L oreal (PowerPoint) by mnmgroup

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									I use the most expensive
Hair colour in the world
It’s not that I care about
It’s that I care about my
It’s not just the colour ,
I expect great colour
What’s worth more to me
Is the way my hair feels
Smooth and silky but with
Feels good against my neck
Actually I don’t mind
spending more for L’oreal

                             ARKAPRAVA GHOSH
                        Product division :                     consolidated sales(euro millions)
                       market weightage(%)                              consolidated sales(euro millions)

                        professional   consumer
                        luxury         active cosmetics                                            17542    17473


1st cosmetics group
worldwide              25%

23 international

17.5 billion euros                                           2005     2006          2007           2008     2009
of sale in 2009

Presence across                                Western Europe & North America accounting for
130 countries                                  43.3% & 23.4% of total sales respectively
                      KEY MARKETS:
                                               Asia accounts for 13.2% of total consolidated sales
                               PROFESSIONAL PRODUCTS
                               • L’OREAL PROFESSIONAL


                                    CONSUMER PRODUCTS
                                    •L’ORÉAL PARIS • GARNIER •
                                    • MAYBELLINE NEW YORK • SOFTSHEEN .CARSON •

•Soft Sheen Products Inc., a leader in the black hair care
industry, was founded in 1964 and acquired in 1998
•In 2000, L’Oréal USA acquired Carson Products, another
successful manufacturer of ethnic hair and skin care
• The two companies were successfully merged in that year
to become SoftSheen-Carson
                     Overview of the black hair care market

               Johnson 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
                                                                        Only 1.5% of the black
                                                                         disposable income
    1994 Black hair care market approached $2 billion ,                 was spent on hair care

           African- Americans represented 12.3% of
          the nation’s population & contributed 34%                Huge market potential &
                to the hair care market in the US                  the need for growth &
                                                                   diversification led to
                                                                   l’oreal’s decision
     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 L’oreal for $250 million & merged with “softsheen” brand
L’oreal now gained control over 3 of the top 5 selling hair care brands & 62% of the African-
American hair market
         SoftSheen·Carson confirmed its position
    2009 as No. 1 in the ethnic hair care products market,
         with new initiatives in three major categories

 upgraded the Dark and                             Launch of ammonia-free
Lovely range with a more                            Dark and Lovely Colour
moisturising formula, richer in                     Confidence Haircolor
shea butter than the other hair
relaxers on the market
                                                 Diversified into the skincare market in South Africa with Dark
                                                 and Lovely Body. A line of body milks enriched with vitamin E
                                                 and glycerine, which provide longlasting hydration
Source:Constructing corporate America: history, politics, culture By Kenneth Lipartito, David B. Sicilia
                          THE JAPAN CASE : THINK LOCAL ACT GLOBAL


        •Japanese women have small mouths & the concept of
         “mother of pearl” is very popular there
        •This particular molecule created the effect of water giving
          the lipstick a wet look

After careful economic analysis , L’oreal caterd to this segment with
Their 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 , L’oreal also launched the same product in
US & Europe where it enjoyed a similar meteoric success

                          Source :The new strategic brand management: creating and sustaining brand equity
                          By Jean-Noël Kapferer
  In 1996, L’Oréal bought 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               VAST
specialised in the different types of make-up         DISPARITY IN
targeting French middle class women”                  POSITIONING

                                     Maybelline was defined as “an in-brand of make-up
                                     from New York, targeting young ladies”
   Progression of the Gemey – Maybelline visual identity

     1998                2000                    2004                         2010
            The brand name Gemey-Paris became Gemey-Paris New York in 1998 and
Stage 1 :   started to be associated with “Maybelline New York #1 in make-up in the
WARNING     USA” both on the packaging and in communication when launching new
            products. 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

                               Gemey and          Integration of skyscrapers into the
                began in the
   Stage 2 :                   Maybelline have    background of advertisements and
                second half of
REPOSITIONING                  come together to   sales outlet visuals, sponsoring by
                               offer you better   American TV series and
                               technology         slogans
              Value Curves and Value Proposition

                                                                                                   The Body Shop made clear decisions regarding:
                                 The Body Shop - Illustrative Example
                                                                                                    –   What factors could be reduced below the
                                                                                                        industry standard?
              The Body Shop
                                                                                                    –   What factors could be eliminated that the
                                                                                                        industry had taken for granted?
                                                                                                    –    What factors should be raised beyond the
                                                                                                        industry standard?
                                                                                                    –   What factors should be created that the

                                                                                                        industry had never offered?

