L'Oreal is the world's largest cosmetics company. It owns 500 brands and has 6 R&D centers worldwide including one in India. L'Oreal controls 39% of the market share compared to 22% for Revlon and 18% for Oriflame. L'Oreal's new hair spa shampoo aims to provide hair spa treatment results without chemicals. It will use a double channel strategy and promotions through television, radio, print, digital and social media. Market share and sales forecasts will be calculated using the Bass diffusion model and Fishbein model to determine attribute importance. Marketing strategies will focus on consumer engagement through influencers, salon partnerships and apps.

1. Marketing Strategy-
Highlights
Soumyadeep Chowdhury
Deepthi Anand
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2. Introduction
• L’Oreal is the world’s largest cosmetic company based out of France.
• Founded in 1909, the company today owns around 500 brands and 6
worldwide R&D centers spread across 5 countries and India being one of
them.
• With the slogan “Because We Are Worth It”, the company believes in
strong consumer involvement in order to provide more customer
satisfaction with the products.
• With an ecstatic board of directors the group today has a total revenue
generation of 25.25Bn Euros.
• With more people becoming beauty conscious, the group is all set to grow
not just in-terms of revenues but also intends to expand its brands and
product line. For the same reason they will be setting up two more R&D
centers in the US.
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3. L'Oréal Products & Market Share
39%
22%
18%
21%
Market Share
L'oreal
Revlon
Oriflame
Others

4. L'Oréal Hair
Spa L'Oréal -
Consumer
L'Oréal shampoo life cycle

5. Marketing Mix
• Product
 L'Oréal Hair Spa Shampoo
 Results Equivalent to Hair Spa Treatment
 Strong and Healthy Hair – Chemical Free Shampoo
• Place
 Double layer channel strategy will be used – distributors and retailers will form the chain
 Retail Outlets - Reliance Fresh, Big Bazaar, Health & Glow, Newme
 Salesforce will be used to create a strong ‘Sales Relationship’ with various distributors
 Various channel issues like – double marginalization, cannibalization etc. will be taken care of
• Promotion
 Advertisements – Television, Radio and print media will be done as part of ‘Brand Awareness’
campaigns
 HEM model will be used to measure the efficiency of the ‘Brand Awareness’ campaign
 Digital Marketing – Social Media Marketing i.e. Blogging, Facebook, YouTube Campaign to create
‘Brand awareness’ in the digital platform
 Sampling and couponing will be done as part of ‘Demand Generation Marketing’

6. Marketing Mix
• Pricing Strategy –
• Here we will first calculate the cost to manufacture of the shampoo
• Then we will calculate the cost plus price using accounting approach
• Then we will use the ‘price elasticity co-efficient’ to determine optimal mark-up and from
that we will calculate our mark-up price
• Then we will benchmark our competitors price against our optimal mark-up price to see if
we are pricing more or less than the industry standard
Cost to
Manufacture
Cost Plus
Price
Optimal Mark
-up
Bench Mark
Price

7. Forecasting Sales -Bass Diffusion
Model
L'Oréal Shampoo Sales data
Shampoo sales 40,000,000,000
L'Oréal Sales 1,600,000,000
L'Oréal average price 250
unit sold by L'Oréal 6400000
• The tables in the right hand side shows
rough estimate of the L'Oréal sales data
• We did a desk research and found out
the average price of a L'Oréal product is
around INR 250
• We made a few assumptions to forecast
the category level sales of the premium
shampoo product in India:
• 1) co-efficient of innovation (p) and co-
efficient of imitation (q) is equal to the
well established values in various
categories
• 2) 50% of all sales are coming adopters
and rest are coming from repeat
purchases
Bass Diffusion Model
N(t) 342857
M 17,142,857
p 0.03
q 0.38
n(t) 631680
Unit sold
by loreal 246355

8. Determine Importance of Attributes -Fishbein Model
Attributes L'Oréal Revlon Oriflame Others Importance
Frizzy free 8 7 6 5 0
Fragnance 7 5 8 6 0
Chemical -Free 6 6 8 6 48
Anti-dandruff 8 5 9 7 25
Hair- Fall 9 8 7 6 28
Attitude A1 = 6.69 A2 =3.77 A3=3.09 A4=3.6 100
Market Share 0.39 0.22 0.18 0.21
6.685714 3.771429 3.085714 3.6
• We use the reverse fishbein model
to find out the relative importance
of the various attributes that are
relevant for L'Oréal
• We found the rough estimates of
market shares of the various
competitors for previous year
• For this year we use Bass Diffusion
model to forecast category level
sales and calculate market share
• From that market share we find
out attitude and then run a
Regression analysis on Brand
Attitudes and beliefs to find out
the ‘Importance’ ratings

9. Bipolar Perceptual Map
• Here I have identified two most
important attributes from the Fishbein
model used earlier
• Then created a Bipolar plot of the
brands based on these two attributes
• The map shows Oriflame is on the fair
value line
• Whereas our brand is on the upper
side of the fair value line
• This implies we need to improve our
offering according to the perceptual
map shown on the right hand side
• When we launch the product, our
brand should be ideally on the fair
value line
Loreal
Revlon
Oriflame
Others
Min. HairFall
Control
ChemicalFree
Max.
HairFall
Control
HighChemical

10. Marketing Strategies
• L’Oreal believes in a strong consumer inclusion in their marketing
campaigns.
• They believe in defining their essence and aspirations which most will
influence most of its consumers.
• Apart from the regular ad based marketing, they also tie-up with Vloggers
and Bloggers who are influencers and trendsetters and will add credibility
to the brand.
• They also look at partnering with saloons to promote its brand and
products.
• With digitization, the brand has launched a couple of apps that will
engage its consumer base along with virtually applying makeup and
trying different looks.
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