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Ombre, Tie-Dye, Splat Hair: Trends or Fads? “Pull” and “Push” Social Media Strategies at L’Oréal Paris – Case Solution

The case study "Ombre, Tie-Dye, Splat Hair: Trends or Fads?" focuses on a new social media strategy by L'Oréal, which is based on the idea of listening to consumers first, then developing a product, which meets their needs, before marketing it. Initially, the company partnered with Google to identify emerging styles, which might endure. Then, it used social media to define the name, positioning, and launch strategy of the product.

​Katrina Bens; David Dubois Harvard Business Review ( INS676-PDF-ENG ) June 23, 2014

Case questions answered:

• What’s the target market of L’Oreal? What’s L’Oreal’s positioning against its competitors? Summarize L’Oreal’s branding and 4Ps and discuss how these strategies align with their targeting and positioning strategies.
• Use web listening tools to research the three styles identified (Ombre, Tie-Dye, Splat Hair). Evaluate which is a trend (i.e., one that endures change in style) rather than a fad (i.e., a short-term craze).
• Given the trend that you choose, how do you advise L’Oreal Paris to leverage social media to build the marketing plan for the new brand?

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Ombre, Tie-Dye, Splat Hair: Trends or Fads? "Pull" and "Push" Social Media Strategies at L'Oréal Paris Case Answers

Summary – ombre, tie-dye, splat hair: trends or fads “pull” and “push” social media strategies at l’oréal paris.

In this case, Marie Gulin and her Marketing team at L’Oréal Paris are determined to come up with a new, innovative hair product that will boost their company and brand above the competition. The potential trends they were looking to identify were the rising popularity of ombre, tie-dye, and splat hair coloring, all of which presented different opportunities and challenges.

Not only are they looking to create a new product, but they must sift through various fads and define the stable trends in the hair coloring market.

If L’Oréal missed and picked up on a fad rather than a trend, there could be serious revenue and branding implications. Further complicating the matter is that L’Oréal needs to come up with a new product that will still be consistent with the company and brand values as well as attract new consumers.

Finally, the success of this product launch would be very dependent on marketing efforts, especially the execution of their strategy via social media.

Deciding which social platforms would reach their target market, what content to push (and pull) over those platforms, and how to properly engage their consumers to build positive associations and awareness, purchase, and repeat purchases.

L’Oréal’s ability to leverage its digital marketing strategy into its new hair dye product in a challenging and changing market is key.

1.) What’s the target market of L’Oreal? What’s L’Oreal’s positioning against its competitors? Summarize L’Oreal’s branding and 4Ps and discuss how these strategies align with their targeting and positioning strategies.

L’Oréal has a wide appeal due to its diverse product line and benefits derived from its products. Both men and women use their products. However, the products are mostly targeted at women.

The men that do use it are generally aging, looking to cover up their gray hairs and feel revitalized.

The women’s target market can be segmented threefold: the 20-30-year-olds urban professionals looking to add a little color to their style, the 30-50-year-olds who have more sophisticated needs, and the aging 50+-year-olds who need gray coverage and a more basic palette of colors.

With a fairly diverse target market, the brand can afford to try a variety of things but also needs to make sure it executes them properly to convert each segment into loyal.

Positioned very well against its competition (P&G, Unilever, etc.), L’Oréal has become an industry leader due to its business acumen, research and development, diversity, and accessibility of its products.

It is also important to note they have mass-marketed their brands, bringing salon-quality care to the household at reasonable prices. This is a value-based position and is easy to convert to if one is a value-seeking consumer, especially for the quality of the products.

In terms of branding, L’Oréal is a parent brand (along with Garnier and Maybelline) with several children’s brands, like Preference, Excellence, and their Casting Crème Gloss, in the hair dye sector.

While these smaller brands are targeted at various age ranges, they are more mass-marketed and could have potentially been more aptly segmented to capture more representative groups.

Their products are high quality and innovative, in both quantity and quality, making them an industry leader and pioneer in bringing their products from the salon to the bathroom. In terms of pricing, they are…

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Home » Management Case Studies » Case Study: L’Oreal International Marketing Strategy

Case Study: L’Oreal International Marketing Strategy

L’oreal is the world’s biggest cosmetics and beauty products company. Basically it’s a French based company and its headquartered in Paris. It is focusly engaged in the field of production and marketing of concentrating on hair colours, skin care, perfumes and fragrances, make up and styling products. L’oreal products also based on dermatological and pharmaceutical fields. Their products are made for Individual and professional customers. This company operates over 130 countries like Asia, America, East and West Europe through 25 international brands.

The success of L’Oreal lies in the fact that the company succeeded in reaching out to the customers of different countries of the world, across different income ranges and cultural patterns, giving them the appropriate product they are worthy of. The area of expertise of L’Oreal being that it succeeded almost in every country that it entered. The strategies of L’Oreal was varied enough to help it and stop itself from restricting itself in a single country. L’Oreal sold its product on the basis of customer demand and country want rather than keeping the product identical across the globe. It built ample number of brands or mammoth brands entrenched to the restricted culture and which appealed to a variety of segment of the universal market instead of generalising the brand and edible in innumerable culture. L’Oreal went on to being a local product in every international market. The brand extension of L’Oreal also came in the same sector or the same segment of market . L’Oreal believed in growing its expertise in the segment it is conscious of rather than going into a completely new sector of market.

International marketing strategy is more in-depth and broadened in one sense of the term. It is simply a principle of marketing however on a global scale. Setup of global marketing strategy has a lot to do with understanding the nature of global market itself, and most importantly the environment. Business environment across the globe has different economic, social and political influence. Thus, it is believed that selecting a global market target for examples when strategizing is a good idea.

International marketing strategy of L’Oreal is concentrated on a cross cultural arena spanning four market destinations. They are namely, 1.) Asian Market, 2.) European Market, 3.) North America Market and 4.) The African, Orient and Pacific Region.

