Market Analysis and Marketing Strategy of L’Oreal Paris

This case study discusses the market analysis and marketing strategy of L’Oreal Paris. It covers the macro environment analysis, competitive analysis, and marketing strategy of the company. The target audience of the company, its strengths, weaknesses, opportunities, and threats are also discussed. The paper concludes with the importance of developing an effective marketing strategy for the company to gain a competitive advantage.

Market Analysis and Marketing Strategy
Case Study of L’Oreal Paris

Table of Contents
Introduction.................................................................................................................................................3
Overview of the organisation.......................................................................................................................4
Market Analysis..........................................................................................................................................4
Macro Environment Analysis: Porter’s five forces..................................................................................4
Competitive Analysis..............................................................................................................................6
Marketing Strategy......................................................................................................................................6
Conclusion...................................................................................................................................................7
References...................................................................................................................................................8

Introduction
Marketing is an extremely important tool for every business in the contemporary era of business.
With globalisation defeating all the global barriers competition has increased significantly in the
market and hence, it has become important for top multinational organisation to emphasise on
developing a strong marketing strategy which would help the organisation to sustain in the
market for a long time. L’Oreal Paris is one of the most renowned cosmetics brands that has
worked all across the world with time. The organisation has been able to expand its business in
different countries with effective marketing and awareness creation (Chernev, 2018). It is
planning to expand its operations completely in India which is why this paper is important.

Overview of the organisation
L’Oreal Paris is a France based personal care organisation and is the world’s largest cosmetics
company. The company develops products related to skin care, hair care, sun protection and
ageing solutions and is relied upon by many consumers. The company was founded way back in
1909 and continues to expand its business. It carries strength of 86,000 employees with total
revenue of EUR 27billion. L’Oreal has total six different research and development centers in
France, US and Japan from where the organisation comes up with new products and services for
the consumers (Blaszczyk and Wub, 2018). Even though the organisation has had to face some
controversies but it has been able to maneuver them effectively to emerge victorious. It has
expanded its business rapidly in the last few decades which has happened due to an excellent
market analysis strategy and marketing plan. India is one of the largest markets for cosmetics
products for the company and it has experienced an increase of around 7.5% in sales in the 15
years in India which clearly shows that the competition in the Indian market is increasing which
is why it is important for the organisation to develop a strong competitive analysis with the help
of different tools that would allow to prepare marketing strategy accordingly (Sandberg, 2015).
Market Analysis
Market analysis involves analysing the market as well as the competition and understanding the
behavior of the key stakeholders for the organisation L’Oreal. It is extremely important to
understand and implement the 5Cs of marketing and other macro analyses which would help to
come up with effective marketing strategy.
Macro Environment Analysis: Porter’s five forces

Fig 1: Porter’s five forces
Bargaining power of suppliers is comparatively high for L’Oreal because the organisation needs
the supplier for different reasons and there are number of similar organisations operating all
across the world. The suppliers who work with L’Oreal do have number of choices to go to if
business relationship doesn’t work out good with the organisation and hence they are in a good
position. Even though it is important to note that the organisation has long term relationship with
the suppliers which makes them secured but change is the only constant in the market so it is
important for the organisation to focus on understanding the Indian market to retain the best
suppliers (Chernev, 2018).
Threat of new entrants is comparatively high in the sense that there are a lot of new foreign
organisations dealing with the same products that are willing to launch their business in the
Indian market due to the vastness of the market. Since the cosmetics industry globally has been
expanding fast there is a higher threat of entrants in the market.
Threat of substitutes is also high because there are number of local Indian and foreign
organisations that are willing to sell products at an affordable rate and with same promises for
consumers thus, the organisation has to be careful about it (Calder, Malthouse and Maslowska,
2016).
Bargaining power of consumers is high because there are number of other organisations that
have quite similar services to that of L’Oreal and hence, consumers if not satisfied with this
company would definitely move on to others like Avon, Garnier, Lakme et cetera.
Competition in the Indian market is definitely high for L’Oreal Paris because over the year’s
number of organisations has settled down in the Indian market in the cosmetics industry which
makes the Indian market highly competitive for this organisation (Lovelock and Patterson,
2015).
Hence, from the above macro analysis it is clear that the Indian market is highly competitive in
nature.

