L’Oreal Global Branding Strategy
The L’Oreal group has been the market leader of cosmetics and the beauty industry. The
products it mainly sales are in the fields of cosmetics including, hair color, makeup products,
skin care products, perfumes etc. Company has also launched its several products in the field of
dermatology and pharmacy. The sales and profits are maintained through its wide range of
professional consumer luxury and active products showing a strong through it. It was founded
in 1909 by Eugene Schueller and soon it grown into world’s largest company in the industry.
The turnover of the company has grown over 19 billions euro’s with over 11 percent of growth
which considerably indicates the success of marketing strategies of L’Oreal group.
The company market over 70 international brands along with a number of local brands
made specifically for the country it is marketing with the same international standards and
flexibility according to the local needs and requirements that are to be sold to both men and
women over 150 countries. The company has shown enough growth in the continents of North
America and Western Europe with its outstanding performance of twice the market trend
growth of the markets of Asia pacific, Eastern Europe, Latin America, Africa and Middle East.
The global marketing efforts of the company with its smart selling efforts brought the
tremendous amount of success for it.
The differences between the different cultures and the needs of the native people of those
different cultures have been quite successfully understood by the company’s marketing
personals. To understand and to answer the cosmetic requirement of the different types of
people in the world the company has setup its five worldwide research and development
center which are established in the different continents like 2 in France, 1 in the US and 1 in
Japan and 1 in China in order to make the products manufacturing managed according to the
needs of different culture. L’Oreal group has successfully projected itself as a nice example of a
good multi national corporation that manages its profit with considerable success through the
competitions in the market’s surrounded by the various geographical, social, economical and
cultural risks. The company reached out to the variety of the customers with different economic
status and cultural background in overall different perception through its fine global branding
strategies. Through its selling of different products the company sold different genre of
products like Italian elegance, New York street smarts, French beauty, etc through different
global branding methods.
L’Oreal’s global branding strategy that’s doing wonders has been actively spearheaded by
Owen Jones himself. Lindsey Owen Jones has been the CEO of L’Oreal for nearly two decades
and a “Honorary President” now, and under his leadership L’Oreal has really fine tuned its
global branding strategy. Interestingly some press reports tell us that he has been seen roaming
around streets in foreign markets to understand the new and existing trends. And without any
doubts his interesting work style seems to work wonders. The branding strategy of L’Oreal has
such an impact that L’Oreal seems to be the only global leader in every segment of the
cosmetics industry, right positioning of its products seems to be the key. Whatever its trying to
sell the French elegance or street smartness of America; is getting good response throughout
the world and L’Oreal has been able to reach its consumers across the national and cultural
boundaries.
Owen Jones says: “We have this great strategy back in the head office of how we are going
to do it worldwide. But when you go out and look at what is happening, is there a big gap
between your projections and the reality of what you see and hear? It is so important to have a
world vision because otherwise decentralized consumer goods companies with many brands
can fracture into as many little parts if somebody isn’t pulling it back the other way the whole
time with a central vision.” This really explains why he prefers roaming in the streets for his
strategy making rather than sitting in the boardroom.
Having said all that its quiet evident that the global branding strategy of L’Oreal has paid
huge dividends to the company overall. In order to understand this splendid growth story we
need to see how exactly L’Oreal applied their strategy to the countries that were entirely
distinct as far as the lifestyle, spending pattern and culture is concerned. L’Oreal was started in
France, has a good brand value in the united states of America, is reaping good dividends from
India and has a remarkable presence in Japan. These are different complex societies with
different needs, so how exactly L’Oreal managed to be equally successful in all these places?
This question needs some fact finding to be done on the basis of country specific products and
strategies adopted by the cosmetics conglomerate. That’s what exactly we will try doing in the
next section of this case study.
In India 4 billion 7.5 ml sachets are sold every year and that’s a staggering 66% of total
shampoo consumption in India. Most of the urban Indian women (96%) use shampoo, however
only 46% use foundation. For hair care a huge 74% population of Indian women still rely on
home remedies, 42% use henna and 94% use hair oil, as far as the L’Oreal’s sale per person in
India is concerned is just 10 cents compared to 28 Euros per person in France. In India skin
lightening creams (fairness creams) constitute more than 50% of skincare market people seem
to be crazy for getting for getting fairer.
These facts are self explanatory about the nature of Indian market and it’s clearly stating
that the strategy used in USA or any other European countries is not going to work in India. USA
is a mature market as far as cosmetics consumption is concerned India is an emerging economy
with most of the population below 35 years of age and a huge aspiring middle class. The
cosmetics market is growing approximately at an annual rate of 16% in India, still a long way to
go. The youth in urban centers is very concerned about the image but the larger section is still
off the fashion map. Interestingly even after the success story of corporate India, apparently it’s
still a country that is very much community oriented. The great Indian middle class is aspiring
but still has the community driven cultural values intact.
