L'Oreal Paris Marketing Strategy Analysis

This assignment requires a detailed analysis of L'Oreal Paris's marketing strategy, including a SWOT analysis, market segmentation, and competitor analysis. The document must be written in English and should not exceed 3000 words. The student is expected to provide an introduction, literature review, methodology, results, discussion, and conclusion. The assignment also requires the student to reference at least 10 academic sources and include a bibliography. Additionally, the student must provide a summary of the document in a paragraph.

MARKETING STRATEGY

EXECUTIVE SUMMARY
L’Oreal is one of the largest company dealing in manufacturing of cosmetics and
being headquartered in France. The major products of the firm are hair care, perfume, skin
care, hair colour and make-up. The firm has been engaged in this business from 100 years
and is in the list of top cosmetics companies of the world. The main aim of the current
research report is to pays attention on the nature of marketing strategy as well as its
importance in L’Oreal when its plans to introduce new product in the market. The study will
also evaluate the drivers and factors that influence the choice of marketing strategies.
While carrying out research, it was identified that current marketing strategies of the
firm are distinct from other companies operating at the same scale. The strategy being used in
the European market by L’Oreal supports in nurturing self-esteem of people with beauty. The
company launches new product ‘Anti-wrinkle cream’ to target female of upper middle class
and upper class. They make use of premium pricing policy and various advertising methods
along with sales promotion for marketing their products. Subsequently, it is quite evident
from the study that marketing strategy plays a crucial role for making a product reaching to
its end users as well as to achieve success in set objectives

CONTENTS
INTRODUCTION .....................................................................................................................................4
TASK – 1.................................................................................................................................................4
L’Oreal – Introduction of the brand ..................................................................................................4
Environmental analysis .....................................................................................................................5
Current marketing strategy of L’Oreal...............................................................................................6
Critical evaluation of the L’Oreal’s competitive edge .......................................................................7
TASK – 2.................................................................................................................................................8
Rationale for the introduction of new product .................................................................................8
Anatomy of the product ...................................................................................................................9
Segmentation, targeting and positioning...........................................................................................9
Marketing objectives and goals ......................................................................................................10
Marketing strategies .......................................................................................................................11
CONCLUSION ......................................................................................................................................13
REFERENCES ........................................................................................................................................14

INTRODUCTION
Marketing is an important study as well as management of exchange relationship.
With the increased execution of free trade and advent of globalization, numerous firm are
making an attempt to search markets outside their own nations. A marketing strategy of any
firm gives them a sense of direction by clearly mapping out the aims and objectives in the
specified market (Atwal and Williams, 2009). The present research study also pays attention
on the nature of marketing strategy as well as its importance of a particular organization. The
report will also evaluate the drivers and factors that influence the choice of marketing
strategies. For this purpose, L’Oreal a largest cosmetic brand is being taken under
consideration. The firm deals in numerous cosmetic product and is headquartered in France.
The main business of the company pays attention on manufacturing of cosmetics for varied
market. The second part of the present writing will include development of marketing plan
for the new product and also throw light on various models as well as techniques that aid the
strategy marketing process and will evaluate contemporary marketing issues as well as
problems in strategic context.
TASK – 1
L’Oreal – Introduction of the brand
Throwing light in relation with L’Oreal, it is one of the largest company dealing in
manufacturing of cosmetics and being headquartered in France. The major products of the
firm are hair care, perfume, skin care, hair colour and make-up. The firm has been engaged in
this business from 100 years and is in the list of top cosmetics companies of the world.
Further, the annual report of the L’Oreal has depicted that in the year2015, it has highest sales
with US$29.94 billion which is about two times higher than Procter & Gamble (L’Oreal
Paris, 2018). They have their operations in around 140 nations and is giving employment
opportunities to more than 82000 people. In addition to this, they have thirty five thousand
patents granted in total and near about 500 patents which is registered every year. The major
strength of the company lies in its research as well as innovation ability. L’Oreal has around
35 research and evaluation centres, 153 distribution centres and 44 factories all around the
globe. The main mission of the firm states that beauty is language and commitment. From
past so many decades, the firm has devoted energy towards beauty, it helps in expressing
individuality.