Marketing Strategy of L’Oreal in Asia

At present L’Oreal is one of the best company in the whole world in the field of cosmetic products. The cosmetic products of the L’Oreal are widely used and specially the hair colour which was introduced by L’Oreal few years ago. L’Oreal is very famous in Asia and their products in Asia are very cheaper than the other companies and are used by majority of people in china, Thailand, Japan etc. L’Oreal is famous and very successful because of their global marketing strategies which are very helpful and also distinct from the strategies used by other companies in this field. L’Oreal in Asia uses the sustainable strategy that is of growing the company as the demands of cosmetic products in the countries like china, Thailand etc is in great amount. This company uses the strategy of suspicious brand management and they also brought the strategy of more suspicious acquisitions . The main problem that a company like L’Oreal faces in Asia is of competition given by the other companies dealing with the cosmetic products. To overcome this problem in Asia these companies use the strategy of selling good quality products at the cheaper rates than the other companies. One of the best strategies of L’Oreal in Asia is of diversification of the brand and the main reason behind this strategy by L’Oreal is to make them palatable in the local cultures. L’Oreal in Asia aims at the management of the global brands with the local variations and this means that their main aim is of becoming a local and not the foreign company in Asia. For example L’Oreal in Thailand has given local names to their stores and most of the employees present in this company, are local people of Thailand. It is because of all these strategies, L’Oreal is very successful in whole Asia.

Marketing Strategy of L’Oreal in European Market

L’Oreal is the only company which uses the strategies which also supports the people in many ways and not only in providing good quality products at cheaper rates. L’Oreal used different strategies of marketing in the European market like they used the strategy of nurturing self-esteem of the people with beauty. In France, L’Oreal created the programs like “Beauty from the heart” for helping the people made helpless by illness or any kind of negative life experiences. In the countries like UK and Germany, many of the women and also the young people regain their confidence and their self image gradually by using the cosmetics which are provided by L’Oreal. In European countries L’Oreal also used the marketing strategies like taking calculated amount of risk etc but most of the strategies are related to the growth of the people mentally and not only for the beauty or the fashion purpose. Various innovative treatment programs are launched by L’Oreal for the young people of European countries and this company also launches the free skincare and make-up workshops for the women suffering from cancer. For example in France a programme named as “La Vie, de Plus Belle” offers the free skincare and makeup for the cancer suffering women in all over the France. This helps them to cope with the treatment’s side effects and it also helps them to retain their self esteem which is very important for a patient. In the European countries L’Oreal generally uses the strategy of the management of brand by which L’Oreal had made a large amount of brands which are rooted in the local culture and which all appeals to the various segments of the global market. By using these social types of strategies for the people of Europe has helped L’Oreal in expanding their business in the whole Europe.

Marketing Strategy of L’Oreal in North American Market

North American markets are considered as a perfect place for the companies like L’Oreal, Olay, ponds etc. The best business of L’Oreal comes from the market of US. The reason for this much success is that L’Oreal uses very good global marketing strategies in North America and the other countries like Canada etc. One of the successful strategies of L’Oreal in US market is brand extensions which includes the extensions of the brands after doing a complete research. For example when L’Oreal launched a shampoo for kids they firstly made a complete research and also debated about the new launch or for an extension. In US and Canada L’Oreal uses the strategy of frequent advertisements and promotions. As we know in the present scenario proper advertisements and promotions are very important for any company because people follow the promotions and due to which the demands of the products like hair colour increases at a very rapid rate. We can clearly understand the advertisement and the promotions of L’Oreal through their media budget. L’Oreal has the twelfth largest media budget in the world which is much more than the other companies of this field. For example in the late 1990’s the expenditure of L’Oreal advertising and promotion was jumped from the 37% to around 47% of the total amount of sales. The global ad spending of L’Oreal was increased to $1.25 billion which was on par with the company named as coca cola. The best thing about this company is that they have a separate and very distinct policy of promotion in the market of US. Matrix is the number one brand of L’Oreal in US and the main reason behind the success of matrix is the frequent and distinct advertisement and promotion of the cosmetic and the hair products. The people of countries like Canada like to use new products that mean they like changes in their product after some interval of time. So by keeping this thing in mind L’Oreal uses the strategies of modifications which mean they modify their existing products according to the latest tastes and fashion of the local people. According to latest surveys of the people of L’Oreal company, majority of the profits of this company is because of US and these perfect strategies used by this company in US is the reason behind this type of success specially in north American market. (Helping vulnerable people)

Marketing Strategy of L’Oreal in Africa, Orient and Pacific Region

Like other countries in the world L’Oreal is also very successful and equally famous in Africa and pacific region. L’Oreal entered into the market of India in the year 1997 and at that there was not much awareness about the sniff of structure in the industry of hairdressing. In the countries like UAE and Australia, proper and the organized education was totally absent and perfect and well trained hairdressers were also not present at that time. Despite of all these problems L’Oreal in India made some of the strategies and one of the best strategies of L’Oreal is that they launched various technical training centers and they even opened a club of only the hairdressers. IN UAE, L’Oreal products which were professional began selling through parisienne salons while the other companies have begun retailing their range of hair color to power growth. L’Oreal uses a global marketing strategy of launching its successful brands all around the world. For example in February of this year only, L’Oreal made an announcement of the arrival of the matrix which is the number one brand of L’Oreal in US to India, UAE etc with a reason of adding range of hair products to their existing products at affordable prices. The main thing about this company is that they make strategies according to the local culture of different countries and not uses the same strategies in every country. Because of all these strategies, L’Oreal gains a huge profit from Europe every year.

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Loreal case study

L'Oreal is a France-based global cosmetics company that has achieved over 18 consecutive years of double-digit profit growth through its presence in 130 countries with 23 global brands, due to strategies like acquiring unknown brands and repositioning them globally, maintaining brand diversity through separate images and products for each brand to prevent cannibalization, and investing heavily in research and celebrity endorsements. Read less

