Table of Contents
- Introduction
- The Marketing Process
- L’Oreal and the Marketing Mix
- PEST Analysis for L’Oreal
- Porter’s Five Forces
- Strategic Road-Map
- Opportunities and Threat Analysis
- Capabilities and Benefits
- The Marketing Planning Process
- The Big Fish Theory and L’Oreal
- Industry Analysis
- Strengths and Weaknesses
- Competitor Analysis
- Market Segmentation
- Conclusions and Recommendations
- References
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Introduction
L’Oreal Group, headquartered in Clichy, France, Paris, is the largest cosmetics and beauty firm in the world. It has developed cosmetics activities focusing on hair colour, skin care, fortification of the sun, make-up, fragrances and hair care. In both dermatological and pharmaceutical areas, it is vigorous. In the United States, it is the primary holder of copyright nanotechnology.
According to a 2005 case study, the L’Oreal group, worth $18.89 billion, has been declared the largest and most successful cosmetics company in the world with more than 17 international brands. (Case Study, 2005). In addition, the inter-band Business Week survey ranked L’Oreal 49th in August 2004, with its brands valued at $5902 million. L’Oreal has expanded its business in 150 countries by offering both men and females a wide range of make-up, fragrances, hair and skin care products. As noted by Morais, L’Oreal is distinguished from other brands because of its reliability over time, because it combines a hot technology company’s double-digit top-line growth with the bottom-line comforts of a well-run bank (Morais, 2000).
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The Marketing Process
L’Oreal finds itself in the situation of the most prosperous hallmark as it serves as the basis for identifying opportunities in order to satisfy the unaccomplished customer needs and requirements. In addition to it, L’Oreal is cognizant of its own capabilities and the environment in which it is operating. The mission of L’Oreal Group aspires to bring to reality the urge for men and women to look beautiful and aesthetic with time. This mission has always been of prime significance in for the company.
As far as the marketing investments are considered, although 90 percent of the investments are accounted for by the investment in brand contacts, until now there hasn’t been any tool which allows the managers to identify, a consumer perspective, the most efficacious set of contacts in which to invest. However, L’Oreal Group has described a tool which empowers the brand owners and marketers to identify and select the crucial contacts which are relevant for a particular brand. Moreover, in order to integrate across these key contact points, L’Oreal delivers brand experience through a relevant and pertinent set of consumer brand which encounters at a minimum cost, but with maximal impact. Moreover, it focuses on the metrics which can be used to inform a variety of significant decisions in the context of managing brand contacts.
The essential marketing principles make it accessible for any business to survive in the market in an efficacious way as it encourages the businessmen to apply them to aspects of their daily lives as well (Jobber, 2007). In context of the first element of its marketing process, it is the company’s distinct expertise of beauty that exists for the reason that it believes in beauty which is all the more unique and diversified that any other Industry. Beauty has always played a significant role in people’s lives, and the directors of L’Oreal Group believe that by enhancing the well being, the satisfaction as well as the self-esteem of people, they can assist them in possessing a better and a happier living (Wharton, 2005). When it comes to marketing the beauty, the process is quite distinct. Unlike other fast growing businesses like that of food, detergents, paper products, etc., beauty doe not grow fast. It is not about just responding to the consumer’s needs. However, it is about transforming dreams in to reality. It invents satisfactions, emotions, pleasures and ultimately moments are reasons for happiness. For L’Oreal, marketing is critical as it is difficult to develop brands which have a strong emotional connection with consumers. The marketing at L’Oreal is a unique combination of intelligence as well as emotion, reasoning and emotion, as well as details and visions.
The consumers are clever and they always recognize the quality and superior performance. Innovation is absolutely critical and as a result, L’Oreal had to have the best research and development to win the battle of technology. The company’s port-folio of brands reflects several fundamental ideologies which define the L’Oreal strategy. Brands are organized by distribution channels, which are absolutely exclusive to each distribution channel, for example, professional products to hair salons, consumer product brands to retail stores including drug stores and food stores, luxury products brands chiefly to specialty stores and department stores and cosmetic brands to dispensing dermatologists and pharmacies.
