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Case L'oréal

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by

Katja Nottbohm

on 26 October 2015

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Transcript of Case L'oréal

Bringing class to mass with
Context


Social Trends
Decade (1990s) is influenced by Californian lifestyle and culture
Increased interest in in health an nutrition
Body care and beauty products are seen as necessary / indispensable products
 
Economic trends
US GDP 1996: $7,813.2 billion
Booming economy: record low unemployment, consumption was at an all time high 
 
Technology trends
Introduction of new patents in beauty industry
Electronic age
Context
Customers

(the needs, wants, and
characteristics of current and
potential customers)

Competitors

(relative strength and weaknesses of competitors and trends in the competitive environment)




Company

(Internal resources, capabilities,
and strategies)


Social Trends
Decade (1990s) is influenced by Californian lifestyle and culture
Increased interest in in health an nutrition
Body care and beauty products are seen as necessary / indispensable products
 
Economic trends
US GDP 1996: $7,813.2 billion
Booming economy: record low unemployment, consumption was at an all time high 
 
Technology trends
Introduction of new patents in beauty industry
Electronic age
Context

(broad social, economic and
technology trends in which
the firm will compete)


Social Trends
Decade (1990s) is influenced by Californian lifestyle and culture
Increased interest in in health an nutrition
Body care and beauty products are seen as necessary/ indispensable products
 
Economic trends
US GDP 1996: $7,813.2 billion
Booming economy: record low unemployment, consumption was at an all time high 
 
Technology trends
Introduction of new patents in beauty industry
Electronic age
Context

General
500 brand names in over 150 countries (1995)
Cosmetics: 81% of the revenue (1995)
USA/Canada: 20% of sold products (1995)
 
Internal Resources
strong key brand image
high number of registered patents
high capacity for innovation
sophisticated product technology
 
Capabilities
Successful research and development
strong advertising, merchandising and promotions
 
Strategies
Firm Strategy: Quality, innovation and geographic expansion
Research and Development Strategy: trickle down and fire up (leverage R&D for high end products into mass market as well)
Plénitude Strategy: class to the mass; high end, superior performance, but accessible
Company
Current
Customers
(US market) 
 Needs
suitable skincare
prevent signs of aging

Wants
sophisticated products that are affordable
education about the products, about own skin and its needs (not necessarily on packaging)
range of compatible products
Understandable and compact description on packaging

Characteristics
modern women – young, middle-aged and aged
Men – young and middle-aged
Both men and women: concerned with their appearance, interested in body care and beauty products

54% of Plénitude users fall in the consumer benefit segments*
stressed out (not concerned about price; want effective product that reinvigorates skin and reduces signs of aging)
age focused (similar to “stressed out” but with more attention to price and natural ingredients)
 
Needs
effective skincare for mature skin
reduce signs of aging
Wants
sophisticated products
premium brand image
Characteristics
middle-aged to aged women
partly price sensitive
partly desiring natural ingredients

* according to Facial Skin Care Market Study (1995)
Potential
Customers
Competitors

L’Oréal
high market share (already established on the market)
high brand recognition and brand loyalty
image: expensive, high quality and high tech products
 
Procter & Gamble (Olay)
Relative strength
customers are more aware of their brand: 96% Olay brand awareness, 77% trial (as compared to Plénitude: 78% brand awareness and 23% trial)
Relative weakness
Procter & Gamble has a lot of brands but umbrella brand isn’t as well-known as L’Oréal
 
Unilever (Ponds)
Relative strength
US women were growing up with their product (childhood memories)
Relative weakness
Unilever has a variety of divisions, brands and products but no strong umbrella brand like L’Oréal
 
Trends in the competitive environment
Beauty industry sells very personal and very high tech products.
Trends might be
competitors invest in R&D to try to become technology leader
competitors develop effective products with only natural ingredients (organic cosmetics)
Technological Factors

New innovations and patents from competitors
High manufacturing and R&D costs
Electronic age
-> New ways to communicate
-> High spread of televisions
Social Factors

Increased interest in health an nutrition
1992: “Year of the Women”
Price sensitivity
High importance of labels and brands
Population gets old and enjoys
retirement
Economic Factors

Booming economy -> record low unemployment
Stock market reached an all time high
Consumption was at an all time high
Increased taxes for cosmetic products
Political Factors

New tariffs & trade barriers
Stable political environment
Democratic party holds the
office of presidency
A1 - "Lift Up":
Plenitude as star product, change packaging design and marketing strategy, Revitalift as a seperate product

A2 - "Remove":
Dismiss Plenitude product line, establish Revitalift as an own product line

A3 - "Revitalize":
Keep Plenitude with small adjustments in packaging design, push Revitalift 
Identification of Alternatives
Product

Price

Place

Promotion
Marketing Mix for Alternative
Adjust ingredients to make product lighter/less greasy

Introduce products specifically made for rougher men’s
skin
Remain slightly above average price to maintain “premium” image.

10% discount coupons in magazines.
“class to mass” strategy:
supermarkets, convenience stores, pharmacies, drug stores
TV ads

Print ads (with samples for regular skin)

Stand-up display for selecting skin type

Different packaging color for different skin types.
Key Performance Indicators
(within one year)
market share: +5%

better reputation, increased satisfaction:
8 of 10 recommendations

brand awareness Plénitude: 78% to 90%

trial: from 23% to 50%
Contingency Plan
In case of failure:
A3 - "Revitalize"
Keep Plenitude with small adjustments in packaging design, push Revitalift. 
´
Internal Factors
External Factors
Caroline Langbein, Alexandra Morasch, Darja Cepelev, Katherina Lysova, Katja Nottbohm
Full transcript