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• 1. L‟Oreal - Building A Global Cosmetic Brand Presenting By, Subash Balasaheb Ashwini Bharath Bhasker
• 3. Synopsis  France based leading global cosmetic company.  Founded in 1909.  Led by Lindsey Owen Jones, the chairman and CEO of the Company.  Achieved double digit profit for eighteen consecutive years.  Business in 130 countries with a turnover of around 13.7 billion Euros.  Only cosmetic company in the world to own more than one brand franchisee.  Cosmetic industry refers to the cosmetics, toiletry and perfumery industry brands.
• 4. Segmentation on the basis of product usage  Luxury  Consumers  Professional  Pharmaceuticals L‟Oreal remained as a global leader in the industry with a market share of 16.8 percent. Due to increased focus on „wellness‟, company focused mainly on  Cosmecuiticals  Neutraceuticals
• 5. Brand Ambassadors in India
• 6. Strengths of L‟Oreal 66,600 employees 23 Global brands 130 Countries 38 Factories 5.7 billion units in 2011 Global presence
• 7. Focused strategy to become Global brand Hair color Skin care Hair care Fragrances Color cosmetics
• 8. Company Launched the legendary advertisement campaign “Because I am worth it” for promotion of a hair color. Extraordinary distribution channel to the US, South America, Russia and the Far East. Diversification into wide range of beauty products. Expanded globally by introducing Maybelline in USA. Relationship with its customers- Personal beauty advisers at department stores. Road To Success
• 9. Acquired in 1996, when lost its focus and band equity. Tagline: “Maybe she’s born with it”. “Maybe its Maybelline”. Already well known for ordinary color lipsticks and nail polishes in USA. Promoted the products by adding a tagline “Urban American chic” . Expanded to Japanese market as well, and captured nearly 56% outside the US. Celebrities for promoting brands. Maybelline a Milestone
• 10. Maybelline's success proved L'Oreal's philosophy by embracing two different cultures (French and American). L'Oreal acquired different unknown brands and gave a facelift, repacked and marketed them aggressively. Promoted brands according to their national culture. Maintained image with the help of research centers in Paris and New York. Attained 493 patents registered on the company name in 2001. Brand Strategy PACKAGING
• 12. •To keep the different brands in one basket and yet keeping the differenciation. CHALLENGE •Good brand management was all about hitting the right target audience with the right product. STRATEGY
• 13. Brand Diversity • Famous for its Huge brand diversity and brand management in different countries and cultures. Good Research & Developmen t • Highly efficient R&D department. • Spending 3% revenue on R&D each year. • 2700 researchers. Worldwide. Modernised approach of advertising • Celibrities from different cultures are used for advertisements. • Programs and events adds more effect to advertisements. Findings & Learning
• 14. Target Market •Middle aged and working women became the main target of the company. Awareness •Established education centers are in many countries. •Conducted programs related to hairdressers. Mass Marketing •Opted complete makeover of the companies by providing wide range of products.
• 15. Brand Positioning •Company has a strong and long-term brand positioning specially within the minds of middle age women and teenage girls. POP & POD •L’Oreal does not appreciate points of parity. •They believe to provide products different from their competitors (P&G and Kevin care). Science Based Approach •Known as Scientific beauty company.
• 16. Brand Consistency •L’Oreal focuses over all to improve and develop the different brands it acquired in different regions. •Maybelline is the best example of consistency. Distribution Channel •Distributed is done with respect to its need and is cost effective. • Used agents and consignments to USA, Japan and other Asian countries. Understandings •Company was brilliant in identifying the needs, cultures and aspirations of different kinds of customers in diversified regions.
• 17. Critically comment on L’Oreal’s global brand management strategies. Do you think L‟Oreal‟s strategies were primarily responsible for its impressive financial performance? What other factors helped the company remain profitable since over two decades? Yes, of our point of view the strategies were primarily responsible for L'Oreals impressive financial performance and its amazing brand recognition. This is because it made sure that each of its brands had its own image and took care that its image do not overlap with the image of another product or company. Developing of new innovative products a strong Development & Research Department with a lot of know how. They expanded in important national markets and invested in new facilities. Adding glamour to its brand to make it more appealing and famous was another factor for its worldwide known performance. Questions
• 18. 2.With specific reference to Maybelline, critically comment on Jones strategy of acquiring relatively unknown brands of different cultural origins, giving them a makeover and marketing them globally. What are the merits and demerits of acquiring an existing brand vis-a-vis creating a new brand? Acquiring an existing brand Advantage Economies of scale Profit centers are already in place Expand geographically Better positioned to evaluate intrinsic value Complement your existing product lines Disadvantage Hard to chose a befitting one Failure to clear seller's potential liabilities Over leveraging
• 19. creating a new brand Advantage Spread the culture of its own company Explore the new area Get the support from the local government Expand the effect of own brand Disadvantage More expensive than acquiring the existing one ,hard to run Create the new market ,it will take a long time If it is fails, it may affect you main brand product
• 20. Loreal followed a multi-brand stratergy Adapt market share Equal opportunities to al brands Inter-brand (self) competition Freedom to develop and innovate better product Positioning Strategy: Repositioning of brands Repositioning according to : Changing preferences Opinions of customer L‟Oreal maintained a large portfolio of brands and was present in all the four segments of the cosmetic markets. What positioning strategy did the company follow to ensure that the image of its brand did not overlap? How and why L‟Oreal did encouraged competition among its brands in particular segments and at the same time prevent the brands from cannibalizing each other?

Fox School of Business

New fox case study details l’oréal’s decision to be ‘in the moment’.

By Steve Orbanek

Mar. 3, 2021

Fox School faculty members Sheri Lambert, Amy Lavin and Dennis Paris outline how L’Oréal implemented its digital transformation strategy

PHILADELPHIA, March 3, 2021 — In January 2016, Nima Gohil, director of product performance management – hair innovation at L’Oréal USA, knew it was time to sink or swim. Companies across several industries had reaped the benefits of committing to a digital transformation strategy, but L’Oréal was not one of them.

In preparing for the Strategic Meeting at L’Oréal North America’s Research and Innovation Headquarters, Gohil spent weeks reviewing L’Oréal’s current digital strategy and assets while also making recommendations for the future. Now, five years later, L’Oréal is among the leaders in the digital realm. Just last year, the company’s ecommerce sales were up 49%, representing 13% of the company’s total global sales. 

How did Gohil and L’Oréal do it? That question is the impetus behind “Optimizing Consumer Insights: L’Oréal’s Digital First Strategy,” a new case study completed by Sheri Lambert, Amy Lavin and Dennis Paris, faculty members at Temple University’s Fox School of Business.

Recently accepted for publication by Ivey Publishing, the case explores the many ways in which L’Oréal implemented digital strategies over the last several years. Lambert and Lavin are also currently teaching the case in their Digital Innovation in Marketing courses on Digital Brand Management and Business Intelligence .

