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The assessment of Loreal Thailand Case Study

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It is about the analysis of the Loreal Thailand Case Study and the way forward plan.

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The assessment of Loreal Thailand Case Study

  1. 1. L'OREAL THAILAND Badariah Baharuddin PBS1331387 Roziana Mohammad PBS1331432 Mohd Ainul Shah Bachok PBS1331421 Norfasha Mohammad PBS1331340 Nor Ain Jafar PBS1331420 Jennie Oh PBS1321264 1
  2. 2. AGENDA 2 Introduction • Country Profile & Company background • L'Oreal Thailand : Case study background • Consumer profile Situational Analysis • Business Segmentation & Competitors Analysis • L'Oreal Thailand SWOT Analysis Problem Analysis • Key Issues • Action Plan and Implementation • Result Conclusion • Evolvement of L'Oreal Thailand : 2001 and beyond • Now & Beyond
  3. 3. The Kingdom of ThailandThe Kingdom of Thailand Floating Market 3
  4. 4. Quick Facts: Thailand Source : The World Factbook (Central Intelligence Agency), doingbusiness.org 67.0 mil 8.642 mil Bangkok 18th ease of doing business 119th real GDP growth 6.5% 120th GDP percapita USD5390 37th economic competitiveness 1 of two SEA not taken over by Western power 4
  5. 5. Hair ColoringMake UpHair Care PerfumeSkin Care 5
  6. 6. L’Oreal Thailand Ltd Company background - L'Oreal Thailand 1950s’ early 1990s’ 1992 1998 1999 Distribution through local agents • JV with local conglomerate • Manufactured some Lancôme product • Lancôme products distributed through counter (department stores) with other luxury L'Oreal brands. Siampar • Directly manage import and distribution (mass consumer & professional hair salon products) • Other product line – hair color, makeup, skin care products • Merging of Siampar and Thailor Thailor  Different locations  Different internal cultural  Different process  Different policies • Discontinuation of Lancôme local production by JV partner share buy out (Siampar) 6
  7. 7. Case Background – L'Oreal Thailand Under capitalized "Thai Exception" management Cash Management Problem Zero Brand Image Pressured market share, sales & profitability Excessive Fixed Asset Investment Reckless Borrowing Undiscipline Financial Institution Asian Crisis 1997 7
  8. 8. 8 COMPETITOR ANALYSIS
  9. 9. Skin care 12% Make-up 29% Coloration 33% Fragrance 26% The Thai Beauty Market (Year 2000) L’Oreal 7% BT 26.6 billion Target Group  20 – 44 years old  Central Thailand & Greater Bangkok  Average monthly – Bt 7,000  Expenditure (personal care & health) Bt 650 9
  10. 10. 30% 22%21% 14% 9% 4% Skincare Make-up Haircare Hair Colourants Fragrances Others Business Segment vs. Competitors 36% 27% 19% 18% Personal Care Foods Refreshment Home Care 25% 10% 9%32% 24% Beauty Grooming Healthcare Fabric Care & Home Care Baby Feminine and Family Care 10
  11. 11.  Operating before World War II  Involved in beauty and non-beauty sections  Thai is the key innovation center  Factory as export hub supplying to Asian market  Products variety and diversification  Leading market position  Products appeal to wide range of population  Go Green Campaign COMPETITOR ANALYSIS - UNILEVER 11
  12. 12.  Involved in beauty and non-beauty sections  Has relocated hair care R&D Center from Japan to Thailand with USD 150m  Procter & Gamble has strong brands.  Take advantage on high-growth markets in hair care and skin care  Opportunity in health and beauty product for men COMPETITOR ANALYSIS – P&G 12
  13. 13. Strong growth prospects for China skin care – Estee Lauder SWOT ANALYSIS - THREAT 13
  14. 14. Regulation of cosmetics were highly regulated and inflexible SWOT ANALYSIS - THREAT 14
  15. 15. Substitute products offer cheaper price SWOT ANALYSIS - THREAT 15
  16. 16. SWOT ANALYSIS - WEAKNESS 16 Lack of media support – ranked no. 35 in overall media spending in 1999. – ranked no. 4 in media spending in beauty industry.
  17. 17. Poor brand awareness in consumer division SWOT ANALYSIS - WEAKNESS 17
  18. 18. Too depending on foreigner and no senior local people in management SWOT ANALYSIS - WEAKNESS 18
  19. 19. Reckless borrowing and undisciplined financial institutions SWOT ANALYSIS - WEAKNESS
  20. 20. Led brands in make-up and hair care industry SWOT ANALYSIS - STRENGTH 20
  21. 21. Excellent image among top professional salon owners (L’Oreal Professional and Kerastase) SWOT ANALYSIS - STRENGTH 21
  22. 22. Strong R&D + Best technology SWOT ANALYSIS - STRENGTH 22
  23. 23. 5 strong brands in Luxury Division Lancôme, Biotherm, Helena Rubinstein, Giorgio Armani and Ralph Lauren 16% share SWOT ANALYSIS - STRENGTH 23
  24. 24. Gain SWOT ANALYSIS - STRENGTH 24
  25. 25. Hiring High Profile International, Local Ambassador And Experts (Make Up, Hair Care And Skincare) as product ambassador SWOT ANALYSIS - STRENGTH 25
  26. 26. Focus only in beauty section SWOT ANALYSIS - STRENGTH 26
  27. 27. Online social networks and internet marketing techniques SWOT ANALYSIS - OPPORTUNITY 27
  28. 28. Enter new market such as fragrance industry where less competitor SWOT ANALYSIS - OPPORTUNITY 28
  29. 29. Tap into more prospective distribution channels SWOT ANALYSIS - OPPORTUNITY 29
  30. 30. Metrosexual Trend SWOT ANALYSIS - OPPORTUNITY
  31. 31. 31 KEY ISSUES AND HOW DID LOREAL THAILAND TRANSFORM?
