HND Business 40: L'Oreal's International Marketing Strategies

This report provides a comprehensive analysis of L'Oreal's international marketing strategies, covering key aspects such as the concept and scope of international marketing, reasons and routes for internationalization, criteria for selecting international markets, and various market entry strategies. It also delves into the global vs. local debate, examining how product, pricing, promotion, and distribution approaches differ across international contexts. The report further explores multinational, global, and meta-national approaches to international marketing that L'Oreal can adopt, offering recommendations for operating effectively in an international context. The analysis emphasizes L'Oreal's need to adapt to local preferences while maintaining its global brand image to achieve sustainable growth and competitive advantage.

International marketing
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Contents
INTRODUCTION...........................................................................................................................3
Main Body.......................................................................................................................................3
Task 1...............................................................................................................................................3
P1 International marketing concept and scope for a business.....................................................3
P2 Reason and various routes of internationalization of a business............................................3
Task 2...............................................................................................................................................5
P3 Key criteria and selection process to use when considering which international market to
enter..............................................................................................................................................5
P4 Different market entry strategies............................................................................................5
Task 3...............................................................................................................................................6
P5 Overview of global vs local debate........................................................................................6
P6 How the product, pricing, promotional and distribution approach differs in a variety of
international contexts...................................................................................................................7
Task 4...............................................................................................................................................8
Explain and analyse multinational, global, and meta-national approaches to international
marketing that an organisation can adopt....................................................................................8
Recommendation to operate in an international context-..........................................................10
Conclusion ....................................................................................................................................11
REFERENCES..............................................................................................................................12
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INTRODUCTION
Every company focusses to expand their business at international level. Hence, they are
required to adapt effective internationalization strategies to expand their business. L'Oreal is an
international brand which is founded in the year 1909 and it is headquartered in Clichy, France.
It sells cosmetics products to their targeted customers. The main feature of their products are
high quality and low prices as compared to their competitors. The following PPT covers scope
and concept of international marketing, reason for internationalization of a business, routes of
internationalization, key criteria and process used to enter new market, strategies to enter new
market and their advantages and disadvantages. It also covers overview of global vs local debate
and how the product, pricing, promotional and distribution approach differs in a variety of
international contexts
Main Body
Task 1
P1 International marketing concept and scope for a business
International marketing consists of promoting a product or services by a company at
global level into various countries (Bailey, 2018). Every country has their culture and rules and
regulations different from other countries. Hence, L'Oreal is required to analyse the needs and
preferences of customers at different countries and then promote their products. Hence, in simple
words, international marketing consists of exchanging goods and services across national
boundaries to fulfil the customer's demand. It further includes research activities related to
foreign countries and their customer's preferences. In context of L'Oreal, they analyse the need
and preference of customers for cosmetic products in different countries and then focus to supply
and promote those products which the customers of that location prefer to use. L'Oreal is having
high brand image, hence, customers trust the company and show their interest to purchase their
products. Due to internationalization of business L'Oreal can gain competitive advantage.
P2 Reason and various routes of internationalization of a business
L'Oreal have various reasons for expanding their business to international level which are
explained below-
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 Increase customer base- The main reason for internationalization of business for any
company including L'Oreal is done because they want to expand their total number of
customer's base. Expanding the business to other countries will help them to reach
customers at global level and make them loyal customers of the company.
 Increase in profitability- Another main reason for expanding business to outer countries
is to earn more profit by offering products to more segments of customers (Chen and
et.al., 2019). When customer range get increased then automatically profit will also
increase. Hence, internationalization of business also done with the main aim of earning
profit.
 Increasing brand recognition- L'Oreal also aim to expand their brand name across the
national borders. Internationalization of business will help them to enhance their brand
recognition across the world. When company will expand more in various countries then
customers will start connecting to it and get to know about the company and its offerings.
 To gain competitive advantage- Another main reason for L'Oreal to expand their
business across the world is to become industry leader.
