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PROFESSOR: Mark Runge

GROUP 12
Tran Thi Hong Diep Nguyen Thuy Ha Hoang Phuong Hang Le Thanh Huyen Luong Dinh Long Pham Thi Hong Nhung
GROUP 12

Nguyen Thanh Ngoc Nguyen Thi Ha Phuong

Introduction:

1. Purpose of the presentation 2. the business scope, geographic establishments, and background information of Loreal

INTRODUCTION
PURPOSE OF PRESENTATION

1 2 3

To introduce one of the leaders in the beauty market, the worlds largest cosmetics & beauty company To learn about the application of marketing into practice To understand how marketing strategies make the companys success

INTRODUCTION
HISTORY

1909 1956
The first steps, constructing a model

1957 - 1983
On the road to the Grand Loreal

1984 - 2000
Become number 1 in the beauty industry

2001 - now
Diversity of beauty worldwide

INTRODUCTION
DISTRIBUTION

27 International Brands 130 countries


Initially Holland, Austria &
Italy Later US, Russia& far East Now present worldwide, major drugstores, supermarkets, beauty outlets & even direct mails

INTRODUCTION
PRINCIPLES & MISSIONS

Principles
Passion Innovation Entrepreneurial spirit Open-mindedness Quest for Excellence Responsibility

Missions
Beauty for all, a beauty for each Observe local customs of beauty Providing access to cosmetic products To accelerate the localization of our expertise

INTRODUCTION
HUMAN RESOURCES & ADVERTISING SLOGAN
About 67,662 employees
worldwide. Legendary advertising:

Because Im worth
it

INTRODUCTION
Beauty is a commitment Beauty is a science

Beauty is a language

Beauty is universal

BEAUTY FOR ALL

BRANDS

INTRODUCTION
AWARDS & RECOGNITION

Environmental analysis:

1. ECONOMIC ENVIRONMENT 2. LEGAL & POLITICAL ENVIRONMENT 3. SOCIAL & CULTURAL ENVIRONMENT

ECONOMIC ENVIRONMENT
GLOBAL SCOPE
Business-cycle Boom Recession Depression Cricis

ECONOMIC ENVIRONMENT
Example: Crisis in 2008 - 2009
The world GDP felt sharply, which reduced the purchasing

powers custommers. L Oreals average annual growth rate


in 2008 was nearly 3%

and it decreased to 1% in 2009. ( Source: LOral estimate).

ECONOMIC ENVIRONMENT
REGIONAL SCOPE

All the different L'Oreal need adapt to:

economic environments and problems in


all countries it operates in.

The level of

Changes in major economic variables:


income, cost of living , interest rate, currency exchange rates, cost of capital...

economic development
of the country/area.

ECONOMIC ENVIRONMENT
Example: China

POLITICAL & LEGAL ENVIRONMENT


VARIOUS GOVERNMENTS RULES
Foreign trade policy: instability of trade
policies governing imports of different industrialized products between Argentina and various Latin American countries.

Procedures for product registration


delays product launches. The company tries to become alliances with governmental bureaucracy regulating administrative procedures

LEGAL & POLITICAL ENVIRONMENT


INCREASING LEGISLATION OF BUSSINESS
Strict product safety standards
a decline in the dermatology branch led by its Galderma brand due to new legislations governing drugs.

LOreals methodologies for


evaluating the safety and efficacy of ingredients and finished products, product evaluation and claim substantiation are recognized by the international scientific community.

SOCIAL & CULTURAL ENVIRONMENT


Culture impacts on marketing strategy People in different countries carry out their skin care routine different from each other

SOCIAL & CULTURAL ENVIRONMENT


ADAPTION
L'Oral has built its

innovation strategy
around getting to know and listening to different groups of people worldwide. The Research division is widely open to the world, with its evaluation centers based on every

continent.

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

SOCIAL & CULTURAL ENVIRONMENT


They have to ask such

questions as:

Case in focus : Brazil

Brazilian women like purchasing from door-

to-door salespeople.
LOreal will not be using the door-to-door sales approach attempting to make Brazilian women just forget about part of their culture. A cosmetics brand will probably not be incentive enough to change traditions in Brazil.

