Strategic Management Report: Analyzing L'Oreal's Market Strategy

This individual report provides a comprehensive analysis of L'Oreal's strategic management within the UK cosmetic industry. It begins with an introduction highlighting L'Oreal's leading position, its product range, global presence, and revenue figures. The main body delves into L'Oreal's strong market position, discussing its revenues, competitors, and strengths, including its global distribution network and innovative marketing strategies. The report examines both internal factors, such as innovation, marketing, and workforce, and external factors, including economic and political influences, that shape L'Oreal's market position. It also analyzes the company's strategic alliances, supplier relationships, and the impact of economic conditions and political factors. The report further explores Porter's Five Forces to assess the competitive landscape, including supplier and customer bargaining power, rivalry, and threats of substitutes and new entrants. Finally, it outlines L'Oreal's strategies for gaining competitive advantage, such as its supply chain management, advertising strategies, HR policies, competitive pricing, and responsiveness to market trends. The conclusion summarizes the key findings, emphasizing L'Oreal's strong brand image, consumer satisfaction, and the importance of strategic market positioning in maintaining its competitive advantage.

INDIVIDUAL REPORT
(Strategic management L' Oreal)

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
Innovation, beauty bloggers have given new direction to the cosmetic industry of UK.
Over a period of time revenues of this sector has been increased to great extent. L' Oreal is the
leading cosmetic brand., it provides hair colours, skin colours, sun protection, make up etc.
Products to consumers. It is the multi national firm which operates its business in more than 130
countries (Cunha, 2017). It hires skills and experienced people in the organization those who can
service its consumers well. Currently company has employed 68900 people in the workplaces. In
the year L' Oreal revenues accounted for 20.3 billion and in the same year it has registered 613
new patents. Its physical stores are present across the world and it also operates its business
online. The main aim of the firm is to satisfy its consumers and retain them in the organization
for longer duration (Kotler, 2015).
Current report will cover positioning of L' Oreal and factors that contribute to this
positioning. Furthermore, it will explain major competitors of L' Oreal and its strategies of the
company that helps the entity in gaining competitive advantage (L'Oréal Paris SWOT Analysis,
USP & Competitors, 2017).
MAIN BODY
L' Oreal is holding strong market position, its strategic decision helps the firm in gaining
competitive advantages. In the year 2016 revenues of the organization was 25.837 billion and
operating income of L' Oreal was 3.996 billion. There are many competitors of L' Oreal such as
Marico, ITC limited, HUL, Dabur India etc. They all are big brand and having strong market
share. But still L' Oreal has earned good brand image and in the recent time its customers are
highly satisfied with the quality of products and services of the entity (Tournois, 2014). The
main strength of the cited firm is that it has more than 38 factories which manufactures over 5
billion units annually. Global distribution of the organization support the firm in dealing with
mass audience and fulfilling their needs and requirements (L'Oréal Paris SWOT Analysis, USP
& Competitors, 2017). Brand visibility, marketing tactics, quality products have made the L'
Oreal the top cosmetic brand across the world. It continuously implements innovative ideas in
the workplace so that it can design its products in such manner that can meet with the needs of
consumers (Wang, 2017). It has covered 36.9%% Asia, Pacific, 24.8% North America and many
more geographical areas across the world. L' Oreal is holding 28.02% market share. Whereas
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others such as Estee Lauder has 11.10, procter and Gamble has 17.60, Shiseido has 7.11 market
share (L'Oréal Paris SWOT Analysis, USP & Competitors, 2017).
There are many internal and external factors that shape the market position of the
company and supports in maintaining its strategic position in the market. Internal strength of the
entity of creating innovative, safe and sustainable products is the main element that enhance its
market position (Tuten and Solomon, 2017). It has excellent marketing and advertisement policy
that helps the entity in making connection with mass audience and attracting them towards the
corporation to great extent. Operational efficiency of L' Oreal is excellent that gives strength to
the entity. Apart from this skilled and creative workforce is another major component that helps
the organization in maintaining its market position. This assists the entity in enhancing loyalty of
the consumers to great extent. It concentrates on the needs of local market and according
provides products in such location (Hamelin, Gbadamosi and Peters, 2017).