Various routes that organisations can possible adopt to target international market-
 Exporting- This is the method where companies manufacture their products within their
home country and export the finished goods to targeted country. This method is having
lowest risk in context of any business.
 Joint venture- This is the method where company can merge with other company who is
well known in their targeted country. For example, a company based in US want to
expand their company in Asia then that company will merge with those different
countries who are well aware about market of targeted country and their customer's
preference.
 Foreign direct investment (FDI)- It consist of directly investing in foreign market. A lot
of capital is required to cover the cost related to technology, staff and premises.
Companies who choose this method can establish their new venture or acquire an existing
company.
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Task 2
P3 Key criteria and selection process to use when considering which international market to
enter
key criteria to enter international market-
 High demand of available product- This is the basic criteria which is focused by
companies to enter new market. In context of L'Oreal, they first analyse whether their
product will grow well in the new market or not and then after analysing that they have
the chances to grow effectively within the targeted country then they can expand their
business in targeted country (Collinson and et.al., 2020).
 Availability of workers and labours- This is another important criterion for expanding a
business in other countries. In context of L'Oreal, they will also focus to expand their
business in those countries where they can find skilled labours and staff members easily.
 Technological advancement- It is also important for a company to focus on the
technological factor of the country where they plan to expand. In context of L'Oreal, they
will mainly focus to expand their business in those countries where they can find updated
and advance tools and machines for increasing their productivity and profitability.
P4 Different market entry strategies
 Exporting- This is one of the most popular marketing strategy where a company is
required to manufacture their products within their home country and then they export it
to other countries. The main advantage of using this method is that the company is not
required to invest high and the disadvantage of this method is that products may get
delayed to deliver due to various factors like checking of products, preparing contract and
many others.
 Franchising- This is the strategy where main company allow others to use their brand
name and earn profit with a specific charge (Demir, Budur and Heshmati, 2021). The
main company is called franchisor and the companies who take their agreement to work
with company are franchisee. The advantage of using franchising method is that the
company can expand their brand recognition quicker among local customers of their
targeted country. Disadvantage of using franchising method is that the cost to expand the
business is even higher than the expectations.
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 Piggybacking- This is another important strategy for entering a new market where
companies ask other companies to add their product to sell. For example, L'Oreal
Company can ask any Chinese cosmetics company to sell their products by using their
own staff members and other essential resources with a payment. The main advantage of
this strategy can consist of better using available channel bandwidth. Disadvantage of
this strategy is that it is not sure that the company in targeted country will promote and
sell the product at their full potential.
 Counter trade- It is the marketing strategy which is same as barter system where two
companies located in different countries agrees to sell each other's products in their own
country. This will help them to target new country effectively by continuing the business
in their home country. The advantage of using this strategy is that it reaches to local
customers quickly as compared to other methods. Disadvantage is that the company can
delay in contracting with other companies.
 Partnership- This is the way by which two or more companies work together by using
each other's technology, resources, staff members and many others. The main advantage
of this strategy is that it will help the company to use other company’s customer's,
technology, staff members and their resources (Dionisio and de Vargas, 2020).
Disadvantage of this strategy is that the company may control power because their
decisions are made with the agreement of other companies also.
In context L'Oreal, they can use exporting method for expanding their business internationally.
This strategy is chosen by the company due to its advantages for business. There is least risk for
adapting this strategy because here, the company is not required to establish their whole business
like establishing building, hiring staff and many others. They only required to pay some product
distributing agencies who can distribute their products within the country.
Task 3
P5 Overview of global vs local debate
It is essential for the chosen organisation to focus for the development of their business in
both local area (within the geographical area) as well as global area (across global boundaries).
The company start from local area first, they fulfil the needs and wants of their customers
appropriately. They also make strong relationship with their local customers at initial stage but
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when they start growing well, they expand their company in foreign by using appropriate
international strategy. Once they reach to other countries then they start focusing to expand their
business appropriately at new market. Due to this they start avoiding their local customers which
is not ethical. Both local growth and global growth has their own advantages (Gereffi, 2019).
