Company Case L’Oréal: The United Nations of Beauty

How does a French company successfully market an American version of a Korean skin
beautifier under a French brand name in Australia?
Ask L’Oréal, which sells more than $28 billion worth of cosmetics, hair care products,
skin care concoctions, and fragrances each year in 130 countries, making it the world’s biggest
cosmetics marketer. L’Oréal’s success is based on a concept it calls “universalization.” It sells its
brands globally by understanding how they appeal to varied cultural nuances of beauty in
specific local markets. Then it finds the best balance between standardizing its brands for global
impact and adapting them to meet local needs and desires.
L’Oréal is as global as a company gets. With offices spread across 130 nations and more
than half of its sales coming from markets outside Europe and North America, the company no
longer has a clearly defined home market. L’Oréal’s well-known brands originated in a half-
dozen or more different cultures, including French (L’Oréal Paris, Garnier, Lancôme), American
(Maybelline, Kiehl’s, SoftSheen-Carson, Ralph Lauren, Urban Decay, Clarisonic, Redken), British
(The Body Shop), Italian (Giorgio Armani), and Japanese (Shu Uemura). With these and many
other well-known brands, the master global marketer is the uncontested world leader in
makeup, skin care, and hair coloring and second only to P&G in hair care.
Because I’m Worth It
L’Oréal’s strategy of universalization is tied to its mission— “beauty for all.” If there is
one thing that L’Oréal has discovered about women worldwide, it is that they want to feel good
about themselves. And how they feel is inherently connected to how they care for themselves
and their appearance. This universal characteristic holds true regardless of ethnicity, culture,
age, or socioeconomic status. For this reason, “beauty for all” has L’Oréal focused on providing
the ultimate in luxury beauty for the masses.
While the Paris-based giant has been peddling cosmetics for more than a century, the
relevance of its mission became more apparent than ever in the 1970s. The company launched
Superior Preference hair color with an advertisement that presented a woman’s point of view
and ended with four words— “Because I’m Worth It.” From the moment the ad hit, those
words struck a chord with women. Here was a brand with a message about what a woman
thought—about her self-confidence, her decisions, her style.
Originally just a tagline, those four words have transcended their intended purpose and
have even become part of the social fabric. They have been written into global language, used
by a woman for any situation where she wants to stand up for herself and proclaim her self-
worth. Today, 80 percent of women worldwide recognize and respond to this phrase in a
positive and powerful way. And today, “Because I’m Worth It” is translated into action every
day by L’Oréal.
Beauty from Multiple Perspectives
To achieve “beauty for all” globally, L’Oréal’s starts with a corps of highly multicultural
managers. The company is famous for building global brand teams around managers who have
deep backgrounds in several cultures. Unlike many global corporations that set up an
international structure composed of autonomous subsidiaries, divisions, and management
teams in different parts of the world, L’Oréal knew that such a structure would not provide the
balance between standardization and adaptation that is critical in today’s cosmetics industry.
Instead, the company built global teams around individual managers with deep backgrounds in
multiple cultures, allowing them to switch easily among them.
Able to see things from multiple perspectives, a truly multicultural manager can think at
any moment as if he or she were German, American, or Chinese—or all three at once. The
Indian American French manager of a team that launched a men’s skin care line in Southeast
Asia explains: “I have a stock of references in different languages: English, Hindi, and French. I
read books in three different languages, meet people from different countries, eat food from
different [cultures], and so on. I cannot think about things one way.”
For example, a French-Irish-Cambodian manager working on skin care noticed that, in
Europe, face creams tended to be either “tinted” (and considered as makeup) or “lifting” (and
considered as skin care). But in Asia, many face creams combined the two traits. Recognizing
the growing popularity of Asian beauty trends in Europe, this manager guided his team in
developing a tinted cream with lifting effects for the French market, a product that proved to
be highly successful. As the global environment has created a greater need for this type of
knowledge integration across cultures, L’Oréal’s strategic use of multicultural managers
provides built-in shortcuts. This management structure has given L’Oréal a critical competitive
advantage in new product development.
Diving Deep for Beauty
L’Oréal digs deep to understand what beauty means to consumers in different parts of
the world. It outspends all major competitors on R&D, painstakingly researching beauty and
personal care behaviors unique to specific locales. One of the goals of its global R&D efforts is
to gain an in-depth understanding of the behaviors of women and men around the world with
respect to beautifying and taking care of themselves.