“For our students, we see this case as both a timely and relevant illustration of the importance of continued innovation,” says Lambert, assistant professor of marketing as well as director of the Master of Science in Market Research & Insights program. “In the past year, we’ve seen so many small businesses adopt digital transformation strategies but this case offers a reminder that the big companies must remain equally nimble and agile too.”

The case is also cross-disciplinary, appealing to both students and practitioners in the realms or marketing as well as management information systems.

“All marketers need to think like information technology professionals and vice versa. Nima did not have a background in IT, but she was cognizant of its importance and the role it plays in allowing L’Oréal to grow its brand,” says Lavin, an assistant professor in management information systems and director of the Master of Science in Digital Innovation in Marketing program. 

One of the key takeaways of the case is its illustration of how Gohil approaches the age-old notion of “if it ain’t broke, don’t fix it.” L’Oréal had had considerable success with its well-established Beauty Babble program, but Gohil believed its impact could be even greater. She was right.

“We wanted to expand our reach to new consumers and better understand how much they engage with, or listen to, social media influencers, so we thought it would be helpful to introduce a customer relationship management (CRM) technology that would enable L’Oréal to capture, track and manage their relationships with not only social media influencers, but their followers as well,” Gohil explains in the case. 

L’Oréal offered its Beauty Babblers early access to products and in return for these perks, they received a one-year commitment from the vloggers, as well as their consent to post their product experiences online and to generate a minimum following of 35,000 followers. 

The strategy was an example of L’Oréal’s desire to be “in the moment” with its consumers. The company wanted to be present, at least digitally, with its customers as they were using its products. That philosophy has continued to guide L’Oréal’s digital efforts.

On Sunday, March 21, at 7 p.m., Gohil will meet with students in the Digital Brand Management and Business Intelligence course to discuss the case and her work reframing L’Oréal’s digital strategy. Her talk is free and open to the public. Attendees can access the presentation via this Zoom link .

ABOUT THE FOX SCHOOL OF BUSINESS

The vision of Temple University’s Fox School of Business is to transform student lives, develop leaders, and impact our local and global communities through excellence and innovation in education and research.

The Fox School’s research institutes and centers as well as 200+ full-time faculty provide access to market-leading technologies and foster a collaborative and creative learning environment that offers more than curriculum—it offers an experience. Coupled with its leading student services, the Fox School ensures that its graduates are fully prepared to enter the job market.

The flexibility and responsiveness of our knowledge-creating research faculty allow the school to address the needs of industry and generate courses and programs in emerging fields. As a leader in business research, the Fox School values interdisciplinary approaches and translational research that influence and impact real-world problems. Our research informs an adaptive curriculum, supports innovation in teaching and prepares students for the ever-changing business environment.

• Dennis Paris
• Digital innovation in Marketing
• Experiential Learning
• Fox Experiential Education
• Master of Science in Digital Innovation in Marketing
• Master of Science in Market Research & Insights program
• Sheri Lambert

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Building a  Culture of Innovation

How L’Oréal empowers its employees to innovate using Viima

About L’Oréal & Nihon L’Oréal

Industry : Beauty  Size : 2700 employees    Location : Japan

Founded more than 110 years ago, L’Oréal Group is the 1st cosmetic group worldwide, and employs 88 000 people across 150 countries . The group has currently 21 research centers , one of which is located in Japan, the subject of our case study. Nihon L’Oréal has been operating for nearly 40 years in Japan and it has over 200 researchers working in skincare, make-up and hair care labs.

In brief, the outcomes of a systematic use of Viima at Nihon L’Oréal :

• Leverage the knowledge of 200 researchers to solve difficult technical problems
• Improved communication  between employees and management
• Reinforce a culture of innovation, mutual respect and positive communication
• Improvement of internal processes
• Optimized the efficiency of meeting practices
• Discover the best way to achieve the overall strategic goals of L’Oréal Group.

The Story of Nihon L’Oréal

Historically, research and innovation have been at the heart of L’Oréal’s philosophy, and to this day it’s a key pillar of their business driver. Nihon L’Oréal and the Research & Innovation Center have been operating in Japan for 40 years now and today it has 2700 employees working on unique and cutting-edge solutions  for tomorrow’s consumers. Nihon L’Oréal operates in the  second largest market in the world , and must answer the constant need to discover, invent and changing beauty needs and aspirations.

The evolving lifestyle and the emergence of a new beauty era, as well as the recent difficulties that hit all industries around the globe, brought a new set of challenges to the beauty and cosmetics industry. Expectations and needs have shifted considerably. Customers expect a more personalized experience in choosing their products and want an immersive and unique experience from brands.

The Challenge

To meet all these needs and build the future of the beauty industry in a highly competitive market, Nihon L’Oréal strives to be a constant source of innovations, ideas and technologies while adding value to the entire L’Oréal Group’s growth. At the same time, Nihon L’Oréal is also operating in East Asia, an area where respect for experience and seniority are highly valued and are essential parts of the national culture. This means that organizations are also influenced by the local culture and have more hierarchical structures than in many Western cultures.  While such organizational structures and respect of seniority have many upsides, it can lead to some communication challenges in both directions, as well as make junior employees more apprehensive in voicing concerns, as well as expressing their ideas.

The Solution

As part of their strategic mission to identify new business opportunities and ideas, Nihon L’Oréal wanted to improve communication between employees and management , and to engage more employees into solving scientific and technical problems that help develop and improve products.  To build an innovation culture is essential to reinforce the positive culture within the organization and acknowledge and praise employees. However, showing respect and admiration to colleagues doesn't come naturally in the context of remote work. To support all this strategic work, Nihon L’Oréal  chose Viima as their go-to solution for collaborative idea development, feedback collection and transfer of tacit knowledge into more refined ideas. For this, they created dozens of boards in Viima, some used by the R&D department and others used by smaller teams for internal brainstorming on specific topics.

With Viima, L’Oréal addressed five different areas

Cross-functional collaboration.

Having over 200 researchers, using Viima boards allowed L’Oréal to leverage their in-depth expertise and solve difficult problems. This also saved a lot of time and lead to much better outcomes.

Reinforce a positive organisational culture

With over 200 researchers in the organization, the use of Viima boards allowed L’Oréal to leverage their in-depth expertise and solve difficult problems. This also saved a lot of time and lead to much better outcomes.

