L Oreal Marketing Analysis Marketing Essay

EXECTIVE SUMMARY

Managing a successful business is not like a field of dreams; you may build it but it might not come true. Marketing is all about making your product known to consumers and persuading them to use. A well-organized market plan needs to be developed and unbeaten marketing strategy has to be followed to capture the hearts of millions. You have to repeatedly make people aware of your products and service to make it effective. L’Oreal being a brand in itself would be an added advantage for the launch of any product.

This market plan, like all others would be a road map which would guide us to the direction towards our destination.

I would be launching the L’Oreal men’s line of products including Moisturizer along with its existing products of deodorant, roll on, after shaving lotion and so forth. The literature review of this market plan would consists of it target market, situational analysis, it macro environment and competitive factors, along with branding and product life cycle. There would be a set of primary research questionnaires’ with its analysis, followed by implementation.

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1. INTRODUCTION

1.1 Company Profile

L’Oreal is a leading French brand, with 23 global brands in 130 countries having 64,600 employees working for it. Its brands provide a turnover of more than 50 million Euro’s. Having a portfolio of powerful, international brands, L’Oreal enters the 21st century by embracing diversity in its global growth agenda. (Source: www.loreal.com)

1.2 Company Mission

At L’ORÉAL, we believe that everyone aspires to beauty. Our mission is to help men and women around the world realize that aspiration, and express their individual personalities to the full. This is what gives meaning and value to our business, and to the working lives of our employees. We are proud of our work. (Source: www.loreal.com)

1.3 Company Objectives / Marketing Objectives

According to the company, the creation of a strategic marketing department is a “result of the decision to anticipate worldwide evolutions, in order to steer the group towards essential transformations in the areas of strategic watch, consumer understanding, marketing creativity, advertising creation, and digital communication and distribution methods”.

(http://www.marketingmagazine.co.uk/news/1030103/LOrEal-brings-marketing-executive-committee/)

2. SITUATION ANALYSIS

2.1 Market Summary

The market stats are defined in the Table A. (See App. A)

2.1.1 Market Demographics, Needs, Trends

Analysis involves:

Actual and potential market size:

Estimation of total sales to evaluate the market share.

Identification of UK submarkets for men’s’.

Potential Areas of growth like diversification and focus on men’s product line.

Trends:

General trends analysis and critical factors behind these changes in relation to UK market which involves multi cultural environment.

Customers:

Analysing the potential customer and their decision making factor for buying a product with regards to the fact that the economic downturn has badly affected the households and emerging men’s attitude towards their individual care.

Information on how, when and where the customer purchase the product.

2.2 SWOT Analysis

Strengths

L’Oreal’s vision as a team concept.

Continuous research leading to innovation.

Passion for work.

Developed fields of dermatology and pharmaceutical.

Its mass market channels.

Weaknesses

Decentralized organizational structure – difficulty in control of subdivisions.

Profit margin lower in comparison of rivals.

Dissimilarities.

Opportunities

Brand image.

Benefit of patent rights

Emerging mens’ market

Threats

Growing competition.

Economic crunch issue and spending habits.

2.3 Competition

While entering into UK market, Porter’s five forces would be beneficial to consider about the competitors.

Potential entrants: This would be determined by barriers to entry. Due to its large scale operation, L’Oreal is in a position to control its costs.

Substitutes: All products suffer from generic substitution; however buyer’s propensity would be high due to the very fact that many an alternatives are available. As men are less into fashion, L’Oreal would need to have a thorough market research.

Competitive rivalry: The stage of industry life cycle is one of the reasons to effect. Competition could go fierce as those who lead have strong brand identity, heavy marketing and sales strategy and high capital expenditures. (Table B – See App. A for product life cycle)

Buyers: There is mass market available in UK, thus heavy marketing and product differentiation are the major tools. As brand individuality plays a critical role in the buying behaviour; well-built identity would gain consumers trust and loyalty. Also many buyers are price sensitive and switching cost is low for the buyer.

Supplier: In essence, there is very little differentiation among the suppliers which makes suppliers’ bargaining power non-existent due to availability of so many suppliers. Conglomerates such as L’Oreal have a definite advantage and power over their suppliers.

2.4 Macroenvironment

Firms which are skilful at monitoring and analysing the business environment are said to perform better than those which are not (Norburn 1974).

Political / Legal factors

Political structure of any country needs to be considered when expanding market internationally. L’Oreal, a French brand being in European Union would not be having problem in this regard, having sound relations.

b. Economic Factors

These factors need to be considered from a wider perspective, since economics is concerned with allocation of resources; domestic economic conditions need to be considered.

Currency Exchange Rates: The fluctuation between Pound sterling and Franc need to consider for L’Oreal’s financial statements.

Cost of Capital: Raising capital outside the firms’ home country may not be possible most of the time, so multinationals like L’Oreal have to consider the cost of borrowing which may differ from country to country.

The transportation and inventory handling cost have to be budgeted for its distribution in UK market.