GLOBAL marketing entry and cooperative strategies:

Loreal international marketing entry and cooperative strategies

GLOBAL OR NOTHING

GLOBAL OR NOTHING
Traditional strong holds : LOreal Paris and Europeans countries

In the late 1930, by launching the first sunscreen, LOreal earned a reputation as a European leader in hair-coloring and body-care products. From then on, European continent has still been the base and the major market of LOreal, majorly Paris, England, Germany, and the Italy

GLOBAL OR NOTHING
Coming to USA after WWII, LOreal met some challenges:
Few relationships with local middlemen distributors .

American hair salon were unfamiliar with LOral brands and their quality -> resisted selling LOral products French prestige, which had been helpful in selling perfumes, was less useful in selling hair-coloring products in the U.S. market.

GLOBAL OR NOTHING

New consumers

GLOBAL OR NOTHING
Emerging markets: Asia, Africa, Latin America

Growing middle class Booming population Consumerism

Dramatic economic growths

OPPORTUNITIES

Greater access to information thanks to Internet

GLOBAL OR NOTHING GLOBAL OR NOTHING


The

cultural distance and physiological differences make


these markets are extremely different than any other Western markets LOral had ever entered before.

Eg: diifferent types of skin

GLOBAL OR NOTHING
LOreal in Kenya

LOreal in Latin American

LOreal in India

GLOBAL MARKETING PROGRAM


Standardized global marketing

Promotion

GLOBAL MARKETING PROGRAM

Adapted global marketing

Products

GLOBAL MARKETING PROGRAM


STANDARDIZE GLOBAL MARKETING
Launching its successful brands all around the world (Maybelline, The

Body Shop, Loreal Paris...)


Launching various technical training centers (in India, France, America, China, Japan...) => Marketing programs in all over the world are focused on their core strength : Research and

Innovation

GLOBAL MARKETING PROGRAM


ADAPTED GLOABAL MARKETING

Different strategies for different markets

Asian

European

North America

African, Orient and Pacific Region

Sustainable strategy, diversification of brand, selling good quality products at a cheaper rates...

Most related to the growth of the people mentally, not only for beauty purpose

Brand extensions, frequent advertismenta and promotion...

Launching technical training centers, cheap prices...

GLOBAL MARKETING PROGRAM


PRODUCT

Straight product extension

Product adaptation

Product Invention

GLOBAL MARKETING PROGRAM


PRODUCT ADAPTION

In India, hair care is one of the foremost beauty routines.


=> A source of inspiration for the 2 in 1 formula

Shampoo and Hair Oil


developed by Garnier.

GLOBAL MARKETING PROGRAM


PRODUCT ADAPTION

In Brazil, more than half of the women have long hair, very curly, dry and dull.
L'Oral launched Elsve

Total Reparao

GLOBAL MARKETING PROGRAM


PRODUCT INVENTION

Chinese consumers judge the effectiveness of a lip balm by the sensation on their lips but also by the visual results.

launch Baby Lips

GLOBAL MARKETING PROGRAM


PRODUCT INVENTION

Observing shiny skin of Chinese men


the creation of Garnier

Men Sweat & Oil Control

GLOBAL MARKETING PROGRAM


PROMOTION

European women care about self esteem LOreal created the programs like Beauty with

heart for helping the people made helpless by illness or


any kind of negative life experiences

GLOBAL MARKETING PROGRAM


PROMOTION
In US and Canada, people follow the promotions and due to which the demands of the products increases LOreal uses the strategy of frequent advertisements and

promotions

COOPERATIVE STRATEGIES

Suppliers

RELATIONSHIP

Partners

COOPERATIVE STRATEGIES
LONG-TERM RELATIONSHIP WITH SUPPLIERS
committed to remaining

loyal to both local and international suppliers

seeks not only to help its suppliers meet its expectations but to contribute to their growth, through opportunities for

based on dialogue and joint efforts

innovation and competitiveness


hold in a regular exchange platform for its suppliers to discuss programs to help strengthen the cooperation and to help the suppliers improve

events and meetings every year

There is no doubt that we have paved the way for LOreals sustainable development and innovations with the full dedications and supports from our suppliers.

