L'Oréal's Market Development and Product Development Strategies

The assignment discusses the Ansoff Matrix and BCG Matrix to analyze the current situation of L'Oréal products and suggest strategies for growth. The company is currently in a 'Cash Cow' stage, where it has high market share but low product growth. L'Oréal can either develop its new markets or introduce new products with creative features to gain a competitive edge. The recommended strategy is to develop new markets and launch high-quality products. Additional recommendations include improving feedback systems, focusing on promotional activities, meeting customer demands, and lowering prices to attract the middle class.

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Contents
Executive Summary.....................................................................................................................................3
Introduction.................................................................................................................................................4
Internal and External Analysis.....................................................................................................................5
Stakeholders of the Loreal.......................................................................................................................5
SWOT Analysis...................................................................................................................................6
PEST analysis..........................................................................................................................................7
Political factors....................................................................................................................................7
Economic factors.................................................................................................................................7
Social factors.......................................................................................................................................8
Technological......................................................................................................................................8
Legal Factors............................................................................................................................................8
Environmental Factors.............................................................................................................................9
Marketing Strategies....................................................................................................................................9
BCG Matrix.............................................................................................................................................9
Ansoff Matrix........................................................................................................................................11
Recommendations.....................................................................................................................................12
Conclusion.................................................................................................................................................13
References.................................................................................................................................................15
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Executive Summary
There are enormous strategic options available with the organization used to build the company
reputation and useful for the growth of the company. The report outlines the analysis of the internal
and external environment and SWOT analysis before choosing the right strategic path or the option.
However, with the help of the Ansoff Matrix , the company can analyze the best strategic option
available to them.
The Loreal group of the company is, hereby, taken as an example to understand the concept of the
strategic marketing and the competition level faced by the companies in the cosmetic industry. The
report covers the SWOT analysis , PESTLE analysis , BCG matrix and the Ansoff Matrix , for choosing the
right strategic option that fit for the Loreal Company.
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Introduction
The Loreal Company is the famous brand of beauty or cosmetics products. The company is
distributing its business all around the world in 130 countries. The company was founded in the
year 1953 in Paris. Loreal has a strong growth from the previous years. The reports of 2014
revealed that, the company earned operating profit of approximately 3890 million Euros. The
Loreal company focused to attract the cosmetics companies and keep consumers by focusing on
the innovation and creativity. Loreal owns many luxurious brands like Garnier, Maybelline,
Ralph Lauren and Armani. The company also owned professional products like Matrix and
Kerastase. Moving further, the Loreal group is founded by the Eugene Scheller. The Loreal
group offers a wide variety of the products of the cosmetics such as Skin care, Make-up, Hair
care, and Sun care professional products and the company is the largest brand of the beauty
products in the world.
Mission: The mission of the company is to produce the innovative cosmetics products for
women as well as for the men. The mission statement of the LOreal group is to provide the
beauty for all.
Vision: The vision of the company is to win the hearts of the billion consumers of the world by
providing innovative and creative products in the future and these products will meet the needs
and desires of the consumers (Palade, 2011).
Values: The values of the Loreal are expressed in the daily routine of the team members of the
company. The company values are:
 Innovation of the products
 Passion for the cosmetic business
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 Open Mindedness
 Quest for excellence
Internal and External Analysis
Stakeholders of the Loreal
Stakeholders of the company can be the individual, groups or the organizations and these
stakeholders are those who are mostly affected by the change in the company policies or profits
and they are the one who shows the great interest in the affairs of the company. There can be the
plenty of the shareholders of the company such as owners, creditors, government, directors,
suppliers, unions and the communities. The stakeholders of the Loreal company include the
customers, employees, investors and the shareholders. These are the most important part of the
company as they are given the top priority before making any business decisions. They all are
the members of the decisions making process and management team of the Loreal company.
Customers: The Loreal group of company always focuses on the customer’s need and
expectations with regard to the beauty products. The company always wants to build its brand
image in front of the customers. Loreal Company always thinks out of the box to attract
maximum customers by introducing new beauty products (Ashraf et al., 2015).
Investors: The investors of the of the company are also the most important people as they are
highly affected by the profit margins of the company. The reports of the company show that the
company earning continuous profits for the last years and it increases the rate of 4.8% every
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year. The companies and the people are very much interested to invest their money into the
company because of the increase in profits.
Employees: The employees are the also the important part and the company has the manpower of
the 60,000 employees in all over the world. The employees are the key part of the
implementation of the strategic management and they are the real people who build the company
image.
SWOT Analysis
Strengths  Leader of the cosmetics industry
 Offering high quality and the innovative beauty products to the
customers .