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The company is also quite popular for their global marketing strategy which are
distinct from other companies operating at the same scale. The strategy being used in the
European market by L’Oreal supports in nurturing self-esteem of people with beauty
(L’Oreal, 2018).
Environmental analysis
This analysis refers to the evaluation of the macro as well as micro environment of the
company in which they operate their business. The analysis of the macro-environment of
L’Oreal can be performed by adopting PEST analysis tool and is being explained underneath:
PEST (external analysis) Political – This factor has direct as well in-direct influence on the operation of the
firm. Decisions being made by the government of UK might have impact on the
business of L’Oreal. Talking in reference with the cosmetic industry in United
Kingdom, the European Cosmetics regulations 1223/2009 is very crucial because it
encompasses all the law that are required to be considered by an cosmetic industry
such as animal testing, safety, restrictions for particular substances, consumer
information, free movement of goods, implementing measures and many more
(Koblentz and Wei, 2011). Other than this, increase and decrease in the corporation
tax will influence the cosmetic industry either positively or negatively. Economic – These are the factors that mainly influence the purchasing power of
customers. If people will demand product more than there will be more profits to the
firm. It significantly include economic growth rate, interest rate, unemployment rate
etc. Focusing towards the beginning of the year 2009, the unemployment rate was
quite high in comparison with the end of the year 2010. This rising unemployment
rate in UK depicts that a part of customer base has lot their purchasing power and will
mainly effect the luxury products. Social – Talking in reference with the social factors, one of the biggest beauty trend in
UK right now is bespoke makeup. This depicts the late shift of the industry in regards
with the greater diversity where each and every brand are making efforts in putting
their customers on the first priority. L’Oreal has to match with this trend to meet out
their expectations. In addition to this, another social issues the company may
encounter is related with animal testing.it becomes very hard for the firm to market
themselves as ‘cruelty free’, as they are not sure which ingredient used in the product
has been tested on animals (Winter, 2014).
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 Technological – The UK market ranks third largest market in the field of e-commerce
market all around the globe. Around 13 percent of the cosmetic industry’s sales is
being generated online and thus, it will add benefit to the firm.
SWOT analysis (Internal analysis of the firm)
Strength
 Leader in the growing cosmetic industry
 Continuous research and innovation in the field of beauty
 Wide-spread operations in more than 130 nations of the world
 Fantastic products and brand portfolio (Anticova, 2014)
 Strong integrated marketing communication
Weakness
 The profit margin of the firm is low
 Stiff competition in the market
 Decentralized structure of the firm leads to difficulty in controlling
the activities
 Hair care is a degrowing segment
Opportuniti
es
 Affluent, aging as well as markets of developed nations can be
tapped
 Large share in the market because of numerous patents being
registered by the firm
 Demand for organic cosmetics
Threats
 Increasing competition in the market
 Economic down turn in other nations (Duflot, 2014)
 Dynamic nature of cosmetic industry
 Cash crunch
Current marketing strategy of L’Oreal
Focusing towards the success of the brand L’Oreal, it exist in the fact that the firm is
capable enough in reaching out to the people of varied nations of the world, across different
cultural patterns and income ranges. The firm has offered them suitable product range that
they are worthy of. The strategies of the company was quite different enough to stop itself
from restricting it in a single nation (Sheldon, 2006). The firm sale their product based on the
demand of the customer and wants of the nation rather than keeping their products same for
all nations. In addition to this, they have established numerous brands entrenched to the
restricted culture significantly appealing to diverse segments of universal market.