Achieve strategic goals

After the early pulse survey that sets the strategic goals across L’Oréal Group, Nihon L’Oréal is using Viima to find the best way to achieve the overall goals.

Continuous Improvement

Different teams found new ways to leverage Viima and use it to improve on their internal processes and to get the best outcomes of their meetings and working processes.

Improve communication across the organization

Junior employees are now heard and management can have an even better understanding of the concerns and opportunities perceived by employees. Employees and top management got closer which brought clarity to the actions required to improve the working environment. 

The Results

In such large organizations like L’Oréal, it’s not easy to pinpoint exact actions that lead to innovation. There’s an entire ecosystem built to work towards the common goal of innovation. A big part of this ecosystem is made of  idea collection and development, enhanced flow of information and knowledge  as well as an  excellent communication  across different levels and parts of the organization. Thanks to Viima, Nihon L’Oréal is now collecting more ideas, solving more scientific issues that help develop new products and nurtures a culture where all employees have a voice and a role to play.

Viima allows everyone in the company to raise ideas, questions or concerns, directly to the top management team, and in an anonymous way.

It's a powerful tool to get feedback in full transparency and find adapted solutions in a very timely manner.

Did you know?

20,000+ organizations across the globe innovate with Viima.

Discover how they use Viima to innovate, grow, cut costs, and achieve their business goals.

Signify, the world leader in lighting for professionals is using Viima for collaboration and co-creation.

Viima takes great pride in enabling innovation in forward-thinking organizations, like L’Oréal .

You too, can drive more innovation in your organization! Start with a 7-day free trial, or book a demo for a guided tour .

L’OREAL Company: Expansion in China Case Study

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Introduction (Problem, Objectives, and Resources)

Case study analysis, feasible recommendations, works cited.

L’Oréal is one of the most famous and purchased cosmetic brands in the world. The company produces many popular brands of cosmetics, perfumes, as well as hair and skincare products, including L’Oreal Paris, Garnier, Maybelline New York, Lancome, Giorgio Armani, Vichy, and others. This Group is represented in 130 countries all over the globe. The given case study focuses on the expansion of the mentioned company in China and presents three essential challenges that it encountered on the way to success. Namely, consolidation with the local market, integration issues, and differentiation may be noted among the problems.

The objectives of this paper are to analyze the case of expansion based on the current literature and provide reasonable solutions to the identified problems along with feasible recommendations. The paper will be based on the critical review of the existing evidence in the field of strategic management and L’Oréal’s brand management. In addition, the resources will include scholarly articles, books, and official websites presenting reliable statistics and any other important data. Such tools as strengths, weaknesses, opportunities, and threats (SWOT) and benchmarking will be employed to present the results of an in-depth analysis.

“Because you are worth it” is a famous phrase used in L’Oréal’s advertisement at the dawn of almost 40 years, and its authorship belongs to the advertising agency of McCann Erickson. Since then, the screen with a beautiful French accent was played by actresses Catherine Deneuve, Jennifer Aniston, Mila Jovovich, Beyonce Knowles, Kate Moss, and others. The men’s L’Oréal line was advertised by the Formula One pilot, Michael Schumacher, and the football player David Ginola (Hong and Yves 117). In 1996, there was an acquisition of Maybelline, a leader of the decorative cosmetics of the mass market in the US, which had strategic importance. It not only positioned L’Oréal as the undisputed leader of the key market all over the world but also turned the corporation into the world leader in the field of makeup tools for mass demand. Moreover, Maybelline was an entrance ticket for L’Oréal to the Asian market, especially in China, where there was a factory of this brand.

To engage consumers interactively with the products, L’Oreal has released the Makeup Genius application, which allows users to do makeup online. Girls use a smartphone as a mirror and try various make-up variations likewise filters on Instagram to find out the best option. This application was already downloaded more than 14 million times. In today’s China, goods and services for personal care, healthy lifestyles, and entertainment are quite popular. Three factors affect consumer behavior, including large families, bad ecology, and general Asian trend for personal hygiene and care. It should be stated that there are more men than women, but the female half of the population makes more purchases.

Traditionally, girls, even the younger generation, use cosmetics. Being in serious relationships, they often buy something for the family, parents, children, and husband. As for the age, the target audience is composed of people from 17 to 36 years old, who are called the generation of two thousand people or the generation of the millennium. This is a young generation of Chinese consumers who are versed in modern technology, who make 66 percent of all purchases on the Internet. All of them use social networks, and they are interested in new ideas as well as trying something new. Currently, L’Oreal Group follows a comprehensive strategy of promotion on Weibo and Wechat platforms.

Issues Underlying the Problem

In partnership with Suzhou Medical College, one of the oldest Chinese universities, L’Oréal created Suzhou L’Oréal Beauty Products. In 1996, the industrial complex of Suzhou began the construction of the plant, which was opened in 1999, while two other factories were opened in the next decade to serve the rapid development of the Chinese market. Furthermore, to accelerate the development of the Garnier brand in China, which is already marketed by the Nutrisse brand, L’Oréal acquired Mininurse in 2003. This local brand, a leader of skincare products of a mass-market, already enjoyed great popularity and a powerful presence in the market. The first means of leaving Garnier were issued under the name Mininurse.

One of the challenges to entering the Chinese beauty market was associated with the overall value of the existing brands. In response to Chinese preference for these brands that take into account the specific nature of Asian skin type, L’Oréal acquired Yue-Sai – an affordable luxury brand of skincare and decorative cosmetics Yue-Sai that personified a modern resident of China and became a successful addition to the collection of the international portfolio of L’Oréal Group. However, the review of the literature shows that the company needed research and innovation to meet customers’ quality expectations and remain in-demand. In this regard, a new research center in China was launched. The main project of L’Oréal’s fourteenth research center in Pudong, near Shanghai, was the achievement of the perfection of knowledge about the skin and hair of the Asian type. Its paramount goal was to develop products that meet the needs of Asian descent around the world as well as the production of real geo-cosmetics that can cover the diversity of cultural and climatic features of Asia.