Even local growth is the base of any company which motivate and support them to grow well to
other countries. Beside the importance of both, the L'Oreal is growing well by expanding their
business across the globe. L'Oreal company is well aware about the factors which can impact the
customer buying behaviour in local market but they are having less knowledge about various
other factors and their effect upon customer buying behaviour toward cosmetics. Hence, they are
required to research about international market appropriately and for this they must hire local
employees of the country where they expand their business. It is suggested to the L'Oreal
company that they can expand well if they hire diversified employees within their offices and
stores.
P6 How the product, pricing, promotional and distribution approach differs in a variety of
international contexts
It is essential for a business to follow the rules, regulations, preferences and laws of the country
where they have their business. For example, a UK based company who has branches in China
must follow the promotional channels and style which is popular in China only.
Product approach- It contain the main features and specific product of the company
which is sold to any customer (Giuliani, 2018). In context of L'Oreal, they are required to
identify the needs and preferences of the customers and identify that which cosmetic product is
having more demand in which country and then focuses to sold them appropriately. For example,
Asian countries prefer to buy their diversified products. Hence, they sell large variety of
cosmetic products of good quality within Asian countries. Some countries prefer to use organic
and natural products, hence, the L’Oreal company make sure that they will adopt selling organic
products under their brand name in those countries where they get the demand of natural
products. This will help them to adopt changes as per the requirement of different customers of
different countries.
Pricing approach- It consist of monetary value of the product. In context L'Oreal, they
are preferring to analyse income distribution of the country where they expand their business.
For example, in Asian countries especially in China, Thailand, India and many others, the prices
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of L’Oreal products are lower than other company's products. This is based on the income
distribution of the nation. For example, few countries have lower distribution of income where
L’Oreal charge low prices for their products and where the income distribution is high there the
company charges little high prices.
Promotional approach- It is essential for L’Oreal to follow those promotional channels
in different countries which are popular and commonly used by customers. For example, in case
a country whose youth is more involved in using social media channels than the company can
advertise their products through social media channels like Instagram, Facebook and many
others. On the other hand, few countries restrict the social media sites for their citizens, hence for
such countries, the company must use direct marketing of provide advertisement on TV.
Distribution approach- It means the techniques used by companies to distribute their
products and services to their customers (Jafari-Sadeghi, Kimiagari and Biancone, 2019). In
context of L'Oreal, they are required to choose those distribution channel which is commonly
used by their competitors within that specific location. For example, they can use online mode as
well as use physical stores to sell their products.
Task 4
Explain and analyse multinational, global, and meta-national approaches to international
marketing that an organisation can adopt
 Multinational- The company which has business operations in more than one country is
called multinational corporation. They are having them headquarter within their home
country where they initially start their business.
 Global- It consist of applying similar marketing strategies at worldwide market. The
main difference between multinational and global companies is that multinational
companies have offices all across the world whereas global companies have trading
relations all across the world (Loufrani-Fedida, Hauch and Elidrissi, 2019). It is not
essential for a global company to establish their office in other countries. They just export
and import their products.
 Meta-national- These are the companies which grow their business with innovation and
introduce some innovative features within their existing products to target a new place
across the globe.
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Competitor's analysis- It is also essential for any organisation to identify their
competitor's and their strategies so that they will defend them and gain competitive advantage. In
context of L'Oreal, their main competitors are Unilever, Revlon, Estee Launder Companies and
many others. They make their cosmetic products with good quality. L'Oreal is required to
maintain their quality high as well as offer their products below the price level of their
competitors to attract more customers.
Poster Five Forces- This is the competitive model which help to analyse the competition within
the industry so that company will make their strategies accordingly to gain competitive
advantage. The elements of porter five forces are mentioned below-
 Threat of new entrants- This element refers to analyse how a company get impacted
due to new companies entering the market. In context of L’Oreal Company, they are
having well developed brand image and effective strategy. Hence, they are also
successful to gain loyal customers with the help of their quality products. Therefore, they
are not having much impact of new companies within their industry.