L’Oreal has taken this fact very much into consideration while preparing the marketing
strategy for India. A very good example would be the launch of garnier fructis shampoo in India.
The concept was to rely on idea rather than relying on advertising a brand. The idea of getting
five times stronger hair was the central point that created the hype, through “word of mouth”
or network marketing. Initially it was positioned as product for young and teenagers, once the
product was established in the market it tried to change or rather increase the target base by
shifting gears. In a recent advertisement of garnier hair color a daughter is shown advising her
mother to try the garnier product and explaining the benefits. Again it relies on the concept of
idea getting spread by “word of mouth” to another customer segment. This is the best example
of marketing in a closed &community driven society. There is one more remarkable thing about
this entire campaign the catch line “take care”. It shifts the focus from the product to the core
value of Indian society “caring about others” and the entire advertisement becomes more of a
good advice rather than publicity.
China is the world’s most populated country in the world and that makes it very clear that
it has the potential of being the biggest consumer market. These days Chinese women are
spending on an average 10 to 15% of their income on cosmetics products, an urban Chinese
lady would use 2.2 cosmetics products on an average every morning. Evidently most of them
want to be fashionable and the L’Oreal punch line – ‘if you want to be fashionable, just choose
Maybelline’, really seems to work. Masses are made to believe that this is something that
represents America and it ought to be trendy. Maybelline is the product line for the masses and
L’Oreal really uses the tendency of masses to look towards the USA that’s why the Maybelline
products are displayed against the backdrop of shiny skyline of New York City Chinese women
prefer skincare and beauty products.
According to a research by L’Oreal in china women are concerned about the radiance of
their skin and prefer skin nourishing lotions that protect their skin from skin-drying winters.
Unlike us customers most Chinese women like skin whiteners rather than tanning products. It’s
a sign of beauty for Chinese women. Also, the texture of Chinese hair is thicker and more
course than typical US Caucasian hair. This requires different product, and really a different skill
set to effectively sell and get these products moving in China. L’Oreal has dedicated research
facilities for these and other issues, and followed up with more innovations to suit the needs
and preferences of Chinese consumers. There is one more very interesting fact about Chinese
cosmetics industry; Chinese women are very concerned about the ingesting of lipsticks. This is
the most interesting food attitude about Chinese women. Now following its global strategy
L’Oreal even took this into consideration and developed lipsticks containing vitamins; as soon as
this was told to the women they were more comfortable in using the product.
European countries are mostly developed, here L’Oreal has the liberty of publicizing the
brand value rather than focusing on pricing, the benefit to L’Oreal in these markets is that it is
already well established and the brand is well known so it can concentrate on grabbing the
attention of individualistic feminist women. Pricing is not a concern in these markets so L’Oreal
can afford to have punch lines like-“I am worth it” because these punch lines justify the high
pricing of the products and fulfill the feeling of exclusivity of high end clientele.
Now lets take another example from the European and us markets, L’Oreal brands in these
markets are quiet well established. L’Oreal products have been used there for few generations
now; once young consumer of the L’Oreal brand has started aging and the same street smart
products could not be positioned to them, they have started becoming the mature citizens;
now their priorities have changed. A recent market report suggests that the new target
segment in the cosmetics industry is 40 plus women who once used the teenage cosmetics
products. The thrust is on anti aging products because it not only adds the new customer base
but retains the once teenage customer also. Customer from the baby boom generation reaches
the retirement age and tries to maintain healthy and youthful look and finds out that their
favorite cosmetics brand is still making products for them. L’Oreal capitalized on their desire to
look youthful and started marketing it anti aging products, it has signed sixty year-old Diane
Keaton to represent the Age Perfect Pro-Calcium skin care line. Also L’Oreal has signed Scarlett
Johansson, Penelope Cruz, Eva Longoria and Beyonce Knowles to promote specific cosmetics
lines according to the age groups. Now this tells us how L’Oreal used the desire of customers to
position its products.
The French conglomerate believes that only two different cultures as far as fashion is
concerned, are dominant, represented by two flagship brands L’Oreal Paris and Maybelline new
York. L’Oreal has been projected as a French origin with elegance, high end presentation and
obviously high pricing. Whereas the Maybelline product line represents the street smart
American babe who is looking for the value of the money.
America seems to be the growth engine of the world, in the cosmetics industry as well.
L’Oreal has understood this and they made a strategy based on the trends in the USA and that’s
how Maybelline came into existence. Maybelline currently is the second largest brand in share
of unit sales of cosmetics products and number one in makeup brands. It claims to be totally
consistent with today’s confident woman.
Maybelline products targets three customer segments; youngster (16 to 25), office lady
(26-35) and career women (35 plus). Marketing mix for Maybelline line of products consists of
two main strategies: foreign consumer cultural positioning and symbolic New York City imagery
that women can relate to everywhere. Maybelline promotion include different way of grabbing
attention including promotional coupons, online advertising, sponsorship of fashion shows,
signing fashion icons as spokesperson of the product, free make up consultancy and providing
scholarships etc. we can see as American cosmetic market is a mature market so L’Oreal tries to
rely on mature marketing tactics.
