L'Oreal Marketing Strategy and Plan: Growth, Implementation & Control

This report provides a comprehensive analysis of L'Oreal Paris's marketing strategy, focusing on both internal and external environmental factors. It employs strategic frameworks such as SWOT analysis and Porter's Five Forces model to assess L'Oreal's competitive position in the cosmetics industry. The report identifies L'Oreal's strengths, weaknesses, opportunities, and threats, along with an examination of the competitive landscape. It also delves into the marketing mix strategy, including product life cycle, pricing, distribution, and promotional strategies. Furthermore, the report recommends competitive advantage strategies, growth matrix approaches, and implementation plans, including new product development and customer relationship management. The analysis concludes with insights into strategy implementation, evaluation, and control measures for L'Oreal to sustain its market leadership.

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MARKETING STRATEGY AND PLAN
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7/22/2019
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MARKETING STRATEGY AND PLAN 1
Contents
Introduction......................................................................................................................................2
Swot analysis...................................................................................................................................3
Strengths......................................................................................................................................3
Weakness.....................................................................................................................................3
Opportunity..................................................................................................................................3
Threats.........................................................................................................................................3
Porters five force model...................................................................................................................4
The threat of new entrants...........................................................................................................4
Bargaining power of buyers.........................................................................................................4
Bargaining power of suppliers.....................................................................................................4
Industry rivalry............................................................................................................................4
Threat of substitute......................................................................................................................5
Marketing mix strategy....................................................................................................................6
Product strategy...........................................................................................................................6
Product life cycle.....................................................................................................................6
Product level............................................................................................................................7
Pricing strategy............................................................................................................................7
Distribution strategy....................................................................................................................8
Promotional strategy....................................................................................................................9
Strategy implementation, evaluation and control..........................................................................10
Recommended competitive advantage strategy.............................................................................10
Growth matrix............................................................................................................................10
Execution of product development strategy..............................................................................11
New product development.....................................................................................................11
Customer relationship management......................................................................................11
Conclusion.....................................................................................................................................12
References......................................................................................................................................13

MARKETING STRATEGY AND PLAN 2

MARKETING STRATEGY AND PLAN 3
Introduction
L’Oreal Paris is a cosmetic brand serving global with best quality products and said to be a
global leader in the cosmetics industry. The company is serving in more than 140 nations. The
product range of the company includes various ranges of products from drugstore products to
premium product range. The company is trading through offline and online mode. It is a French
personal care company, headquartered in Paris. The key products include skincare, hair care,
makeup products, sun protection and perfume (loreal, 2018). The target market for L’Oreal is
largely based on gender that is targeting women for good quality cosmetics products.
The report’s purpose is to critically analyse the external and internal environment of the
company and developing marketing strategies for the company that will help the company
gaining sustainable competitive advantage. The report will discuss the situational analysis of
L’Oreal Paris, using some strategic frameworks like porters five force model, SWOT analysis.
Other than this, the recommended strategy would also be provided after the analysis for L’Oreal
(loreal-finance, 2017).

MARKETING STRATEGY AND PLAN 4
Swot analysis
Strengths
 Brand equity – The Company was in the 133rd position in top multinational performers
list in Forbes. Thus, it can be said that the brand equity of L’Oreal is one of the strengths
of the company.
 Brand recognition – L’Oreal is one of the largest cosmetic company consisting of a large
number of brands, that is more than 40 brands, which are recognized by customer easily;
For example Maybelline and dove.
 Global presence – The company is serving more than 150 nations, reflecting large
diversity in the company and a huge global presence (loreal-finance, 2017).
Weakness
 Loss of control due to decentralized organization structure – The Company has been
diversified due to increased classification into brands that decrease the level of control
over the company and its management.
 Large competition - the competition is increasing in the industry and since the company
is diversified the competition is with different level of brands like for hair care products
the competition may be different like with Procter and gamble. However, considering the
cosmetic range the competition is with other brands like MAC (Ryan, 2016).
Opportunity
 Product expansion – Entering into new product category would be one of the
opportunities for the brand. This may include the diversification strategy like to enter
men’s personal care.
 Natural products range – This is to introduce a range of cosmetic product using natural
ingredients safe for the skin (Zhang, 2015).
Threats
 The threat of growing competition
 People increasing awareness about harmful effects of cosmetics (Bakir & Rose, 2015)

