Date post: | 12-Apr-2017 |
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Marketing |
Upload: | krunal-chakravorty |
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Tapping into global markets
L'Oréal was founded in 1909 by French chemist Eugène Schueller
70000 employees globally (2014) revenues of € 25.26 billion
net profit of € 3.3billion in 2015
Consumer products52 % of sales
Includes brands like Maybelline New York,
Garnier L'Oréal Luxe 27%of sales
Premium brands like Ralph Lauren, Giorgio
Armani
Professional products14% of sales
Brands like Redken, Kérastase specifically
designed for professionals
Active Cosmetics7% of sales
Products sold at pharmacies etc like
Skinceutical
Groups of products
The Body Shop combines innovation, sensory experience and performance, while maintaining environmental protection at its core of values. L'Oréal has a portfolio of 27 global brands including those mentioned above
DECIDING TO GO
GLOBAL
Opportunities
International markets might offer better profit chancesAllows developing larger customer baseReduced dependence on one market Consumers are now global citizens, expect international quality and serviceAllows countering global brands at their local markets
Risks that might be faced:
Failure to understand foreign preferencesInability to adapt to business cultureMay not match regulations, adding to costs
Existing company managers may not have required international experience Foreign market instability due to political or social or economic changes
WHICH MARKET TO ENTER
Criterion How many markets to enterL'Oréal now largely uses waterfall way (for unestablished markets)Early on in 1936-37 employed sprinkler approach to set up subsidiaries in Algeria, Italy, Denmark, Belgium.
Evaluation of marketsFirst preference neighbouring countries May also choose psychic proximity
L'Oréal has employed former and constantly target new upcoming market
Ways to enter
Indirect exportDirect exportLicensingJoint venturesDirect investment and acquisitions
L'Oréal’s strategyCompany has expanded largely by local acquisition routeExpanded to markets like China , South America and erstwhile Soviet Union before others Also key to success is its constant innovationSpends heavily on R&D with 22 centres across the worldHas even used JV route to enter markets like China
MARKETING
Various celebrity ambassadors to endorse products
Key is correct target pricing for L'OréalAlso sponsors many events in fashion industry like fashion showsOffering premium experiences to customers via lounges and other special marketing events
L'Oréal Marketing Methods
Questions About L'Oréal
1. L'Oréal brand portfolio and role of smart acquisitions, local and global marketing, and R&D in growing brands Large brand portfolio allows targeting different sectors.
Local acquisitions make it easier for L'Oréal to enter and establish itself in
market and also expand these brands into new markets
Smart acquisitions and innovations like The Body Shop among others
allows catering to different segments (from mass marketed to high line
products) with variety of products
Local and global marketing strategies to reach out to customers locally by
celebrity endorsements, while adding global image to enhance connect
Strong R&D to continuously adapt, research and innovate in local markets
2.Keys to successful local product launches
Good brand adaptability
Incorporates culture, climate, traditions and customer feedback
Maybelline Kaajal Line in India, Wonderlust in Japan to suit local requirements of customers i.e. product adaptation well employed
Significant investment in 22 R&D centers has allowed to test for variety of conditions
Appealed also as has a strong global image
Well thought of global pricing strategy to target correct segment in each market
Asia , Africa and Latin America – next big target markets
Must continue investment on innovation to expand to new sectors and markets
Must use the social media platforms to reach
Can work to expand on incorporating technology into beauty line
Enhance further its footprint online by acquiring digital beauty brands globally and start-ups in these sectorsL'Oréal – the most digitally advanced beauty brand, here’s why :Among first to launch app called Makeup Genius (to visualise makeup effects on
phones)Acquired makeup brand Nyx that sells entirely on digital platformsOffers live chat to consumers
3. Biggest competitors and sustaining growth L'Oréal's biggest competitors in India – ITC Limited, Nirma, Marico, P&G , Dabur
L'Oréal’s global competition includes P&G and Unilever
Also large number of competitors as various segments targeted
Continues to lead due to innovation in all departments and strong local acquisition policy + strong marketing strategy
Continue heavy investment in innovation
Increase line of products and try to expand towards more eco-friendly products under The Body Shop space
Continue policy of local acquistion to expand, and further diversify, especially in emerging markets which have good scope
Strong digital presence must be expanded to court new users and increase connect globally
Continuously adapting to new market trends (like hair styles and colours)
Sustaining Growth
RECAP
Following are the things we learnt:1. About L'Oréal and its acquisitions 2. Deciding to go global3. Deciding which Markets to enter4. How to enter new markets5. Questions on L'Oréal’s growth and future
DISCLAIMER Created by Krunal Chakravorty, RVCE Bangalore during a marketing internship under Prof. Sameer Mathur, IIM Lucknow.
THANK YOU!