COOPERATIVE STRATEGY

Worldwide Suppliers Day

LOreal s Buy & Care Program

COOPERATIVE STRATEGY
PARTNERSHIP LOral establishes joint ventures with companies in other industries.

COOPERATIVE STRATEGY
PR CHANNEL In PR channel, Loreal cooperate with celebrities in many famous events

COOPERATIVE STRATEGY
PR CHANNEL The company also take part in many community and charity activities

COOPERATIVE STRATEGY
MERGER AND ACQUISITON
As the competition intensifies, OwenJones is likely to continue making acquisitions
confirms our determination to step up the pace of our growth on this strategic market

Enter the Chinese market by acquiring the Chinese brand Mininurse in December 2003.

Acquire the Chinese make-up and skincare brand Yue-Sai on 26th January 2004.

Consumer product decision & PRICING STRATEGIES:

1. Pricing Strategy chosen by loreal 2. factors affecting the marketing pricing strategies of Loreal

PRICING STRATEGY
Valuebased

Product - mix Pricing strategy

Cost based

New product

Competi tion based

PRICING STRATEGY
VALUE- BASED PRICING

R&D Research
2,980 researchers

PRICING STRATEGY
VALUE- BASED PRICING

R&D Research
3% of revenue

Example: Satisfy women at all age

For 20s For 30s For 40s For 50s

PRICING STRATEGY
COST-BASED PRICING
Professional products Consumer products Luxury products Active comestics

For 20s

PRICING STRATEGY
COST-BASED PRICING
Operating Income

4 Divisions
Consumer Products

9% 21%

54%

16%

Professional Products Luxury Products Active Cosmetics

suit the needs of all people of all economic status

COST-BASED PRICING

Luxury Products 5 times higher than consumer products Prpductss Professional 6 - 18

Consumer Products 3 - 14

PRICING STRATEGY
COMPETITION-BASED PRICING
LOreal plans to release lower price products with the slogan: A price for

everyone sales promotion


having a wide assortment with varying range of products for

premium and the middle class

PRICING STRATEGY
PRODUCT-MIX PRICING

LOreal Paris products range from 11 to 18


The Garnier range retails for slightly less than LOreal Paris, Garnier Essential range which would retail at about 5. In this way, the company will have skin care that range from 5 to 250

PRICING STRATEGY
NEW PRODUCT PRICING

Innovative new products


added to the existing product portfolio of the company to

penetrate the market deeply and quickly

PRICING STRATEGY
PRODUCT-MIX PRICING
LOreal has produced

pricing optional products by proving a


variety of products with the same functions at different quality. Additionally, within each main product line, LOreal also produces some

4,99

accessories

14 - 21

FACTORS AFFECTING PRICING STRATEGY


INTERNAL FACTORS
- Good research and innovation
STRENGTH

- Developed activities in the field of cosmetics as well as in the dermatological and pharmaceutical fields. - Well invested advertising strategy

- Decentralized organizational structure


- Low profit margin
WEAKNESS

- Weak coordination and the control of the activities and image in the worldwide market

FACTORS AFFECTING PRICING STRATEGY


EXTERNAL FACTORS
- The growing demand for beauty - Growing market. - Greater market share enables them to have the top of the line products.

OPPORTUNITIES

- Growing competition - Economic downturn


THREATS

- Changing spending habits of consumer and the economic crunch

CONCLUSION:

Summary and recommendations FOR LOREAL

CONCLUSION
SECRET OF SUCCESS

Aggressive research

Shrewd marketing

Skill in managing a large stable of brands

1st global cosmetic manufacturer

CONCLUSION
PLAN FOR FUTURE GROWTH
Focus on the emerging markets

Latin-America (Brazil and Mexico) Asia (China and India).

Mainlytargeted market

urban middle class mass market segment.

CONCLUSION
CHALLENGES

Competitors who appear sooner in these markets: P & G, Unilever, Revlon...

Short-term effect on profitability in order to make greater presence in the new markets.

CONCLUSION
RECOMMENDATIONS
take advantage of its achievements and its strength in research and innovations.

be careful in choosing the market target for particular brands and products.

the countrys culture has to be taken into

consideration in the marketing process.