Loreal MM Report
Loreal MM Report
Loreal MM Report
INTRODUCTION
L'Oréal Group, the largest cosmetics and beauty corporation in the world (Rooney, 2014), offers beauty
product innovation to women and men with regards to their diversity through its large portfolio brand that
is present in 130 countries (L'Oréal, 2015b). According to Abnett (2015), L'Oréal has strong growth. The
annual report (L'Oréal, 2015b) reveals that in 2014, the operating profit increased to 3,891 million Euros
from 2013, and sales reached 22.53 billion Euros from sales, a 3.7% increase from the year before. One
could conclude these figures are of L'Oréal's benefit, as according to The Statistics Portal (2015), the
global cosmetics market has grown at a slower rate since 2011 and 2012 (Figure 1). This might have
impacted the competition where Avon's revenue dropped as well as Procter & Gamble's beauty
operating division sales (Abnett, 2015).
2008
2009
2010
2011
2012
2013
2014
0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0%
Therefore, as stated by The Statistics Portal (2015) in the next few years cosmetic companies will attract
and keep consumers by emphasising on product innovation. Hong and Doz (2013) however state that
products, services, and business models need to be adapted to local consumers when serving both
nation-ally and regionally. This further leads to a complex comprehension of marketing, which according
to Kotler and Armstrong (2010, p. 28), is “managing profitable customer relationships” with the key goal
to attract new customers, ensure a value for them, and keep the current clients by bringing satisfaction.
This is especially crucial when it comes to driving L'Oréal's “universalisation” strategy, which means
globalisation representing differences (L'Oréal, 2015a), and fulfilling the organisation's aim of captivating
1 billion new clients by 2020 as mentioned by Masidlover and Burkitt (2014). Therefore, the purpose of
the report is to critically assess L'Oréal Group's current marketing and how it is going to support
L'Oréal's aim in winning 1 billion new customers. By utilising various theoretical models and academic
sources, this critical report focusing on the application and analysis of L'Oréal's marketing, assesses the
current marketing strategy, digital marketing, brand, and the pursued relationship marketing strategies of
the corporation, all of these crucial components which could support L'Oréal's goal.
MANAGING MARKETING REPORT ON L’ORÉAL GROUP
1. MARKETING STRATEGY
The first chapter discusses L'Oréal's current marketing strategy by looking at its core
marketing strategy, integrated marketing communication, and strategic marketing.
After the organisation's analysis, the author assumes that it uses product differentiation determining the
qualities of the products with a combination of image differentiation due to the distinct position-ing
among brands. Overall, according to the author, the organisation should prevent any confusion of
brands by positioning and differentiating clearly the brands in the wide portfolio. Marketers could man-
age this, for instance, by the integrated marketing communication analysed below.
According to the author, L'Oréal could enhance its promotion and fight the criticism by
developing similar ads to Dove and its campaign for 'real beauty'. This could improve the
reputation and image as Kharaim (2011, pp. 123-133) reports that promotion can assist with
creating consumers' opinions or perceptions and products differentiation.
With regards to L'Oréal, it could be assumed that firstly through promotion and branding,
customers are aware of the product's existence yet do not know anything else. In this case,
L'Oreal needs to heavily advertise to enhance the product's promotion. Then, the customers know
about its benefits such as the composition and price, and they might show their initial interest, and
thus develop a connection. In the next stage, the customers prefer the product to other goods.
This might be boosted by in-store product testing, which further assists with convincing customers
of the product's purpose over other products. Finally, using discounts, in-store advice from
personnel, or perhaps the product's availability, pull the customer to purchasing the cosmetics.
Similarly, Rooney (2004) stresses the importance of bringing the promotion towards clients. Therefore,
L'Oréal informs customers about the product, how to use it, or perhaps how to achieve the desired look
made by the makeup product. As Speichert (2014) says, L'Oréal adapts the content to various media.
This helps them to ensure that the consumers are connected throughout the stages. However, a brand
with intentions to keep its customers should also ensure for the benefits in the product and convince the
customer via the product characteristics, not promotion only, especially if the promotion might be lacking
the evidence, as was the case with the anti-age creams mentioned earlier. It could be assumed that
unclear and inconsistent messages within the stages may harm sales. Therefore, based on the criti-cism
to attract more consumers and pull them towards the product, L'Oréal could consider enhanced
promotion, complying with relevant laws.
