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Loreal HBR case analysis- Global brand local knowledge

case analysis of HBR case on Loreal- global brand local strategies

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Loreal HBR case analysis- Global brand local knowledge

  1. 1. Global Brand Strategy Class-2 Made by: Jibin C Joseph PGDM 11-13 IFIM B School, Bangalore
  2. 2. CASE
  3. 3. About LOrealFounded: 1909, ParisWorlds largest cosmetics & beauty companyMission statement:“LOreal has set itself the mission of offering allwomen and men worldwide the best of cosmeticsinnovation in terms of quality, efficacy and safety. Itpursues this goal by meeting the infinite diversityof beauty needs and desires all over the world.Beauty is universal.”
  4. 4. Summary of the caseLOreals Philosophy: Selling the science of beauty in ajar.LOreal started by French chemist Eugene Schuellerdeveloped a hair color known then as ‘Aureole’ forPersian hairdressers.LOreal then went to consumers through variouschannels according to consumers psychographic &psychological profiles.But its international image hampered as Persian beautyproducts was considered expensive.
  5. 5. Contd..Inter brand 2011: No- 40, above Nestle, Jhonson & Jhonson &Nivea. Global presence 66,600 23 Global 130 Countries employees brands 5.7 billion units 38 Factories in 2011
  6. 6. Focused strategy to become Global brandHair color Skin care Hair care Fragrances Color cosmetics
  7. 7. Product Portfolio
  8. 8. Consumer products
  10. 10. Year- 1999Added Mens beauty products to its portfolio
  11. 11. Local consumer understandingCreated ‘Geocosmetics’ to study the need, habits & trendsaround the world.Loreal institute for ethnic hair & skin research in Chicago –2003Research center in Pudong, China -200512 evaluation centre around the world.Local teams tweak the products with the help of theseresearch. Local products taken to global. Eg: Garnier men
  12. 12. Promising new markets
  13. 13. Promising new markets
  14. 14. Region specific productsMEXICO W. EUROPE ASIA E. EUROPE INDIA
  15. 15. Brand Diversity CHANNELS BRANDS Professional LOreal, kerastase,Redken, Matrix Food, Drug & Mass LOreal, Garnier, Maybelline, Softsheen carson Perfumeries & departmental Lancome, Biotherm,HR stores Pharmacies Vichy, skinceuticals, sanflore The Body shop Body shopProducts followed specific channels: LOreal Paris sold through retailoutlet but with restriction on product placements.
  16. 16. Villages lacked retail infrastructure in India & Pakistan, SoGarnier was sold in kiosks.Category named Masstige – Mass+ Prestige.Premium but attainable.R & D helped in keeping the brand relevant for longerperiod of time.Eg: Genfique- youth activating concentrate helped revivethe premium Lancome brand. It was backed by 10 yearsof research
  17. 17. LOreals marketing excellenceAcquired in 1996, when lost its focus & brand equityTagline: Maybe she’s born with it. Maybe its Maybelline!Major overhaul in its operation, branding & advertising.Ad spend increased by 30% to $70 million.Modernized approach to advertising & was targeted to workingwomen class who were in need of speedy makeup.Used its technological innovations to address this demand.It went to 70 countries & sales grew 93% from 1996 to 2002.
  18. 18. Redken launched in Latin America in 1990’s and was in 13Latin American countries by 2008.Education program aimed at top hairdressers withproduct tailored to Latin Americans.Sales growth of 20% from 2005-2008By 2008, over 4000 luxury salons adopted Redken in LatinAmerica.
  19. 19.  Launch of INOA in western Europe - 2009. Training sessions provided to 80,000 hairdressers. Result: 36000 salons adopted INOA in just 3 months! To back that- Strong Ad campaign on internet & women magazines.
  20. 20. Top beauty spenders Brazilian womenTraditionally they bought from door to door sales rep.Big Local players.L’Oreal hired personal beauty advisers at departmentstores
  21. 21. Telling the storyAging population in west Ethnic groups around the globe Aspiring customers in the east Interest of beauty among men
  22. 22. Ad Spending
  23. 23. Fame by associationSarah Jessica Parker SPOKESMODEL Eva longoria Gerard butler Patrick Dempsey Scarlett Johnson
  24. 24. Sonam Frieda Pinto Aishwarya
  25. 25. Spokes models around the world ITALIAN HUNGARIAN ETHIOPIA GERMAN ARABIC
  26. 26. Other AssociationsMajor sponsor of Cannes film festival.Also sponsored the festival’s dinner & afterparty which benefitted AmFar (Americanfoundation for AIDS research)Film & TV placement
  27. 27. L’Oreal BrandstormMarketing as recruiting. (Launched in 1992)Contest for students of marketing major 43,000 285 43 STUDENTS UNIVERSITIES COUNTRIESIn 2011 contest was to design an Ad concept to attractmen to professional salons.Contest helps LOreal to identify new talents.
  28. 28. Smart spendingPRINT MEDIA DIGITAL MEDIA Ad spending shifted towards internet
  29. 29. ExampleUser could upload their hair style. It also had ‘how to’ videos
  30. 30. ExampleDigital marketing innovation- 3D scanning booth at retail stores
  31. 31. Example L’Oreal’s Grassroots campaignHelped 4000 salons to build their Facebook pageL’Oreal offered instructional videos, and training & advertising credits tothe salons.Also displayed products in tabs & ‘how to’ videos
  32. 32. ExampleLOreals official Youtube channel: ‘Destination Beauty’Web personalities to pitch products. Eg Michelle Phan