L’Oréal explains the need for this worldwide approach to beauty rituals: How many minutes
does a Chinese woman devote to her morning beauty routine? How do people wash their hair
in Bangkok? How many brush strokes does a Japanese woman, or a French woman use to apply
mascara? These beauty rituals, repeated thousands of times, are inherently cultural. Passed on
by tradition, influenced by climate and by local living conditions, they strive to achieve an ideal
of perfection that is different from one country and from one continent to the next. They
provide an incredibly rich source of information for L’Oréal Research. Behind these rituals,
there are physiological realities: fine, straight, and short eyelashes cannot be made up the same
way as thick, curled, and long lashes.
To facilitate this major R&D effort, L’Oréal has set up centers all over the world,
developing a science of local observation it calls “geocosmetics.” This science is fueled with
insight gained through in-home visits as well as observations made in “bathroom laboratories.”
Equipped with high-tech gadgetry, these labs enable teams to study consumer behavior around
the world.
L’Oréal’s R&D program produces very precise information about regional rituals of
hygiene and beauty as well as local conditions and constraints that affect the use of products,
such as humidity and temperature. These insights feed R&D teams in the process of creating
products for local markets. Combined with insights from global locations, such products can be
adapted for multiple markets.
For example, consider Elséve Total Reparação, a hair care line initially developed at
L’Oréal’s labs in Rio de Janeiro to address specific hair problems described by Brazilian women.
In Brazil, more than half of all women have long, dry, dull, and very curly hair, resulting from the
humid Brazilian climate, exposure to the sun, frequent washing, and smoothing and
straightening treatments. Elséve Total Reparação was an immediate hit in Brazil, and L’Oréal
quickly rolled it out to other South American and Latin American markets. The company then
tracked down other global locales with climate characteristics and hair care rituals similar to
those faced by Brazilian women. Subsequently, L’Oréal launched the brand as Elséve Total
Repair in numerous European, Indian, and other South East Asian markets, where consumers
greeted it with similar enthusiasm.
Such adaptation often plays out across multiple L’Oréal brands—which takes us back to
that Korean skin beautifier sold under a French brand in Australia mentioned in the opening
paragraph. Blemish balm cream (BB cream) was originally created by dermatologists in Korea to
soothe skin and hide minor blemishes. It quickly became a high-flying Korean brand. However,
applying their deep knowledge of skin colors, treatments, and makeup worldwide, L’Oréal
researchers developed a successful new-generation BB cream adapted to conditions and skin
colors in U.S. markets (where BB stands for “beauty balm”) and launched it under the
Maybelline New York brand. Still not finished, L’Oréal created yet another local version for
Europe under the Garnier brand, which it also introduced in other world markets, including
Australia.
L’Oréal’s global R&D efforts have produced a “geography of skin colors”—a proprietary
mapping of the world that makes it possible to adapt cosmetic products to the needs of women
around the world. In a similar manner, the company has expanded the traditional classification
of three hair types (African, Asian, and European) to eight different categories, based on a
scientific measurement of curl characteristics that includes the diameter of the curvature, the
curl index, the number of waves, and tendrils.
 L’Oréal doesn’t just adapt its product formulations globally. It also adapts brand
positioning and marketing to international needs and expectations. For example, more than 20
years ago, the company bought stodgy American makeup producer Maybelline. To reinvigorate
and globalize the brand, it moved the unit’s headquarters from Tennessee to New York City and
added “New York” to the label. The resulting urban, street-smart, Big Apple image played well
globally with the midprice positioning of the workaday makeup brand. The makeover soon
earned Maybelline a 20 percent market share in its category in Western Europe. The young
urban positioning also hit the mark in Asia, where few women realized that the trendy “New
York” Maybelline brand belonged to French cosmetics giant L’Oréal.
By acquiring brands such as Maybelline, L’Oréal also gains brands that have immediate
recognition and products already made for a given market. This gives the company an
immediate point of entry to a market at a cost that is lower than building a brand from scratch.
Such is the case with Yue-Sai Cosmetics, a Chinese company that uses herbs in its creams.
L’Oréal bought it a decade ago. Sales of Yue-Sai products increased by 20 percent last year.
L’Oréal and its brands are truly global, and its approach to providing luxury beauty for
the masses is working. Total revenues have grown by 30 percent over the past four years. Even
as the Western European market growth has slowed and Brazil is in a slump, L’Oréal’s revenues
climbed by 12 percent in the past year alone. In the United States, L’Oréal is growing even as
key rival Unilever has seen its revenue decline and is losing market share.
L’Oréal’s huge international success comes from achieving a global–local balance that
adapts and differentiates brands in local markets while optimizing their impact across global
markets. L’Oréal is one of few companies that has achieved both local brand responsiveness
and global brand integration. “We respect the differences among our consumers around the
world,” says L’Oréal’s CEO. “We have global brands, but we need to adapt them to local needs.”
When a former CEO once addressed a UNESCO conference, nobody batted an eyelid when he
described L’Oréal as “The United Nations of Beauty.”