L Oreal Final 022110

Tools for Successful Innovation Glenn Baptiste SVP, Marketing Multicultural Brands

A few of our key brands…

A large portion of L’Oreal’s annual revenue in Consumer Products comes from Innovation

The Seven Chakra of Innovation These principles apply to fresh thinking on any subject…

Above all, innovation must add value to the organization
Basic principles of accounting
Build top line revenue
Increase margins
Better utilize assets
Borrow money at a lower rate
Reduce taxes
These programs are designed to enhance all three areas

This was a typical description of a target: Beauty involved, hair involved, 35 to 55 years old, ultra high income, blonde…

Find a definition of an “insight”
“ Deep or fundamental truths about the consumer that forces a transformation of thinking and can be leveraged for business building or brand development opportunities.”

Insightful comment on behavior:
These moms don’t have the time to cook from scratch the way their mothers did, and they feel guilty about this
True Insight: In this hectic and uncertain world, everyone seeks a sense of comfort, caring, and warmth Person: Real Uhmericans

Product Idea: Fresh, real country comfort food ready in 5 minutes
All creative elements based on true insight:
Product Offering: Various elements of a meal grandma would make – fresh real food, served from a country crock
R&D Details: Thick, satisfying, natural ingredient deck
Packaging Creative: Matches base brand, farm imagery, warm muted colors

“ If you want to be irreplaceable, you have to be different” Gabrielle “Coco” Chanel

Why do people love movies?

Natural, trendy, feminine. A Bad Story

Safe for your health and safe for the environment, hip and chic, organic and green, funky and fresh, happening and just plain fun. A Better Story

Nature Girl products are made with organic and wildcrafted ingredients, peace, love, nature and harmony, baby. Nature Girl is a modern-day super hero who takes the lead, confronts adversity and saves us from the perils of toxic chemicals, corporate greed and pollution. This is someone who most women can identify with. Beautiful, but more importantly, smart, determined and a leader. Modern with a sense of visual irony, what Murakami did for Louis Vuitton – we are eco-chic. A Great Story

The Brand Diamond The person and situation for which the Brand is always the best choice. Define in terms of attitude/values, not just demographics. The market and alternative choices as seen by the consumer and the relative value the Brand offers that market The element of all you know about the target consumer and their needs upon which the brand was founded. What the Brand stands for and believes in as well as what personality traits it exhibits. The differentiating functional and emotional benefits that motivate purchase. The single most compelling and competitive reason for the target consumer to choose the Brand. The proof we offer to substantiate our positioning. The distillation of the Brand’s genetic code into one clear, compelling thought.

The Brand Diamond The distillation of the Brand’s genetic code into one clear, compelling thought.

The Essence
Disney – Magic Happens
Ritz-Carlton – Ladies and Gentlemen serving Ladies and Gentlemen
Axe – Win at the Mating Game
Corona – Tropical Bliss in a Bottle
Country Crock – “Find Your Porch Swing”

Trendiness and profit margin… Cutting Edge Low Awareness Routine High Awareness Trend Adoption Life Cycle Stages Leader Early Adopter Early Majority Late Majority Laggard Stage 1 Stage 2 Stage 3 Stage 4 Stage 5

A Few Tools on the Business Side
The 5 “U”s
The SOPA tool
Capabilities Foundation

What are the 5 U’s?
Attracting new Users
How can we get more people to try us and come into our franchise?
Driving incremental Usage occasions
How can we get them to use us more often and/or in different ways?
Impacting Use-up rate
How can we get them to use our products faster or buy them faster?
Trading users Up
How can we get them to trade up to higher cost/higher margin items?
Penetrating Untapped channels
Are there other channels in which we want to sell our products that we aren’t selling in now?

Attracting new Users: How can we get more people to try us and come into our franchise?

Finding out why a population group is not using a product can lead to products to accommodate them, bringing them into a category and franchise.
Product:
Mobile phones were not extensively used by older people.
Marketer Insight:
Market research revealed that mobile phones weren’t being used much by seniors, because the buttons were too small for older eyes to see and operate. Companies that have created phones that are easy for seniors to use have seen increased sales.
Attracting new USERS

Driving incremental Usage occasions: How can we get them to use us more often and/or in different ways?

Looking at a product’s core benefit can help identify new products where that benefit can be applied.
Consumer Problem/Insight:
People are always looking for ways to clean, freshen, and deodorize, particularly without chemicals, if possible.
Product Description:
Arm & Hammer baking soda
Was a simple baking ingredient
Freshening & deodorizing benefits discovered
Many sublines created to utilize core benefit
Incremental USAGE occasions

Impacting Use-up rate: How can we get them to use our products faster or buy them faster?

Demonstrating “typical usage” of a product which uses much more of it than average can increase consumption.
Consumer Insight:
Consumers emulate what they see on TV and other media.
Marketing Description:
In the 1980’s, Aim toothpaste aired TV spots that ended with an abundant amount of product being applied to a toothbrush. Consumption of toothpaste increased by 10% in one year.
Impacting USE-UP rate

Increasing the size of a package can sometimes increase consumption.
Consumer Insight:
Marketers realized that the original 12 ounce can was generally used as a single-serving. If single-serving size was increased, people would automatically buy more pop.
Product Description:
With the resealable bottle, the size was increased to 16 ounces.
The bottle eventually grew to 20 and then 22 ounces.
Impacting USE-UP rate

Trading Users Up: How can we get them to trade up to higher cost/higher margin items?

Thinking about a product’s core benefit and then increasing the effectiveness of that benefit encourages consumers to trade up.
Consumer Insight:
Women need moisturizers for their skin. But as they age, they want and can afford more premium products with special anti-aging benefits.
Premium Product Descriptions:
Olay has multiple product sub-lines, with increasing price points & added benefits:
Oil of Olay
Daily Renewal
Regenerist
Definity
Trading users UP 4 oz for $7 2 oz for $10 1.7 oz for $18 1 oz for $25

Penetrating Untapped channels: Are there other channels in which we want to sell our products that we aren’t selling in now?

The incredible growth of non-retail outlets have brands examining how they can play a bigger role in this area.
Consumer Insight:
Consumers increasingly want:
Shop-at-home convenience,
Product demonstrations
Testimonials from other consumers
Channel Descriptions:
Direct-to-consumer channels offer all features above, examples include:
HSN and QVC cable channels—can order via phone or online.
Amazon.com and other online retailers sell everything imaginable.
Most brick & mortar retailers also have online stores.
Many brands now have their own online stores.
UNTAPPED Channels

Capabilities
A tool to getting more production out of existing assets
The goal is to understand our current world to that we can determine which ideas are:
Quick and easy to implement
May take somewhat more resources to employ
Are simply cost prohibitive

Capabilities

Innovation Explosion Events

Questions?

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L Oreal Final 022110

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L Oreal Final 022110 — Presentation Transcript