Ombre, Tie-Dye, Splat Hair: Trends or Fads?

Oliver Zheng, Adil Malik, Jay Patel, Amanda Wang, Johnny Wang

Case Overview: The birth of L’Oreal can be dated back to 1908, when a young chemist
discovered an innovative hair dye. After WW2, people’s spending power increased significantly
and hair care became an affordable luxury. Currently, the company controls three lines of
products under their CPD: L’Oreal Paris, Garnier and Maybelline. L’Oreal Paris and Garnier
controlled a large portion of the hair colour market. In 2011, the hair colour market lacked
innovation, and L’Oreal was “keen to break out of the traditional industry an revitalize it’s hair
colour brands.” First, the company needs to decide on a suitable marketing strategy and
implement it in a market where failure to identify a trend from a fad can cost the company
hundreds of millions of dollars.

SWOT Analysis

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Strengths Weaknesses

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- L’Oreal Paris and Garnier controlled a - Failure to identify a trend vs a fad can
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large portion of the hair care market. lead to large losses for the company
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12.7% combined
- The long history of the company
allowed them to establish strong brand
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loyalty
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- More than 20 R&D centers, 17

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evaluation centers and 611 registered

patents as of 2011

Opportunities Threats
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- The emerging popularity in Ombre, - Other companies that offered hair dye
Tie-Dye and Splat hair fashion products including Schwarzkopf,
Clairol, and Wella Professional
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STP Analysis
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Segmentation: We will begin by segmenting the market based on the needs of consumers. There
are three main segments. The first segment should focus on a product designed for older woman
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to cover their grey hair. From the surveys conducted, woman over 50 accounted for more than
70% to 80% of the hair colour market. This data reveals that this segment is a major part of
L’Oreal’s operational revenue. Secondly, L’Oreal should develop a product line focusing on
woman who want to colour their hair in a more neutral tone. The demographic that represents
this segment is usually between the ages of 30 to 50. These people are part of the workforce and

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 interactions between colleagues and friends requires them to have a high level of self-confidence.
Finally, the last segment should be focused on the “colouring for fun” market. These customers
have a variety of different reasons to dye their hair ranging from Youtube challenges to charity
events. In relation to the case, Splat hair dye should be considered a product targeted in this
segment.

Targeting and Positioning: In this phase, we will look at the attractiveness of each market
segment as well as identify how to position each product in the minds of consumers. As
mentioned above, woman over 50 account for a large portion of the market. This makes the first
segment a major part of L’Oreal’s focus. The company should further devote increasing research
and development into this segment to discover new innovations. For these woman, covering grey
spots is the most important priority, therefore, this product line should focus on how effective the
dye is at targeting hair roots. The second largest category is the segment targeting the 30-50
demographic. A study in 5 countries reveals that 88% of woman felt that colouring their hair

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increased self-confidence levels. As colouring hair in various tones of blonde and brown can

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increase a woman’s perception of their sexual attractiveness and impulsiveness, L’Oreal’s second

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largest segment is this one. For this segment, the company should position their product as a

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permanent or semi-permanent solution to hair colouring. Finally, the coloring for fun” market
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should be the least attractive market as people do not permanently wear a funky dye colour. It is
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important to note however, a celebrities (Youtube stars or pop stars) can strongly influence this
market and increase the market size in a very short time. In this segment, L’Oreal should position
their brand as very active on social media, able to pick up on new trends quickly. This will
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engage customers worldwide and further establish brand loyalty.

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Competition & Collaborators

L’Oreal’s primary competitors are P&G, the Estee Lauder Companies, Avon, Unilever, Revlon
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and Alberto Culver. Some primary collaborators that work with L’Oreal to market and outreach
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to consumers are Google, Wal-Mart, CVS Pharmacy, Target, other large department stores,
Youtube and bloggers.
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Marketing Mix
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Product: The main product L’Oreal Paris is to develop a hair dye for one or many of the new
hairstyle trends the company is seeing from fashion shows, the press, and online. Three main
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categories define hair colouring: Temporary, Semi-Permanent and Permanent dyes. Permanent
dye represent the largest share of the market, (in EU, it makes up 70-80% of the colour market,
where 60% of women and 5-10% of men colour their hair.)