 Strong advertisement strategies
 Having 60,000 employees in the company
 Also deals in the pharmaceutical fields apart from the hair
protection, make-up and skin care products
 Operating in 130 countries and have 40 manufacturing plants
Weaknesses  Organization structure of Loreal is not Centralized.
 High competition because of the other brands like Lakme, Color
Bar, Avon, etc.
Opportunities  Greater market share because of the owned companies like Matrix,
Maybelline and Ralph (Yang, 2013).
 Loreal has the capability to tap the growing markets of the
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developed countries
Threats  Increase of the competition and the biggest competitors are –
Revlon, Lakme, Garnier, color Bar, Avon.
 Downfall in the economic conditions of the other countries
PEST analysis
Political factors
The political factors have a great impact on the performance of the company and Loreal is highly
influenced by the government rules and regulations, trade policies, provisions of the policies,
political infrastructure. Every country in this world has its own political system and has different
laws made by the government. The company has its manufacturing plant at Paris, so the policies
of the government of France affect the business to a great extent. The different import policies
also influence the business of the Loreal. Political roles are positive for the Loreal because of the
advent of the globalization (Anju, 2013).
Economic factors
These factors include the economic condition of the country where the Loreal company is
working. The change in the exchange rates of the country directly affects the profits of the
company. However, the recession is the main element of the cosmetic industry and to maintain
that balance the company set the prices of the products differently in the different regions.
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Moving further, the GDP of the country also the important factor that contributes in the business
of the beauty products.
Social factors
The social factors are the most important elements for the business of the Loreal as it involves
the latest fashion trends, needs and expectations of the customers, consumer behavior, culture of
the country, etc. Loreal has the sense of offering the new trends and solutions for the problems
of the customers. For example, the company introduced the Loreal shampoo to the different hair
problems as per the demand of the customers (Marskell, 2012). The ethical issues are also the
important part as they are also playing important roles.
Technological
The cosmetic brand, Loreal, is famous because of the innovation and always follow the latest
trends. The use of technology is helpful for the Loreal to introduce the latest fashion products
and spread all the products in seconds to its customers. The buying and supplying of the
cosmetics products becomes easier because of the advancement of the technologies (Haseeb,
2017).
Legal Factors
It is very important to understand the legal terms and conditions, where the Loreal company is
operating its business. The company needs to understand the legal stuff about the country. The
country has different laws and provisions made by the government of the country.
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Environmental Factors
The Loreal also need to analyze the environmental and safety laws. The Loreal company has the
social responsibility towards the people and the Customers. The company should manufacturing
the products without harming the environment. Before choosing the best strategic option, the
ompany need to analyze the environmental aspects and safety laws.
Marketing Strategies
BCG Matrix
Talking about the BCG matrix, it stands for the Boston Consulting group and this is very helpful
in demonstrating the different stages of the product strategy. There are four stages explained by
the BcG matrix and these are the Stars, cash cows, Question and Dogs. All these four stages are
showing the level of the market share and business growth. This matrix is useful to analyze the
different aspects of the market share and the growth of the business In relation to the products of
the Loreal.
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Star: This is the position when both the levels of the market share and the growth are high. For
example the Loreal has its Luxe Products which have high growth rate and the high market share
in the different countries (Cuellar-Healey & Gomez, 2013).
Cash Cow: This is the stage when the growth of the products is low, but market share is high.for
example, the professional products of the Loreal generate the large cash sales, but very limited to
grow in the market.
Question mark: This stage includes the high growth rate and low market share as the consumer
products of the Loreal have the huge market growth, but they are not holding good market share
in the cosmetic industry (ICAI, 2015).
Dogs: This stage arises when both the elements are low. These products neither need the cash
nor they produce high growth rates. For Example, Loreal Active products.
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Ansoff Matrix
Ansoff Matrix is the matrix that provides the different options to the company for the successful growth
of the business and to gain the highest market share. The Matrix demonstrates the product and market
strategies for the high growth rate. There are four elements of the Ansoff Matrix and these elements are
Market development, product development, market penetration and the differentiation. The different
strategies of the Loreal are applicable only in those markets which have the ability and potential
to grow. Loreal is a well established company so it will not be difficult for the company to
develop new products or the market with differentiation in the quality.
The two best directions which are suitable for the Loreal company are explained as below:
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1. Market Development strategy: As per this strategy, Loreal need to focus on the new
developed countries to increase its market share. The company needs to focus on those new
territories which have the highest potential to grow in the market to become a successful leader
in the beauty products.