MANAGING MARKETING REPORT ON L’ORÉAL GROUP
Advertising
L'Oréal uses TV and magazine ads with the brand ambassadors and celebrities (L'Oréal
Paris, 2015; Rooney, 2014), which together with TV, is the most prospective instruments for
building awareness (Kotler, 2000, p. 106). However, L'Oréal's advertising is criticised for a
lack of evidence for some of the anti-aging products (Rodriguez, 2012) or as Sweney (2011)
reveals, some advertising campaigns with celebrities were removed because of over
airbrushing. Therefore it could be stated that L'Oréal advertisement does not fully comply
with the Food and Drug Administration law and the interna-tional advertising standards code.
Sales Promotion
Promotions, in-store materials, and the possibilities to test the products before in the stores (Neff, 2015),
according to Doyle (2002, p. 250) work on behaviour, not only the mind as does advertising. However,
as L'Oréal's retailors offer discounts and samples it might happen that they attract clients who tend to
switch brands often according to deals and thus L'Oréal could lose money.
L'Oréal manages various PR activities, for example shareholder fairs (L'Oréal, 2015d), sponsoring vari-ous
fashion shows, events including the Cannes Film Festival (Festival de Cannes, 2015; L'Oreal, 2015l), or
launching competitions for hair stylists (The Argus 2015) and makeup artists (PR Newswire, 2015).
Sales Force
The beauty advisers in stores are talking directly to customers, which according to L'Oréal's employ-ees,
does not carry the potential (Howarth, 2014). Therefore, L'Oréal might be wasting resources.
Direct Marketing
L'Oréal uses the e-mail news marketing (L'Oreal, 2015k), which might be very
informative, but less public. Thus it might not contribute to its aim greatly.
Thus, one could see that L'Oréal is utilis- isting markets through continuous innova-
ing its distribution channels to satisfy more tion (L'Oréal, 2015b). This might be due to
customers as these move across channels, the fact that Winter (2014a) mentions that
which could further strengthen its com- the selection of beauty products is increas-
petitive advantage (Rooney, 2014). ing to satisfy the consumers' needs, thus
for example, the beauty director advises
that companies may develop 2-3 shadows
darker choices for their make-up products.
that The Body Shop Division entered the mixing hair care for multicultural women
Brazilian market in 2014 for the first time, (Winter, 2014a). However, in the future, the
and continues its expansion and will open Group might not easily establish it, as creating
500 stores there by 2019. a new product in a new country is highly risky
and costly especially when the portfolio aug-
ments as Doyle (1989, pp. 77-95) mentions.
From the analysis above, the author can conclude that clearly there are various opportunities for the Group to
accomplish significant growth, and thus to obtain 1 billion new customers by adopting market penetration,
product development, or market development strategy. Yet, to choose, according to Kumar (2010, p. 176), the
least risky way, L'Oréal might consider market penetration. According to Hill and Jones (2010, p. 197), market
penetration can be achieved through heavy publicity and product differentiation. Further, this would increase
L'Oréal's market share, avoid high expanses and risks, and eventually bring higher revenues.
MANAGING MARKETING REPORT ON L’ORÉAL GROUP
2. DIGITAL MARKETING
The following chapter inspects the extent L'Oréal utilises digital marketing and highlights the
benefits for companies as it could be assumed that the trend of TV and print promotion is
diminishing, while digital marketing is developing rapidly. As Ryan (2014, p. 12) mentions, digital
marketing is not about under-standing the technology, instead one must understand the people
and their use of technology to build lasting and equally fulfilling relationships. Therefore, digital
marketing provides the ability to target specific segments using the appropriate tool and message.
Overall, one could assume that the set of digital marketing tools brings various benefits. For the
website and e-mail marketing, these are reaching the targeted customer segments and informing
them about the organisation's performance and news, which may lead to increased sales. Further,
social media brings benefits like building a platform for sharing news, accessing data by receiving
opinions, and staying connected with customers. While its mobile applications carry benefits such
as creating noise, interact-ing with customers, and cosmetics advertisement.
Additionally, to the various benefits of digital marketing for companies, McKinsey & Company
(2012) claim that it is justified that digital marketing in general has on average 6 times greater
return on investment than TV advertisement.
