shares to stockholders. This was followed. although he continued to act as chairman of the group's strategic committee. after merging with Metabio -Joullie. allowi ng the company in . soon to take control of the company's financial policy. which.4 billion through a one -for-ten rights issue. joint vice president. by a one - for-five stock split. At the same time the new management clearly felt it necessary to centralize control of the company's finances. in 1987.'  6   In 1984. L'Oréal's shares were distributed to investors outside France for the first time when the company raised FFr 1. in 1985 the Parfums et Beauté division was split into three departments--Lancôme/Piaubert. Lindsay Owen-Jones became vice president and Marc Ladreit de Lacharrière. he gave up the leadership of L'Oréal. The pos ition of chairman and CEO went to Charles Zviak. Synthélabo's research - and-development budget was increased considerably. This event was followed by some restructuring within the group. and active cosmetics--and five geographical areas. had become France's third-largest pharmaceutical company. and in 1987 a financial bulletin was issued announcing the creation of L'Oréal Finances. which would implement the financial strategy established approximately ten years before. In 1986. perfumes. At this time L'Oréal began to play an increasingly active role in the management of Synthélabo.

launched in 1986. it was also the era of designer brands. however.S. launched in 1987. L'Oréal's enormous commitment to research resulted in the success of products such as Lancôme's Niosôme. Meanwhile. Nestlé took over Warner Cosmetics of the United States on behalf of L'Oréal's U. If this was the age of high-tech skin care. The company also took controlling stakes in Kramer of Switzerland. L'Oréal's research-and-development facilities continued their steady growth. thereby offsetting unfavorable domes tic pricing and reimbursement policies. wet on to become a best seller. Searle. one of the few anti-aging creams found to be effective by independent dermatologi sts. Paloma Picasso. Prestige et Collections.9 percent stake . In 1983.1982 to become the first private laboratory to participate in the World Health Organization's project for research and education in neuroscience. owing to difficulty in updating its product line and unfavorable market conditions in France. and establishing joint ventures in Japan with Fujisawa and Mitsubishi Kasei. in 1982. with research staff reaching 1. the company sold its 49. keeping restructuring to a minimu m and increasing its holding from 63 percent to 65 percent after October 1987's Black Monday when the shares fell considerably. was created for Cacharel. profitability had improved and some promising new drugs were ready to be approved for marketing in the 1990s. in 1980 a new distribution company. Nevertheless Synthélabo continued to report poor sales figures. agent Cosmair. thereby acquiring for the group the prestigious names of Ralph Lauren. L'Oréal saw that the solution to Synthélabo's problems lay in extending its overseas sales. setting up joint marketing affiliates in the United States and Britain with the U. company G. During the 1980s Synthélabo enhanced its international status. and Gloria Vanderbilt. L'Oréal subsequently reiterated its commitment to Synthelabo. D. At this stage.000 by 1984. L'Oréal was interested only in the perfumes and cosmetics divisions of the designer brands. By the end of the decade. and LIRCA of Italy in 1983. In 1984.S. whose perfume Loulou.

which were felt to be too far outside the group's main area of interest and not in accord with L'Oréal's policy of internationalization. L'Oréal took a 75 percent stake in Paravision International. L'Oréal was keen to diversify into communications. in 1984.. production.S. company Carolco Pictures Inc. Laboratoires Goupil. In 1988. and distribution of audiovisual products for an international audience. was also unprofitable. L'Oréal's last acquisition of the 1980s was the skin-care specialist Laboratoires Roche Posay. In 1983. a dental -care-products manufacturer whose toothpastes held over 90 percent of the French market. In 1988. a U. with the stake raised to 10. but it was felt that L'Oréal's skillful marketing could remedy the situation. These included the personal hygiene and comfort products of Laboratoires Ruby d'Anglas and Chiminter. Boug ht in the same year. Canal Plus. the former integrated with Lancôme in the new Japanese affiliate.in the couture house Courrèges to Itokin of Japan. L'Oréal entered by way of Paravision into a joint venture with the U.4 percent in 1986. In 1984 the company took a 10 percent stake in the French pay-TV company. L'Oréal also took the opportunity to sell off unwanted components of the group. While making acquisitions. L'Oréal bought Helena Rubenstein Inc. L'Oréal began by taking major stakes in Helena Rubenstein's Japanese and South American subsidiaries. Marc Ladreit de Lacharrière became director and .. although it retained 100 percent of Courrèges Parfums. to handle foreign television -distribution and programming rights. The following year. an organization charged with the creation. Lindsay Owen-Jones became the new chairman and chief executive of L'Oréal at the age of 42. Parfums et Bea uté. It would not be an easy matter to bring the company back into profit. A further addition to the L'Oréal group was the Helena Rubenstein skin-care and cosmetics range. company that was in financial difficulties as a result of the sharp drop in sales following the founder's death. In 1988.S.