Competitive Analysis
The 5Cs of marketing tool is an extremely effective tool for the organisation L’Oreal Paris to
analyse competition. It consists of consumers, competitors, company, collaborators and climate.
Consumers: The organisation mainly focuses on secondary and primary sources of data in order
to understand the market. It emphasises on market survey preparation and existing data of market
surveys already done. This helps the organisation to understand the trend in the best possible
manner. Understanding customer demands and trends become extremely easy by directly
communicating with them to learn about their demands. Customers want affordable and quality
product and there are number of organisations to provide that.
Company: The major strengths of L’Oreal are innovation, expertise and great research whereas
weaknesses lay in the aspect it has not been able to communicate with people effectively in the
last few years. Opportunities lie in the new markets whereas threat mainly remains to be
competition (Homburg, Jozić and Kuehnl, 2017).
Competition: Analysing the competition in the market L’Oreal takes the traditional approach
with the integration of technology. Business intelligence and analytics are retrieved which helps
the organisation focus on understanding the market scenario and emerging competitors in the
Indian market. Ten years statistics help the organisation to analyse the shifts in demand curves
and accordingly move towards developing marketing strategy. The immediate competitors of
the market involve Lakme, Avon, Garnier, Unilever et cetera.
Collaborators do play an important role in distributing the products and hence, poor relationship
with them affects the business which the organisation has to keep in mind.
Context: The organisation doesn’t have any research center in India which would largely reduce
the cost of production due to low labor costs and lesser operating. Stable government largely
helps the organisation to operate well. Positive change in the economic condition has helped
India (Atwal and Williams, 2017).
Marketing Strategy
In Brief the marketing strategy of L’Oreal has to be consumer oriented. The marketing strategy
should be penetrative in nature which would help to ensure reaching mass audience. The

organisation should emphasise on providing quality product which at core is of effective quality
and the parameter of the augmented product should be style. The price of the products has to be
penetrative in the initial period which would help to make sure each and every customer in the
target audience is able to purchase them. The promotion should be done based on promotional
mix with discount and personalised sales process and direct marketing like mass media
advertisement by celebrities. L’Oreal should also indulge in excellent digital strategy through
web selling and social media marketing putting the interested people together to promote the
company effectively. The target audience of the organisation is middle class people especially
female between the age group of 18-50 (Bagozzi et al., 2018).
Conclusion
India is one of the largest markets for almost every FMGC products and the sale of cosmetics
items have been hot product and hence, the organisation focuses on creating an effective
marketing strategy which would help the organisation to gain competitive advantage. The
present study has discussed the key aspects of macro environment, 5Cs of marketing which has
helped to prepare an effective marketing strategy.

References
Atwal, G. and Williams, A., 2017. Luxury brand marketing–the experience is everything!.
In Advances in luxury brand management (pp. 43-57). Palgrave Macmillan, Cham.
Bagozzi, R.P., Rosa, J.A., Celly, K.S. and Coronel, F., 2018. Marketing-Management. Walter de
Gruyter GmbH & Co KG.
Blaszczyk, R.L. and Wubs, B. eds., 2018. The Fashion Forecasters: A Hidden History of Color
and Trend Prediction. Bloomsbury Publishing.
Calder, B.J., Malthouse, E.C. and Maslowska, E., 2016. Brand marketing, big data and social
innovation as future research directions for engagement. Journal of Marketing
Management, 32(5-6), pp.579-585.
Chernev, A., 2018. Strategic marketing management. Cerebellum Press.
Homburg, C., Jozić, D. and Kuehnl, C., 2017. Customer experience management: toward
implementing an evolving marketing concept. Journal of the Academy of Marketing
Science, 45(3), pp.377-401.
Lovelock, C. and Patterson, P., 2015. Services marketing. Pearson Australia.
Sandberg, S., 2015. Lean in-Women, Work and the Will to Lead.