The company has segmented their market on the basis of demographic such as upper
middle and upper-class customers wear beauty as their identification. Other than this, for the
purpose of targeting varied segments of customers, they have adopted differentiated strategy
to target middle, upper middle and upper class customers. Majority of them are working
professionals and those who desire to flaunt their personas. Additionally, L’Oreal has
positioned itself as the most ethical cosmetic as well as beauty care company that pays
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attention in universalism that is significantly respecting the variation in culture, aspirations,
desires of internal and external stakeholders (Keller, 2013).
Critical evaluation of the L’Oreal’s competitive edge
Articulating in relation with the Unique Selling Point (USP), it is being defined as a
factor or consideration being presented by the company as a reason of their product
differentiation from their companies. Before selling products to the customer, the
organizations are required to work out that what is unique in their product. L’Oreal has also
set their USP which entails that the firm best caters to the beauty demands of women of
varied cultures by constant research and innovation (The Unique Selling Point explained,
2013). Thus, it can be said that the firm’s strategic plan to maintain a competitive edge over
the other firms operating in the market is being done by research and innovation to
manufacture a sustainable future. The main source of their competitive advantage is the
energy as well as ideas of their employees. Further, the strength of the company lies in what
they value i.e. performance, customers, quality, environment and integrity.
In addition to this, the firm believes that by making use of these intensive strategies
will support them in innovating faster, earlier as well as better. Moreover, the entire life cycle
of each of the product takes into account the rules of Eco-design that comprises testing small
quantities for minimizing waste, select ingredients, re-utilization of products, production
processes that requires low level of energy as well as toxic solvents and recyclable
packaging. The firm is also committed to augment the utilization of renewable raw-material
in their products. In the year 2010, near about 40 percent of the material in the portfolio of
L’Oreal is based on plant. Furthermore, 26 percent of the materials in their portfolio comply
with green technology. By the end of the year 2011, 80 percent of the raw-materials of the
firm with biodiversity issues will be addressed significantly (Cant and et.al, 2006).
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Competitive advantage of marketing strategy
The competitive advantage of marketing strategy of L’Oreal lies in basic two points and these
are explained below: Strong brand portfolio – L’Oreal have extensive brand portfolio such as consumer
products like, NYX Nicely, Dark & Lovely Essie, L’Oreal Paris, Maybelline etc. and
professional products like, Redken, Matrix, Kerastase, Purelogy, Decleor etc. Diversity in the company – The organization has always laid emphasis on
universalization and diversity operating with around 34 brands and more than 82000
employees. Further, they are also operating in more than 155 nations of the world
(Perry, 2014).
Competitors of L’Oreal and their market performance
The major competitor of L’Oreal are Estee Lauder, Revlon and Chanel. They are also
offering products with high quality and satisfying the people of UK with innovative beauty
products (L’Oreal’s Competitors, Revenue, Number of Employees, Funding and
Acquisitions, 2018). Market performance of all these companies are being defined in the
below table:
Brands Annual revenue Employees Market share
L’Oreal $32.4B 82,600 19.9%
Estee Lauder $106M 46000 9%
Revlon $2.7B 7,800 3%
Chanel $2B 15,355 2.6%
TASK – 2
Rationale for the introduction of new product
Innovation is being regarded as one of the most critical level for each and every firm.
It includes risks in relation with product failure that might takes place soon after the product
is being launched in the market. The market around the globe is being featured by numerous
taste and patterns of the customers and thus, in this face of increasingly altering needs of the
clients, technology and competition, L’Oreal is required to offer new products that satisfy all
the segments of the market (Espejo and Kuropatwa, 2011). Company carries out systematic
research and development as well as innovation for developing successful products that meet
out the needs of market demand. In the current case, L’Oreal is launching an “Anti-Wrinkle
cream” in the market of UK through their research and development efforts. The firm has
exclusively innovated this product considering the fact that since the younger female
consumers are being spotted by the firm, consumers in their later years of life should also be
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targeted. Further, it has been noticed that life expectancy is rising throughout the globe and
increasing snowy-haired population in UK is the main reason behind the introduction of Anti-
wrinkle face cream in the market.
