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ARKAPRAVA GHOSH

I use the most expensive

Hair colour in the worldIts not that I care about

money

Its that I care about my

hair

Its not just the colour ,

I expect great colour

Whats worth more to me

Is the way my hair feels

Smooth and silky but with

body

Feels good against my neck

Actually I dont mind

spending more forLoreal

BECAUSE Im WORTH IT

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1st cosmetics group

worldwide

23 international

brands

17.5 billion euros

of sale in 2009

Presence across

130 countries

14533

15790

1706317542 17473

2005 2006 2007 2008 2009

consolidated sales(euro millions)

consolidated sales(euro millions)

15%

53%

25%

7%

Product division :

market weightage(%)

professional consumer

luxury active cosmetics

KEY MARKETS:

Western Europe & North America accounting for

43.3% & 23.4% of total sales respectively

Asia accounts for 13.2% of total consolidated sales

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PROFESSIONAL PRODUCTS

LOREAL PROFESSIONALREDKENKERATASEMATRIX

LUXURY PRODUCTSLANCME GIORGIO ARMANI YVES SAINT LAURENTBIOTHERM RALPH LAUREN KIEHL S SHU UEMURA HELENA RUBINSTEIN CACHAREL DIESEL

CONSUMER PRODUCTS

LORAL PARIS GARNIER MAYBELLINE NEW YORK SOFTSHEEN .CARSON

ACTIVE COSMETICSVICHY LA ROCHE -POSAY INNOV SKINCEUTICALS

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Soft Sheen Products Inc., a leader in the black hair careindustry, was founded in 1964 and acquired in 1998

In 2000, LOral USA acquired Carson Products, another

successful manufacturer of ethnic hair and skin careproducts

The two companies were successfully merged in that yearto become SoftSheen-Carson

Overview of the black hair care market

1960-1970Johnson products was the largest in black business & the first one

To be traded on the American Stock Exchange. Johnson was closely followed by

Soft sheen and Pro-line

1980 Black skin & hair care market had approached $1 billion

1994 Black hair care market approached $2 billion ,

Only 1.5% of the black

disposable incomewas spent on hair care

African- Americans represented 12.3% of

the nations population & contributed 34%to the hair care market in the US

Huge market potential &

the need for growth &

diversification led toloreals decision

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1998 Carson Inc. acquired Johnson products from IVAX co. for $90 million

With its Dark & Lovely black hair products , Carson became the market leader in black

hair-care products

2000 Carson could not survive the debt incurred by the purchase of Johnson products &

Was sold out to Lorealfor $250 million & merged with softsheen brand

Lorealnow gained control over 3 of the top 5 selling hair care brands & 62% of the African-

American hair market

2009SoftSheenCarson confirmed its position

as No. 1 in the ethnic hair care products market,

with new initiatives in three major categories

upgraded the Dark and

Lovely range with a moremoisturising formula, richer in

shea butter than the otherhair

relaxers on the market

Launch of ammonia-free

Dark and Lovely ColourConfidence Haircolor

Diversified into the skincare market in South Africa with Dark

and Lovely Body. A line ofbody milks enriched with vitamin E

and glycerine, which provide longlasting hydrationSource:Constructing corporate America: history, politics, culture By Kenneth Lipartito, David B. Sicilia

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THE JAPAN CASE : THINK LOCAL ACT GLOBAL

TARGET SEGMENT: HIP , YOUNG & TRENDY WOMEN OF JAPAN

Japanese women have small mouths & the concept ofmother of pearl is very popular there

This particular molecule created the effect of water givingthe lipstick a wet look

After careful economic analysis , Loreal caterd to this segment withTheir new offering Maybelline Watershine Diamonds

In space of a year , Maybelline was the market leader in the mass-makeup market in Japan

Following success there , Loreal also launched the same product inUS & Europe where it enjoyed a similar meteoric success

Source :The new strategic brand management: creating and sustaining brand equity

By Jean-Nol Kapferer

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Case of BRAND SUBSTITUTION:

GEMEY PARIS MAYBELLINE NEWYORK

In 1996, LOralbought the American make-up brand

Maybelline, decided to promote it to a global make-up brand& as a consequence to substitute it to the local make-up

brands, as Gemey in France

Gemey, the leader in mass market (45.4%

market share) was considered to be a brand

specialised in the different types of make-uptargeting French middle class women

Maybelline was defined as an in-brand of make-upfrom New York, targeting young ladies

VAST

DISPARITY INPOSITIONING

1998 2000 2004 2010

Progression of the GemeyMaybelline visual identity

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Case of BRAND SUBSTITUTION:

GEMEY PARIS MAYBELLINE NEWYORK

Stage 1 :WARNING

The brand name Gemey-Paris became Gemey-Paris New York in 1998 and

started to be associated with Maybelline New York #1 in make-up in theUSA both on the packaging and in communication when launching newproducts. From 1999 onwards, the two brand names Gemey and Maybelline

were more closely linked on the packaging but in communication only the

Gemey slogan was used

Stage 2 :

REPOSITIONING

began in the

second half of

2000

Gemey andMaybelline have

come together to

offer you better

technology

Integration of skyscrapers into the

background of advertisements and

sales outlet visuals, sponsoring by

American TV series and

slogans

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Value Curves and Value Proposition

The Body Shopmade clear decisions regarding:

What factors could be reduced below theindustry standard?