L' Oreal has strong market position and has huge opportunities to grow more. At the time
of recession consumption of cosmetic products have been reduced to great extent. But strong
positing strategy of the organization has supported in maintaining its position for the longer
duration. L' Oreal has built strategic alliances with its potential buyers and suppliers. This has
provided certain growth opportunities to the business unit. L' Oreal selects its suppliers after
conducting market research (Wolff, 2016). It has suppliers those provides quality raw material at
affordable rates to the company. That is why entity has become able to offer quality products to
consumers at reasonable prices. Apart from internal factors there are many external factors that
helps the company in maintaining its strategic position. Economic factor is considered as one of
the major component that has supported the entity in maintaining its strategic position. In the
recent time people are having adequate job opportunities and they have adequate income sources.
That is why per capita income of the country is growing (L'Oréal Paris SWOT Analysis, USP &
Competitors, 2017). This supports L' Oreal in attracting consumers towards the brand
effectively. People are able to afford its products and services. Political factor is another major
external element that assists in maintaining strategic position of the company (Sandıkcı, 2017).
Every country has some policies and laws that need to be followed by each business unit.
Favourable legislation, political support aid the L' Oreal in strengthening its market position. At
the time of prohibition on drugs or using some material as ingredient in cosmetic products have
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been banned by the government, at that time company has implements innovative techniques and
stopped using such raw material (Moriarty and et.al, 2014).
Being a global brand L' Oreal has to face huge competition. The major competitor of the
cited firm is Unilever, Procter and Gamble etc. Apart from this entrance of new companies also
increase competition in the market. In such condition it becomes difficult for the entity to survive
in the market for longer duration. But rapid change in technologies has supported the L' Oreal in
strengthening its market position (L'Oreal Annual report, 2016). This has helped in producing
something different but quality cosmetic material to the consumers. This has brought drastic
changed in the market position of L' Oreal and after that company has become the leading
cosmetic company across the world. L' Oreal offers identical products are higher prices but all
these products are having quality that no other brand can provide. Therefore, cited firm has
become able to attract mass audience towards the brand. L' Oreal promotes its brand through e-
commerce that give new opportunities to the business unit to grow and enhance its market
position (L'Oréal Paris SWOT Analysis, USP & Competitors, 2017).
Porter's five forces are the tool that supports in identifying the competition in the market.
It is the external analyses tool that assist in identifying external position of the company in the
market. Each firm has to face huge competition and risk. For sustaining in the market for longer
duration it is essential for the organization that to look at the internal external elements and make
effective strategies that can assist the brand in sustaining into market for longer duration.
Bargaining power of suppliers is the first force of external market analyses (Hamelin, Gbadamosi
and Peters, 2017). Suppliers of the company plays significant role in the business unit. If
suppliers provide quality products at reasonable prices then it would be beneficial for the
organization to provide quality goods to buyers at affordable rates. Suppliers bargaining powers
matters a lot in the corporation. Suppliers of L' Oreal has low power because company has many
suppliers. If it feels that suppliers is unable to meet its requirements then it moves towards other
suppliers. Bargaining power of customers is another major element in the organization that helps
in identifying external position of the organization in the market. Customers are the life blood of
the business unit, if buyers are not satisfied with the products and services of company then it
affects overall profitability of the organization (L'Oréal Paris SWOT Analysis, USP &
Competitors, 2017). When buyers are ready to pay more prices for the quality products then
increment in product cost do not affect them. People will still buy its goods and services.
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Inelastic demand impacts positively on the L' Oreal. People of the country always prefer to buy
quality cosmetic products which do not harm their skin. Thus, they are ready to buy more prices
for these products (Tuten and Solomon, 2017). Thus, limited bargaining leverage supports the
cited firm in growing well. Rivalry is another component of porter's five forces. If competitors
are offering products at low rates then it may turn mind of consumers. But L' Oreal has built its
unique brand image that assist the entity in retaining its consumers in the organization for longer
duration and making them loyal towards the brand. Thus, rivalry does not much affect the brand.
Furthermore, threats to substitute products is another major element that can impact on external
position of the corporation (Cunha, 2017). L' Oreal has strong brand image so no other substitute
can replace it. Threats to new competitors is moderate. L' Oreal has made consumers satisfied by
providing them quality products and services. New firm will require to invest huge amount and
will have to provide quality products so that it can change mind of consumers which is quit
difficult (Tournois, 2014).