MARKETING STRATEGY AND PLAN 5
Porters five force model
The five forces that will affect L’Oreal strategy in the cosmetic industry include
The threat of new entrants
The threat of new entrants seems to be lower for L’Oreal, the reason being the companies have
gained enough brand recognition and higher goodwill, for which a new entrant Will need large
time and investment. A new company can come with some innovation through its product and
technology, for which L’Oreal must be working rapidly in order to keep the market leader
position sustain (Ryan, 2016).
Bargaining power of buyers
It can be said that the bargaining power of buyers is quite high as the availability of products and
services have been increased because of increasing globalisation and digitalisation across the
world. It can be said that the customers are looking for a high quality product especially when it
comes to cosmetics because of increasing awareness of skincare. However, it can be said that
the switching brands are not very deep it in the cosmetics industry, the reason being customer
found the product of one brand suitable to their skin or hair because of which they do not prefer
to switch brands in case of a slight price hike (Pansari & Kumar, 2016).
Bargaining power of suppliers
The bargaining power of suppliers is lower for L’Oreal, the reason being the company has been
working for an agile supply chain. Moreover, the company has gained more than 34 brands for
which the company has found various alternatives for the Raw Material used like Cosmetic
chemicals. The major role of suppliers for L’Oreal are packaging, raw materials, equipment’s for
which the company has various producing suppliers across the globe which justify the lower
bargaining power of suppliers (Petersen, 2015).
Industry rivalry
For L’Oreal the competition is very huge, the reason being the company has diversified business
for which the company is competing with various companies. The major competition to the
company considering to cosmetic business is Estee lauder, Mac, Bobby Brown. The companies
are dealing in premium cosmetics and the strategy is quite similar to that of L’Oreal. Moreover,
the competition is Direct because of the similar target market. Other than the cosmetic range, the

MARKETING STRATEGY AND PLAN 6
other competitors to the company include brands serving more of personal care range like
Unilever products, Procter and gamble brands (Tuten & Ashley, 2015).
Threat of substitute
The major substitute for L’Oreal skincare range is the permanent skin treatment through skin
clinics. The increase in technology could be great for cosmetic brands like L’Oreal. Similarly,
for the personal care products, the major substitutes are natural alternatives that the customer can
use for their skincare and hair care. This has increased with an increase in awareness among the
people regarding the adverse effect of these products for long. Because of which the customer
may shift to products that are more natural and homemade (Zhang, 2015).

MARKETING STRATEGY AND PLAN 7
Marketing mix strategy
Product strategy
Product life cycle
Figure 1: (Source: (loreal, 2019)
It can be said that L’Oreal is in its growth stage, as the company global strategy includes
diversification strategy. Through this, the company is dealing into expanded brand portfolio
while entering into new nations. This reflects that the product life cycle of L’Oreal is quite
lengthy.
Considering the levels of products the company has expanded brand portfolio that include
various division. For example, consumer products division that includes brand like NYX,
L’Oreal and Maybelline. However the professional product division also exist which includes
premium products like professional shampoo range (loreal, 2019).