Place: L’Oreal Paris products should be made available in most department stores and shopping
centers. Because L’Oreal hair dye is a product well in its maturity stage, the company must look

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 for ways to make the product as available as possible to everyone looking to purchase hair dye.
By using a medium length distribution channel, the company can sell directly to retailers such as
The Bay and Shoppers Drug Mart. This way, the retailers selling the product will have an
abundance of knowledge when communicating with potential customers. The company can also
have a couple premium feel flagship stores as well in populated areas.

Price: L’Oreal Paris was established in 1908 by Eugene Schueller who formulated an innovative
hair dye. After all these years, the company has built a durable and one of a kind reputation with
their customers. Their high brand loyalty kept consumers coming back to repurchase the brand’s
products. For this reason, it is important to adopt value based pricing as the optimal strategy to
market Ombre, Tie Dye and Splat hair dyes. Consumers use L’Oreal Paris and Garnier to not
only colour their hair, but also for the brand’s trusted formula to cover 100% of hair while
delivering the coveted shine that customers are looking for. We have decided to market the Splat
hair dye at an average price of $18.99, the Ombre Dye at $8.99 and the Tie-Dye hair dye at

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$10.99. Although these prices are higher than what most competitors charge, it represents the

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perceived value to the consumer.

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Promotion & IMC: Several promotion techniques can be used to get these products the most
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exposure. However, we will focus on Integrating Marketing Communications (IMC). IMC is
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basically determining the optimal mix of options based on economic considerations, target
market, and effectiveness of brand building. IMC ensures that all forms of communications and
messages that are directed towards consumers are linked together. IMC is focused on managing
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two dimensions: consistency and complementary.

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A method of promotion for L’Oreal Paris is through social media exposure and online promotion.
With the existing partnership with Google, L’Oreal are able to see what the public is searching up
most (Type of hairstyles). With so many videos on youtube relating to hair dying, L’Oreal should
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implement ads before videos. Other online promotion methods can include Facebook and
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Instagram ads. With online ads, L’Oreal can see whether a hairstyle is a trend or fad.

Another method of promotion is television ads. With such a large population having their hair
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coloured, tv ads are a logical promotion method.

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L’Oreal has both a cognitive and affective appeal, since hair dye is mostly used for covering grey
hair, which is a problem - solution, but also a large majority of people also use hair dye to
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improve self confidence.

Branding Strategy

L’Oreal provides a way for people to have a red carpet look without going to the salon. Being a
sophisticated brand that offers excellence with accessible and affordable products, it is a leader in
the haircare industry, with 7.6% market share. As a brand, it wants to appeal to women of all

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 ages (from teenagers to working class to old age woman), and also a few select men, through its
brand portfolio centered around 3 key brands: The Casting Creme Gloss brand, The Preference
brand and The Excellence brand. Casting Creme Gloss is the brand for consumers new to dyeing
hair, typically between the ages 20-30. The Preference brand is the brand for more sophisticated
women between the ages 30 and 50, that have a need for novelty. The Excellence brand is the
brand for people over 50 that need coverage for grey hair.

Resources & Capabilities

L’Oreal spent almost $800 million on R&D and 611 technology patents. Through heavy
spending on R&D as well, L’Oreal has remained an industry-leading innovator with a stellar
reputation. By investing a great deal in marketing, it offers some of the best celebrity
endorsements from any brand, with actresses such as Anne Hathaway, Emma Watson, Beyonce,
Blake Lively and Julia Roberts endorsing their products.