                                                                                                   In so doing, The Body Shop created a unique
                                                                                                    business model, brand and position that ensured
                                                                                                    an sustainable competitive advantage

                                                                                                   The Body Shop’s robust business model and
              Cosmetic’s                                                                            unassailable position was evidenced by
               Industry                                                                             L’Oreal’s acquisition of it in 2006

                                                                                                   Despite being an established, extremely well-
                  Price       Packaging &     Hi-Tech     Glamorous     Natural     "Ethical"       resourced competitor L’Oreal had been unable
                               Advertising   Scientific     Image     Ingredients   Concerns        to compete against The Body Shop’s values and
                                              Image                                                 positioning…..whether The Body Shop’s values
                                                                                                    were compromised by its acquisition, however, is
                                                                                                    a different matter!
                    Greasy & rocksolid     Quirky urban             Conscious
                                           fashonistas              hedonism
Reason for being    Dress the tough guys   Make people feel         Help people carry
                                           different &              a more pleasant
                                           provocative              experience
Value proposition   Stylish jeans &      Affordable fashion         Fun , imaginative
                    workwear with a used urban street wear          & colourful
                    worn out look                                   fashion
Differentiation     Worn out look          Urban street wear        Happy &
                                                                    colourful clothing
Persona             Tough , wild ,         Extravagant , critical   Witty , culture
                    adventurous                                     conscious
Associations        Rebels , women ,       Political issues ,       Youth , vitality ,
                    cigarettes , gas       religion , sexuality ,   happiness
                    stations , leather     fashion
Product range       Jeans & workwear       Jeans , clothing ,       Jeans , clothing ,
                                           shoes , fragrances       sunglasses ,
                                                                    watches , shoes ,
                                                                    bags , fragrances
Audience            Tough guys             Intelligent urban        Hipsters
                    wannabes               fashionistas
  1978-1993                                                                   2000-
Original motto “only      Communication shifted to odd      Communication changed to
the brave” charectizes     messages & unexplainable “how      individual itself , their passions ,
their first era            to” guides                         fears & motivation for life
Differentiated            This branding redirection was     With the consolidation of
themselves by selling      exemplified using models & non     Internet and the explosion of
jeans that looked worn     models in the same picture         free fashion magazines they
Jeans came pre            The aim was to get people to      realize that their consumers are
washed and with holes      remember their campaigns by        really smart and they decide to
on them                    creating a “mismatch buzz”         change their strategy and gear
Initially consumer        “people in jeans drowned          their brand towards very
perception related to      underwater with a stone attached   informed people, intelligent,
defective jeans on         at their feet” which was very      more individualistic and most
shelves                    controversial in Argentina since   important that want to be
Communication             many people during the             treated intelligently
changed to tight fitting   dictatorship was murdered that      creation of campaign specific
jeans & mohawk logo        way                                web sites that provide a more
T shirts with the         “being a man” ad portrayed 2      intimate relationship with their
mohawk logo soon           gay sailors kissing                audience

                    •First body shop opened at a small street in brighton
         1976       •sold only about a dozen inexpensive ‘natural’ cosmetics, all herbal
                    creams and shampoos, all in simple packaging

Differentiated business model     Why should anyone not have the freedom on the
                                  quantity they buy?
Offering totally natural          With this in mind , body shop offers customers only the
products , against testing on     required amount of cosmetics specified by them be it
animals                           skincare or haircare

Business model could easily be
copied by competitors                             Developed the idea of franchising
Lack of finance with founders
for rapid expansion of brand

       Selected partly with their fit on “body shop ideals” a head franchisee was granted
       exclusive rights as user of the trade mark, distributor and, after an initial trial of
       running a few shops themselves, the right to sub-franchise

                   Key advantage of      All “Body shop” built upon local market knowledge
                   franchising           thus minimizing loss of risks and cultural clashes

                 Company gets listed on the stock market
       1984      while still maintaining the franchisee model

                               •Own warehousing & distribution network wherein products
    Key strategies followed    were 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   sourcing ingredients and accessories
      communities in developing countries so that       from disadvantaged communities
      they can sustainably finance their own social     around the world
      and economic development

                              ACQUISITION OF BODY SHOP BY L’OREAL
 Body shop contribution to      L’oreal contribution to the
             l’oreal                       body shop
 Naturally oriented natural    Access to R&D practices ,
  cosmetics with strong           improved product
  identity & values               development for body
 Distribution expertise and      shop
  access to direct producer     Leverage L'Oreal's
  channels                        marketing expertise while
 A leading british brand to      respecting body shop
  complement L’oreal UK           identity
                  Established 2004 , a joint venture between L'Oreal & Nestle

