Tapping into global markets

L'Oréal was founded in 1909 by French chemist Eugène Schueller

70000 employees globally (2014) revenues of € 25.26 billion

net profit of € 3.3billion in 2015

Consumer products52 % of sales

Includes brands like Maybelline New York,

Garnier L'Oréal Luxe 27%of sales

Premium brands like Ralph Lauren, Giorgio

Armani

Professional products14% of sales

Brands like Redken, Kérastase specifically

designed for professionals

Active Cosmetics7% of sales

Products sold at pharmacies etc like

Skinceutical

Groups of products

The Body Shop combines innovation, sensory experience and performance, while maintaining environmental protection at its core of values. L'Oréal has a portfolio of 27 global brands including those mentioned above

DECIDING TO GO

GLOBAL

Opportunities

International markets might offer better profit chancesAllows developing larger customer baseReduced dependence on one market Consumers are now global citizens, expect international quality and serviceAllows countering global brands at their local markets

Risks that might be faced:

Failure to understand foreign preferencesInability to adapt to business cultureMay not match regulations, adding to costs

Existing company managers may not have required international experience Foreign market instability due to political or social or economic changes

WHICH MARKET TO ENTER

Criterion How many markets to enterL'Oréal now largely uses waterfall way (for unestablished markets)Early on in 1936-37 employed sprinkler approach to set up subsidiaries in Algeria, Italy, Denmark, Belgium.

Evaluation of marketsFirst preference neighbouring countries May also choose psychic proximity

L'Oréal has employed former and constantly target new upcoming market

Ways to enter

Indirect exportDirect exportLicensingJoint venturesDirect investment and acquisitions

L'Oréal’s strategyCompany has expanded largely by local acquisition routeExpanded to markets like China , South America and erstwhile Soviet Union before others Also key to success is its constant innovationSpends heavily on R&D with 22 centres across the worldHas even used JV route to enter markets like China

MARKETING

Various celebrity ambassadors to endorse products

Key is correct target pricing for L'OréalAlso sponsors many events in fashion industry like fashion showsOffering premium experiences to customers via lounges and other special marketing events

L'Oréal Marketing Methods

Questions About L'Oréal

1. L'Oréal brand portfolio and role of smart acquisitions, local and global marketing, and R&D in growing brands Large brand portfolio allows targeting different sectors.

Local acquisitions make it easier for L'Oréal to enter and establish itself in

market and also expand these brands into new markets

Smart acquisitions and innovations like The Body Shop among others

allows catering to different segments (from mass marketed to high line

products) with variety of products

Local and global marketing strategies to reach out to customers locally by

celebrity endorsements, while adding global image to enhance connect

Strong R&D to continuously adapt, research and innovate in local markets

2.Keys to successful local product launches

Good brand adaptability

Incorporates culture, climate, traditions and customer feedback

Maybelline Kaajal Line in India, Wonderlust in Japan to suit local requirements of customers i.e. product adaptation well employed

Significant investment in 22 R&D centers has allowed to test for variety of conditions

Appealed also as has a strong global image

Well thought of global pricing strategy to target correct segment in each market

Asia , Africa and Latin America – next big target markets

Must continue investment on innovation to expand to new sectors and markets

Must use the social media platforms to reach

Can work to expand on incorporating technology into beauty line

Enhance further its footprint online by acquiring digital beauty brands globally and start-ups in these sectorsL'Oréal – the most digitally advanced beauty brand, here’s why :Among first to launch app called Makeup Genius (to visualise makeup effects on

phones)Acquired makeup brand Nyx that sells entirely on digital platformsOffers live chat to consumers

3. Biggest competitors and sustaining growth L'Oréal's biggest competitors in India – ITC Limited, Nirma, Marico, P&G , Dabur

L'Oréal’s global competition includes P&G and Unilever

Also large number of competitors as various segments targeted

Continues to lead due to innovation in all departments and strong local acquisition policy + strong marketing strategy

Continue heavy investment in innovation

Increase line of products and try to expand towards more eco-friendly products under The Body Shop space

Continue policy of local acquistion to expand, and further diversify, especially in emerging markets which have good scope

Strong digital presence must be expanded to court new users and increase connect globally

Continuously adapting to new market trends (like hair styles and colours)

Sustaining Growth

RECAP

Following are the things we learnt:1. About L'Oréal and its acquisitions 2. Deciding to go global3. Deciding which Markets to enter4. How to enter new markets5. Questions on L'Oréal’s growth and future

DISCLAIMER Created by Krunal Chakravorty, RVCE Bangalore during a marketing internship under Prof. Sameer Mathur, IIM Lucknow.

THANK YOU!