case analysis of HBR case on Loreal- global brand local strategies

1. Global Brand Strategy
Class-2
Made by:
Jibin C Joseph
PGDM 11-13
IFIM B School,
Bangalore

2. CASE

3. About L'Oreal
Founded: 1909, Paris
Worlds largest cosmetics & beauty company
Mission statement:
“L'Oreal has set itself the mission of offering all
women and men worldwide the best of cosmetics
innovation in terms of quality, efficacy and safety. It
pursues this goal by meeting the infinite diversity
of beauty needs and desires all over the world.
Beauty is universal.”

4. Summary of the case
L'Oreal's Philosophy: Selling the science of beauty in a
jar.
L'Oreal started by French chemist Eugene Schueller
developed a hair color known then as ‘Aureole’ for
Persian hairdressers.
L'Oreal then went to consumers through various
channels according to consumers psychographic &
psychological profiles.
But its international image hampered as Persian beauty
products was considered expensive.

5. Contd..
Inter brand 2011: No- 40, above Nestle, Jhonson & Jhonson &
Nivea.
Global presence
66,600 23 Global
130 Countries
employees brands
5.7 billion units
38 Factories
in 2011

6. Focused strategy to become
Global brand
Hair color Skin care Hair care
Fragrances Color cosmetics

7. Product Portfolio

8. Consumer products

9. Major acquisitions
U.S.A
UNISA CHILE
JADE GERMANY
ETHNIC BRAND
CHINA
CHINA

10. Year- 1999
Added Men's beauty products to its portfolio

11. Local consumer understanding
Created ‘Geocosmetics’ to study the need, habits & trends
around the world.
Loreal institute for ethnic hair & skin research in Chicago –
2003
Research center in Pudong, China -2005
12 evaluation centre around the world.
Local teams tweak the products with the help of these
research.
 Local products taken to global. Eg: Garnier men

12. Promising new markets

13. Promising new markets

14. Region specific products
MEXICO W. EUROPE ASIA
E. EUROPE INDIA

16. Brand Diversity
CHANNELS BRANDS
Professional L'Oreal, kerastase,Redken,
Matrix
Food, Drug & Mass L'Oreal, Garnier, Maybelline,
Softsheen carson
Perfumeries & departmental Lancome, Biotherm,HR
stores
Pharmacies Vichy, skinceuticals, sanflore
The Body shop Body shop
Products followed specific channels: L'Oreal Paris sold through retail
outlet but with restriction on product placements.

17. Villages lacked retail infrastructure in India & Pakistan, So
Garnier was sold in kiosks.
Category named Masstige – Mass+ Prestige.
Premium but attainable.
R & D helped in keeping the brand relevant for longer
period of time.
Eg: Genfique- youth activating concentrate helped revive
the premium Lancome brand. It was backed by 10 years
of research

18. L'Oreal's marketing excellence
Acquired in 1996, when lost its focus & brand equity
Tagline: Maybe she’s born with it. Maybe its Maybelline!
Major overhaul in its operation, branding & advertising.
Ad spend increased by 30% to $70 million.
Modernized approach to advertising & was targeted to working
women class who were in need of speedy makeup.
Used its technological innovations to address this demand.
It went to 70 countries & sales grew 93% from 1996 to 2002.

19. Redken launched in Latin America in 1990’s and was in 13
Latin American countries by 2008.
Education program aimed at top hairdressers with
product tailored to Latin Americans.
Sales growth of 20% from 2005-2008
By 2008, over 4000 luxury salons adopted Redken in Latin
America.

20.  Launch of INOA in western Europe - 2009.
 Training sessions provided to 80,000 hairdressers.
 Result: 36000 salons adopted INOA in just 3 months!
 To back that- Strong Ad campaign on internet &
women magazines.

21. Top beauty
spenders
Brazilian women
Traditionally they bought from door to door sales rep.
Big Local players.
L’Oreal hired personal beauty advisers at department
stores

22. Telling the story
Aging population in west Ethnic groups around the globe
Aspiring customers in the east Interest of beauty among men

23. Ad Spending

24. Fame by association
Sarah Jessica Parker
SPOKESMODEL Eva longoria
Gerard butler
Patrick Dempsey
Scarlett Johnson

25. Sonam Frieda Pinto
Aishwarya

26. Spokes models around the world
ITALIAN
HUNGARIAN
ETHIOPIA
GERMAN
ARABIC

27. Other Associations
Major sponsor of Cannes film festival.
Also sponsored the festival’s dinner & after
party which benefitted AmFar (American
foundation for AIDS research)
Film & TV placement

28. L’Oreal Brandstorm
Marketing as recruiting. (Launched in 1992)
Contest for students of marketing major
43,000 285 43
STUDENTS UNIVERSITIES COUNTRIES
In 2011 contest was to design an Ad concept to attract
men to professional salons.
Contest helps L'Oreal to identify new talents.