  32. 32. • Poor Product Positioning • Product Overlapping • Lack of product localization • Not focus on whitening products for skin care Loreal Thailand Key Issues in 1999 Product Marketing Financial People Operations Management Brand and Communication • Negative cash flow • Flat sales – declining sales • Poor financial performance • No budget to increase marketing spending • Traditional promotions • Using international celebrities to be ambassador • Not understanding the local market • Poor engagement with retailers • Low brand awareness – Ranked 8th • Zero visibility in print media • No budget to advertise on TV • Poor image and reputation • Rank 4th in media spending (beauty industry) • Limited media support • No convincing ambassadors • Poor inventory control • Account receivable increased to 203 days -6.7 months • Problem of overstocking • Clash cultures – Siampar and Thailor • Managed by expatriates • Perceived as a Company that has no vision, no results and no rewards • Under utilized of local talent • Low morale among staff • High labor turnover – 2nd highest 32
  33. 33. Loreal products are being segmented by price and distribution channel 33 LOREAL PARIS • Loreal Feria Brands • Loreal Plenitude • Loreal Make up • Maybeline • Garnier LOREAL PROFESSIONAL Hair colour Hair Colour Treatment Other Products :- Excellence and Natea LOREAL LUXURY • Bioterm • Kerastene • Helena Rubinstein • Lancome • PCI- Perfumes Loreal Paris – 1,200 outlets Maybeline& Garnier -5000 stores Leading brand – Skincare- Plenitude 65% 15% 20% 2000 Top professional salons Market leader for Hair Products – rapid innovation and true technical superiority Helena – 6 major dept stores Lancome – 34 outlets Target market : Teenagers and Women Target market : Hair Salon Target market : Men and Women High end market
  34. 34. 34 Turn around L’oreal Thailand by transforming the following … PEOPLE FINANCIAL AND OPERATIONS MARKETING
  35. 35. PEOPLE – CULTURE REVOLUTION • Change of culture – banned employees from using the names Siampar and Thailor – formed new entity Loreal Thailand Ltd • Restructuring of HR Department – 2 units set up : 1) Focus on HR and systems, 2) Focus on training and retention • Relocate to a brand new office, prestigious building (but cheaper) • Offer interdivisional transfer – widen opportunities • Talent Spotting – Key Personnel : Government Relation Manager, Head of IT, Warehouse Manager (Local) • Talent mobilization –Groom potential local talents to become the next generation leaders • Use persuasive and creativity method to motivate the talent to stay with L’oreal • Revisit reward system – Hard work and dedication will be rewarded i.e. Bonus 35
  36. 36. FINANCIAL • Subsidy grant from Loreal HQ in Paris – Bt 50 million – money to exclusively spend on COMMUNICATIONS only • Restore cash flow and profitability • Loreal luxury products – Stock coverage at counters reduced from 5.2 months in Dec 1999 to 2.5 months a year later  Improve account receivables from 203 days to 130 days  Improve cash flow • Focus investments on 2 major outlets, and getting designers from Paris and London to develop the best beauty counters  6 months after – Sales up more than 50% 36
  37. 37. 37 MARKETING – UNDERSTANDING THE MARKET -RETAILERS • Listen and engage with the retailers – tailor made strategies  Drug stores – consumer would find rational and highly emotional benefits from beauty products  Carrefour vs Tesco – Carrefour – revamp beauty space, whilst Tesco concerns on Category Management • Help retailers to create a better understanding the emotional values of beauty products • Be more professional in dealing with retailers • Clearer ideas for product positioning • Understand market better when launch products • Support the right communications strategy
  38. 38. 38 MARKETING – UNDERSTANDING THE THAI CONSUMER • Skincare products are the most preferred and popular. Most Asean consumers are looking for skin whitening products. • Thai Skin is unique – Not Caucasian, Indian, Oriental Hispanic or Black • Consumers like to see the products further segmented for different age groups and skin types • Motivation and needs – Brighten skin, fulfilling emotional needs and uplifting self esteem – Brighter skins means high status • Thais often associate the made-in Japan image with high-quality or premium products, which encourages Thai consumer’s willingness to pay a premium price • Factors to purchase cosmetics – Quality and Price • Preferred means of cosmetic info – Magazines (79%), TV (64%) and friends (58%)
  39. 39. 39 MARKETING – PRODUCT POSITIONING • Reposition of Loreal Paris, Maybelline and Garnier, by redefining pricing strategy • Increase SKUs of hair colour products from 15 to 20 compared to 7 of Sunsilk’s (Main competitor)  Increase shelf space from 50 to 90% at Watson  Matching the hair color demanded by consumers • Consider Whitening Skin Product as one of the killer skin care product
  40. 40. 40 MARKETING - COMMUNICATION CONVINCING LOCAL AMBASSADOR Before - The boring and lacking in self confidence ambassadors After - The WELL KNOWN LOCAL STAR – enjoys widespread respect and credibility achievement at international level – represents as Thai icon Laila Boonyasak (White Perfect Laser Ann Thongprasom (Revitalift / L’Oreal Excellence) Araya Alberta Hargate (Total Repair / Revitalift white / UV perfect / Areeya Sirisopa (Fall Repair) PRINT MEDIA AND POINT OF SALE Print media – Use to explain technical innovation Point of sale and Merchandising – Use for product innovation i.e product testing Communication message - Thai women are highly sophisticated and understand beauty!