What factors could be eliminated that theindustry had taken for granted?

What factors should be raised beyond theindustry standard?

What factors should be created that theindustry had never offered?

In so doing, The Body Shopcreated a uniquebusiness model, brand and position that ensured

an sustainable competitive advantage

The Body Shops robustbusiness modelandunassailable position was evidenced by

LOreals acquisition of it in 2006

Despite being an established, extremely well-

resourced competitorLOrealhad been unable

to compete against The Body Shops values and

positioning..whetherThe Body Shops valueswere compromised by its acquisition, however, is

a different matter!

The Body Shop - Illustrative Example

Price Packaging &

Advertising

Hi-Tech

Scientific

Image

Glamorous

Image

Natural

Ingredients

"Ethical"

Concerns

PARAMETERS

PERFORMANCE

The Body Shop

CosmeticsIndustry

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EVOLUTION

Greasy & rocksolid Quirky urbanfashonistas

Conscioushedonism

Reason for being Dress the tough guys Make people feel

different &

provocative

Help people carry

a more pleasant

experience

Value proposition Stylish jeans &

workwear with a used

worn out look

Affordable fashion

urban street wear

Fun , imaginative

& colourful

fashion

Differentiation Worn out look Urban street wear Happy &

colourful clothing

Persona Tough , wild ,

adventurous

Extravagant , critical Witty , culture

conscious

Associations Rebels , women ,

cigarettes , gas

stations , leather

Political issues ,

religion , sexuality ,

fashion

Youth , vitality ,

happiness

Product range Jeans & workwear Jeans , clothing ,shoes , fragrances

Jeans , clothing ,sunglasses ,

watches , shoes ,

bags , fragrances

Audience Tough guys

wannabes

Intelligent urban

fashionistas

Hipsters

-

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1978-1993 1993-20002000-

PRESENTOriginal motto onlythe brave charectizestheir first era

Differentiatedthemselves by selling

jeans that looked worn

Jeans came pre

washed and with holes

on them

Initially consumerperception related to

defective jeans on

shelves

Communication

changed to tight fitting

jeans & mohawk logo

T shirts with themohawk logo soon

Communication shifted to odd

messages & unexplainable howto guides

This branding redirection wasexemplified using models & non

models in the same picture

The aim was to get people to

remember their campaigns by

creating a mismatch buzz

people in jeans drownedunderwater with a stone attachedat their feet which was verycontroversial in Argentina since

many people during the

dictatorship was murdered that

way

being a man ad portrayed 2gay sailors kissing

Communication changed to

individual itself , their passions ,

fears & motivation for life

With the consolidation ofInternet and the explosion of

free fashion magazines they

realize that their consumers are

really smart and they decide to

change their strategy and gear

their brand towards veryinformed people, intelligent,

more individualistic and most

important that want to be

treated intelligently

creation of campaign specific

web sites that provide a more

intimate relationship with theiraudience

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1976First body shop opened at a small street in brightonsold only about a dozen inexpensive natural cosmetics, all herbalcreams and shampoos, all in simple packaging

Differentiated business model Why should anyone not have the freedom on the

quantity they buy?

With this in mind , body shop offers customers only therequired amount of cosmetics specified by them be it

skincare or haircare

Offering totally natural

products , against testing on

animals

Business model could easily be

copied by competitors

Lack of finance with founders

for rapid expansion of brand

Developed the idea of franchising

Selected partly with their fit on body shop ideals a head franchisee was grantedexclusive rights as user of the trade mark, distributor and, after an initial trial of

running a few shops themselves, the right to sub-franchise

OVERVIEW

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Key advantage of

franchising

All Body shop built upon local market knowledgethus minimizing loss of risks and cultural clashes

1984Company gets listed on the stock market

while still maintaining the franchisee model

Key strategies followedOwn warehousing & distribution network wherein productswere delivered within 24 hrs.

Started manufacturing with the trade not aid policy

Body shop gained popularity worldwide mainly due to its sustainable development programmes

establishing direct trading links with producer

communities in developing countries so thatthey can sustainably finance their own social

and economic development

sourcing ingredients and accessories

from disadvantaged communitiesaround the world

OVERVIEW

2006:ACQUISITION OF BODY SHOP BY LOREAL

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STRATEGIC RATIONALE

Body shop contribution to

loreal

Naturally oriented natural

cosmetics with strongidentity & values

Distribution expertise and

access to direct producer

channels A leading british brand to

complement Loreal UK

Loreal contribution to thebody shop

Access to R&D practices ,

improved productdevelopment for body

shop

Leverage L'Oreal's

marketing expertise whilerespecting body shop

identity

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Established 2004 , a joint venture between L'Oreal & Nestle

