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Nyu miss alpha

  1. 1. 1
  2. 2. Our team chose to specifically focus on the existing ASEAN product portfolio. Products in the Elsève line are moderately priced to appeal to the widest array of consumers, yet embody the elegant, high-performance brand image that is the essence of L'Oréal Paris. COMPANY MISSION L'Oréal Paris (or “L'Oréal,” or “The Company,”) is devoted to the mission of bringing affordable luxury to the masses – enabling all individuals across the world to express their personalities, gain self-confidence, and enhance their unique beauty. L'Oréal takes great pride in spearheading advanced technologies in its beauty business to invent the products of the future. By providing access to superior products at low prices and encompassing the beauty of the planet, L'Oréal Paris hopes to convey the iconic tagline “Because You’re Worth It” to every person, regardless of their background, age, or gender. Accessibility, diversity, and the commitment to inspire are three pillars that have guided L'Oréal Paris over the years, and they will continue to do so in the future as the company expands into emerging markets. Consumer Products Division “BEAUTY within reach” Because Western Europe and North America are established, mature markets with little room for drastic growth, L'Oréal is aiming to gain one billion new consumers by focusing on spreading its global reach1. Hair CareSkincare Cosmetics Hair Styling L'Oréal PARIS: ASEAN PRODUCT PORTFOLIO Smooth Intense Total Repair 5 Re-Nutrition Nutri-Gloss Light Fall Repair 3X Color-Vive Frizz-free, silky smooth hair • Silk Protein: enhances smoothness and is thermo-resistant • Nutrileum: nourishes weak hair Weak, limp, damaged hair looks replenished, fullness restored • Pro-Keratin: strengthens hair • Ceramide: restores smoothness and shine Revive your shine • Pearl Protein: provides brilliant shine • Citrus: purifies hair by freeing deposits and cleaning fibers • Shine Booster Technology: boosts light reflection Nourish your roots, make your hair stronger • Microcirculation: applied directly to scalp • Reduces Hair Fall by 90% • Restructures hair fiber Visibly prolonged hair color • Color Protect Light Reflecting System: nourishes hair and protects hair fibers [with UV filter] • Provides shiny and radiant hair color Rediscover incredible elasticity, bounce and silky smoothness with Royal Jelly • Royal Jelly: natural ingredient that bathes hair in light, nourishing ingredients (our focus) 2
  3. 3. ASEAN Region: Indonesia, Malaysia, Philippines, Singapore, Thailand, Vietnam, Brunei, Burma, Cambodia, Laos, & Mumbai, India The ASEAN market for L'Oréal Paris holds immense potential for the brand in the upcoming years. Economists are bullish on growth in the ASEAN region, projecting a 5.8% growth for 2013 compared to 0.2% growth in the core Euro zone and 2.1% in the United States2. The ASEAN region has developed as a result of production facilities taking advantage of the large pool of low-cost, skilled labor. A new crop of white collar jobs are being created as more production workers move up into management positions. The middle class has expanded drastically over the past decade and will continue its swift growth in the ASEAN region. Within the next four to ten years, this block of consumers is expected to grow to more than 150 million3. A growing middle class means more dispensable income in the hands of consumers, leading to increased demand for more sophisticated products and services. In the case of hair care products, this means more advanced hair treatments in addition to basic shampoos and conditioners. ASEAN ECONOMY SOURCES: 1“Industry Report C1934-GL: Global Cosmetics Manufacturing,” IBISWorld, September 2012 | 2IMF October 2012 http://www.imf.org/external/pubs/ft/survey/so/2012/RES100812A.htm 3US Commercial Service. Doing Business in Indonesia: 2011 Country Commercial Guide for US Companies EVOLUTION OF THE HAIRCARE INDUSTRY 2005 2012 SOURCE: Euromonitor International Reports for Malaysia, India, Indonesia, Philippines, & Thailand. (2011-2012) Dying sales of 2 in 1 products: have consistently decreased in sales by 10% on average Colorants are slow but steady: average growth of 4%; significant high sales in Indonesia after 2007 Consistent 3%-4% sales in: Salon Hair Care & Total Shampoo High but fluctuating in Styling Agents: high average growth of 7%, but saw a sharp increase in 2010 to 10% and sudden decrease the year after to 5% Stable sales in Hair Loss Treatment: sales see very flat but consistent average growth of 5%; slowing in the Philippines The rise of Conditioners: sales have been growing around 8%, the highest among all other hair care products Perms and Relaxants are slowing: The Philippines saw drastic sales growth drops in 2007-2008, Thailand is steady, but its total average is -1% 3