  41. 41. ARAYA ALBERTA HARGATE 41  Choompoo as a nickname  Famous Thai Superstar  Born in 1981  A Thai-British born  Model, Actress, TV Host and Singer  A graduate in Bachelor in Arts  Won many awards i.e  FHM Sexiest Actress in Thailand Awards 2007 – 2010, W Style Awards, Siam Dara Stars Awards, and The Best Actress Awards
  42. 42. FACES OF LOREAL 42
  43. 43. 43 AS A RESULT, FINANCIALLY BOOSTED UP 1. 1.Customer credit cover days improved for all product lines especially the Luxury Product Division! 2. NEGATIVE Cash Flow has turn into POSITIVE! 3. Sales improved tremendously by 80% up!
  44. 44. 44 • Change in organizational capability and morale • No. of talents of recruited increased • Job distribution was more structured • The brand - the asset in attracting new talent • Lower labor turnover rate averaged around 4% • Local “real stars” developed to run the division • Engage with retailers closely – focusing extra value that Loreal tailor made strategies would bring them – win-win situation • Strong and aggressive marketing & sales team contributed to the faster turnaround – move fast in the market with good innovations • Launched of the 4th Division - Active Cosmetics (for sensitive skins or affected by dermatological conditions) Local talent being recognized… Better engagement with retailers and strong sales and marketing team led to Loreal’s success in winning the heart of Thais. Launching of Active Cosmetics has strengthen Loreal’s market position. CULTURAL CHANGED AND MOTIVATED EMPLOYEES CONTRIBUTED TO THE LOREAL THAILAND OUTSTANDING PERFORMANCE
  45. 45. 45 ALL IN ALL, LOREAL THAILAND HAS SUCCESSFULLY TRANSFORMED… Understand the Market Get the right products Communicate Effectively with Consumers Get the right resources to implement WINNING STRATEGY
  46. 46. 46 CONCLUSION
  47. 47. 47
  48. 48. 48
  49. 49. 49 HONESTY RESPECT COURAGE TRANSPARENCY
  50. 50. COMMITMENTS & TARGETS FOR 2020 PRODUCING Reduce their footprint by 60% - CO2 = -60% - H2O = -60% LIVING Make social profile of 100% of the products. This is to allow consumers to take right choice while buying DEVELOPING COMMUNITIES Enables 100K people from underprivileged communities to access work SUPPLIERS Evaluate & select on social and environmental performance EMPLOYEES Access to health care, social protection & training INNOVATING 100% of the products: Natural materials with social and environmental benefit 50
  51. 51. 51 MISSION (OFFERS BEAUTY TO EVERYONE) BEAUTY IS ITS - Create products that meet needs & desires Deliver innovative & quality cosmetics BEAUTY IS UNIVERSAL - Different researches explore new ideas - Innovative products inspired beauty BEAUTY IS SCIENCE - Brainstorming to innovate & inspire creativity - Suit the local community BEAUTY IS THE COVENANT - Diversify universalization the brand perfectly
  52. 52. 52 AIM To reach 1B new consumers around the world Beauty 4 everyone Beauty 4 Individual Opportunity to reach beauty Accelerate regional specialization Local Observers on innovation
  53. 53. 53 28 International brand World No. 1 in cosmetics business Sold 22.98B Euros in 2013 Be in 130 countries 77,500 employees 624 patents in 2013
  54. 54. 54 • Support by L'Oreal, France Foundation with MoE, government agencies and private organizations • Provide training with great facilities, learn professional skills • For ages of 15 - 40 years, have insecure income • Creating beautiful and social equality • After project, participants stand on their own with skills SPECIAL PROJECT
  55. 55. 55 “A diversified workforce in every function and on all levels strengthens our creativity and our understanding of consumers and it enables us to develop and market products that are relevant” JEAN-PAUL AGON, CHAIRMAN AND CEO OF L’ORÉAL
  56. 56. 56

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