MARKETING STRATEGY AND PLAN 8
Product level
From the figure above, the core benefit of the L’Oreal product include the basic use of the
product that is personal care, and better looking skin. The actual product level depicts the
packaging of the products like brand names that is Maybelline, ralph Lauren, and Giorgio
Armani. The company is offering best quality products along with availability of classic
packaging and design by high-end brands like urban decay. Third level of product is augmented
level, which would include digital services by L’Oreal, and after sale services that would include
assisting the customer for using directions of the products.
Pricing strategy
From the pricing strategy matrix presented below, reflects the alternate of pricing strategy.
Considering this model or framework, the L’Oreal use a combination of premium and skimming
strategy. This strategy could work for one of the product range but maybe different from various
product ranges. For example in the case of the premium cosmetic products the company could
have use premium strategy in order to compete with Mac. Moreover, in case of luxurious
skincare range, the company could have used skimming strategy that is introducing the product

MARKETING STRATEGY AND PLAN 9
with high range however lowering the product after a time span in case the competitors are able
to imitate the innovative product range (consultancy.uk, 2018). However, due to large portfolio
and various price range products the target audience considering the income factor is not clearly
stated by the company.
Figure 2: (Source: (Muller & Nagle, 2017)
Among the cost-based pricing, market based pricing, and value based pricing. It has been found
that the company has been using value based pricing that is assuming the value of the products
offered as per the customer perception that is sets primarily.
Distribution strategy
L’Oreal is recommended to adopt off-line and online mode for the distribution of products and
services into the market. One is the traditional method that is the use of off-line mode through
retailers. The channel level may differ as per the country in which the company will be
conducting business. Another distribution channel for the company will be online mode.
Through online mode, it can sell the products through the official website, various retailing

MARKETING STRATEGY AND PLAN 10
websites for example Amazon, and the social media tech firms like Facebook and Instagram. The
company is recommended to use more of online mode so as to decrease the cost of the
distribution, it has also been identified that the sale of the company since years of e-commerce is
higher than that of its competitors, which reflect the strategy to be more appropriate for the
company to adopt (Tiago, 2014). Direct channel is also used by company included in online
mode, that is selling directly to the customer through official website.
Promotional strategy
The cosmetic industry is found to need to promote it because of close and direct competition
among the brands. Therefore, it is important for L’Oreal to position itself in the way in order to
be unique and gain competitive advantage. The purpose of the promotional strategy for L’Oreal
is to remind the customer about the brand and the products that the company is offering.
Moreover the company would prefer to provide information to the customer related to the new
product launched by the company or any offer promoted by the company for the limited time
(Armstrong & Giardina, 2016). L’Oreal must use various promotional tools in order to gain
customer attention and increase customer loyalty. L’Oreal by now has been promoting the
products in order to target women, which have been reflected through their marketing campaigns
and advertisement. However, this has limited the advertising criteria by the company, which
must be expanded by using innovative ideas. The tools the company must use will include some
traditional tools like advertisement through television and printed form. This may include
holdings, billboards, point out sale advertisement and magazines (Tiago, 2014). Online mode is
one of the best ways in order to reach out to maximum customers in a single post. Social media
marketing is one of the common promotional tools, which the company must use because of the
increasing use of social media platforms by the customers. Brand ambassadors are one of the
best ways in the cosmetic industry to target customers, as the customers perceive the brand based
on the brand ambassador especially in case of cosmetics. The reason being such products reflect
the beauty for which a popular face is to be given by the brand to the public (Thomson, 2016).

MARKETING STRATEGY AND PLAN 11
Strategy implementation, evaluation and control
Preparing a strategy is of no use if the company is not implementing it properly. It is important to
for L’Oreal to implement the strategy as the major issue with the company is a too diversified
brand portfolio that has decreased the control over the company through its brands.
The other two relevant activities to be conducted by the company are to evaluate the strategy
implemented and controlling the deviations found at the stage of monitoring and evaluation. It
can be said that it is the continuous process directing improving in the strategy or course of
action by the company (Schlegelmilch, 2016).
Recommended competitive advantage strategy
Growth matrix
According to the answer to the growth matrix presented below, reflects the four alternative
product strategies that the company may have. L’Oreal after analysing the external and internal
environment, the suggested product strategy would be Product development strategy. The reason
being asked for the great the company must be offering new products and services to the existing
market. The company has already targeted most of the nations, for which is the company needs
to sustain in the industry then it must provide more innovation through its products or increase
the range of its products (Yen, 2017). Therefore, it can be said that the four recommended option
for L’Oreal, which can be implements that is either to expand business in new marker with new
product that would include diversification strategy, for which the company has already covered
most of the suitable nations across the globe. Another recommendation is to target existing
market with existing products that is market penetration strategy, which would include
repositioning the brand, which doesn’t seems to be necessary for L’Oreal due to strong brand
positioning. Another alternative recommendation is market development strategy, for which
L’Oreal will target new market with existing product; however, the company has targeted most
of the nations. This lead top the justification for selection of most suitable strategy for L’Oreal to
be product development.