  4. 4. 17% 30% 18% 35% Unilever P&G L'Oreal Other 59 % 22 % 5% 14 % 50% 29% 3% 18% 51 %31 % 5% 13 %36 % 18 % 46 % 47% 28% 13% 12% Unilever P&G L'Oreal Other COMPETITORS COMPANY market share BRAND market share The top 5 players in the ASEAN countries consistently include Unilever, Proctor & Gamble, and L'Oréal. Other prevalent companies include Mandom and Colgate. We will focus on Unilever and P&G as L'Oréal’s main competitors because in addition to being top players, both of these companies have at least two hair care brands that are in the top 10 in terms of favored products across the ASEAN countries. While L'Oréal as a company remains in the top 5, it usually falls some place after these two competitors in both company market share and brand market share. In addition, although Elsève and L'Oréal Studio are the two L'Oréal brands that have the greatest market penetration, both of these are not consistently in the top 10 for market share. Malaysia Philippines India Thailand Indonesia (Percentages based upon the top 10 products in each country) Like P&G, Unilever has some very successful brands like Sunsilk and Dove, which have up to 19% of brand market share in select countries. Although they have lower profit margins, their revenue has been growing at a faster rate than L'Oréal. However, they have been attempting to significantly cut costs by revamping their supply chain and eliminating unproductive advertisement and media. Unilever’s biggest threat today is the increased competition and the chance of a competitive price war, especially since all of the companies are cognizant of the threat of inflation in Southeast Asia. P&G has publicly stated that they are changing their strategy to focus on their operations in the US, China, and Western Europe. Although this focus overlaps pretty significantly with L'Oréal operations, P&G will most likely not invest a huge amount into emerging markets. Pantene and Head & Shoulders are already well-established brands that have up to 17% of brand market share in some countries. As a result, P&G has had lower revenue growth and lower profit margins than L'Oréal. Unilever currently leads these companies in revenue growth, followed by L'Oréal and then P&G… Proctor & Gamble Unilever L'Oréal has managed to keep its margins much higher than that of its competitors, especially in gross margins. This shows that L'Oréal has been able to expand into these emerging markets more cost efficiently than its competitors, which puts L'Oréal at a huge operational advantage. As competition increases, the cost of growth increases as well. We think that having higher margins and lower operational costs gives L'Oréal a larger cushion to invest more in Southeast Asian expansion than its competitors. HOWEVER: competitor POSITIONING -2% 0% 2% 4% 6% 8% 10% 2008 2009 2010 Unilever P&G L'Oreal Other COMPANY growth P&G, Unilever, and L'Oréal have all slowly been losing market share despite the increase of sales in Southeast Asia. The slowdown has largely been caused by increasing competition. 4
  5. 5. STRENGTHS - Existing high-end brand image with L'Oréal Studio Line - Existing Elsève products already target the major consumer needs in Southeast Asia (Total Repair 5, Nutri Gloss, Smooth Intense, etc.) - Experience in using celebrity marketing campaigns - Current global reach/capacity - Advanced research & marketing capabilities WEAKNESSES - Variety of consumer needs (dandruff, damaged hair, dry hair, oily hair, thin hair, etc.) means that L'Oréal needs to provide many different products - Increasing inventory and decreasing inventory turnover OPPORTUNITIES - Growth of conditioner sales in Southeast Asia - Positive economic conditions and growing middle class - Growth of concern on HALAL producers - Increasing importance of natural products - Globally, L'Oréal has twice the market share as Unilever, so it should be able to claim that spot in the ASEAN market as well - Strong growth of premium-priced products - Roll-back from discounts and promotions THREATS - Strength of competitors (Unilever, P&G) and the existing number of brands that L'Oréal has available - Increase of counterfeit goods; both because of their low price cannibalizing L'Oréal sales but also cheap products ruining