L'Oréal Brand Analysis and Strategies

This assignment delves into a comprehensive analysis of L'Oréal, a leading player in the global cosmetics market. Students are tasked with examining L'Oréal's market dominance, strategic approaches including multiculturalism and social media marketing, brand image, ethical considerations surrounding skin-whitening products, and its future prospects within the evolving beauty landscape. The assignment encourages critical evaluation of L'Oréal's successes, challenges, and impact on consumers worldwide.

Running head: MARKETING AND MANAGEMENT
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MARKETING AND MANAGEMENT

MARKETING AND MANAGEMENT 1
Table of Contents
Issue 1: Company and industry analysis:.....................................................................................................1
Issue 2: analysis of 5C’s..............................................................................................................................2
Company: SWOT analysis:.....................................................................................................................2
Customers:...............................................................................................................................................4
Collaborators:..........................................................................................................................................4
Competitor’s analysis:.............................................................................................................................4
Context: PESTLE analysis......................................................................................................................5
Issue 3:........................................................................................................................................................6
Issue 4: Developing the marketing strategy.................................................................................................7
Issue 5: Development of marketing tactics..................................................................................................8
Conclusion:.................................................................................................................................................9
References:..................................................................................................................................................9

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Issue 1: Company and industry analysis:
L’Oreal group is one of the largest cosmetic companies in the world. The registered office of the
company is located in Paris and the head office of the company is situated at Clichy, France. The
company operates in the industry of cosmetic products. The company has come into existence in
the year of 1905 and today the company serves the market with its 2000 products. The company
is continuously experiencing growth and serving the market with wide and diverse product
range. As far as the mission of the company is considered, it has been analyzed that the company
wants to help the customers in realizing their aspiration and expressing their personalities to the
fullest. This is the statement that helps the company to create value to their business. In terms of
market orientation, the company focuses on customers and societal marketing orientation
concept. The company’s slogan, “Because I’M worth it” justifies that the company is
personifying its image and connecting its products to the customer’s personality (Gangjee &
Burrell, 2010). The company has the great products range, following are the products divisions:
 Consumer product division: L’Oreal Paris, Garnier, Maybelline NY
 Professional product division: L’Oreal Professional, Matrix, Kerastase
 Active cosmetic: Vichy
 Luxury product: Lancôme, Biotherm, ralph Lauren and Giorgio Armani
Industry analysis:
The global cosmetic industry has seen a great growth of around 3.8% in last 10 years. Out of all
the brands, L’Oreal is found to be the strongest brand and it has been reported that this is the
luxurious brand that is expected to attain more growth in near future.

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(Consultancy.uk., 2018).
The above figure suggests that L’Oreal is at the top of all the top 7 companies of cosmetics in the
world. The statistic suggests that it has the largest market capitalization of all the brands.
Issue 2: analysis of 5C’s
Company: SWOT analysis:
In order to analyze the company.it is required to conduct the SWOT analysis of the organization
that helps in identifying the strengths, weaknesses, opportunities and threats for the company.
Following is the SWOT analysis of L’Oreal.
Strengths:
1. L’Oreal is considered as the largest and the strongest cosmetic brand in the world. Its
market capitalizations found to be largest of all the top cosmetic brands.
2. Research and development: It has been analyzed that only pure manufacturing is not the
way to success for the cosmetic brand thus it is required to involve dermatology,
cosmetology, skin care, hair care etc. in the brand and this is what L’Oreal do (Crittenden,
Crittenden, Ferrell, Ferrell & Pinney, 2011).

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3. Large products range: as far as the product range is considered, it has been identified that
L’Oreal is the company that is serving the customers with great range of products in
different categories such as hair care, skins care, make up etc. not only the range of the
products but the company has different products division and brands (Brandt, Cazzaniga &
Hann, 2011).
Weaknesses:
1. Slow profit growth: although the company is earning great revenue from its sales but due
to high expense on R&D and other sectors for handling such a large company, it becomes
difficult and tough for the company to earn profit (Shen & Bissell, 2013).
2. Decentralization of the division: it has been analyzed that the company has many brands
and because of this division, the company finds it difficult to position itself in e market
with single image. The damage to single products of any brand may affect the other
products as well (Łopaciuk & Łoboda, 2013).
Opportunities:
1. Business expansion: as the company is doing well with range of products in cosmetics so
it can also expands its business in different products range such as in natural products or
any clothing brand that can support the business to expand
2. Alliances and acquisition: the company also has the opportunity to make alliances with
other brands or acquire small brands to have more and larges market share in order to
fight the tough competition.
Threats:
1. Competition: cosmetic industry is experiencing a great competition and new brands are
entering the market now and then. As per the analysis, Estee Lauder, Mac etc. are some
of the great brands that re competition for the market share.