Al the brand strategies of product launches as well as their marketing are conceived to be truly global. The brand strategy is absolutely similar everywhere in the world for it is a rule. Moreover, the products are designed to be global. The key to marketing strategy of L’Oreal is the real secret weapon of the group, which are its employees. These are the most important assets of the company as they are individual talents of their teams. Where most of the competitors of L’Oreal believe in the importance of the organization and process, the L’Oreal Group believes in the enhancement of its employees as well as their talents. It possesses all forms of talents for all forms of disciplines, i.e. finance, sales, manufacturing, and chiefly marketing. Having the best talent in its team, it is natural and obvious for the group to become the most successful cosmetic brand across the globe.
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L’Oreal Marketing Mix
The marketing mix or the four P’s of marketing comprise of the four key areas, Product, Place, Price, and promotion. In the developing world, the social marketing of L’Oreal is dependent upon the change in behavior of its consumers. Their diversified products are tangible, they comprise of cosmetics which operate in four segments. They are professional products, Consumer Products, Luxury Products, and Active Cosmetics. L’Oreal has a wide range of products which proves helps it to gain authority over the entire cosmetology. It is easier for L’Oreal to satisfy its customers with the most efficacious range of products throughout the world.
L’Oreal owns a world market share of 15.3 per cent and has generated 29 per cent of its revenue from the emerging markets in 2007 (Annual Report, 2007). The major market places of the emerging fields are inclusive of Western Europe and North America, thereby, taking hold over most parts of Asia, as well as South America. Moreover, it has initiated with expertise in sections of South Africa as well. This widespread business of L’Oreal enables it to take over the citizenry of the entire world. As stated above, it is the most successful hallmark of cosmetology in the world, its popularity amongst masses helps it sustaining throughout.
Products are the core element of the company as they provide the functional requirement sought by customers. The marketing managers of L’Oreal group have developed their products into brands which has helped them in creating a unique position in the minds of the customers. The superiority in brand leads to high sales, ability to charge price premiums, and the authority to resist the distributor power. L’Oreal attempts to retain their customers through brand loyalty since, loyal customers are typically less price sensitive and the presence of a loyal customer base facilitates the group with valuable time to respond to the competitive actions. As a result, the management of products and brands therefore, is a key factor in marketing success.
Moreover, as far as promotional strategy is concerned, it has been discussed further, that L’Oreal, being a paramount hallmark seeks for the world’s most incredible promotional strategies. Models, televisions, internet, bill-boards, etc. refer to the message which the L’Oreal group seeks to convey to its customers in order to avail the maximum of benefits of its products and services. It helps in efficaciously conveying the target audience about the behavior they want to promote.
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L’Oreal PEST Analysis
PEST analysis is inclusive of the Political, Economical, Social and Technological factors. Regarding the Political challenge, L’Oreal should conform to all the different government leadership styles in the various nations of its operation. There are many laws which can prove to be adversely influential to the group. Hence, it is necessary for L’Oreal to keep up with the rules and regulations of the government, in terms of producing safe products which do not contain any harmful substances. For the economic wellness, it is required for L’Oreal to adapt all the economic changes and transformations of all the countries it operates in. moreover, it requires to maintain its social status in the society. However, it has maintained it efficaciously so far, but there is never a stoppage to anything. It should keep up to its socialization with world brands as well as people for the reason that it would help it in maintaining its brand value as well as its status in the global market. Lastly, technology being one of the most impeccable factors in today’s marketing world, L’Oreal group should make use of the most of it. Technology would allow for products and services to be of a better standard of quality. The more the company uses it, the more it offers consumers and businesses more innovative products as well as services. Accessibility to products on internet, telephonic services etc. are some of the basic implements which can add on to the efficaciousness of the company.