 Bargaining power of suppliers- It will analyse how a company manage their suppliers
within their industry to gain competitive advantage. In context of L’Oreal Company, they
are having various suppliers and they maintain the good relationship with their suppliers
so that they will offer them good quality of raw material at reasonable prices. Having
more suppliers will help them to compare the prices and quality of raw material and then
make decisions.
 Bargaining power of buyers- It consist of how customers impacts the company. In
context of L’Oreal, they are totally depending upon the loyalty of their customers. They
are having high customer base and impacts a much upon the growth of this company.
Hence, there is high degree of bargaining power of customers upon the chosen
organisation.
 Threats of substitute products- Substitute products are those products which are used
in place of each other. In context of L’Oreal, they are having various substitute products
of their cosmetics and skin care products in the market. Hence, they are supposed to
become unique and different from their competitors to gain competitive advantage. For
this they can focus diversify their product line and introduce organic products line range.
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 Competitive rivalry- It consist of competitive environment and how they impacted the
existing company. In context of L’Oreal, they are having various competitors like Olay,
Nivea and many others which are having high competitive strategies within their market.
Hence, there is tough competition for L’Oreal company within their industry.
Recommendation to operate in an international context-
 It is recommended to the chosen organisation that they should hire an appropriate team of
research who will help them to conduct research about the nature of market and customer
preference within the country where they plan to expand. With the help of proper
research, they can analyse the demands and needs of their products in various countries
and then they can target that specific country.
 It is also recommended to the L’Oreal company that they must hire local employees more
in case of international expansion of their brand so that they will help the company to
grow well by suggesting the changes to meet customer’s cultural and traditional needs.
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Conclusion
From the above information it is concluded that a company must focus to expand their
business at international level to enhance their brand recognition and profit for achieving
competitive advantage. There are various reasons for a business to expand their business across
the globe such as increasing customers, increasing profit, gaining competitive advantage,
enhancing brand reputation and many others. It is also concluded that different
internationalization strategies like exporting, franchising and many others can be used by
companies. A company is required to compare all international growth strategies and adopt that
option which has more advantages than disadvantages according to the objective of the business.
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REFERENCES
Books and Journals:
Bailey, N., 2018. Exploring the relationship between institutional factors and FDI attractiveness:
A meta-analytic review. International Business Review, 27(1), pp.139-148.
Chen, L. and et.al., 2019. The international penetration of ibusiness firms: Network effects,
liabilities of outsidership and country clout. Journal of International Business
Studies, 50(2), pp.172-192.
Collinson, S. and et.al., 2020. International business. Pearson UK.
Demir, A., Budur, T. and Heshmati, A., 2021. Antecedents of trust, corporate image, and
switching costs: a case in telecommunication services in the Kurdistan region of
Iraq. International Journal of Mobile Communications, 19(1), pp.53-74.
Dionisio, M. and de Vargas, E.R., 2020. Corporate social innovation: A systematic literature
review. International business review, 29(2), p.101641.
Gereffi, G., 2019. Global value chains and international development policy: Bringing firms,
networks and policy-engaged scholarship back in. Journal of International Business
Policy, 2(3), pp.195-210.
Giuliani, E., 2018. Why multinational enterprises may be causing more inequality than we
think. Multinational Business Review.
Jafari-Sadeghi, V., Kimiagari, S. and Biancone, P.P., 2019. Level of education and knowledge,
foresight competency and international entrepreneurship: a study of human capital
determinants in the European countries. European Business Review.
Loufrani-Fedida, S., Hauch, V. and Elidrissi, D., 2019. The dynamics of relational competencies
in the development of born global firms: A multilevel approach. International Business
Review, 28(2), pp.222-237.
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