L'Oréal brand image - Macroeconomic factors that decrease consumers’ spending SWOT ANALYSIS SWOT DEEP DIVE High-End Brand Image: Market share percentages for L'Oréal Paris’ more sophisticated hair care products (Salon Hair Care & Hair Care Premium brands) are significantly higher than that of the Normal Hair Care sub-category. For example, L'Oréal Professional in Salon Hair Care has more than 15x the market share of Elsève in Normal Hair Care. This shows that the L'Oréal Paris brand connects more strongly with salon usage and quality. Opportunity for Mass-market: Despite higher market share in Salon/Premium Hair Care, growth in the Normal Hair Care category is higher and more stable – pointing to high potential in mass- market products, as well. Compelling Marketing Strategy: L'Oréal Paris has a long and effective history of using celebrity marketing – to inspire and advance the beauty standard. Strong International Presence: International expansion is moving rapidly and has been a driving factor for revenue growth. Due to L'Oréal’s successes in Asian expansion, similar products and marketing strategies have been efficient in targeting the Southeast Asian region. 5
  6. 6. A RISING MIDDLE CLASS The middle class in ASEAN countries are growing at an incredible pace. In Indonesia, for example, the middle class comprises of approximately 40% of the population – or more than 90 million people. Within the next four to ten years, this block of consumers is expected to grow to more than 150 million1. SOURCES: 1 US Commercial Service. Doing Business in Indonesia: 2011 Country Commercial Guide for US Companies | 2 Deloitte, “Consumer 2020” Research Report. The top 20% of the population have purchasing power similar to that of the average citizen of developed countries. Even the next 20% are relatively affluent, holding discretionary income. Moreover, as these economies continue to grow, the number of people that shift from poverty into the middle class tend to grow faster than the overall economy, which is critical for consumer oriented companies such as L'Oréal2. INCREASED PURCHASING POWER Each of the five countries in the ASEAN zone experiencing the fastest advancement of education showed an average literacy rate of 93% between 2006 and 2008, according to the Asian Development Bank. Indonesia, Thailand, and Vietnam have all experienced steady increases in adult literacy rates, averaging at around 95% in the most recent survey by the United Nations Education, Scientific and Cultural Organization (UNESCO). As countries become more developed, women are finding greater opportunities to achieve higher education, leading to increased female labor participation. For example, India is seeing the rise of two-income households, which in turn, has led to increased demand for the conveniences of modern retailing. EDUCATION AND GENDER EQUALITY $ = UNDERSTANDING THE CONSUMER MEET ANNISA our target consumer in the ASEAN zone, representing young women aged between 15-35. SHE IS EMPOWERED - just beginning to enjoy the freedom and purchasing power that comes along with a fast-growing economy. SHE IS EDUCATED - most likely completed secondary school and part of university. SHE IS AMBITIOUS - women are more inspired than ever to work their way up the career ladder, to break into a new social class. Whether she is a student studying hard in high school to get into a top university, or a young woman starting on the production line in a factory looking for the next promotion, she is independent and takes charge, looking to better her life. SHE IS BUSY - as either a student or young professional, she works extremely hard and is crunched for time. SHE IS IMAGE-CONSCOIUS - the modern ASEAN girl knows the importance of a professional, put-together appearance in achieving professional success. 6
  7. 7. “Which existing haircare product(s) would you push to attract more consumers in the 15-35 age range in the ASEAN zone? How would you re-launch your product/product range in order to regain impact on your target market?” CONSIDERATIONS In pitching the perfect product for the ASEAN zone, we took into consideration the following factors: GEOGRAPHY GENETICS Southeast Asia is located in the warm, humid tropics zone with plenty of rainfall all year-around. The humid climate tends to have a harsher effect on thicker hair – moisture easily relaxes the hair cuticle layer, penetrating the cortex layer, causing uneven swelling which appears as frizz. South Asian and Indian hair are straight or slightly wavy, coarse, and thick. Asian hair is 50% thicker