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L’Oreal Porter’s Five Forces Analysis
L’Oreal Group has been a benchmark of Competitive Rivalry. With a very crowded market, the retail industry is extremely competitive. If rivalry amongst the firms in the industry is low, the industry is considered to be disciplined. L’Oreal’s success has been the biggest threat for its competitors for its discipline has resulted from its history f competition with a generally comprehended code of conduct. It has been subjected to rivalry because of its industrial data which consists of a large number of firms. Moreover, its market growth has caused the firms to fight for market share. Nonetheless, being a growing market, the group is able to improvise its revenues simply because of the expanding market. This expansion in market has induced new firms to enter the market and increase production. All in all, whatever be the merits of this fact, it is quite clear that market stability and transforms in supply and demand affect the rivalry.
Threat for substitutes is a common factor for any company, big or small. L’Oreal, being a big brand, still faces such a threat. However, it is quite impossible in today’s scenario for any other company to take its place in the market, but it does not mean that L’Oreal can rest. The competition endangered by such a threat comes from the products outside the industry.
Amongst the Porter’s Five forces, the third force is the Buyer Power. L’Oreal Group is a prominent and one of the most powerful cosmetic brands on the world has a great impact on the production industry. Since, there are many suppliers for the cosmetic products, the power is in the buyer’s hand. However, L’Oreal has maintained the quality of its products which force the buyer to consume its products. As a result, the main power is in the supplier’s hands because of its brand value. L’Oreal renders full concentration on its products and possesses a significant cost which has a power to switch its suppliers. L’Oreal is a powerful supplier as it can exert influence on the producing industry by selling materials at a high price so as to capture some of the industry profits.
Lastly, although, L’Oreal is one of the most successful brand across the globe, there is always a threat for new entry. The possibility of new firms which enter the industry, somehow, affects competition. However, there are a few companies which possess the caliber to stand in parallel with the L’Oreal Company, there are always present some barriers to the company as they distort the equilibrium prevailing in the market.
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Strategic Road-Map
L’Oreal strives to make the right to look aesthetic day after day factual within the attainment of every woman and every man. Its brand port-folio reflects its ambition as unparalleled round the globe. This mission has always been of prime significance since its establishment as a world renowned hallmark (Online Career Day, 2007).
L’Oreal has been on a spending extravaganza in the present years in order to expand its ethical credentials, explore alternative distribution channels along with lessening its reliance on other business battle-fields. As per the research by Euromonitor International, this French cosmetics giant acquired sales of US$ 29.8 billion in the year 2007, with representing an increase of over five per cent on the previous year’s total in actual terms (Euromonitor International, 2008). L’Oreal’s performance fell just short of the global market growth, whilst its status as the world’s paramount beauty firm is secure. It is positioned to make profits in the longer-term. Functionally, the company is a sole example of efficiency, where 2007 was another year for its double-digit profits enabling it to draw on large cash reserves in order to seek innovation as well as make acquirements. Due to the company’s well-financed port-folio, it lengthens all beauty sectors, price points, as well as regional and distribution channels with the help of its initiatives such as the Lancome e-shop, etc. (Euromonitor International, 2008).
L’Oreal has earned a status for trend-setting, allowing it to avail the benefits of consumers’ growing willingness to trade up in key beauty sectors such as hair and skin care, color cosmetics accounting for the multitudes of the company’s business. It strongly emphasizes on advertisements with bringing in to usage celebrity spokes-models and seeing the sights of new media which is inclusive of the internet and mobile phones. It does not only comprise of the prosperity sales for the firm in its core markets of Western Europe and North America, but in the dynamic emerging regions as well. Expansion, there, has become key to L’Oreal’s long term strategy. For example, the firm’s R & D centre in China, entirely focuses on the development of products explicit to the requirements of Asian skin and Hair. L’Oreal does not target the major participants of the market, instead, is picking up smaller companies that occupy strategic market positions. The company acquired a surprise move in purchasing the ethical beauty retailer The Body Shop in the year 2005, since when, it has made supreme strides in order to improvise its ethical silhouette, most currently joining hands with an initiative towards minimizing its carbon foot-print. With rendering significance to Natural, Organic as well as Green Cosmetics, it has shaped the global beauty market today, where major players have been enticed by the generous margins in this well-paid segment.