  33. 33. Finally.. To double its customer base to 2 billion & increase to 50% from 30% share of sales in emerging market
  34. 34. Brand Report Card
  35. 35. The brand excels at delivering the benefits1 customer truly desire 9/10  L’Oreal have products for various categories like mass, medium and high end. Ability to reach global audiences via intensive advertising. Specialist hairdressing cash-and-carry outlets (e.g. Aston and Fincher). L’Oreal created a virtual personal stylist -eliminated changing room line hassles. -multiple applications of skincare & cosmetics.
  36. 36. 2 The brands stays relevantUser Imagery: - L’Oreal have different range of products for various categories like mass, medium and high end.Usage imagery: - L’Oreal products is been used for skincare, makeup and hair care.Personality: - L’Oreal is a sincere and competent as they are consistent with their innovation.
  37. 37. Continued 9/10The feeling brand tries to elicit in customers: - L’Oreal is a purposeful brand as it tries to provide quality products at affordable prices. Relationship with its customers: - L’Oreal is building a committed relationship as they hired personal beauty advisers at departmental stores to engage with customers.L’Oreal poured 5bn into R&D
  38. 38. The pricing strategy is based on 3 9/10 consumers’ perception of value masstige (a combination of mass and prestige). And the two key tenets are: -  L’Oreal products are considered luxury or premium but attainable.  L’Oreal had price points that filled the gap between mid-market and super-premium products. E.g. L’Oreal Paris was L’Oreal’s leading “masstige” brand and one of the first brands globally to offer high quality at an affordable price.
  39. 39. 4 The brand is properly positioned 8/10 L’Oreal do not appreciate points of parity as they believe to provide products different from their competitors (P&G and Kevin care). CDR Special Report says that From the beginning LOreal has kept itself on the cutting edge of beauty care. L’Oreal has always been guided by the conviction that science-based approach to the beauty business will lead to a meaningful point of difference for the consumer and they achieved it.
  40. 40. 5 The brand is consistent 10/10Maybelline is the best example of consistency of L’Oreal i.e. new ways to expand old brands and ability to shift images.Maybelline released a new makeup collection that featured bright colors called Miami Chill.  This was important for two reasons:  For consumers it was,’ Wow, is this Maybelline?’  For retailers it was a signal that the company was changing.
  41. 41. The brand portfolio and hierarchy make 9/106 sense
  42. 42. The brand makes use of and co-ordinates7 a full repertoire of marketing activities to build equity • Brand name designed:- Hair color formula known as “Aureale”. • Slogan: - "Because youre worth it". • Brand awareness: - Through advertising of $4.56 billion in 2009 and in 2011 they have put 18.1% more towards its advertising budget. • L’Oreal gradually reduced some of its ad spending on traditional media and shifted towards internet. • Push and pull strategy: - Garnier Fructis launched a user-generated website which was focus of a major campaign and provide a chance to win prizes or vacation packages.
  43. 43. 8/10 Continued…. LOGO PACKAGING SIGNAGE L’Oreal sold cosmetics through a variety ofchannels, including department stores and otherretail locations, duty free shops, online and via directmarketing to professionals in the beauty industry
  44. 44. The brand’s managers understand what8 the brand means to consumer 9/10 To know the likes and dislikes L’Oreal has spent 3.5 % of its revenue on R&D. Each of the division L’Oreal have, each division has its own marketing team to ensure each brands integrity. Brands are to be sold to a particular type of customer through a particular distribution channel. Managers know that they can’t play with the position of the brands, so they don’t play with that. The only trick is to innovate things inside the brand.
  45. 45. The brand is given proper support, and9 that support is sustained over the long 10/10 run L’Oreal has spent its 3.5% of its revenue in R&D  Even at the time of recession L’Oreal signaled that it would be interested in buying an Indian skin care brand which shows that they were more concerned to keep them self up by acquiring a new brand even during market downfalls. Ex:- Maybelline.
  46. 46. The company monitors sources of10 brand equity 8/10
  47. 47. Rating for L’Oreal (1-10)• Question 1 - 9 points. • Question 9 - 10 points.• Question 2 - 9 points. • Question 10- 8 points.• Question 3 - 9 points.• Question 4 - 8 points.• Question 5 - 10 points.• Question 6 - 9 points.• Question 7 - 8 points.• Question 8 - 9 points.
  48. 48. Questions for you!1. Why did L’Oreal acquire Body Shop? In your viewwas it a sound global strategy.- B22. Is the organization structure of L’Oreal aligned withits global brand strategy? Why or why not.-C23. What are the different cross cultural consumergroup segments which L’Oreal is targeting and how.-C24. “Think global act local” is the approach of LOreal.How are they practicing this in developing Asianmarkets.-D25. How LOreals acquisitions, contribute to theircompetitive advantage on a global scale.-D26. How does LOreal leverage various consumer touchpoints across diverse cultures?-B2