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BEAUTY FOR ALL, BEAUTY FOR YOUR
“L’Oreal”
Introduction
L’Oreal is one of the largest cosmetic and beauty company in the world which
have the diversity of products including hair care, body and skin care, cleansers and
fragrances that suit for women and men lifestyle. L’Oreal has been performed as the
number one beauty company for 100 years which has supplied to 130 countries with
offices in 58 different countries around the world. L’Oreal products are created by
more 1,000 professional chemists and researchers to produce most high quality
products to all consumers, which following company’s slogan, “You are Worth with
our products”.
To preserve as the greatest cosmetic company in the world is not easy.
According to L’Oreal is now facing new competitor which is Procter and Gamble
(P&G) because P&G is currently using similar market strategy as L’Oreal too which
is joint-venture and takeover the other brands. This concept supports L’Oreal and
P&G as two top companies who could expand to all segments of market. However, to
use joint-venture and takeover as the main strategy is loosing a large number of
company’s budget. The company need to rethinking about the budget which they
going to loose that does it worthwhile to invest with that company or not and how
could they make sure that the company would gain the best benefit from their joint-
venture and takeover strategy. So, there are two obstacle points which are the
competitors who has similar marketing strategy and the advantages cost to takeover
the other brands which could be an advantage for company or possibly be a waste cost
for company too, thereby, it is becoming an interesting point for the world’s largest
company that how could they protect its position as number one top’s beauty product
in the world which is now gathering by competitive atmosphere.
In this research paper would like to elaborate about deeply detail of L’Oreal’s
strategy which will be separated into four dimensions; conceptual framework,
background information, analysis, and conclusion.
Conceptual Framework
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To understand the deeply detail about L’Oreal strategy that how could they
perform as number one top cosmetics in worldwide, you need to under stand a little
conceptual about economical frameworks.
1. Diversification
As we know that L’Oreal products has all segments in out daily life
from head to toe. This diversification is the strength point of L’Oreal that
could support L’Oreal to compete with the other cosmetic brand, which
L’Oreal set itself as an umbrella and control other sub-brand in L’Oreal’s way.
2. OLI Paradigm
OLI paradigm is a framework for the company to consider about their
decision to engage in foreign direct investment overseas which based on three
kinds of advantages; ownership, location, and internationalization.
3. Join Venture and takeover other company
Joint venture is the main strategy for L’Oreal which support them for
many long time to be the world’s top market in cosmetic fields. This strategy
is aims to expand its branches by takeover the other brands in order to increase
their strength to compete with the other brands.
4. Geocentric strategy
As we know that L’Oreal has many branches around the world which
not only the factories but also Research and Innovation center. This strategy is
a very great strategy because when L’oreal bring step in having local
management, it would support the company to understand that specially area.
However, the headquater of L’Oreal is in France which is the main based to
manage the movement of the subsidiaries
5. Main strategies for setting up subsidiaries
This concept would elaborate a lot about the reason why L’Oreal
expands its factories and research and development spreading around the
world by the following reasons;
– Resource-seeking
– Efficiency-seeking
– Market-seeking
– Capability-seeking
Background Information
L’Oreal was founded by a young French chemist named Eugene Scheller.
Firstly, the origin of L’Oreal was not cosmetic products as everyone notice, on the
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other hand, the first product of L’Oreal was hair color formula in 1907, in addition, it
was the first man-made hair color product in the world. Eugene manufactured his own
products and sold them to Hair Salon in Paris. In 1909, he trademarked with the
company group as “the Société Française de Teintures Inoffensives pour Cheveux ”
or “Safe Hair Dye Company of France” which its headquarter is located in Paris,
France nowadays. Later, it eventually became as L’Oreal which emphasized on
research and innovation in the field of beauty. In 1950s, there had 100 products and
today there are 2000 products under L’Oreal Company. As mentioned, L’Oreal
started with the hair care business, later, company branched out to other fields of
beauty products. L’Oreal bought other individual brands in all sectors of the beauty
business and controlled all brands in L’Oreal ways, so, L’Oreal has the diversification
of beauty segments including hair color, hair treatment, body care, cleansers, make up
and fragrances. L’Oreal changed its strategic from distribute its products to only hair
salon, to wider distribution channels including local supermarkets, health and beauty
outlets, pharmacies and direct mail, which generating company’s circulation more
than the beginning period. Subsequently, L’Oreal upgraded their ability by gaining
the 1,000beauty professional chemists and establishing L’Oreal Laboratory for
developing higher quality of products. From this turning point, it could prove that
L’Oreal growth from the little chemists group. But now it has achieved success
throughout the world which has been already launched out 27 international brands
under L’Oreal company.
Analysis
Products Strategy
As mentioned, L’Oreal is the only one company that has diversification of
products, which is one of the greatest market strategy to enhance and lengthen the
growth rate of its circulation, which L’Oreal aims to increase more targets by open a
wide variety of segments for its extensive and diverse line of products, which
included cosmetic, dermatology, body care, and hair care. These kinds of product are
the necessary products of people’s daily life which covering from head to toes.
Moreover, L’Oreal products also capture every ages and genders too.
According to L’Oreal targets ranges from professionals, to all types of people
which including health conscious, elegant, and urban-style but the purchasing power
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of each groups are difference. Moreover, physically, some groups of people have a
special skins type, which could not use the normality products, they are necessary to
consume a special medical product from dermatologist ordering So that L’Oreal
offers to separate 4 different products through 4 market lines;
1. Consumer Products
The Consumer Products Division offers the best in cosmetic innovation to the
greatest number of people in every continent. The prices of the Consumer Products
are in affordable level which the rich, the middle class, and the local class could
access to the Consumer Products. For market channels, the Consumer Product are
available in mass retailing channels which are hypermarkets, supermarkets, drugstores
and traditional stores. The division’s brands develop hair care, skin care, make-up and
perfume products that all customers could consume this field of L’Oreal products. In
addition, 52.1% of the company’s sales are attributes to this division. It could prove
that the Consumer Product has been played a significance role for L’Oreal circulation
that could win over a further billion consumers around the world. In 2011, the
Consumer Products’ circulation increased, thanks to its sustained innovation policy.
This new policy has been reinforced by strategic partnership with retailers and
cosmetic developers around the world, notably in Germany, France, and the United
Kingdom. With strategic partnership, L’Oreal enhances to create the superior quality
products which is recognized by consumers.
Mostly, the Consumer Products are the well-known brands including;
L’Oreal Paris
Ombrelle
Garnier
Maybelline
SoftSheen-Carson
Le Club des Créateurs de Beauté
Essie
2. Professional Products
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The Professional Products Division serves its services exclusively through hair
salons all over the world. L’Oreal would meet various requirements from the
professionals’ salon about hair care and colorants and provide them to salon
customers with high innovative and high-performance products. For L’Oreal
circulation, the Professional Products are able to sale approximately 14.9%. The
reason of this percentage came from the specific target of the Professional Products
which emphasize on only hair professional group. However, in worldwide market, the
Professional Products of L’Oreal is still able to maintain as the number one hair
products of the world. In 2011, hair care and technical services became more
highlighted. According to hair salon is becoming more of a beauty salon, where
costumers feel are relishing a special moment, customer services would be more
necessary to be improved in hair salon. The new beauty salons under L’Oreal are
currently increasing during this period. This services strategy began firstly in Europe,
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