Furthermore, L’Oreal is anticipated to continue hunting for acquisition targets. Nonetheless, its search is chiefly focused on the emerging markets. Regardless of its efforts to diversify globally, L’Oreal’s main-stream sales arrive from Western Europe and North America where it faces stiff competition and the threat of recession.
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Opportunities and Threat Analysis
The L’Oreal Company efficaciously concentrates on cosmetic products which enhance the women of all ages. As a result, the growing demand for beauty products provides L’Oreal the opportunity to keep an eye on their field of specialization, meticulously on the hair-styling and color, skin care, cosmetics as well as perfumeries. Their existence as the leading cosmetic brand facilitates them with the edge for their well-prominent image. Opportunity also originates from their growing market which ranges from the wealthy, aging, as well as the masses of the developed countries. L’Oreal avails benefits of another opportunity in its way which is of their greater market share for the reason of their numerous patents as registered by the company. This allows them to possess the top of the line products only to their name and as a result, it would lead customers only to them for if they could not find any of the claimed cosmetics in other hallmarks.
As far as the threats are concerned, a threat to the L’Oreal group is the growing competition within the arena of cosmetic brands. Because of the consistent addition to the field of cosmetics, there still prevails the danger that other brands could improve on the profit of L’Oreal. Adding to the threats to the company is the economic down-turn which is quite evident in other nations. This could, as a result, affect the likelihood for higher profits for the company. L’Oreal may find problems reaching out even to the average people from the under-developed countries, since, most of its products are in such a structure which limited to the citizenry of developed countries. Furthermore, a threat to the L’Oreal Company is the spending habits of consumer and the economic crunch which most of the countries experience today. Whilst, the L’Oreal Group may be producing the supreme products of its line, people may find that their products are not of their basic requirements and would therefore, skip consuming L’Oreal products. Nonetheless, with the incessant growth of the market, the damage could be far off from occurrence.
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Capabilities and Benefits
The capabilities of L’Oreal are offsetting as it focuses on spreading in the emerging markets with countries like China in the first quarters compensating for slow downs in the rest of the market. It is extending its research and development capabilities in the area of reconstructed skin with the acquirement of company Skin-Ethic through one of its subsidiaries (Pitman, 2006). This move will assist it in establishing more accurate capabilities for a range of skin care products, meticulously, UV sunscreens, after keeping in view this acquisition of the company.
L’Oreal reflects in its teams and at every level, the diversified nature of its clients, and promotes the access of women to high-responsibility position, thereby, accumulating skills and capitalization on the experience of its employees. As a result, it avails benefits of the cultural diversity in its teams by making efficacious use of the experiences. Its requirement for excellence in terms of its core-competencies and individual performance attracts people from outside, as it identifies the diversified profiles which will bring with themselves innovative perspectives. Moreover, it focuses on a managerial culture which fosters the inclusion of all employees and capitalizes team-diversity. All in all, diversity is the paramount priority of L’Oreal. This Group has established multitudinous partnerships in France, USA, Latin America etc, and agencies involved in diversity. Such partnerships enable them to gain access to various candidates of diversified backgrounds. This is the most significant advantage for the L’Oreal group which competitors may find challenging to replicate and cope up with.
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The Marketing Planning Process
As stated above, the mission of L’Oreal Group aspires to bring to reality the urge for men and women to look beautiful and aesthetic with time. This mission has always been of prime significance in for the company.
As far as the marketing investments are considered, although 90 percent of the investments are accounted for by the investment in brand contacts, until now there hasn’t been any tool which allows the managers to identify, a consumer perspective, the most efficacious set of contacts in which to invest. However, L’Oreal Group has described a tool which empowers the brand owners and marketers to identify and select the crucial contacts which are relevant for a particular brand. Moreover, in order to integrate across these key contact points, L’Oreal delivers brand experience through a relevant and pertinent set of consumer brand which encounters at a minimum cost, but with maximal impact. Moreover, it focuses on the metrics which can be used to inform a variety of significant decisions in the context of managing brand contacts.