       Diversification into the market of cosmetic nutritional supplements

   This brand marked the launch of “nutraceutical development”

                    •Capture growing demand for skin products to retain youthfulness
Key strategy
                    •Tap 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

                             2004 also saw new haircare developments: by launching
                             Innéov 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 in
                             the number, volume and quality of hair follicles
                       The market for nutricosmetics was practically empty & unexplored
                       Except for a few competitors like “IMDEEN”

BRAND     strong degree of relevance in the associations
FIT       and skills the two brands bring to the alliance
Nestlé’s reputation as leading and competent nutrition brand is highly relevant when making a
diet supplement. L’Oréal image as a beauty expert is just as relevant when making a diet
supplement meant to improving the quality of your skin and hair
L’OREAL USA purchased Kiehl’s 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 , kiehl’s , softsheen-carson , L’oreal had created an
international brand portfolio with wide range of incomes & tastes in 140 countries

Kiehl’s skin care , body care , fragrance & hair care products were renowned for their high
quality , effectiveness & cult following among celebrities

    Customer base was              No advertising at           Little expansion , most
     loyal and young               all , only through        business came from a singe
                                  celebrities touting        neighborhood store in New
                                    their products                       York

                  Unable to meet rising demand , sold itself to L'Oreal
                                         Foray into INDIAN MARKET

        Per capita consumption of skin                    Skin care in India is the most sought after
                   cleansing                              personal care category by both local and
                            US$/year                      global consumer majors given significant
                                                          head room for growth (23% penetration,
With a GDP of 1.9 trillion $ & rising
                                                          growing at 20% p.a.) with an estimated size
per capita incomes India offers a lot
of market potential to tap                                of Rs25bn

                                                                     Penetration in India %
           0.8                                                                  penetration %
                                                          100   94   91
india   indonesia   china       brazil    USA   germany    90
                                                           60                         51
Rising consumer awareness and interest,                    50
increasing income levels and favorable                     30                                   23
demographics (growing share of working                     10                                             1
women) are driving growth for the category
                             L’oreal 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 of l’oreal

2000 – l’oreal launches its range of products in the cosmetic market

Biggest contributor to the Indian revenue - GARNIER

                          HAIR CARE                   SKIN CARE

                           Fructis                    Nutritioniste
                                          USP : strong hair
                                  Caters mainly to the natural segment ; beauty through nature

                                                                 Performance is mainly
   •Garnier mainly operates in the mid price &                attributed to being the first
   luxury segment                                              player in india to launch a
   •In 2000, ganier garnered a 20% share in the
   hair colourant & dyes market                               hair based colour below the
                                                                 price of Rs 100(2002)
                                                              Home highlighting kit(2005)
                               Usage of fruit concentrate
Technological breakthrough :
                               in all their products
                               (combination of fruit acids
                               , vitamin B3 . B6 , fructose
                               & glucose

  The name “Laboratories Garnier” was changed to “Garnier” in 2001 to facilitate the brand’s
  acceptance in all the 5 continents it operates

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

• Garnier as a brand is slowly targeting the entire                       PARACHUTE STARZ
  personal care market
• Adopting a segment by segment targeting strategy

The launch of Garnier Fructis kid's          The entry of Garnier into the kid's segment
shampoo is expected to revive the kid's      may have been to catch them young.The new
personal care category in India. The kid's   generation kids have a mind of their own and
hair care market is dominated by HUL's       they are brand conscious. So tapping them
Clinic Plus brand and the other players      with a variant makes sense. Moreover mothers
being Parachute Starz. But recently the      feel that young hair /skin needs special care
activities in this category has been         and adults products may be too strong for the
minimal.                                     kids.
                      Entry in the men’s fairness segment
                     FMCG companies have been increasingly focusing on catering to men’s
                     grooming products
                      Men’s 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           Hindustan Unilever in 2007 launched 'Menz
segment in 2005 with the launch of 'Fair &       Active' in this sub-category, but the product
Handsome' which still dominates the space        has not been able to garner much share
with 63% share
                                                              Segmentation of Indian skin
Garnier saw a potential in the men’s fairness market               care market (%)
& also realized the gap in the moisturizing market             fairness         moisturizer   anti-ageing    anti-marks
                                                               body care        sun care      others

With that in mind, garnier men's light & power active
were launched which along with fairness also                            4%         12%
catered to “face wash” and “moisturization” instead
of just offering “fairness” as the core benefit                           11%                          46%

               STRATEGY/DIFFERENTIATION                            3%

Diversification into 2 categories with a single brand

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