Case Study on "L'oreal"

Case Study 5 pages (1502 words) Sources: 1+

[EXCERPT] . . . .

L'Oreal Case Study

L'OREAL

MARKETING ANALYSIS CASE STUDY

The problem addressed in this case study is the question of whether two new mid-priced family brand line Garnier products be offered to Dutch consumers and as well to answer the question of: "Whether or not this problem should be carefully approached due the complexity of the issue due to the fact that L'Oreal already has a prescience in the hair color and skincare market however, there is evidence of a growing trend of increased competition. This work examines the use patterns of consumers; the demographics of consumers; product distribution and competition in the market. This work will research each brand individually and on a basis of comparison as well. The first initiative of this case study will be the introduction of the products of 'Synergie' and 'Belle Coulor'.

Case Study Objectives

The L'Oreal case study within the scope of this specific study will use the criteria of measurement first of: (1) Acceptance within the consumer market; and secondly through: (2) Retailer product acceptance. Reviewed as well will be the criteria of the management methods of the product line and finally sales management issues that might severe as primary criteria in assessment of this market. A Marketing 'Mix Analysis' will also be conducted in relation to the mixing of products, pricing, promotion and distribution in the market and specifically as related to the market in the Netherlands. It will be determined whether the price assignment to the product should be optimally in the low-; mid-; or high-end price assignation. Reviewed as well will be issues related to 'product promotion' which is inclusive of 'target market identification and market positioning of the product ad distribution of the product to retailers.

I. L'Oreal - Case Study Facts

L'Oreal is stated to be the 'largest cosmetic manufacturer in the entire world during 1992 with its' headquarters located in Paris... And subsidies..." worldwide. 1992 sales are stated at: $6.8 billion which is am increase of over 12% since the previous year. Net profits of 1992 are stated at $417 million; a 14% increase. Worldwide sales are broken down as follows by country in the following chart labeled Figure 1:

Country Percentage

France: 24% (worldwide sales)

Eastern & Western Europe (excluding France): 24% (worldwide sales)

Canada & U.S. combined 20% (worldwide sales)

All other countries in the world combined

14% (worldwide sales)

Source: L'Oreal Case Study Market Analysis (nd)

The company's subsidiaries are divided into the groups of either 'Minor' or "Major' countries for the purpose of this analysis as follows: (1) Major countries (England, France, Germany and Italy; and (2) Minor countries (the Nederland and nine others) Noted as being a 'critical success factor for the L'Oreal company is this company's ability to innovate due to their heavy investment into product research and development which has served to inform the market assessment specifically to product introduction toward the end of successfully recovering the company's initial investment. This work makes analysis of a 'Dutch market' and specifically as to as which of these 5 million which is composed of approximately 50% of individuals who might not like or have any experience in the use of these 'traditional skin and traditional skin care products." L'Oreal Case Study, Market Analysis,; nd)

II. Situation Analysis

Belle Colour is a lines of hair coloring products which are permanent type hair coloring which are in France generally one of 22 shades or natural tones and one 'strong red or very bright light shades'. (nd) Two specific types of coloring for the hair or those of: (1) semi-permanent colorants; and (2) Permanent colors.

The semi- permanent generally would be gone after five to six shampooing with the disappearing of the permanent color taking considerable longer trending toward semi-permanent colorants evidenced by a decrease in colorant. Over the period of the four years preceding this study semi-permanent colorant which has noted an increase from 12 to 27% or at a rate of 15% per annum. Chain drugstores represent 57% percent of total sales for L'Oreal

III. Market Segmentation

Market Segmentation is stated as follows:

Chain drugstores (57%)

Large independent drugstores (20%)

Small independent drugstores (20%)

Food retailers (3%)

IV. Competition in the Market

Competition in the Netherlands is intense with four of a total of ten brands accounting for 80% of the permanent hair colorant sales while France is stated to have only two brands however, none can be said to have a clear vision in positioning of the product positioning the company as "covering gray with natural colors" in nature. The Hair salons are in "direct competition in the hair coloring market." Indirect competitive factors are also identified.

V. Consumer Behavior

Consumers at the time of 1992 case study held the belief that use of permanent hair color was very technical and risky strong brand locally existing among consumers negatively impacting impulse spending behavior by consumers. Hair color products have traditionally been used to covering gray hair but in more recent use has become a fashion statement which provides the accounting at least in part for the "increased popularity of semi-permanent hair coloring. One study states that "the most frequently cited reason for coloring hair was the achievement of "warm/red tones and another 17% reported that they wanted to "lighten" the color of their hair and 29% citing the reason for use of hair color to be the coverage of gray hair. with 29% stating the reason for the use of hair color was covering gray hair.

VI. Consumer Acceptance

Consumer acceptance is stated to be at 46% by Dutch women in this market case study with consumers under the age of 35 stating use more often for fashion than coverage of gray hair. It was the desire of the L'Oreal company to distribute its Garnier product line extensively across the globe penetrating the market in various retail outlets which has traditionally been a successful approach in product introduction for L'Oreal who has a positive image in the view of consumer in the Dutch retail market with products that are characterized as "high-quality, innovative and good in-store merchandising."

VII. Major Strategic Alternatives Identified

The alternatives that were believed to exist were introduction of both products into the market simultaneously and alternatively that only one of these products be introduced into the Netherlands's market as it was clear that France appeared to be have a better market potential than did the Netherlands for introduction of two products at one time. Therefore it was debated as to whether both products should be introduced in the Netherlands market in which L'Oreal's Garnier already had product presence.

VIII. Decision Criteria

Factors affecting introduction of new brands in the market are inclusive of:

1) a greater need for retail shelf space which is a limited resource; and 2) L'Oreal had already made a reduction in the number of shades from 22 to 15 in the Netherlands which required five feet of shelf space for display of Belle Couleur while only one-half this amount of shelf-space was required by Synergie or approximately 2.5 feet.

Three areas are identified in which decisions must be made which are those of: (1 Should both product lines be introduced at the same time? (2)if one or both products were introduced a marketing program must be developed requiring decisions related to product promotion both in view of retailers and consumers; inclusive of pricing and product distribution (3) Tactical marketing plans would be required to avoid any negative affect of the sales of the new product lines.

IX. Analysis of Alternatives

Since L'Oreal had already reduced the required display shelf-space area by the same approximate required shelf-space needed to introduce the Garnier product into the market in the Netherlands, it was only logical to consider the introduction of the Garnier product into this market and… READ MORE

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