In August 2001, the face of the French company was the Chinese movie star Gong Li. Ginsheng Lan, PR Manager at L’Oréal in China, stated that over the past five years, the Chinese women’s attitude to beauty had changed dramatically since they began to spend a lot of money buying the products of Western cosmetic giants. The market was developing very fast, showing a growth of 10-20 percent per year. L’Oréal began to conquer the Chinese market in 1997, much later than Japanese cosmetics companies (for example, Shiseido). Fashion ideas are changing rapidly, and if earlier only black hair was considered beautiful, now Chinese women are experimenting with color, and L’Oréal is helping them in this with their products. When in 2002, L’Oréal began its expansion into China, its incomes grew by 61 percent, while the entire cosmetics market of this country grew by only 14 percent.

Today, almost all Chinese consumers use mobile payments every day, and many of them make up to eight payments a day. This is convenient since the payment can be made with one finger, with the help of voice commands, or even codes. There are also many commands for the cancellation of transactions, which provides security. The international brands that have already entered the Chinese market should focus their efforts on maintaining and developing the image of the brand through social media. Without this, one cannot be competitive in the market.

Desirable Solutions

To resolve the mentioned problems, L’Oreal also launched its largest Asian plant in China. Namely, the French manufacturer of cosmetics and perfumery, L’Oreal opened a new plant, the production facility of which was worth 200 million yuan ($32 million) and was located in Hubei Province. The plant, which area was about 70 thousand square meters was the largest manufacturing facility of a cosmetic company in Asia. Annually, it produces about 250 million units of cosmetic products and is expected to ensure the growing demand for care products. At the moment, China is the third-largest market in L’Oreal. Earlier this year, L’Oreal reported on the agreement on the acquisition of Chinese Magic Holdings International, specializing in cosmetics, for $ 840 million ( Expansion from France to International Markets ). In addition, the company stated that it is conducting exclusive discussions with the Japanese cosmetics manufacturer Shiseido about buying the cosmetics brands such as Decleor and Carita that belong to it.

By announcing the company’s new commitment to sustainable development, L’Oréal mentioned that a new type of customer has emerged that makes its choice, guided not only by the price of the product or brand but also by environmental friendliness. It seems that consumers are concerned about this because they are increasingly becoming conscious citizens. They have more information that is now open to absolutely anyone, and they understand the danger of depletion of natural resources, reduction of water quantity, environmental pollution, and degradation of biodiversity. In the cities of China, the situation is rather complicated. Therefore, the state of the environment becomes very important. Consumers understand that they are part of the world, and they cannot just forget about it when they make purchases.

Therefore, the consideration of sustainable development and some initiatives in this area is a useful way to attract more customers and also protect the environment. The problem is that there are many products on the market that are called eco-friendly or natural, but they are either quite expensive or not so good. By 2020, L’Oréal expects that 100 percent of its products will be environmentally-friendly or socially-oriented. At the same time, it is not proposed to create a new category of products that will be greener and more expensive, et cetera, but change the way of work. Until recently, the priority was to create effective and safe products of high quality. Now, the company adds one more property that seems to be valuable such as eco-friendly innovations and production.

Suggested Solutions

Product diversification is a relevant solution to market integration. L’Oréal’s target audience in China may be described as follows: 18 -year-old Miss Yu, who lives with her parents and wants to have a pink lipstick; Mrs. Lee, who is more than 20, she has a good job and a deposit in the bank; a 30-year-old Mrs. Wong is married, she has one child and uses skincare products more than cosmetics. Even the mode of transport matters: if Miss Yu drives a car, she is a consumer of the premium brand L’Oréal – Lancôme, and a bicycle symbolizes a more democratic brand such as Maybelline, for example.

One of the most feasible strategies to apply refers to research and innovation. In this regard, it is possible to point out L’Oréal’s initiatives in the field of skin reconstruction. L’Oréal is the first cosmetic company in the world to develop a method for laboratory skin reconstruction from donor cells. Anti-aging serums, bleaching creams, and cleansing lotions are developed specifically for customers of the fastest-growing market. According to the research company Euromonitor International, the volume of cosmetics sales in China will exceed the amount of $ 40 billion by 2021, leaving behind the United States. Chinese consumers are the most demanding, and this applies to virtually all categories of our products. L’Oréal strives to preserve the status of the most profitable cosmetic company in China, but the local brands also tend to gain popularity among customers. Previously, cosmetics manufacturers thought that the Chinese will always give preference to European brands, but the situation is changing. According to the estimates, L’Oréal’s revenue in China increased from 2012 to 2017 by 40 percent, reaching 2.2 billion euros. To realize the great potential of the Chinese market, L’Oréal should adapt its products to residents as much as possible.

The evidence shows that the skin of representatives of different races reacts differently to incentives such as sunlight. On the skin of the Europeans, wrinkles appear under the influence of ultraviolet, while that of the Chinese begins to intensively produce pigment. The interaction with cosmetic products is also different. For example, the basis for make-up, suitable for a representative of the European race cannot be put on the face of a Chinese woman as the increased activity of sebaceous glands can become frozen in the form of an unpleasant crust. L’Oréal began to grow skin cells a few decades ago, yet the first success with samples from China scientists from the subsidiary division of EpiSkin was achieved only in 2005. Nine years later, the EpiSkin laboratory opened in Shanghai. Here, researchers test various ingredients on gelatin-like reconstituted skin. The results of the experiments are used to adapt creams, lotions, and shampoos to the characteristics of the organisms of residents.

L’Oréal does not disclose the number of funds invested in the Chinese direction. However, according to Vivien Qin from Euromonitor, no matter how large the company’s expenses, they are justified due to the promising prospects of the Chinese market, in particular, the growing demand for anti-aging cosmetics. Having opened a branch of EpiSkin in Shanghai, L’Oréal has established supply channels for images of the restored skin, which are provided free of charge to universities along with laboratories, and are also sold to competitors. Due to the development of this direction, companies that previously refused to attend the Chinese market because of the requirement of the local legislation on compulsory animal tests may come to China. Giants such as L’Oréal, Estée Lauder, and Shiseido, already working in China, will be able to label their products with a cruelty-free sign. It is possible to expect that shortly, Chinese regulators will decide on the possibility of using reconstituted skin for appropriate tests.