2004 also saw new haircare developments: by launchingInnov Hair Mass, a product aimed at a wide range

of women affected by low hair mass

The innovative feature of the product is the taurine-based

formulation, which specifically targets the bulb where the

hair is made to produce clinically-proven improvements inthe number, volume and quality of hair follicles

Diversification into the market of cosmetic nutritional supplements

This brand marked the launch of nutraceutical development

Key strategyCapture growing demand for skin products to retain youthfulnessTap the growing market for dietary supplements

ranges target cellulite, wrinkles, and hair loss,

as well as a product that claims to help protect

the skin against UV rays

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The market for nutricosmetics was practically empty & unexplored

Except for a few competitors like IMDEEN

strong degree of relevance in the associations

and skills the two brands bring to the alliance

BRAND

FIT

Nestls reputation as leading and competent nutrition brand is highly relevant when making a

diet supplement. LOralimage as a beauty expert is just as relevant when making a diet

supplement meant to improving the quality of your skin and hair

LOREAL USA h d Ki hl i 2000 t f f ll l d i iti t t

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LOREAL USA purchased Kiehls in 2000 as a part of a carefully planned acquisition strategy

The US buildup was critical to the globalization of its business

By adding brands such as redken , maybelline , kiehls , softsheen-carson , Lorealhad created an

international brand portfolio with wide range of incomes & tastes in 140 countries

Kiehls skin care , body care , fragrance & hair care products were renowned for their highquality , effectiveness & cult following among celebrities

Customer base was

loyal and young

No advertising at

all , only through

celebrities toutingtheir products

Little expansion , most

business came from a singe

neighborhood store in NewYork

Unable to meet rising demand , sold itself to L'Oreal

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Foray into INDIAN MARKET

0.3 0.83.2

10.9

26.9

36.6

india indonesia china brazil USA germany

Per capita consumption of skin

cleansing

US$/year

94 91

5651

2316

10

10

20

30

40

50

60

70

80

90

100

Penetration in India %

penetration %

Skin care in India is the most sought after

personal care category by both local and

global consumer majors given significanthead room for growth (23% penetration,

growing at 20% p.a.) with an estimated size

of Rs25bn

Rising consumer awareness and interest,

increasing income levels and favorable

demographics (growing share of working

women) are driving growth for the category

With a GDP of 1.9 trillion $ & rising

per capita incomes India offers a lot

of market potential to tap

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Loreal in india

Came to India in 1991 with its Ultra Doux range of shampoos through its agent

Laboratories garnier

1994 laboratories garnier becomes 100% subsidiary ofloreal

2000loreal launches its range of products in the cosmetic market

Biggest contributor to the Indian revenue - GARNIER

HAIR CARE SKIN CARE

Fructis Nutritioniste

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Garnier mainly operates in the mid price &luxury segment

In 2000, ganier garnered a 20% share in thehair colourant & dyes market

Performance is mainly

attributed to being the first

player in india to launch a

hair based colour below the

price of Rs 100(2002)

Home highlighting kit(2005)

Technological breakthrough :Usage of fruit concentrate

in all their products

(combination of fruit acids

, vitamin B3 . B6 , fructose

& glucose

USP : strong hair

Caters mainly to the natural segment ; beauty through nature

The core brand values of " Green " and the tagline " Take Care " can be used across multiple

categories without any dilution to the core brand positioning

The name Laboratories Garnier was changed to Garnier in 2001 to facilitate the brands

acceptance in all the 5 continents it operates

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Shampoo market in India generally caters to men & women ; kids & teens category

Is totally absent

COMPETITION: PARACHUTE STARZ Garnier as a brand is slowly targeting the entire

personal care market Adopting a segment by segment targeting strategy

The launch of Garnier Fructis kid's

shampoo is expected to revive the kid's

personal care category in India. The kid's

hair care market is dominated by HUL'sClinic Plus brand and the other players

being Parachute Starz. But recently the

activities in this category has been

minimal.

The entry of Garnier into the kid's segment

may have been to catch them young.The new

generation kids have a mind of their own and

they are brand conscious. So tapping themwith a variant makes sense. Moreover mothers

feel that young hair /skin needs special care

and adults products may be too strong for the

kids.

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Entry in the mens fairness segment

FMCG companies have been increasingly focusing on catering to mens

grooming products

Mens fairness segment is currently estimated to be around Rs4.1bn and

is growing ahead of overall skin care market in India

Emami entered the men's fairness cream

segment in 2005 with the launch of 'Fair &

Handsome' which still dominates the space

with 63% share

Hindustan Unilever in 2007 launched 'Menz

Active' in this sub-category, but the product

has not been able to garner much share

46%

22%

3%

2%

11%

4% 12%

Segmentation of Indian skin

care market (%)

fairness moisturizer anti-ageing anti-marks

body care sun care others

Garnier saw a potential in the mens fairness market& also realized the gap in the moisturizing market

With that in mind, garnier men's light & power active

were launched which along with fairness alsocatered to face wash and moisturization insteadof just offering fairness as the core benefit

Diversification into 2 categories with a single brandextension

STRATEGY/DIFFERENTIATION

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