and Paribas/Parfinance. . charging it with "fraudulent behavior and racial discrimination. Frydman alleged that L'Oréal violated a 1977 French law prohibiting companies from participating in an Arab boycott against Israel when the company forced his resignation and the sale of the family's stake at an unfair price because of his business ties to Israel. L'Oréal explained that although Vuitton owned Dior and Givenchy. fascist politics during World War II. L'Oréal had no Vuitton shares and no intention of attacking the company. Frydman dropped the suit in exchange for a letter of apology from Dalle. Although the existence of such a plan was denied by L'Oréal. company officials remained optimistic. the company joined with Orcofi. competitors in the perfume and cosmetics market. In 1991 L'Oréal found itself embroiled in a bitter dispute with Jean Frydman. a former director of Paravision. On the contrary. however. the Vuitton alliance would give L'Oréal an entrée into the field of luxury goods. Monsieur Racamier. The end of the decade was marked further by rumors of L'Oréal's involvement in a proposed joint takeover bid for the French luxury -goods company Louis Vuitton Mo¨t Hennessy. The ensuing investigation created a minor scandal in France by digging up unsavory facts about founder Eugène Schueller's anti-Semitic. Later that year. to buy 95 percent of the perfume and couture house Lanvin. declaring that the experience gained from running a luxury boutique is valuable in itself. Although Lanvin lost money since L'Oréal's acquisition. Frydman --who holds dual Israeli-French citizenship--had filed suit against the company. together with Vuitton's head. Zviak died the following year.executive vice president while Charles Zviak moved on to the chairmanship of Synthélabo." stemming from the 1989 sale of the Frydman family's 25 percent share of Paravision--L'Oréal's film distribution division--after being pressured by Francois Dalle. having been one of the few chemists to attain leadership of a major French company. a Vuitton-controlled holding company.

despite having full control of strategy. He began cultivating an integrated international team of top ma nagers. enabling the company to quickly respond to and capitalize on consumer trends worldwide.The cosmetics industry is still growing. When the prestige market slumped in the early 1990s. Owen -Jones set about making L'Oréal a genuinely international company. Owens -Jones also supported greater cooperation between L'Oréal's numerous brand names and divisions. and Helena Rubenstein performed extremely well. that led to L'Oréal's 15 percent overall profit growth in the 1980s. One advantage of this system for L'Oréal has been protection from the weakness of the U. such mass market lines as L'Oréal were poised to pick up the slack.S. In the boom years of the 1980s. L'Oréal then translated the new technology into a mass market L'Oréal skin care line sold under the name Plentitude.1 billion that provides the company with the flexibility to launch new products which can ten be transferred to L'Oréal . launch in 1989. it is still vulnerable to competition in Western markets from Japanese competitors. and within two years of its U. It was precisely this kind of synergy between subsidiaries. which represents one-third of the world market. Shiseido and Kao--although 90 percent of the turnover of both companies come from their home market--and from Unilever. analysts say. While L'Oréal's alliance with Nestlé should protect it from corporate marauders. dollar and from high marketing costs --Cosmair handles a sales volume of over &Dollar. After Lancôme Niosôme was developed in 1986. management. following the latter's takeover of Elizabeth Arden and Fabergé. but there is increasing rivalry. L'Oréal reaps only 5. it had captured a 10 percent share of the market. and marketing in this region.S. Plentitude was launched in Europe and Australia in the late 1980s. L'Oréal has said that it sees opportunities for further profit growth in the United States.S. high-end lines such as Lancôme. In the years following his appointment as chairman and CEO.5 percent from the profits of its sole U. Currently. agent Cosmair Inc.

although L'Oréal claims that animal testing of new products is down to 5 percent from 50 percent in 1985. French government agreements restrict foreigners from taking over French companies before 1994. L'Oréal invested &Dollar. in her mid-60s in 1990. forming Soreal. As L'Oréal entered the mid-1990s. perfume. a women's fragrance that was imported to Western Europe in exchange for machinery and materials. shampoos. and hair sprays annually. divided into five divisions.affiliates worldwide. There has been speculation as to the fate of L'Oréal when Bettencourt. Nestlé will have first option to purchase. the company found itself engaged in a battle with rivals Proctor & Gamble and Unilever for worldwide domination of the . with the group consisting of a federation of competitive companies. Soreal created Maroussia. a joint -venture with the Russian chemical company Mosbytchim. which accuses the company of subjecting laboratory animals to inhumane tests. Should she decide to sell. Only research and development facilities and overall management control are centralized. L'Oréal was one of the first western companies to set up shop in the former Soviet Union. The company has been forced to phase out the use of chlorofluorocarbons which are said to be harmful to the ozone layer.50 million in the venture to produce approximately 40 million units of deodorant. including 147 production and distribution facilities worldwide. Hard currency was difficult to come by as banks either collapsed or were unaccustomed to dealing with Western businesses. As consumers became more environmentally aware. relinquishes her corporate involvement. L'Oréal has also come under attack from the animal-rights lobby. In order to obtain the equipment necessary to upgrade production. Soreal products were sold in 1992 at a mere 100 outlets in Moscow and at an additional 10 throughout Russia. L'Oréal fell under increasing pressur4e to conform to new standards of product safety. Other markets targeted for expansion include Japan. L'Oréal's structure remains unchanged. The French government is taking a strong interest in the issue.