29. Smart spending
PRINT MEDIA DIGITAL MEDIA
Ad spending shifted towards internet

30. Example
User could upload their hair style. It also had ‘how to’ videos

31. Example
Digital marketing innovation- 3D scanning booth at
retail stores

32. Example
L’Oreal’s Grassroots campaign
Helped 4000 salons to build their Facebook page
L’Oreal offered instructional videos, and training & advertising credits to
the salons.
Also displayed products in tabs & ‘how to’ videos

33. Example
L'Oreal's official Youtube channel: ‘Destination Beauty’
Web personalities to pitch products. Eg Michelle Phan

34. Finally..
To double its
customer base
to 2 billion &
increase to
50% from 30%
share of sales
in emerging
market

35. Brand Report Card

36. The brand excels at delivering the benefits
1 customer truly desire 9/10
 L’Oreal have products for various categories
like mass, medium and high end.
Ability to reach global audiences via intensive
advertising.
Specialist hairdressing cash-and-carry outlets
(e.g. Aston and Fincher).
L’Oreal created a virtual personal stylist
-eliminated changing room line hassles.
-multiple applications of skincare & cosmetics.

37. 2 The brands stays relevant
User Imagery: - L’Oreal have different range of
products for various categories like mass,
medium and high end.
Usage imagery: - L’Oreal products is been
used for skincare, makeup and hair care.
Personality: - L’Oreal is a sincere and
competent as they are consistent with their
innovation.

38. Continued 9/10
The feeling brand tries to elicit in customers: -
L’Oreal is a purposeful brand as it tries to
provide quality products at affordable prices.
 Relationship with its customers: - L’Oreal is
building a committed relationship as they hired
personal beauty advisers at departmental
stores to engage with customers.
L’Oreal poured 5bn into R&D

39. The pricing strategy is based on
3 9/10
consumers’ perception of value
 masstige (a combination of mass and prestige).
 And the two key tenets are: -
 L’Oreal products are considered luxury or premium
but attainable.
 L’Oreal had price points that filled the gap between
mid-market and super-premium products.
E.g. L’Oreal Paris was L’Oreal’s leading “masstige”
brand and one of the first brands globally to offer
high quality at an affordable price.

40. 4 The brand is properly positioned 8/10
 L’Oreal do not appreciate points of parity as they
believe to provide products different from their
competitors (P&G and Kevin care).
 CDR Special Report says that From the beginning
L'Oreal has kept itself on the cutting edge of
beauty care.
 L’Oreal has always been guided by the conviction
that science-based approach to the beauty
business will lead to a meaningful point of
difference for the consumer and they achieved it.

41. 5 The brand is consistent 10/10
Maybelline is the best example of consistency
of L’Oreal i.e. new ways to expand old brands
and ability to shift images.
Maybelline released a new makeup collection
that featured bright colors called Miami Chill.
 This was important for two reasons:
 For consumers it was,’ Wow, is this Maybelline?’
 For retailers it was a signal that the company was
changing.

42. The brand portfolio and hierarchy make 9/10
6
sense

43. The brand makes use of and co-ordinates
7 a full repertoire of marketing activities to
build equity
• Brand name designed:- Hair color formula known as
“Aureale”.
• Slogan: - "Because you're worth it".
• Brand awareness: - Through advertising of $4.56 billion
in 2009 and in 2011 they have put 18.1% more towards
its advertising budget.
• L’Oreal gradually reduced some of its ad spending on
traditional media and shifted towards internet.
• Push and pull strategy: - Garnier Fructis launched a
user-generated website which was focus of a major
campaign and provide a chance to win prizes or
vacation packages.

44. 8/10
Continued….
LOGO PACKAGING SIGNAGE
 L’Oreal sold cosmetics through a variety of
channels, including department stores and other
retail locations, duty free shops, online and via direct
marketing to professionals in the beauty industry

45. The brand’s managers understand what
8 the brand means to consumer 9/10
 To know the likes and dislikes L’Oreal has spent 3.5
% of its revenue on R&D.
 Each of the division L’Oreal have, each division has
its own marketing team to ensure each brands
integrity.
 Brands are to be sold to a particular type of
customer through a particular distribution channel.
 Managers know that they can’t play with the
position of the brands, so they don’t play with that.
The only trick is to innovate things inside the brand.

46. The brand is given proper support, and
9 that support is sustained over the long 10/10
run
L’Oreal has spent its 3.5% of its revenue in
R&D
 Even at the time of recession L’Oreal signaled
that it would be interested in buying an Indian
skin care brand which shows that they were
more concerned to keep them self up by
acquiring a new brand even during market
downfalls.
Ex:- Maybelline.

47. The company monitors sources of
10 brand equity
8/10

48. Rating for L’Oreal (1-10)
• Question 1 - 9 points. • Question 9 - 10 points.
• Question 2 - 9 points. • Question 10- 8 points.
• Question 3 - 9 points.
• Question 4 - 8 points.
• Question 5 - 10 points.
• Question 6 - 9 points.
• Question 7 - 8 points.
• Question 8 - 9 points.

50. Questions for you!
1. Why did L’Oreal acquire Body Shop? In your view
was it a sound global strategy.- B2
2. Is the organization structure of L’Oreal aligned with
its global brand strategy? Why or why not.-C2
3. What are the different cross cultural consumer
group segments which L’Oreal is targeting and how.-C2
4. “Think global act local” is the approach of L'Oreal.
How are they practicing this in developing Asian
markets.-D2
5. How L'Oreal's acquisitions, contribute to their
competitive advantage on a global scale.-D2
6. How does L'Oreal leverage various consumer touch
points across diverse cultures?-B2