There are many strategies that are adopted by L' Oreal to gain competitive advantage.
Cited firm has strong supply chain. This assists the organization in providing quality products to
consumers at affordable rates. All its suppliers have strong relationship with the brand that is
why company always get raw material on time (L'Oreal Annual report, 2016). That is the main
reason that aid the firm in delivering quality products at right time to all customers. Another
factor that support the organization in gaining competitive advantage is advertisement strategy of
the corporation. Cited firm take support of social media networking strategy. It promotes its
brand through Facebook, Twitter etc. This attracts many new consumers towards the brand. It
gives information about the company and benefits through these sites. By this way company
becomes able to interact with consumers well and identifying their needs and requirements. That
is why now it has become able to meet with their requirements and retaining them in the
organization for longer duration (Sandıkcı, 2017).
Another factor that influence the operational efficiency of the L' Oreal in positive
manner is its HR policy. It hires skilled and experienced people in the workplace those who have
great knowledge about the market and its needs of consumers. This helps the entity in dealing
with consumers well (Wang, 2017). Customers get immediate resolution from these employees,
this enhance their trust and loyalty as well. That is why most of its consumers are loyal towards
the brand and using its products and services since longer duration. Cited firm adopts
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competitive prices strategy, this helps the firm in sustaining in the market and gaining
competitive advantage.
L' Oreal has responded to the market well, it always look upon the trends and accordingly
modify its operations so that it can conduct its business well (L'Oréal Paris SWOT Analysis, USP
& Competitors, 2017). In addition, cited firm make changes in its technologies and implements
the latest technologies so that it can produce quality products and can deal with consumers well.
CONCLUSION
From the above report it can be concluded that L' Oreal has strong brand image in the
cosmetic industry. Consumers always want high quality cosmetic products so that their skin
remain safe. This needs of buyers is easily fulfilled by the L' Oreal , that is why people are
satisfied with the organizational services and its goods. Internal and external factors impact on
its position but effective market positioning strategy always support the L' Oreal in maintaining
its position and gaining competitive advantage. rapid change in technologies has supported the
L' Oreal in strengthening its market position. This has helped in producing something different
but quality cosmetic material to the consumers. Technological changes gives strength to the firm
and support in meeting with the needs of consumers. Rapid change in technologies has
supported the L' Oreal in strengthening its market position. This has helped in producing
something different but quality cosmetic material to the consumers. Cited firm has good
experiences of working in this industry that supports the entity in sustaining in the market for
longer duration.
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REFERENCES
Books and Journals
Cunha, M. D. C. D. O., 2017. L’Oréal: Ombré hair kit consumer-focused product development to
find new market opportunities(Doctoral dissertation).
Hamelin, N., Gbadamosi, A. and Peters, L. M., 2017. MARKETING COMMUNICATIONS
AND THE YOUNG CONSUMER. Young Consumer Behaviour: A Research Companion.
pp.121.
Kotler, P., 2015. Framework for marketing management. Pearson Education India.
Moriarty, S. and et.al., 2014. Advertising: Principles and practice. Pearson Australia.
Sandıkcı, Ö., 2017. 10 Marketing strategy in the emerging Muslim-majority markets. Islamic
Marketing and Branding: Theory and Practice. pp.32.
Tournois, L., 2014. Too many products? Reaching the next billion customers of the beauty
market. Journal of Business Strategy. 35(5). pp.3-13.
Tuten, T. L. and Solomon, M. R., 2017. Social media marketing. Sage.
Wang, H. J., 2017. A brand-based perspective on differentiation of green brand positioning: A
network analysis approach. Management Decision. 55(7). pp.1460-1475.
Wolff, E., 2016. L’Oréal Case. In WCOM (World Class Operations Management) (pp. 19-28).
Springer, Cham.
Online
L'Oreal Annual report, 2016. [Online]. Available through
<https://www.loreal-finance.com/en/annual-report-2016/cosmetics-market>
L'Oréal Paris SWOT Analysis, USP & Competitors, 2017. [Online]. Available through
<https://www.mbaskool.com/brandguide/fmcg/1122-loreal-paris.html>
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