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The Big Fish Theory and L’Oreal
L’Oreal, being one of the most successful brands of the world, works on the theory of Big Fish which states that the Universe is in fact a fish, a big one to be exact. L’Oreal has made efficacious use of this theory and has extracted the maximum out of it by providing its consumers the best of products. Moreover, it has always believed that there is always a bigger fish. In other words, it has always believed that there are always immense opportunities to grab and make the most of them. Some of its theories and strategies are a result of its prominent status across the globe and its enormous success which helps it take risks and win over them.
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Industry Analysis
L’Oreal has made cosmetics the focus of all its energy and know-how for nearly a century. It is totally committed to putting all its expertise and research resources to operate for the well being of men and women, in all their diversity, around the world. Its R&D data states that there are more than three thousand employees from sixty different nationalities working in thirty disciplines (Company Overview, 2008). It possesses 16 research centers across the world and 1/3rd of the R&D budget is devoted to the advanced research. Moreover, it develops around four thousand formulae each year, and 576 patents filed in 2007. Also, it includes more than a hundred co-operation agreements with leading academic and research institutions. It operates forty factories around the world, with 4.7 billion units manufactured the last year, according to its statistics. The best part about this firm is that 100% of its factories are ISO 14001-certified and 100% of L’Oreal’s industrial sites are audited with standard SA 8000 (Company Overview, 2008).
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Strengths and Weaknesses
The enduring prosperity of the L’Oreal group is without if not for the inventiveness of the concept of their vision as a team. The Chairman and CEO of L’Oreal, Lindsay Owen-Jones considers zeal and passion as the key to the well-acknowledged attainment of the company (Loreal, 2008). The prime strength of the company is the incessant research and innovation in the interest of beauty which ensures the supremacy of the L’Oreal Cosmetics to their customers. Their perseverance to their incessant research makes them the leader in the developing cosmetic industry regardless of the competition in the market. Moreover, the L’Oreal Group is the established activity in the arena of cosmetology as well as in the dermatological and pharmaceutical fields so as to put more consideration in their meticulous activities. These activities are divided in to five groups, where the first one in the Consumer Product Division encompassing all the brands distributed through mass-market channels, making sure that L’Oreal quality is on hand to the maximum number of customers. Secondly, the Luxury Products Division includes the prestigious international brands meticulously distributed through fragrances, department stores and duty free shops. Thirdly, the Professional Products Division presents a specific hair-care product range for the use of professional hair-dressers and products sold exclusively through hair-salons. Lastly, the Active Cosmetics Department forms and markets the products for selective distribution through pharmacies and specialized health and beauty outlets. These divisions and sub-divisions assure the quality which the L’Oreal Group presents to its customers. However, Customer Relationship Management was supposed to help businesses better comprehend their customers, thereby, increasing efficiency. Still, most of the companies do not get the anticipated returns (Newell, 2003). L’Oreal believes in depending upon its skills and organizational management rather than on the field of targets. Furthermore, to ass to the enumerated strengths of the company, L’Oreal’s advertising strategy is another major part which complements growth. With the help of adapting to the culture of their target market as the main tool for their advertisement, the Company has introduced L’Oreal products within the reach of the women from diversified parts of the world.
Conceivably, there are some threats which a big brand comes across. One of them is he decentralized organizational structure. This is also a part of the difficulties which L’Oreal comes across. Since, there are present many sub-divisions of the company, there is also an intricacy regarding the control of the firm. As a result, it somehow, slows down the production of the company because of the need of giving reference to the other Board Members and directors of the company. In addition to the weaknesses, L’Oreal’s profit structure is amongst the biggest weakness. The profit margin of the company is comparatively low than that of the other smaller rivals. According to Sang, whilst it projects a considerable uplifting in the digits as its profit, the result however does not usually meet the expectations (Sang, 2003). Conceivably, this is also due to the advertising and marketing as well as the width of the company. Lastly, the co-ordination and the control of the activities and the image in the market are also construed to as the weakness in the part of L’Oreal. There are some disparities brought about in the campaign of L’Oreal Products as to what image do they project sue to their worldwide marketing strategy.