and creating a whole new image for most of its color cosmetics. L'Oréal also planned to expand into the mass-market fragrance business. and L'Oréal appeared well prepared to defend its number one position. The company was also reaching out to customers by repackaging its merchandise and making display cases more accessible and user -friendly. . Owen-Jones seemed to have laid the groundwork necessary to support such an expansion . hiking its advertising budget by as much as 50 percent for some products. introducing at least two new fragrances by 1995.mass cosmetic and fragrance markets. fortified by a strong research and development base. sharpened marketing skills and a sound balance sheet. L'Oréal seemed determined to remain the leader.

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h| Measure progress against specific environmental and SD KPIs. We will: h| Continue to increase. | Carbon Disclosure Project (CDP) Supply Chain: h| Monitor progress of the 26 first suppliers of L¶Oréal that are participating in the CDP Supply Leadership Project. | Continue promoting internal awareness of sustainable development issues among purchasing teams: h| Organise specific workshops on SD across the categor ies and regions. from . OBJECTIVES & SCOPE OF STUDY Effective supplier relations are essential for sustainable development and L¶Oréal has set itself key objectives in this area. h| Conduct a supplier satisfaction survey to identify crit ical issues and areas of improvement. h| Continue training buyers on good purchasing practices (Purchasing Strategy & Practices training) to achieve a rate of 90%. develop and formalise our business exchanges with suppliers: h| Increase coverage of business reviews to all categories and regions. h| Integrate new suppliers into the CDP Supply Leadership Project. h| Ensure ongoing feedback to suppliers following Invitations to Tender.

Latin America and Asia. | Encourage suppliers to achieve FSC certification and reduce their packaging and energy consumption. | Continue the social audits programme with the objective of 400 audits in 2010. | | | | | | | | | | | | | .

These procedures. | | | | | | | Pursue the deployment and further development of the "L¶Oréal Buy & Care"programme. General Direction L¶Oréal Group 14. were prepared under the responsibility of the Human Resources Executive Management in accordance with the Group's internal . indicators. reporting method and systems Review report by one of the statutory auditors on the procedures used to compile certain social data published in the Group sustainable development report. Social data scope. | Increase the visibility of supplier innovations and facilitate access to L¶Oréal decision-makers in Research & Innovation and marketing. we have performed a review designed to enable us to express moderate assurance on the procedures used to compile certain social data published in the L¶Oréal Group sustainable development report and identified by the sign ( ). rue Royale 75008 Paris Further to your request and in our capacity as Statutory Auditor of the L¶Oréal Group. together with the data published in the Group sustainable development report.

h| existence of reporting and consolidation procedures. Based on interviews with these representatives and reviews of documents (Group consolidation manuals and subsidiary reporting schedules). Corporate HR Support Services. Our responsibility is to express a conclusion on the procedures for compiling the selected social data. and we do not express. we obtained assurance as to the: h| existence of instructions concerning definitions of the data to be compiled and the related calculation methods. based on our review. h| due and proper inclusion of the social data obtained from the reporting . We performed the following work: h| At headquarters level: For each of the areas reviewed. Nature and scope of our work We performed the work according to The Compagnie Nationale des Commissaires aux Comptes (CNCC) professional doctrine related to this review. a conclusion on the accuracy of the figures published. Corporate Learning for Development Department. Moreover. h| consistency of the data published with the scope set for such data. HR Information Systems Department. we met with various representatives from the departments listed below responsible for organizing the reporting procedures as well as for the consolidation of social data at Group level: the Labor Relations Department. reporting standards. These standards are available on the Group's website. our review is not intended to express. A higher level of assurance would have required more extensive procedures. We performed the work described below in order to obtain moderate assurance as to whether procedures used to compile the selected social data are free of material misstatement.