than European hair. The genetic make-up of Southeast Asian hair, in combination with the distinctive climate, makes it crucial for L'Oréal to bring consumers a product that is well- equipped to address their distinctive needs. GROWTH Improving macroeconomic conditions have resulted in a rapid growth of hair care products that are particular to ASEAN zone needs. To complement the dying sales of 2 in 1 products, conditioner sales have especially risen, growing at around 8%, which is the highest among all other hair care products. WHAT ARE ANNISA’S IDEALS? ASEAN consumers place great importance on these qualities when it comes to hair: There is much room for expansion in the hair care market in Southeast Asia. In more saturated markets such as Korea and China, consumers place relatively less importance on hair care when compared to skincare or make-up. Strength Healthy scalp Smoothness and manageability Shine Long length In contrast, in Indonesia, India, and the Philippines, an average of 50% of consumers rated hair care as the most important when compared to skincare and make-up, demonstrating a need in the market for more refined products. WHAT ARE ANNISA’S CONCERNS? Damaged hair Split ends Dull, without shine Dry/dried-out hair Hair breakage Top hair concerns for the ASEAN region: SO WHAT CAN L'Oréal DO? Water is less readily available in Southeast Asia than in the West. In India only 38% of women have water 24/7. Most ASEAN women use cold water for hair washing, and the quality of tap water, which often has harsh effects on hair and unpleasant smells, is also a deep Most Indonesian women follow the Islamic religion, which requires them to wear the jilbab, or head scarf. Wearing a jilbab will make hair and scalp conditions damp and sweaty, damaging over-all hair quality. 7
  8. 8. 5 PROBLEMS 1 SOLUTION The Total Repair 5 product line caters almost specifically to the ASEAN consumer, combating the region’s top hair concerns with a “5 problems, 1 solution” promise. One specific product we are especially excited about is the Conditioning Restoring Spray. This spray provides a quick fix for dry, dull hair without weighing it down, making it perfect for the busy ASEAN woman on the go. TOTAL REPAIR 5 WHY THE SPRAY WORKS The ASEAN zone marketing hub recommends pushing the TR5 Conditioning Restoring Spray as the next “star” product in the ASEAN region. It is the product that adds convenience & ease into Annisa’s busy lifestyle – a quick spritz of shine & nourishment anytime, anywhere. Conditioning Restoring Spray POSITIONING STATEMENT FULL SILKY SMOOTH REVITALIZED SHINE STRONG The great thing for Annisa is, not only does the spray promise beautiful hair on the outside, the Pro-Keratine and Ceramide enriched formula actually dives deep to replace her hair's natural cement and helps repair weak, limp, lifeless hair, improving actual hair quality over time. The spray’s water-less application allows Annisa to escape the hassle of cold showers and a limited water supply. Hair-coloring was recently a huge trend in the ASEAN zone. However, Annisa’s hair quality took a toll, as colored hair tends to become more dry, brittle, and harder to manage. She loves how the spray works to restore hair quality, adding back smoothness and manageability to her damaged hair. The Restoring Spray is super easy to use, no need to let the conditioner set for 5 minutes – just a quick spritz and Annisa is ready to go. The spray works around the clock, constantly revitalizing her hair when it is needed the most, even while Annisa wears her headscarf. HAIR FALL ROUGHNESS DRYNESS DULLNESS SPLIT-ENDS 8
  9. 9. “SHARE YOUR STORY”CAMPAIGN Leveraging its current brand image in Southeast Asia, the company can teach women why Total Repair 5 should be their go-to hair solution. EDUCATE CONSUMERS BUILD RELATIONSHIPS L'Oréal needs to create a relationship with its consumers to increase brand loyalty. Better market penetration will allow the company to increase the growth rate of its market share. A TWO PART STRATEGY OFFLINE ONLINE L'Oréal can reach the consumer with “Share Your Story.” Consumers will share how they are diligently pursuing their ambitions, and how Total Repair 5 conditioning spray fits into their lifestyle. 