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L’Oreal Competitor Analysis
Being a world-level competitor, L’Oreal possesses different strategy across countries due to the disparity in ethnicities. L’Oreal is on the top, while its competitors restructure and reinforce their port-folios. Some industry observers as well as competitors note that L’Oreal has been steady in entering the body care category. The company seems intent on incrementing its position. However, it has launched a green body care version of Plenitude in Europe which forces one to wonder that when will the similar product debut in the United States, which is the largest body care market of the world (Article, 2002).
L’Oreal’s efforts pay off handsomely. Its aggregate growth for overall sales is around 10% every year where much of this increase was attributed to impressive growth rates attained in emerging markets like that of Asia, Latin America and Eastern Europe where sales grew by 30% with sales in Russia increasing by 61 per cent (Case Study, 2008). This is for the only reason that L’Oreal builds long-term relationships thereby, bringing in profits instead on relying over one-time sales (Newell, 2003). As observed by many analysts, L’Oreal is much ahead of its competitors in terms of profitability and growth rate. L’Oreal’s rival in the luxury segment, Estee Lauder, reportedly gave a 22% drop in profits in August 2002. The company has also announced a cost-cutting programme. Revlon, which is L’Oreal’s competitor in the mass-market segment has posted nine consecutive quarterly losses since late-2001 (Case Study, 2008).
In March 2003, the company entered in the most prestigious list of the world’s fifty most admired companies which was compiled by the leading business magazine, Fortune, for the first time. The future would continue to be glowing for the company that had sold millions of women the dream of living a beautiful life.
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Market Segmentation
L’Oreal Group’s prime activities are the development, manufacture and marketing of cosmetics and dermatological products. This Group operates in Cosmetics, The Body Shop and the Dermatology Segment. The Cosmetic Segment is inclusive of customer products, professional products, luxury products as well as active products. The Body Shop segment offers a broad range of cosmetic products and toilet of natural inspiration. On the other hand, Dermatology products are manufactured through Galderma which is a joint venture with Nestle SA whose brands are inclusive of Garnier, Redken, Maybelline, Kerastase, Matrix, PuroOlogy and Softsheen Carson (Company Profile Report, 2008). This group mainly is operative in Western Europe and North America. In 2007, the Group attained Beauty Alliance, PureOlogy Research as well as Maly’s West, whereas, in the year 2008, the Group acquired Canan.
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Conclusions and Recommendations
Every company confronts some critical issues as faced in strategic marketing, such as escalating customer demands driving the imperative for superior value, totally integrated marketing to deliver customer value, and the managing processes such as planning and budgeting in order to achieve efficacious implementation (Piercy, 2002). Established in the year 1909, L’Oreal, the French Cosmetic Company, had become the world leader in the cosmetic market by the year 2003. The L’Oreal group markets over 500 brands, which consists of more than 2,000 products. With an extravagant range of products including make-up, perfume, hair and skin care products, which are tailored according to the customer needs. The most significant strategy of the company is innovation and diversification. The Global Marketing Strategy of L’Oreal is an example for other competitors which aspire to come in parallel. Its success story claims that, even in its recessions, has given tough competition to its competitors.
The L’Oreal Group has experienced unprecedented prosperity through its expansion in global manner in to innovative beauty-products under the direction of its chairman. However, a couple of years before, his plans to retire led the Group to speculate on how things may turn out with his successor. L’Oreal offers them a number of opportunities. They are already on the correct pathway in Africa because of their recognition about the enormous customer base in that area. Till date, there have been many companies which have ignored the African market as per their assumptions about low interest for beauty products. They have realized that all they had to focus upon was creating the need so that they would fulfill the demands (Trenholm, 2005). It might be profitable for L’Oreal to open a line of training salons where people can purchase products and get a reasonable hair cut from students.