(FME Team, 2013).
2. Product development: According to this strategy, the company need to develop the products
just to gain the high share and value in the market. Moreover, Loreal can introduce the creative
feature in their products as it is very important for the company to compete with the other beauty
brands for gaining the competitive advantage in the market. To provide innovation and beauty
for all is the strength of the company and this is the best strategy to attract the maximum number
of employees (Sirova, 2015).
Best strategic option
As it is analyzed that the company should choose any one strategic option from the above. The
Loreal can either develop its market or its products just to gain the highest market growth rate.
The best strategic option for the Loreal is to develop its new markets an launch their high quality
products in this market. After analyzing all the internal and external factors, the company need to
focus on the new markets for the continuous success.
Recommendations
There are some of the recommendations or the suggestions are given to maintain the brand image
of the company and all the above strategies need to analyze in a proper way before their
implementation in the company. The recommendations for the strategies and the Loreal products
are as follows:
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 The feedback systems of the Loreal company need to be improved as it will help to
analyze he demands and the expectations of the customers with regard to the products of
the Loreal. The ways of collecting the feedback should be like mail, mobile phones,
cards, questionnaire and person to person feedback (Macedo-Soares & Silva, 2012).
 The company should need to focus more on its promotional activities to spread the
knowledge about the new innovative products in the markets and advertisement strategies
should be implemented to compete with the other competitors.
 It is recommended that the Loreal should meet the demand and expectations of the
customers and to launch the product at the right time, at a right place, for the right person
in the right terms and conditions (Dung, 2012).
 It is suggested that the company should focus more on the consumer products as they
have the potential to grow and those products fulfill the needs of the people.
 It is advised that the company should lower down the prices of the products to attract the
middle class customers and to increase the market share of the company.
Conclusion
In this report, it is concluded that the Loreal company needs to follow the strategic directions to
maintain its brand image and come up with the new ideas. In this report, the Ansoff matrix and
the BCG matrix are used to analyze the current situation of the Loreal products as well as
suggest some of the strategies in order to compete in the market. At last, the company has the
three objectives to increase the sales, market share and profits which are possible only by
following the strategic directions given in the report.
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References
Anju, 2013. Study of Marketing Mix of Anti Study of Marketing Mix of Anti-Aging Products in
India Aging Products in India. International Journal of Engineering, Applied and Management
Sciences Paradigms, 8(1), pp.1-1.
Ashraf, I., Azhar, N. & Anam, W., 2015. The Case Analysis of L’Oreal Corp. as Market Leader.
International Journal of Academic Research in Business and Social Sciences, 5(8), pp.1-18.
Cuellar-Healey, S. & Gomez, M., 2013. Marketing Module 3: Company Analysis. Cornell
University, Available at:
http://publications.dyson.cornell.edu/outreach/extensionpdf/2013/Cornell-Dyson-eb1304ii.pdf
Dung, V., 2012. Brand And Product Divestiture: A Literature Review And Future Research
Recommendations. Management & Marketing Challenges for the Knowledge Society, 7(1),
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FME Team, 2013. Ansoff matrix: Strategy skills, Available at: http://www.free-management-
ebooks.com/dldebk-pdf/fme-ansoff-matrix.pdf
Haseeb, 2017. Pestle Analysis of L’Oreal, Available at: http://marketingdawn.com/pestle-
analysis-of-loreal/
ICAI, 2015. Business Strategy & Strategic Cost Management, Available at
https://www.cakart.in/blog/ptpans-business-strategy-and-strategic-cost-management-cma/
Macedo-Soares, T. & Silva, B., 2012. Assessing The Strategy Of Firms That Compete Globally
In Alliances In The Cosmetics Industry: The Case Of L’oréal In Latin America. Corporate
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Ownership & Control, 9(4), pp.1-11.
Marskell, D., 2012. Integrated marketing communications plan, Available at:
https://images.template.net/wp-content/uploads/2015/10/06195004/integrated-marketing-
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Palade, A., 2011. Analysis of marketing mix on cosmetics products case study. Annals of the
University of Petroşani, 11(4), pp.233-44. Available at:
http://www.upet.ro/annals/economics/pdf/2011/part4/Palade.pdf.
Sirova, V., 2015. Managing Marketing Report On L’oréal Group, Available at:
https://www.degruyter.com/downloadpdf/j/cris.2015.2015.issue-1/cris-2015-0003/cris-2015-
0003.pdf
Yang, H., 2013. Loreal in China: Marketing strategies for turning around chinese luxury
cosmetic brand, Available at: https://cases.insead.edu/loreal-china/documents/5960-
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