In the early 20th century, even American society was not very much open to makeup and
skin care products. People thought that only sinful women should wear makeup but eventually
with the economic independence that the American women gained; makeup and cosmetics
started coming into mainstream. Cosmetics apparently became the symbol of new self belief
that the American women was beaming with; and remember even Maybelline claims to be
totally consistent with today’s women, there are several other punch lines like ‘maybe she’s
born with it’, ‘maybe it’s Maybelline’, all the punch lines keep the self confidence of women in
center as if its not the make up but its the attitude that has to be worn. That’s why women of
every nationality and culture started identifying herself with the product and this became the
symbol of the 21st century woman.
The mindset and the lifestyle of the customer are heavily impacted by the culture. Culture
is defined by different norms, values, interactions, language and others personal components
shared by groups of people across the world. It is a social phenomenon which defines people’s
interests, thoughts and other behaviors they may exhibit in the social life. From one country to
another, humans have evolved and developed different types of expressions, beliefs and
behavior which can be difficult to understand for someone who does not belong to the same
culture.
Culture is the way how the members of a particular group interact with each other on the
sharing of the available means, now that determines what is going to be the need for a
particular product in that society, that also decides whether a particular advertising
strategy will work or not and how exactly that will be interpreted by the target customers. In
different markets consumer requirements and consumer behavior may vary. Cultural aspects
deeply impact the consumer behavior; the impact may be direct or indirect. The culture
distinction creates the consumer behavior difference, as it can be noticed between the Asian
and European continent where the culture and the behaviors are very different.
Being a global organization L’Oreal certainly needs to understand the cultural
differences and position its products accordingly otherwise the results may be far more
different than they are at this moment. The thrust has to be on hitting the right customer with
the right product. This can be possible only if one has a deep knowledge of local culture and
beliefs. A very interesting example would be of lipstick use in china; according to a research
only 3% women use lipstick for makeup. The reason that was supposed to be behind this low
percentage of lipstick use is even weirder; women in china have concerns about ingesting
lipstick. L’Oreal conducted a survey to see whether this is just an age old saying or it holds some
truth, based on the findings it came up with a lipstick that had vitamins in it and in turn the
demand for L’Oreal vitamin lipsticks increased.
Another example could be real handy; in India long hair is considered necessary for a
woman to be considered beautiful. L’Oreal considered this fact while launching its shampoo
product in India and it focused on publicizing the fact that using the garnier fructis
shampoo helps in getting long and strong hair. This strategy made the product very popular in
India.
In china or India people like to have fair complexion. In Asia, women take special care of
their skin. People want radiant skins and lotions that can nourish their skin against sun, whereas
in the United States people would rather buy tanning cream. On basis of this knowledge L’Oreal
can position their whitening creams in India and the interesting part is the way the
advertisements could be interpreted .the way the advertisements for the fairness creams are
made in Asian countries these can be interpreted as racial advertisements in the USA but in
Asian countries that seems to be quiet usual. Now that’s where the knowledge of the culture
and beliefs comes handy and helps avoiding unnecessary problems. From a business point of
view, companies have to adapt themselves to the culture of each country in which they want to
have business in.
Because of the differences of culture between countries, companies need to adjust their
products and services according to the local demands. This will help them to create
and develop a brand image across the globe that is based on a large number of globally
recognized products. L’Oreal was able to be successful in these markets because it adapted to
ground realities of the particular market yet it followed a standardized strategy. If we consider
the marketing mix of Maybelline, it has two pronged strategy – one for the foreign markets
another is the global street-smart image of the American chic. The global street smart image of
New York chick can be admired in almost all the urban centers, be it India, china or Brazil.
However there has to be a right mix of local flavor as well.
The most important part of the L’Oreal’s strategic plan is opportunity hunting or
the marketing of their products worldwide. From the initial days it already started catering to
the demands of women worldwide. In order to do that efficiently they were expected to be well
aware of the diversities of women across the globe. Once they knew the diversities their job
was to come up with different line of products suitable to the women from all parts of the
world. Innovation has been the keyword for L’Oreal and this was made possible through
constant research and development over the years. The group has already covered most parts
of the world and still striving to cover more. In order to do so L’Oreal group has to keep
respecting other peoples identity, ideas and culture. L’Oreal has to keep valuing different
cultures and nationalities to get their brand value up and it seems that they have been doing it
really well.
The success story can continue further because even today products of L’Oreal touches the
cultural values instilled in potential customers mind. L’Oreal just does not sell the product it
makes the customer buy the idea of dreaming big but still remaining rooted to the core cultural
values. It has carefully devised its global marketing strategy and customized it to the local
needs, and that is the reason people from Africa to Europe and America to Australia are using
the L’Oreal products.