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Customers:
Understanding consumer behavior is very important in the way that it helps in analyzing the
position of the brand in the minds of the customers. This helps in making the marketing targets
by the company. As far as L’Oreal is considered, it has been analyzed that it focuses on culture,
psychological and social factors to apply the knowledge in order to make marketing strategies.
L’Oreal group has the customers which are based at their demands. For instance, in the business
of skin care, the people who are facing ageing problems or skin problem will buy the products as
per their needs and demands from the product type (Hamzaoui Essoussi & Merunka, 2007).
Collaborators:
Collaborators of the company or the brand includes the partners, suppliers and there stakeholders
of the company that are linked and associated with the company in one or the other way. These
collaborators help the company to make their business functions more effective. L’Oreal believes
in developing strong bonds with its suppliers and tries to develop the relation that is sustainable
in nature. Reciprocal commitment is found to be the base of the relationship in order to have the
mutual growth (Loreal.hk., 2018). .
As far as the partners are considered, the company has three types of partnership that are
academic partnership, institutional partnership and private sector partnership. All these partners
are important for the company to help the firm in its research and development function. Some of
the science institution helps the company to manufacture its products and makes them effective
and harmless.
Competitor’s analysis:
Porter’s five forces is the analysis that can help in evaluating the competitive environment of the
company.
Threat of new entrants It has been analyzed that barriers to entry is very high in this industry
and thus the threat from new entrants is low for the companies like
L’Oreal. This is because the companies need to have high capital in

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order to enter the industry and also have to make the products that are
not harmful for the skin. This requires them to have a certified
permission.
Threat of rivalry The rivalry for L’Oreal is also moderate in nature because there are
many companies in the cosmetic industry but L’Oreal is a very big
brand and it is very difficult for any of the company to replace the
brand. L’Oreal has around 50 brands and it would be very difficult for
the company to reach up to that place. Although the competition is high
in the industry but L’Oreal is at very high level (Fayolle, Basso &
Legrain, 2008).
Threat of substitutes Threat of substitutes or the company is high in nature. This is because
of the preferred natural products choice of the customers. these days are
preferring to buy the natural products and avoiding the use of chemical
products on their skin thus these natural products can replace the
L’Oreal products in the market
Buyer’s power The power of buyers is very one as compared to the company and the
company has its hands up in this case. This is because of the large
number of customers in the market. As there is large number of
customers in the market thus the company has the power to bargain and
set the prices (Edu, Negricea & Nicolaica, 2013).
Supplier’s power The bargaining power of suppliers is again very low in comparison
with the company lie L’Oreal. This is because the company has its own
image in the market and thus has many suppliers.
Context: PESTLE analysis
To analyze the contextual factors, PESTLE analysis needs to be done:
Political factors:

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There are many political challenges that the company has to face. It has been analyzed that as a
cosmetic brand the company has to follow the guidelines given by each of the government in
every country where the company operates and series the market. The company is obligated to
manufacture safe products as per the standards of the government and should be passed by the
authorized institutions of every country.
Economic factors: as the company operates in many different countries, thus it has to follow the
guidelines of those countries. Thus, the global economic conditions affect the functioning and
the revenues of the company. Any variation or fluctuation in any of the market affects the
functioning of L’Oreal and its overall profits (Saraswati, 2010).
Social factors: social factors include the culture of the countries and the values of the customers.
L’Oreal is considered as the leader of change and thus it adopts the strategy of universalism and
tries to serve the market as per their preferences.
Technological factors: technology plays a great part in this industry of cosmetic products. This is
because science is the major part of the manufacturing process. The scientific and technical
knowledge of the skin and the hair as well as the chemical is very much required.
Legal factors:
The company should focus on being legally and ethically correct. This is because the company
has to follow all the legal obligations and it is required to produce the products that do not harm
the customers in being ethical.
Environmental factors: environment is also main concern for the companies like L’Oreal. This is
the reason why the company belies in sustainable practices.
Issue 3:
a. What customers want?
As per the analysis, it has been identified that customer behavior is in terms of their demands. As
the company provides various product ranges to the customers thus the customer’s choice

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depends on their demands and needs. The customers with skin care needs prefer to buy the
products from the skin care range. A customer who runs the salon prefers to buy the products of
the professional range. L’Oreal used to analyze the customs demands with the help of demands
that the customers generate (Gangjee & Burrell, 2010).
b. Which competitors pose a threat?
It can be analyzed by conducting mare research. It is required by L’Oreal to conduct market
research timely in order to identify the threats for them. The major threat or competitors of the
company are found to be Estee Lauder and Beiersdorf etc.
c. How the context of business is changing, if at all?
The context of business is changing as per the change in the demands of the customers and the
preferences of the customers I different countries. The L’Oreal should think of going into natural
products range as the customers are taking interest in buying the same these days.
d. What role collaborators play in the process?
Collaborators play a great role in L’Oreal process. The suppliers are the one who acts the
mediators between the company and the customers. Thus, it is important to make good relations
with the suppers in order to serve the market effectively. Partners are the one who are
responsible for making the functions more effective and restricting the company to be in its legal
and ethical limitations. Partners help the company for its research and development processes as
well (Ren, Xie & Krabbendam, 2009).
Issue 4: Developing the marketing strategy
Target market: as the company has the opportunity to enter the new market by launching the
natural range of products thus the target market for the company should be the teenage girls who
cannot put so much of chemical o their sensitive and young skin.