Implementation Plan

The development of the Internet should be considered as one more factor affecting the company’s strategy. L’Oreal’s consumers have almost completely changed their habits in buying cosmetics and finding information about them. Beauty and everything connected with composing one of the most hotly debated topics in social media. For the company, this opens up new opportunities in interaction with customers. The digital revolution has created an unlimited space for consultations, serving people, and offering them new services. L’Oreal can form a new level of interaction with its consumers, who want to be able to make a purchase anytime and anywhere. The majority of customers still buy in traditional stores, but more and more shopping is tracked through websites and mobile applications. Many of L’Oreal’s brands have e-commerce platforms that present great potential for a serious increase in sales. For some brands, for example, Kiehl’s, the share of e-commerce is about ten percent of the total turnover in the world.

It is additional values ​​that form loyalty to the brand, thus making it successful. The band performs the following functions for the consumer: it provides a value proposition and confidence in the firm’s branded products. In L’Oreal, the essence of the brand is the central idea presented to a consumer. It reflects the most important meaningful signs of the brand, that is, it represents a core of brand content. Therefore, it is advisable to consider the brand as a dialectical unity of its form and content. If the external identifiers shape a form, then the internal identifiers, by which a consumer determines the correspondence of the brand values ​​to their settings, constitute the content of the brand. To ensure brand effectiveness, the company needs to strive for compliance between the form and content of the brand. Modern successful brands are empirical brands that are the result of empirical marketing. In empirical marketing, the emphasis is transitioned to the experiences of a client, which generates values ​​of the sensory, emotional, cognitive, and behavioral nature.

With the development of technologies, it becomes increasingly difficult for companies to maintain the functional values ​​of brands for a long time as the benefits-oriented on functional properties become relatively simple to copy. Without a strong brand, a company cannot move forward. Therefore, one should ensure seamless communication with customers on all possible platforms. A consumer expects companies to be available at three in the morning on Sunday in his favorite application, for example. Companies that plan to sell their products to the Chinese market from other countries should start building relationships with the local bloggers and opinion leaders. The SWOT table can be created to summarize the analysis (see Figure 1).

The potential implementation plan may be based on the method of benchmarking. An important feature that determines the conduct of business in the context of globalization is the intensification of competition. A significant challenge for L’Oréal is the search for new ways and tools to improve competitiveness as a strong competitive position is a basis for its successful operation in the long term. Benchmarking helps to identify problems in the organization of the company’s activities and areas of backwardness as well as identify ways to overcome them. In this case, L’Oréal itself can serve as a standard, and its practices will be used for subsequent implementation. It is useful to apply benchmarking to improve business processes, the characteristics of their products, reduce costs, and achieve the best performance indicators based on a benchmark comparison of their activities with that of other leading companies.

Benchmarking implies comparing a company’s activities with those of others that have the best practices in the areas of business that are of interest. The first stage refers to the collection of the required information. This phase involves not only the collection of qualitative and quantitative data but also the study of the content of the market along with processes or factors that explain productivity (Hill et al. 109). Identifying potential partners for benchmarking is another step in the research phase. It is more coherent to apply the experience of enterprises operating under similar conditions, steadily setting high goals for themselves. To identify a potential partner, several methods may be used to find who best satisfies the needs of consumers and have the best processes to be evaluated. The most obvious would be to look for the industry leaders among direct competitors. The difficulty of this situation is that some companies are not yet ready to share the experience with their competitors and did not realize that such a procedure is mutually advantageous.

The next stage of benchmarking is the analysis of information. This stage puts forward great demands on the creative and analytical abilities of the participating sides in the process of analysis of superiority, thus promoting awareness of the similarities and differences and understanding their relationship (Hill et al. 110). In addition, it is necessary to identify effects that can complicate comparisons and falsify results. The purposeful implementation of the information received, namely, not only the implementation of the developed opportunities for improvement but also further development of the organization of the enterprise should be followed. In this case, the point is not copying yet creating an incentive for further innovative development of the company.

The analysis of only one category of data will not give a complete picture of the company’s activities, while every indicator should be compared with a similar one of the partner company’s performance. In this regard, there are two questions: how critical is the dissimilarity between the compared companies, and how much technology does the partner apply (Hill et al. 109). In case the data regarding the partner firm can be compared with similar data on the initiating company, the benefits of the results obtained are great. Even if the initiator company outperforms the partner on most indicators, there will always be something to be learned. Nevertheless, as a partner in benchmarking, it is more logical to choose a company that exceeds in this or that field of activity. Repeating the analysis results in an adjusted manner completes the process of benchmarking.

Legal and Ethical Considerations

The media and current literature support the image of a growing high-potential cosmetics market in China, but its effectiveness does not always depend only on the size. The customers should not only want to buy but also have to have money for this. Although there are many buyers in China, and their incomes are rising, many people remain below the poverty line and are unable to acquire what they want. First of all, it is clear that the aspirations of customers are growing, the desire is ahead of opportunities, and the traditional areas of modernization are not always applicable. Taking into account the vastness of China’s territory, ethnic diversity, and a rapid pace of change, it should be noted that China’s traditional culture is not respected all the time and in all places. Today, Chinese business ethics should instead be seen as a so-called “pot” of modern Western ideas and traditional Chinese values ​​with several paradoxes. The ethical considerations should consider the superficial Western framework that is built on deeply entrenched Confucian values, while the goals of economic efficiency are created by people who are oriented towards the ideology and the traditions of social responsibility.

As for legal considerations, it is rather important to register the product and then export it. Contacting Chinese representatives and getting a license for a product from the State Food and Drug Administration (SFDA) requirements. Now, China has simplified rules for the import of goods into the country, which allows foreign retailers to sell their products on the territory of ten free trade zones without passing checks and customs clearance. According to the law from June 30, 2014, ordinary cosmetics testing on animals, which is produced and sold in China, becomes optional. However, there is no answer to the question of whether products are to be sold in China, but it is evident that Chinese law no longer forces to test cosmetics on animals. In the article of Humane Society International, it is explained that the changes in the Chinese legislation of 2014 will largely affect all cosmetic companies. According to these changes, some products are not required to be tested on animals by law, but this does not guarantee that they will not be tested. Companies can also decide to test animal cosmetics in China because this is legal.