Social/Cultural/Demographic Factors

The central factors for changes in consumer behaviour are the core values and beliefs socially, culturally and in line with fashion around which would revolve the key strategic factor for L’Oreal. As men are becoming more conscious with skin care and hair styles, it would be just converting their needs into desires and wants. Also due to global convergence of tastes and needs, some experts claim that the tastes and needs of customers in different countries are becoming increasingly similar, which has been labelled ‘global convergence’ (Levitt 1983).

Technological Factors

An innovation may render a firm’s technology obsolete or it can lead to the creation of entirely new industries. Three important issues to consider are global technology scanning and technology clusters, the rise of the knowledge based economy, and the spread of the internet.

Some experts have argued that the internet has not only brought new products and new distribution channels but also transformed the way we do business in general. Don Tapscott (2001). As online buying is the most used forms in UK market, L’Oreal could benefit from this tactic.

3. MARKETING STRATEGY

Today the global market is signified by a fiercely competitive environment in which the important target for companies is to capture increasing returns to scale while minimizing / lowering costs of production with great speed and flexibility (Kotabe, 1990). L’Oreal as an international chain tries to achieve these targets through its consistent R&D innovations in order to create products that are marketable and have a significant turnover within various segments and sub-segments of the international market (Elisa, ND).

3.1 Market Research

L’Oreal endeavour to analyse its competitor’s products in order to evaluate the viability of its innovations during new product development process through L’Oreal’s R&D segment. It expends about 20% more on its R&D for new product development as compared to its competitors such as Procter & Gamble and Unilever, occupying number one position in the market (Elisa, ND)*

3.2 Target Market and Positioning

It would a mass marketing involving young college/university grads, young career professionals and the niche fashion industry of UK.

Marketing is a dialogue, not a monologue. Listening to customers has many dimensions but it is primarily an attitude towards customers as active partners, not passive targets. This involves looking at things from the customers’ point of view.

Just “placing some ads” isn’t specific enough to serve as a marketing objective. The real meaning of marketing is not about advertising and selling but choosing the right customers in the first place, then being prepared to put them at the centre and build your business around their requirements, listen to them and respond to their changing needs. (Refer Table C. App. A)

3.3 Marketing Mix

A successful marketing mix which involves:

To have a right product

Sales at the right price

At the right place

With suitable promotions

PRODUCT

The reason for launch of men’s product line in UK is to reposition it to make it acceptable for new users as part of long term plan.

“Hydra Energetic moisturiser is L’Oreal’s No 1 men’s skincare product, selling more than half a million units every year”. (Source: EPOS data YTD 5th Dec 2009)

PRICE

Researching client’s outlook about pricing is important as it designate how they value what they are looking for as well as what they want to pay. Pricing, since is the only factor for having sales revenue, its consideration revolves around customer’s value for money notion. L’Oreal would be following the price penetration strategy for its men’s product as researched about 52% men claim that purchasing skincare is guided by price. (http://www.loreal.co.uk/_en/_gb/pdf/LOreal_Mens_Grooming_Report_FINAL.pdf)

PLACE

Getting the right product to the right place at the right time involves the distribution system.The distribution channel design of L’Oreal gives full consideration to the product target customer group orientation, it includes (1) a wide range of sales channel for end users to be able to see and buy products anytime (2) mid-level brand, such as L’Oreal Professional Hair limiting it to hair salons and professional hair stores. (3) Specific products usually through the major cities in the professional pharmacy distribution; (4) high-end brands such as Helena to be available at counters to be sold.

PROMOTION

This consists of interrelated tools like advertising, sales promotion, direct marketing.

All of these are essential about getting the right message to the right people in the most effective way. Moore (2004) says: “Advertising is not just about the things we buy. It’s how we feel about things, including ourselves. That’s what makes it interesting.”

L’Oreal can take actors as brand ambassadors like it had been as part of their promotions.

4. BRANDING IN ITSELF

Every company who wants to craft its brand presence in order to connect itself with a market spends a lot of time and effort for a perfect logo, its tagline, its design language and the tone of voice with regards to its marketing vehicles.

It sets the tone for both company’s short-term demand and long term credibility in market. With the well renowned name of L’Oreal, having a mantastic approach towards its men’s product line, a tag line of “Surreal with L’Oreal” would be a catchy insignia.

L’Oreal follows a line brand strategy.

5. IMPLEMENTATION, EVALUATION AND CONTROL

“Marketing is the art of getting people to change their minds – or to maintain their mindsets if they are already inclined to do business with you”

New product development is the most crucial stage for a company and it carries significant risk in the context of product failures that might occur right after their launch in the market. The product failure rate can be as low as 30% and as high as 90% in this regard. (Antil, J.1988). The globalization and varying customer preferences would assist L’Oreal with its quest for innovation, excellence and diversity.

A plan will not happen by itself. It has to be converted into living document (Refer App. A – Primary research).L’Oreal would need to make responsibilities for monitoring progress and chasing up overdue activities. Reviewing progress will help to learn from mistakes so that improvements for future plans can be made. (http://www.businesslink.gov.uk)