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Value proposition: as far as the value proposition of the company is considered, this new range
should be positioned as the products for the younger skin so that the company can attract young
generation for the products.
Positioning statement:
The positing statement of the company should be:
“Natural me, young you”. This statement suggests that the company is making the products from
the natural products that will help the young to be young always and make their skin healthy
without any chemical use.
Issue 5: Development of marketing tactics
Recommended marketing mix:
Product: the product in the case is natural products range for the young generation. The products
range is into skin care products only (Edu, Negricea & Nicolaica, 2013).
Price: the penetration strategy of pricing should be used in this case so that the company can
compete with other natural product competitors.
Place: the place should be the distributor and the retailer point along with the franchisee stores.
Promotion: the major promotional tool that can be used by the company is campaign and public
relations. This helps the company to develop good relation with the youth. Campaigning can be
done in schools and colleges.
Process: the process that needs to be followed in order to reach the customers is through retailers.
As the products are natural so the sustainable processing should be used.
People: the people who all are involved in the process are employees, suppliers, workers,
government, partners, customers etc. (Fukukawa, Balmer & Gray, 2007).
Physical evidence: the physical evidence of the products is the brand name and the packaging.
The packaging should be green in color and should use the disposable material.

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Conclusion:
It has been concluded from the report that L’Oreal is the company that operates in cosmetic
industry.it is the firm with great products range and its weakness is its decentralization because
of the high products range. The company has the opportunity to expand its business in natural
products for the young generation and thus it is required by the company to use the marketing
strategies like campaigning and public relations to make the youth aware about the presence of
new products range of the company.

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References:
Crittenden, V. L., Crittenden, W. F., Ferrell, L. K., Ferrell, O. C., & Pinney, C. C. (2011). Market-oriented
sustainability: a conceptual framework and propositions. Journal of the Academy of Marketing
Science, 39(1), 71-85.
Hamzaoui Essoussi, L., & Merunka, D. (2007). Consumers' product evaluations in emerging markets:
does country of design, country of manufacture, or brand image matter?. International Marketing
Review, 24(4), 409-426.
Hong, H. J., & Doz, Y. (2013). L’Oreal masters multiculturalism. Harvard Business Review, 91(6), 114-
118.
Shen, B., & Bissell, K. (2013). Social media, social me: A content analysis of beauty companies’ use of
facebook in marketing and branding. Journal of Promotion Management, 19(5), 629-651.
Consultancy.uk. (2018). Global cosmetics market worth €181 billion, L'Oreal dominates. Retrieved 18
January 2018, from https://www.consultancy.uk/news/2810/cosmetics-market-worth-181-billion-
loreal-dominates
Loreal.hk. (2018). Suppliers - L’Oréal Group. Retrieved 18 January 2018, from http://www.loreal.hk/en-
hk/suppliers
Fayolle, A., Basso, O., & Legrain, T. (2008). Corporate Culture and Values: Genesis andSources of
L'Oréal's Entrepreneurial Orientation. Journal of Small Business & Entrepreneurship, 21(2), 215-
229.
Saraswati, L. A. (2010). Cosmopolitan whiteness: The effects and affects of skin-whitening
advertisements in a transnational women's magazine in Indonesia. Meridians: feminism, race,
transnationalism, 10(2), 15-41.
Gangjee, D., & Burrell, R. (2010). Because you're worth it: L'Oreal and the prohibition on free riding. The
Modern Law Review, 73(2), 282-295.
Edu, T., Negricea, I. C., & Nicolaica, A. (2013). Facebook-a Marketing Instrument and Differentiator in
Brand Positioning. A Case Study on L’Oreal Paris Romania. International Journal of Economic
Practices and Theories, 3(2), 92-102.
Ren, L., Xie, G., & Krabbendam, K. (2009). Sustainable competitive advantage and marketing innovation
within firms: A pragmatic approach for Chinese firms. Management Research Review, 33(1), 79-
89.

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Fukukawa, K., Balmer, J. M., & Gray, E. R. (2007). Mapping the interface between corporate identity,
ethics and corporate social responsibility. Journal of Business Ethics, 76(1), 1-5.
Brandt, F. S., Cazzaniga, A., & Hann, M. (2011, September). Cosmeceuticals: current trends and market
analysis. In Seminars in cutaneous medicine and surgery (Vol. 30, No. 3, pp. 141-143). Frontline
Medical Communications.
Łopaciuk, A., & Łoboda, M. (2013, June). Global beauty industry trends in the 21st century.
In Management, Knowledge and Learning International Conference (pp. 19-21).