Anatomy of the product
Throwing light in relation with the anatomy of the product, it is being defined as an
evaluation of the product as per various benefits it offers. There are many layers of benefits
of the product depending upon different buyers i.e. core product, actual product and
augmented product. In case of L’Oreal, the firm is introducing a new anti-wrinkle cream in
the market so the core product will be the most basic level of benefit that people looks to buy
(Amstrong and Kotler, 2013). For example, the cream can be applied on face and will keep
their skin hydrated. The next level is the actual product and it is the stage where benefits are
being translated into the products that people will purchase. It includes branding, packaging,
features, styling and quality level that persuades people to buy such products. In case of the
new product of L’Oreal, they are styling the product in goof looking bottles and presenting
extensive range of anti-wrinkle creams to people so that they can search ideal formula for
their skin needs.
Further, the product is also available for different age group such as combating
appearance of deep lines with mature skin, firming complexion with elastic with formulations
enriched with collagen etc. Finally, the last level of products includes augmented benefit that
includes the additional advantage attached with the product which is intangible in nature. It is
basically related with after sales services such as free or cheap delivery, warranty, help lines
and many more (Aaker, 2008). L’Oreal makes use of celebrity to advertise their products and
have help lines through which customers can give their feedback and make their experience
better with the product.
Segmentation, targeting and positioning
Market segmentation
As per Kotler, market segmentation is nothing but an art of categorizing a market into
various subsets which are identifiable as well as meaningful. Marketers than target one of the
segment or all subsets by making use of particular marketing mix. It is being regarded as one
of the most powerful element of marketing strategy. If the firm fails to segment the market
properly in comparison with their competitors than this will bring appalling effect. Market
can be segmented on the basis of five set of variables i.e. demographic, geographic,
psychographic, behavioural and geo-demographic segmentation (Bailey and et.al, 2009).
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Considering the new product of L’Oreal i.e. ‘Anti-Wrinkle cream’, the company can make
use of demographic segmentation which includes occupation, income, age, level of education
and gender. The company needs to target upper middle class as well as upper class females
with high income group. This is because of the fact that they are concerned and ready to pay
in order to appear beautiful.
Target market
It is again defined as a process of segregating a group having similar needs and wants
in a particular segment. In simple words, it is a process of deciding which segment to be
targeted based on its attractiveness. The target customer of L’Oreal’s new anti-wrinkle cream
will be female with age group 30-65 years both professional and non-professional. These
target customer group is interested in beauty and want to take care of themselves (Moroko
and Uncles, 2009). In addition to this, they are also willing to spend some extra money in
their skin care products.
Market positioning
This is being regarded as the last step in STP process wherein the firm decides the
ways to position their new product in the market. Here, the company is required to determine
their USP and draw a positioning map to comprehend each segment. Since L’Oreal’s target
customers are high income group, it is being known as a high end brand. They need to
position their new product in the market through attributes of the products, beliefs as well as
values. They can make use of campaigns with celebrities which highlights the benefits of the
cream such as it helps in reducing the appearance of wrinkles and supports in improving the
elasticity of skin etc. This will help in establishing a positioning of a product in the intellects
of the customers (Cartwright, 2002).
Marketing objectives and goals
It is quite significant for almost every company to set marketing goals and objectives
so as to have a clear path or direction of things that needs to be achieved and how to proceed.
However, it is also crucial to consider that the marketing objective should be specified,
measurable, achievable, relevant and time bound. In simple words, the marketing objectives
which will work best are known as SMART objectives. Specific – The marketing objective should be such that it clearly defines the purpose
of the firm and it is very easy for the whole team to comprehend the things that needs
to be achieved.
