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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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