except for th e two specific indicators related to retirement (total cost of the retirement programmes. Sweden. number of women amongst the management committee for instance). data taken from the management database of executives' profiles and careers (nationalities. assessed on a test basis. Our work was based on the following indicators: total cost of the retirement programmes. | At subsidiary level: Additional tests were carried out to ensure the understanding and correct application of Group reporting procedures by the subsidiaries. The tests involved assessing: h| the understanding and application of Group data definitions and data collection procedures at country and subsidiary level. absenteeism rate. amount allocated to the WPS program. % of countries which complete local social security and mandatory programmes) performed for all countries at headquarters level. % of countries which complete loc al social security and mandatory programmes. and Spain) and in respect of the aforementioned indicators. Our work was based on interviews with the individuals responsible for reporting at country level as well as with other people involved in the data collection and reporting procedures. Norway. on a selection of five countries (Denmark. number of employees' representatives. systems in the consolidation packages. number of employees per gender. number of executives by gender. Finland. h| the consolidation procedures at country level and exhaustiveness of the scope. These tests were carried out at country consolidation level. number of employees and executive staff trained. h| the existence and appropriateness of internal control procedures at .

Partner in charge of our Sustainable Development Practice. country level with a view to ensuring compliance with such proce dures by the subsidiaries. We were assisted in our work by Sylvain Lambert. .

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I decided to ignore them and simply divide the raw Climate Counts score (0-100) by 20 to create my Citizens Market rating from 1 -5. Climate Counts categorizes com panies as ³Stuck´ (red). a leading sustainability strategy firm. ³Starting´ (yellow) or ³Striding´ (green). . the highest score is 82 (Nike) and most (67) of the scores are below 50. Starbucks is labeled as ³Striding´ (green) for a score of 49 in the pitiful Food Services sector. provided strategic guidance on the Climate Counts program. whereas Dell is labeled as merely ³Starting´ (yellow) for the same score of 49 in the climate -conscious Electronics sector. Climate Counts appears to be considering more than the raw score in assigning these categories. assisted in the development of the scoring system.´ Of the 104 companies on the Climate Counts website. and verified the scoring results for accuracy. For example. potential factors include prior performance and peer performance. So there¶s a lot of room for improvement across the board. In addition to the 0-to-100 point scale. As the methodology for assigning the three Stuc k/Starting/Striding categories was not clear.METHODOLOGY Climate Counts says they ³use a 0-to-100 point scale and 22 criteria to determine if companies have: ‡ MEASURED their climate ³footprint´ ‡ REDUCED their impact on global warming ‡ SUPPORTED (or suggest intent to block) progressive climate legislation ‡ Publicly DISCLOSED their climate actions clearly and comprehensively ³GreenOrder.

Lindsey Owen Jones (Jones) was honoured with the µBest Manager of the Last 20 Years' title by the French Minister of Finance and Economy. for Europe by 'The Economist Group'. L'Oreal. Jean -Pierre Raffarin. L'Oreal's Chairman and CEO. the honour was given in appreciation and recognition of the 'depth. Awarded by the publisher of the world's leading weekly business and current affairs journal The Economist. was in recognition of Jone¶s outstanding achievements in transforming L'Oreal from a French company into a global powerhouse. which was sponsored by the leading French business publication. and diversity of L'Oreal's management team. Jones was the first foreign head of any French company to receive this award. August 12. Jones also received the prestigi ous 'Manager of the Year 2002' award from the French Prime Minister. Le Nouvel Economiste. 2002. the France -based leading global cosmetics major. giving them a facelift and exporting them around the world. In the same month. L¶Oreal Makes Waves In November 2002. . Francis Mer.L¶Oreal ± Building a Global Cosmetic Brand ³It is a strategy based on buying local cosmetics brands. breadth.One Brand at a Time: The Secret of L'Oreal's Global Makeover." -. received the 'Global Corporate Achievement Award 2002¶. This award instituted by the leading French business publication. Challenges.

LIMITATION h| Because of time constraint sample size was the scope of this project is limited to areas in New Delhi only. which was beyond my resource due to time constraint and work pressure. . h| Because of time constraint sample size was restricted on 100. h| Some of the respondents did not respond due to lack of time. h| The project had scope for future research. h| The estimates are done on average basis.

which might not be giving them good service.h| Some were biased towards their brand. .

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Conclusion ‡ L¶ORÉAL is the world market leader in cosmetics ‡ They are very innovative and invest a lot of money in research and development ‡ Products are positioned in the high-priced segment because of their high quality ‡ They offer well coordinated products for different target groups ‡ To keep their strength alive they have to observe their competitors Recommendations .

Observation of the market ‡ Competition analysis ‡ Using competitive intelligence to achieve strategically competitive advantages ‡ Early market entry ‡ Growing competition to ensure the long-term economic success at the market .

loreal.org/wiki/L'Oréal .Bibliography Websites www.wikipedia.com/ en.

lorealacademy.com/ www.business-standard.aspx L'Oreal Paris Skin-Care Products Survey Part 1 /4 .loreal.com ¾ Home ¾ The Strategist www.in/_hi/_in/cosmetic-products.co.www.

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