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 Measurable – Another important aspect is that it should be measurable. They must
have key performance indicators as well as benchmarks that empowers the company
to measure the success of the product or a particular brand (Kotler and Armstrong,
2010). Achievable – Each and every goal and objective must be set as per the ability and
within the reach of the firm and its whole team. In other words, it can be said that the
goals should not be set at too higher bars that it becomes difficult for the team to
achieve the same. Relevant – It is also important element for developing SMART objectives. It states
that the goals and marketing objectives should be according to the mission and
direction of the business of the firm. Further, there must be good reasons behind each
of the marketing objectives (Kumar, 2010).
 Time bound – Last but not the least, the goals should have time line which will clearly
depicts the beginning as well as ending of the objectives.
The following are the marketing objectives for Anti-Wrinkle Cream of L’Oreal:
 To augment the sale of anti-wrinkle cream by 15 percent in next 18 months
 To generate 200 leads through websites every month
 To increase the share in the market for the new product by 6 percent over the next 14
months
 To grow the distribution of anti-wrinkle cream by 12 percent within a year
Marketing strategies
For creating marketing strategy, it is quite significant for the marketers to determine
the market segment as well as target market and the ways through which it can be performed.
As per Cant, segmentation, targeting and positioning process supports the firm in determining
these facets. Since, L’Oreal has determined its target market for the new product ‘Anti-
Wrinkle cream’, the next step is to develop and execute appropriate marketing mix, as this is
considered as one of the most vital set of tools to utilize for this purpose (Hrebiniak, 2013).
Marketing mix
After determining the market or group to be targeted, it is quite essential for L’Oreal
to formulate marketing mix. This will help in achieving position in the intellects of the
customers and make the products as well as services attractive to the group to be targeted. It
is very much significant in marketing to have right mixture of product, place, price and
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promotion. In addition to this, the main aim of marketing mix is to represent an image for the
product that will match with the ways organization wants to visualize in the intellects of the
customers. The marketing mix for anti-wrinkle cream of L’Oreal is being described in the
subsequent paragraph: Product – Talking in reference with the products, they are things which supports in
creating an image in the cognizance of the clients. They have decided to launch new
anti-wrinkle cream in the market of UK which will many range such as combating
appearance of deep lines with mature skin, firming complexion with elastic with
formulations enriched with collagen etc. Further, all the products of the firm passed
the international standards of testing (Pearson, 2014). Price – This figure is estimated when market demand as well as cost of manufacturing
the product comes together and identifies the profitability. For the new product,
L’Oreal will adopt premium pricing policy, as the target market is high end users and
they consider expensive things as high quality. They will use value added pricing
policy for all their product range. In addition to this, discounts as well as reductions
will be provided occasionally. Place – L’Oreal has their operation in 30 nations of the world and development and
research centres in 6 places such as China, japan, US and France. This new product
called ‘Anti-wrinkle cream’ will be found in various outlets such as super markets,
salons, beauty outlets. Other than this, the product will also be available in company’s
own websites along with tie ups with other shopping sites. The product will reach to
the customers significantly through three distribution channel called wholesalers,
retailers and customers (Brassington and Pettitt, 2006).
 Promotion – It includes all the methods that helps in communicating the offering of
the company to the target market. For promoting anti-wrinkle cream in the market,
L’Oreal will make use of advertisement. Wherein, products, its benefits as well as
features will be advertised on Television, radio and print media such as magazines,
newspaper and brochures. In addition to this, sales promotion techniques like free
sample, gifts, vouchers, coupons will be offered by the firm (Clow, 2010).
CONCLUSION
Consequently, it is quite evident from the study that marketing strategy plays a crucial
role for making a product reaching to its end users as well as to achieve success in set
objectives. In the report, L’Oreal is planning to launch Anti-Wrinkle cream and it has been
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noticed that life expectancy is rising throughout the globe and increasing snowy-haired
population in UK and thus it is the main reason behind the introduction of Anti-wrinkle face
cream in the market. Further, it was analysed while writing a marketing strategy and plan for
introduction of new product of L’Oreal in the market that it is not an easy process. It needs to
be monitored at each and every step precisely than only the firm will be able to get its desired
outcome.
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