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To reach out to a targeted male audience, they should reach out to a star like Justin Bieber, and to

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maintain the female engagement, the company should reach out to other prominent influencers

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such as Rihanna, Nicki Minaj and Ellen Degeneres, who all serve as a role model to people of
varying ages.
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Recommendation
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We think that the best way to utilize Social Media to acquire both push and pull as well as help
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tackle our challenges is by releasing a contest involving L’Oreal Ombre, Tie Dye, and Splat hair
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products. People will need to post a photo on Facebook, Twitter, and/or Instagram with the
application of the product with either of the following three hashtags: #L’OrealTeamOmbre,
#L’OrealTeamTieDye, #L’OrealTeamSplat. The individual with the post amount of likes will win
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a $2000 L’Oreal gift card. The contest will be open to everyone. Vloggers, Beauty Gurus,
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Makeup Artists, critics, journalists and every day people. The more exposure we have with the
product the more information we can receive as well as more awareness for our brand and
products. Whatever hashtag has the most likes we can take that information and read comments
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on those posts too see what feedback consumers have in order for us to come up with more
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attributes to make new products.

Furthermore, L’Oreal should focus on more standardization with its assortment of products over
adaptation. By managing its variety of lines and brands this, L’Oreal would save time, money
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and resources, as trends and fads are usually similar worldwide, and through slight modification,
standardization would be more effective worldwide. This way, the product lines would have
great quality with lower costs, due to the streamline distribution. And, with a similar product, it is
much easier to reinforce the branding of the product. The main value proposition L’Oreal Paris
offers is customer intimacy and this approach highlights that.

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 Challenge #1: Trend or Fad

Figuring out if Ombre, Tie dye, and splat hair styles are trends or fads is crucial for L’oreal. They
need to establish this in order to figure out what product is the most profitable for them to
launch. Looking at the amount of google searches that are done about Ombre, Tie Dye, and Splat
will allow us to see what people are more interested in. If we look at the frequency on how many
people are searching each style as well as check if we are getting new traffic or if it's the same
individuals who are searching them are all crucial aspects to figure out if its a trend or fad. The
information that we receive from the contest will help us figure out what people are more
interested in and help us identify if it is a trend or fad based on the likes and interactions that we
receive from the posts.

Challenge #2: What Marketing and Social Media Strategy?

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Using Social media to market. Social media has the power to reach to millions of individuals

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who are interested in colouring their hair. There are beauty gurus and models that have a loyal

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fanbase that are willing to try products that their guru or model chooses. Social media is amazing

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because it allows us to “push” product as well as “pull” in consumer insights.
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Push ● Instagram and Youtube: Affiliate
Links
● Product Awareness
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● Discounts codes
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Pull ● Beauty Vlogger Feedback

● Figure out Trend
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● Competition Feedback
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When talking about social media marketing it is important to look at three sub categories:
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product form, branding, and pricing. We have decided that we need to make our product simple
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and available for home use. We need to provide labels and instructions so our consumer at home
or at an hair salon will be able to utilize our product. When looking at branding, and how to
come up with names for our product. We have decided to use the same system that L’Oreal has
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been using historically and use names that represent the attribute of the product. For example,
L’Oreal has a product called make-up visible lift. We believe keeping the name of the product
associated with its attribute is a very simple way to communicate to the consumer on what the
product is.

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 Our social media competition will allow us to reach to new consumers as well as target the loyal
fanbase of those Beauty Gurus and Youtubers that we choose to sponsor. We want to utilize
Social Media by providing affiliate links to instagram models and Youtubers as an incentive to
promote our product is a great way to attract revenue because there is money in it for them as
well. For influencers with a big following with over 2 million followers on instagram or 1
million subscribers we can offer them $500 to promote our product for an Instagram post or a 20
second commercial in their Youtube Video.

The information that we will receive from our competition, our social media partners, and
consumers we will be able to have quantitative data to decide on which product we will want to
use and the correct price we can have.

Worldwide Expansion

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There are certain factors that should be taken into account for L’Oreal to success in more foreign

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markets. First is to identify customers’ purchasing preference in the targeting region. This

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involves the volume of different colors of the hair dying products that L’Oreal should distribute.

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For example, in the most Asian countries, black and brown hair are more popular than others.
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Some countries have their own popular social media channels where consumers share their
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reviews of the products. Therefore, L’Oreal should discover more channels other than Facebook
and Twitter that facilitate the promotion.
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Last but not least, L’Oreal should pay close attention to uncertainty avoidance that each country
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embraces. For countries that do not easily accept innovative products, using research and
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statistics gathered from other countries help to convince consumers to purchase the product.
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