MARKETING STRATEGY AND PLAN 12
Figure 3: (Source: (Aksoy, 2018)
Execution of product development strategy
New product development
One of the product range that the company could enter into is the natural product that is using
organic ingredients like fruits essence in skincare for example use of lemon essence instead of
chemical form of vitamin C (Adam & Kotler, 2014).
Customer relationship management
It has been identified that the company is not directly link to their customer as they are reaching
to the customers through channels. L’Oreal is suggested to increase the link with the customer,
for which one of the suggested strategies includes email marketing in order to receive feedback
and send personalized messages to loyal customers. Through this, the brand may reach to the
customer directly and make the customisation easier for the company to attract customers and
retain them (Pansari & Kumar, 2016).

MARKETING STRATEGY AND PLAN 13
Conclusion
From the L’Oreal marketing report, it can be concluded that L’Oreal Paris is a cosmetic brand
serving globally with the best quality products. The threat of new entrants seems to be lower for
L’Oreal, but the bargaining power of buyers is quite high as the availability of products and
services. The bargaining power of suppliers is lower for L’Oreal, the reason being the company
has been working for an agile supply chain. The major competition to the company considering
to cosmetic business is Estee lauder, Mac, Bobby Brown. L’Oreal after analysing the external
and internal environment, the suggested product strategy would be Product development
strategy. L’Oreal must use a combination of premium pricing strategy and skimming pricing
strategy. L’Oreal is recommended to adopt off-line and online mode for the distribution of
products and services into the market. L’Oreal must use various promotional tools in order to
gain customer attention and increase customer loyalty. L’Oreal by now has been promoting the
products in order to target women, which have been reflected through their marketing campaigns
and advertisement.

MARKETING STRATEGY AND PLAN 14
References
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Aksoy, S., 2018. Applying Ansoff’S Growth Strategy Matrix To Innovation Classification.
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Armstrong, C.G. & Giardina, M.D., 2016. Embracing the social in social media: An analysis of
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Bakir, A. & Rose, G., 2015. A preliminary investigation of the reliability and validity of
Hofstede’s cross cultural dimensions. In Proceedings of the 2000 Academy of Marketing Science
(AMS) Annual Conference, p.226.
consultancy.uk, 2018. Global cosmetics market worth €181 billion, L'Oreal dominates. [Online]
Available at: https://www.consultancy.uk/news/2810/cosmetics-market-worth-181-billion-loreal-
dominates.
loreal, 2018. The Board of Directors. [Online] Available at:
https://www.loreal.com/group/governance/the-board-of-directors.
loreal, 2019. consumer-products-division. [Online] Available at:
https://www.loreal.com/brand/consumer-products-division.
loreal-finance, 2017. LOreal_Rapport_Annuel_2017. [Online] Available at: https://www.loreal-
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Petersen, J.A., 2015. Marketing communication strategies and consumer financial decision
making: The role of national culture. Journal of Marketing, 79(1), pp.44-63.

MARKETING STRATEGY AND PLAN 15
Ryan, D., 2016. Understanding digital marketing: marketing strategies for engaging the digital
generation. Kogan Page Publishers.
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