1. Secondary School & University Brand Ambassadors 2. Pop-Up Salons & Workshops 3. Distribution Method 1. Social Networking 2. The Online Gaming Sector 3. Short Video Series: Make it viral! Secondary School & University Brand Ambassadors • Increase confidence and drive in students, have them apply by submitting their version of Share Your Story. • “L'Oréal Paris encourages women to embrace their beauty and celebrate their self worth. I feel very honored to be working with L'Oréal Paris to help spread that message to young women.” –Lea Michele • Brand Ambassadors will distribute product samples and coupons to build relationships with consumers and promote the TR5 spray. • Will spearhead Share Your Story at their respective schools. Pop-up Salons & Workshops • Coordinate with shopping centers, companies, and local schools to host pop-up salons, offering free hair care services and advice. • Goal: Women will be involved with Share Your Story during and after their workshop experience. Social Networking • L'Oréal has done an exceptional job with social media in Southeast Asia, beating competitive brands [Head & Shoulders] in metrics such as Facebook “likes” and Twitter “followers.” • The strong social media base should be used to promote Share Your Story. Stories, whether they are on the Facebook wall, a YouTube video, or a Tweet @ #ShareYourStory, will be released daily. • Community managers will actively encourage users to “share their story” via social. • There remains the opportunity to create online relationships with relevant strategic partners – i.e. fashion designers, community events, and other organizations whose brands align well with L'Oréal Paris and would contribute to promotional synergies. 9
  10. 10. OFFLINE continued ONLINE continued Distribution Method • Countries of high GDP: Glamorous shopping centers [Central World] have tenants: 1.Watson’s is well-known in Asia for the “Watsons Your Personal Store” chain [Indonesia, Malaysia, Singapore, Philippines, Thailand], and should be considered as a potential distributor. 2.The Body Shop, another L'Oréal brand has expanded into Asia through these high-traffic shopping centers. This shows that there are existing synergies with L'Oréal that exist in these areas that can be expanded upon. • Countries of low GDP: 1.Consumers are starting to desire higher quality products as their disposable income grows. 2.Give them a taste of L'Oréal: We want L'Oréal Paris to maintain its high quality image while making this product accessible to individuals with lower income. Therefore, it would be best to introduce sachets only in select areas. 3.When demand for TR5 products increases to a certain point where we are certain that brand loyalty has taken hold, when we think it’s the proper time to introduce the bottled product. At that point, consumers, now familiars with TR5, should be willing to pay a premium for the product. • Have beauty consultants educate women on how to use the Total 5 Repairing Conditioning spray depending on their specific lifestyle. The Online Gaming Sector • Southeast Asian gaming revenues are expected to double by 2015 and half of that money is coming from women. • Integrate L'Oréal’s mission into the game; women will create a user profile through Share Your Story. In the digital L'Oréal Paris world, each woman is represented by her story. This will encourage women to embrace themselves and celebrate their beauty and success. • Have a point system or different levels that can allow users to win prizes and TR5 products. The more time people spend playing the L'Oréal game, the more they share with friends, the more they can win! Short Video Series: Make it Viral! • Create a short video series targeting different age groups in our demographic (15-35 yrs). • Young Adult, College Student, Professional Worker, Mother • Videos should use basic plots that are comparable to popular soap operas in the Southeast Asian region. The plot for the final video in each series should reveal inspiration from Share Your Story to celebrate the life of a real L'Oréal customer. • Make TR5 blend seamlessly into consumers’ entertainment and take full advantage of product placement. • Make it Viral! Like all digital media campaigns, these videos should spread rapidly, and the success of this distribution should be monitored on a regular basis through : • L'Oréal Paris Website, YouTube, Facebook Video CLOSING STATEMENTL'Oréal Paris owns an aspirational brand image that is a reflection of an ASEAN woman’s pursuit for a better life. L'Oréal encourages women not to stay content with where they are, but to advance to their full potential. The TR5 Conditioning Restoring Spray especially hopes to fit seamlessly into their lifestyles by helping them achieve beautiful hair without the hassle, thus boosting their confidence as they advance towards their goals. Because They’re Worth It. 10