All things considered, it could be seen that L'Oréal puts a significant emphasis on digital marketing, as cur-
rently it belongs to one of its main approaches (L'Oréal, 2015b), which may represent numerous oppor-tunities
for addressing both customers and other stakeholders. Also its website, social media, and mobile apps are
largely utilised owning to the significance and benefits to the organisation. Overall, it could be recognised that
continuous enhancement and expansion of L'Oréal's digital media could enjoy the benefits of digital marketing,
but only with the support of TV and printed advertising it could contribute to its aim.
3. L'ORÉAL BRAND
The third chapter justifies the significance of the brand L'Oréal for the organisation's success
that could be analysed using the brand system explained by Kapferer (2012) as shown in
Figure 6. Later, the brand's value creation for customers is analysed too.
Product
or service Brand name
experience & symbol
at contact
points
Brand concept
tangible & intangible
values
provides a sense of belonging to customers, and thus people might feel good wearing the brand's make-
up or perfume. Further, brand provides values for customers in terms of qualities noticed by contact
(texture, packaging, smell, colour) and by experience (pleasure, reliability, younger look, for instance).
Additionally, these brand values may lead to higher brand awareness, securing future sales volume,
customer satisfac-tion, and loyalty, which could be highly relevant towards achieving L'Oréal's goal.
This chapter analyses L'Oréal's current relationship marketing approach while applying customer reten-
tion, customer lifetime value, customer churn, and customer loyalty. Also throughout the analysis, the
advantages of such an approach are identified for both the organisation and its customers.As stated by
van Raaij et al. (2003, pp. 41-58), 20% of all the customers buy 80-90% of the production of the
company. Therefore, agreeing with Moutinho and Southern (2010, p. 21), those buyers are highly
valuable to the organisation, and thus a company must retain them with exceptional benefits. L'Oréal
(2015d) under-stands that effective relationship marketing is essential for its growth; therefore, the
organisation listens to customers, provides customer service, and constantly improves customer
relations. To emphasise, this could be seen by engaging in various activities analysed below.
4.3. ORDERGROOVE
Additionally, L'Oréal uses the OrderGroove company to perform a customer relationship marketing strat-
egy. As revealed by Chaey (2012), L'Oréal's clients can subscribe for their preferred skincare products,
which then will be supplied to them regularly. OrderGroove states that by using this technology L'Oréal
recognises a 2-4 growth in customer lifetime value (Chaey, 2012). This potentially decreases customer
churn, thus its customers tend to stick to L'Oréal cosmetics. For L'Oréal this carries benefits of enhanced
productivity by adjusting the inventory through effective targeting and at the same time it may shorten
the sales cycle. As a result, the customer then benefits by the product's availability.
MANAGING MARKETING REPORT ON L’ORÉAL GROUP
Overall, CRM, cross-selling and up-selling, OrderGroove, loyalty programmes, and direct emails together
pursue its customer relationship marketing strategy. Yet to be able to fulfill L'Oréal's aim and potentially to
satisfy and retain these customers, the Group could remove some in-company rules (as data should be shared
across the company which might not be allowed) and incorporate CRM software training. Also one could see
the Group manage activities separately, rather than running them all in one place. Thus, a centralised
relationship strategy creating a more coherent programme could be recommended.
MANAGING MARKETING REPORT ON L’ORÉAL GROUP
L'Oréal Group aims at offering beauty product innovation to 1 billion new women and men
with regards to their diversity; therefore the purpose of the report is to critically analyse
L'Oréal Group's current marketing and determine how it is going to support it.
The analysis shows that a clear positioning and differentiation, improved publicity, obeying with relevant laws,
and growing further through market penetration could further strengthen the brand's multiple cus-tomer
segmentation. Additionally, despite the criticism, L'Oréal significantly emphasises on digital market-ing through
its official website, social media, email marketing, and mobile marketing. Yet, extra develop-ment of the mobile
applications could be suggested. In terms of branding, the Group's brands possess different values and
elements, yet all together build a strong corporate brand equity, which could be fur-ther boosted by the overall
experience and brand extension. Moreover, based on the analysis to improve the current relationship
marketing strategies, L'Oréal might consider engaging customers to be part of an exclusive programme or to
register through its official website; however the Group might be required to remove some in-company rules
and integrate CRM software training to gain even more advantages. Additionally, a coherent centralised
relationship strategy programme could be recommended.
Overall, based on the conducted analysis of its current marketing, it could be concluded that
there are vari-ous aspects supporting L'Oréal's aim; however there is room for improvement
in order to attract 1 billion new customers by 2020.