On the other hand, the Japanese market is quite intricate to predict, as a result, it has had a troubling period in the past with their inabilities of the Moisture Whip Lipstick. Since, Japan is white unpredictable with trends, so there is much caliber for creating different brands in order to fulfill certain fashion needs. All they need to do is to create brands scientifically designed for Asian skin and hair, as they did it for the African products. Previously, they had flowed from West to East, with much of Europe and Asia thereby, embracing westernized brands. However, in today’s times, this trend is transforming as fashion from East to West. There is a growing interest in North America in the Asian culture, and styles as inspired by the Japanese fashion divas (Trenholm, 2005).
Moreover, L’Oreal should consider diversifying in to new areas. Since, they have already grasped on world fashion trends, they could concentrate upon Clothing production. Instead of moving on in areas where there is little demand for L’Oreal Products, it could initiate with a line of training salons, thereby, creating a new market. South America could be one of the areas where such as model could be brought in to shape since L’Oreal owns little presence. Furthermore, L’Oreal could initiate with a lone of cosmetic stores featuring all of their products, with their own trained staff to offer advice and recommend the perfect line of products for each customer.
In general, L’Oreal should commence with its takeover of Shu Uemura, considering a double prolonged plan of action by designing products appropriate to the Japanese market, and then turning around and selling those products to the American Market which strives for the exotic touch of Asian Trends with a little transformation in packaging so as to turn it authentic. Moreover, they should reconsider their purchase of the brand Nivea, as this potential takeover risk seems to prevail over any advantage, they should revamp the current mid-market brands so as to enhance meeting the demands of its consumers (Trenholm, 2005). In the long term, there are a number of expansion plans which L’Oreal should consider. By providing training to meet the market needs for their African Expansion, they could tap in to a huge market in South America, conceivably even designing products for South-American ethnicities (Trenholm, 2005). Clothing and accessories would be the ideal step forward, thereby, making use of the company’s experiences at predicting fashion trends. Also, they should seek upon expanding the number of dermo-cosmetics lines for the reason that there is a high demand for ‘miracles in the jar’ offering a reasonable replica to plastic surgery (Trenholm, 2005).
In consideration with the growing demand for plastic surgery, L’Oreal’s ability to do research and development of the related products shall precede them from the crowd in this area. There is another long-term goal which should be focused upon the increment of forward integration in to the market by introducing a chain of stores which could feature all the products of L’Oreal. There is actually, a relatively unconsidered niche available for a chain of cosmetic stores, and therefore, a company like L’Oreal would be ideally located to fill this forte for the reason that they already have world-wide chains of supply which could prove to be the biggest challenge to an independent company initiating with a chain of cosmetic stores. In order to solve the problems of supply chain in areas such as Moscow, there should be introduced emergency stockpiles on hand in area headquarters, therefore, in the case of an emergency order, the turn-over time will decrement and lesser sales will by lost.
In order to introduce a new project, there are four stages which comprise of research, development, start-up, and creating a demand. A fair amount of research involved by studying and comparing factors like population demographics, fashion trends, competitors and political situations of the relevant areas could be introduced. In the early on, a compilation of research reports for every expansion idea and presentation of the pros and cons to the board of directors, leading to further research by drawing drafts of the business plans and calculating the costs would commence to develop products, or to adjust the current method. Supply lines are required to be calculated in order to locate the most cost efficient arrangements and an advertising campaign could be introduced along with the packaging design for new products. This pre-launch would be inclusive of sending out the samples of new products to influential people of the industry, store buyers, magazines and other media personages. Depending upon the areas of focus, the ad-campaign would be initiated with spots on television, magazines, and the web, i.e. the internet. Interestingly, according to Hamel, Internet was never a business model, and was merely a technology, however, it turned out to be little more than re-engineering on steroids and its competitive influence has been vastly overstated (Hamel, 2002). The L’Oreal group should be all set for the contingency plans by stockpiling emergency stock in the problematic fields. If there is an extraordinary demand, the company will not lose business.
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