Speaking of my role as a researcher of the given case study, I would like to emphasize that my role is mainly theoretical. Namely, I can analyze this case and apply various strategies in an attempt to suggest some relevant strategies and use appropriate tools. At the same time, this may provide essential grounds for conducting scholarly research regarding the current situation of L’Oréal in the Chinese market. The review of the existing evidence demonstrates that the company moves forward and tries to follow the current trends in social, economic, and cultural issues. Therefore, it seems that the new research would contribute to the theory of strategic management associated with the expansion to foreign markets.

Lessons Learned

In my point of view, this assignment is rather useful as it provides the opportunity to understand and interpret a real-life situation on the example of L’Oréal’s acquisition of the Chinese cosmetic brands. I have learned that it is significant to pay attention to a full range of factors that may either improve or weaken the company’s condition in terms of a foreign market. I have understood that it is essential to figure out what attracts the Chinese as their cosmetic tastes and needs are different from Western addictions. For example, Europeans and Americans prefer to purchase artificial tan cream, and the Chinese adore bleaching (Xie and Zhang 540). In other words, all the local specific cultural, ethical, and legal peculiarities are to be taken into account.

More to the point, this assignment allowed integrating information presented by the case study and those obtained from the recent evidence. Based on the credible sources, I have suggested several strategies to resolve the problems outlined in the case and also offered several recommendations on how L’Oréal may enhance its positions in China, focusing on technology, social media, and brand awareness. It should be stressed that writing the report about this case study required following a specific format that is important for an academic style.

In conclusion, one should emphasize that L’Oréal is a large and promising company that operates in the field of cosmetics. On the Chinese market, it encountered both challenges and opportunities, which may foster its expansion and improve the positions. Consolidation with the local market, integration issues, and differentiation problems were revealed in the course of the analysis. It was determined that the company should follow the current trends and apply technology and innovation to remain competent and competitive. Brand management strategies and social media coverage were recommended as the relevant ways to resolve the above problems. More to the point, it should be stressed that proper investigation of the local customer preferences may significantly contribute to the expansion of this cosmetics company.

Given the mentioned issues and solutions, it is possible to suggest several recommendations that may improve the performance of L’Oréal in the Chinese beauty market. The company should change a lot in production, focusing on the concept of products as well as the choice provided to customers. It seems that this is what is now expected from manufacturers all over the world. Since it strives to increase the number of loyal consumers, people who buy this product should be fully confident that they make a responsible choice. China is an extremely important beauty market for the whole world. L’Oreal in China has been present for many years and it is successful there. What is important, the market has great potential as there is a tradition of beauty.

Speaking about new consumers, in the presentation of the company for employees and investors, one may note the statement that the company should follow the current changes in the world. In particular, one of the economic trends such as the formation of the middle class, the main request of which is a good and affordable product. With the recent development of countries such as Mexico, China, Brazil, and others, a middle-class stratum appears in them, and people need access to good products as buying safe and effective cosmetic products is a very simple way to improve the quality of life. Therefore, the company should gain an audience by being where customers are looking for the identified cosmetic products.

There is a huge offer of different brands on the market, every year it becomes more difficult to stand out, and a consumer seems to be simply disoriented. To manage to compete, L’Oreal should understand that this is the price of this game – in free markets people have a choice. The cosmetic industry provides the widest range of products, which is generally good, but a brand can be successful only if it is a product of high quality. Without this, it can be popular for a very short period. Therefore, it is necessary to constantly focus on research, innovation, and science to constantly improve and anticipate customers’ expectations. For example, environmental friendliness and as well as skin reconstruction may be recommended as the areas for development. Some part of turnover should be invested in research and development more than competitors can do. This will allow being sure that by trying products, a consumer will return to them again.

Another recommendation may be formulated as follows: be active on the Internet. It is possible to run a blog and write articles regularly to allow consumers to receive the latest news promptly. The posts should inform about the company and its products, and also contain reviews of satisfied customers to prove that the brand can be trusted. Activity in social networks is another part of this recommendation as the Chinese do not part with their smartphones, and they need innovation and authenticity. Of the 630 million Internet users in China, about 90 percent use social networks to gather information about brands. The most popular social networks in China are Weibo microblogging and WeChat messenger, which have a news line. This popular platform will allow turning the target audience into the brand’s followers.

Opinion leaders are popular bloggers and stars who advise about the skincare and selection of a suitable product. To make the company’s positions even more stable, it is possible to consider concluding a partnership with them. If the leader of opinion tells about the brand, it will become a well-known brand among numerous followers. For example, the Chinese are deeply in love with the British actress Emma Watson, who is the face of the Lancôme brand. She has fair skin, and all Chinese women want to be like her. When expanding to the Chinese market, it is important to know exactly what the target audience is. By examining customers’ needs and expectations, it is essential to regularly update information about the brand along with the current trends.

Expansion from France to International Markets . 2018. Web.

Hill, Charles WL, Gareth R. Jones, and Melissa A. Schilling. Strategic Management: Theory: An Integrated Approach . Cengage Learning, 2015.

Hong, Hae-Jung, and Yves Doz. “L’Oreal Masters Multiculturalism.” Harvard Business Review , vol. 91, no. 6, 2013, pp. 114-118.

Tao, Zhigong. L’Oreal: Expansion in China. Harvard Business Review . 2018. Web.

Xie, Qinwei, and Meng Zhang. “White or tan? A Cross-Cultural Analysis of Skin Beauty Adv ertisements Between China and the United States.” Asian Journal of Communication , vol. 23, no. 5, 2013, pp. 538-554.

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• Chicago (A-D)
• Chicago (N-B)

IvyPanda. (2021, May 30). L'OREAL Company: Expansion in China. https://ivypanda.com/essays/loreal-company-expansion-in-china/

"L'OREAL Company: Expansion in China." IvyPanda , 30 May 2021, ivypanda.com/essays/loreal-company-expansion-in-china/.

IvyPanda . (2021) 'L'OREAL Company: Expansion in China'. 30 May.

IvyPanda . 2021. "L'OREAL Company: Expansion in China." May 30, 2021. https://ivypanda.com/essays/loreal-company-expansion-in-china/.

1. IvyPanda . "L'OREAL Company: Expansion in China." May 30, 2021. https://ivypanda.com/essays/loreal-company-expansion-in-china/.

Bibliography

IvyPanda . "L'OREAL Company: Expansion in China." May 30, 2021. https://ivypanda.com/essays/loreal-company-expansion-in-china/.

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International Journal of Research & Review (IJRR)

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