Group 3 Loreal Case Study

Abhay Gupta J022

Marmik Desai J020

Nikhil Nerkar J045

Kavya Rastogi J049

Sayali Patil J047

Siddhant Sharma J055

Q1. Evaluate LOreals international product and communication strategies. How are they executing
this strategy?

- They adapted the product with
countries and cultures. Eg: They
Straight Extension
Communication Adaptation
-They started moving to digital
promotions and campaigns like
the virtual 3d avatar, youtube
channels and blogosphere
- Collaboration
Product Adaptation
the local needs of different
launched Garnier Men in India
- They launched Geocosmetics
to study the beauty trends
around the world and tweak
their products accordingly Product Invention
- They introduced a number of
patents and spent 3.5% of their
revenue on product innovation
and design with over 612
patents
Dual Adaptation
- Launched technlogically
advanced products like Express
Finish - Fast Dry Enamel and
Great Wear Makeup
-Reinvented brand image,
added an urban flair to their
promotions

Thus Loreal used a combination of various strategies to enter into different markets
strategically, depending on their diversity. They expanded into different markets by acquiring
companies like Unisa in Chile, Jade in Germany and Maybelline in USA
Q2. What are the trade-offs of such a strategy?

Huge investments in R&D which was 3.5% of their revenue

Heavy investments in advertising and promotions
Difficult to manage diverse product portfolio and maintain brand image and consistency
Tough competition from local players who are resorting to door to door selling
Losing Loreal Paris as a premium brand
A huge expenditure required for local R&D and research
Too much focus on digital marketing with lack of personal interaction with the consumers

Q3. Discuss the effectiveness of LOreals communication mix?

LOreal used various means to communicate to its user its presence. LOreal used various
channels and means to do so. The Marketing Communications Mix is the specific mix of
advertising, personal selling, sales promotion, public relations, and direct marketing.
It invested heavily in advertisements and covered all mediums- television, print and bill
boards. It also eventually used 2% of its marketing budget for internet advertising, they
invested heavily in advertising in 2009. (Advertising expense swelled to $4.56 Mn)
Promotional Money was spent considerably ($7 Bn).
Advertising Budget Break up :
a) 75% Television
b) 20% print
c) 5% Billboards
d) In 2007 2% was dedicated for online Initiatives.
LOral sold cosmetics through a variety of channels, including department stores and other
retail locations, duty-free shops, the Internet, and direct marketing to professionals in the
beauty industry.
LOral developed brands in the low-, mid- and high-ends segments with a portfolio that
comprehensively covered price points and distribution channels hence, It had products in
three ranges, premium brands, higher end mass range products and low end brand which
were distributed strategically.
Premium products were sold in departmental stores, higher end products through retail
outlets though importance was given to shelf space, availability, etc. Whereas low end brands
were available to all mass outlets.
LOreal came up with a category known as masstige a combination of mass and prestige.
These products were premium but attainable. LOreal Paris was LOreals leading masstige
brand and generated nearly 50% of the companys total sales in Western Europe and 20% in
the U.S., and had over 3% of the global beauty and personal care market.
Maybelline was the most successful marketing venture, where they took over the brand, gave
it a makeover. They made effective use of bright colors, advertisements and modern setting
to give a psychological impact.
LOreal did not use the direct-sales approach, it had hired personal beauty advisers at
department stores in Brazil to create a retail strategy from scratch
It very strategically associated itself with various A-list stars from different age, culture, race,
color etc. to promote diversity and ensure that masses can relate. It covered Jennifer
Anniston, Beyonce, Sarah Jessica parker, etc. they made actors like Gerad Bulter as their face
for men products.
 It was associated with Cannes where it sponsored stays and after parties, the stars who
walked the red carpet and did their makeup with LOreal products. Also it made a Cannes film
festival inspired product range
It also was associated with producers of film and ensured that their products are advertised
them in subtle manner.
It went on to do something different and came up with a challenge for students of various
universities in different countries. The challenges varied from to come up with marketing
strategies for LOreal to come up with beauty product range for men.
Its brand garnier used social media for marketing, Elle created personal virtual stylist using
avatar at 3d booths which was a new strategy, it launched its YouTube channel which had
make up and styling tips from bloggers and actors.
Grassroot Campaigns: Helped 4000 salons to setup Facebook page. This helped in tying up
with the salons and thereby increasing awareness among the customers about LOreal
products visiting the salons.
LOreal has a very effective marketing strategy. Its communication mix was very strong. With
transition face it changed to cover diverse mediums and reach to masses. It associated with a
variety of people to ensure it reaches to people of different age, sex, race, etc.
The impact of these initiatives can be gauged from the uptrend of the sales.
Total Market :
2006 : 14930.4 Mn (Euros)
2009 : 16257.0 Mn (Euros )
Eff Growth Rate 8.85%
New Market Growth Rate :
2006: 40404 Mn (Euros)
2009: 5445.8 Mn (Euros)
Eff Growth Rate 34.79% .
This reflects that the communication strategies used were effective in reaching to the new
customer.

Q4. What lessons can you draw for Consumer Packaged Goods Management?

Consumer packaged goods (CPG) are a type of goods consumed every day by the average consumer.
The goods that comprise this category are ones that need to be replaced frequently, compared to
those that are usable for extended periods of time. While CPGs represent a market that will always
have consumers, it is highly competitive due to high market saturation and low consumer switching
costs.

Maintain brand integrity - Each division of Loreal had its own marketing and development teams,
structured around individual brands to maintain brand integrity

Maintain position of brands while marketing - Managers were not allowed to change the position
of the brands, as the products in each brand catered to different price segment, culture, geography.

Invest in Rnd and promote innovation Loreal spent 3.5% of revenue on Rnd in 2010

Distribution channel discipline to be maintained Products were sold through particular

distribution channels based on their positioning.
 Moving from Print to Digital marketing- Youtube channel, user generated content, instructional
videos

Collaborate with industry professionals- Sales were driven by training industry professionals

Product Placement- High and low end product were differentiated through placement on shelves
, displays, kiosks etc

Celebrity endorsement, sponsor Cannel festival, celebrity makeup, placement in films and
television to target various demographics

Loreal brandstorm - Acquiring best marketing talent through case study competition

High advertisement and marketing budget for promoting CPGs In 2009, $4.65 billion worldwide
advertising spend, $7 billion marketing outlays

Quickly moving from generic websites to personalised experience and tips from experts