L`OREAL PROJECT

Brand Management
Erasmus

11.04.2017, Canakkale, Turkey

Student,
Maria Adelina Boloagă

1
 L`oreal

L'Oréal S.A. is a French cosmetics company headquartered in Clichy, Hauts-

de-Seine with a registered office in Paris. It is the world's largest cosmetics company
and has developed activities in the field of cosmetics, concentrating on hair colour,
skin care, sun protection, make-up, perfume and hair care; the company is active in
dermatology, toxicology, tissue engineering, and biopharmaceutical research fields
and is the top nanotechnology patent-holder in the United States.

History

In 1909, Eugène Paul Louis Schueller, a young French chemist of German

descent, developed a hair dye formula called Auréale. Schueller formulated and
manufactured his own products, which he then sold to Parisian hairdressers. On 31
July 1919, Schueller registered his company, the Société Française de Teintures
Inoffensives pour Cheveux (Safe Hair Dye Company of France). The guiding
principles of the company, which eventually became L'Oréal, were research and
innovation in the field of beauty. In 1920, the company employed three chemists. By
1950, the team was 100 strong; that number reached 1,000 by 1984 and is nearly
20,000 today.

L'Oréal got its start in the hair-colour business, but the company soon branched
out into other cleansing and beauty products. L'Oréal currently markets over 500
brands and thousands of individual products in all sectors of the beauty business: hair
colour, permanents, hair styling, body and skin care, cleansers, makeup and fragrance.
The company's products are found in a wide variety of distribution channels, from

2
hair salons and perfumeries to hyper - and supermarkets, health/beauty outlets,
pharmacies and direct mail.

L'Oréal has six worldwide research and development centres: two in France:
Aulnay and Chevilly; one in the U.S.: Clark, New Jersey; one in Japan: Kawasaki,
Kanagawa Prefecture; in 2005 one was established in Shanghai, China, and one in
India. A future facility in the US will be in Berkeley Heights, New Jersey.

Slogan

L'Oréal's advertising slogan is "Because I'm worth it". In the mid 2000s, this
was replaced by "Because you're worth it". In late 2009, the slogan was changed
again to "Because we're worth it" following motivation analysis and work into
consumer psychology of Dr. Maxim Titorenko. The shift to "we" was made to create
stronger consumer involvement in L'Oréal philosophy and lifestyle and provide more
consumer satisfaction with L'Oréal products. L'Oréal also owns a Hair and Body
products line for kids called L'Oréal Kids, the slogan for which is "Because we're
worth it too".

Brands

L`oreal is representing a family branding. A family branding is a branding

strategy in which products are given brand names that are closely connected or share
the same overall name as an existing brand. Some brands that are existing under
L`oreal umbrella are:

3
 L`oreal umbrella has in the same time premium or luxurious brands and
economical products. For example, as luxurious brands the most famous products are
Lancome, Giorgio Armani, Yves Saint Laurent. About economical brands it should be
mention Garnier and Maybelline. Even if L`Oreal has over 500 brand, they apply
individual branding for every brand under umbrella.

The advantage of brand L`oreal as umbrella brand

1. Inexpensive Market Entry

An umbrella brand has an established reputation, meaning a company can add

new products to its line and draw on the benefits of all previous marketing efforts.

2. Efficient

Another benefit of umbrella branding is efficiency. Instead of running multiple

campaigns for different products, a company instead can focus its efforts on
promoting a single brand.

3. Rising Tide
4
 The success of one product within an umbrella brand can translate into public
goodwill for other products under the same brand.

4. Flexibility

Using umbrella branding doesn’t prevent you from using a variety of strategies

for your products.

About risks for umbrella brands it should be mention

A major risk of utilising umbrella branding is that it may result unsuccessful in

promoting new products if the company does not have a strong brand equity.
Secondly, the consumer’s experience with one umbrella branded product may affect
their perception of other products and services falling under the same corporate
umbrella as well as the brand itself. Consequently, if one umbrella branded product
does not satisfy the consumer's expectations, the other products sold under the same
brand are also likely to suffer.

A similar case happened for L`oreal when some photos with testing the
products on animals apperead on media. The managers from L`oreal were forced to
recognaise their testing on animals. In 1993, L'Oréal was faced with problems due to
animal rights activists who protested against the use of animal testing by the
company.
From that moment their sellers discrease with 15%, because more associations
about saving animals were promoting the ideas to not buy anymore products from
L`oreal presenting photos with rabbits and mices hurted. In the same time, L`oreal
lost the trust of costumers and the only way of regain the trust and the increase of
sellers was to gave up to testing on animals method.
Nowdays, L`oreal does not test anymore the new products on animals 1 and they
implemented very rigorous safety evaluation procedure of its products.

Customers
1
http://www.loreal.com/sustainability/l'or%C3%A9al-answers/the-question-of-animal-testing
5
 Usually, an umbrella brand try to involve all types of customers, that`s why
they introduce all the time new products. For example, L`oreal has products for all
types of customers, including even kids, but in the same time they try to individualize
every customer: “Beauty for all, beauty for each individual”.
Normally, every company has a segmentation of public with different criteria
like age, lifestyle, income. L`oreal has products for all ages, starting with kids and
finishing with the older. The same company has products for customers with all kind
of income. For example, for the customers with high income L`oreal has luxurious
products like perfume, clothes from Giorgio Armani, Lancome, Yves Saint Laurent.
On the other hand, people with modest income will buy economical products from
L`oreal like Garnier and Maybelline.
About lifestyle criteria, L`oreal involves people who are looking for natural
products without parabens, which are more expensive than the normal ones. For
example, customers who will search for natural products they can choose to buy from
The Body Shop, where can find these kind of cosmetics. On the other side, customers
who are not available to pay much money and they don’t want natural products will
choose Garnier.
L`Oreal has even medical products like dermatological products which are
healthier and better than the economical ones because the active ingredient from these
products is thermal water. Much more about this is that dermatological cosmetics are
recommended in medical cases like acne, irritation and burns marks. The brand which
have dermatological products under L`oreal umbrella are Vichy and La Roche Posay.

Communication

6
 In a constantly changing world, the communications teams at L’Oréal play a
crucial role. Their mission is to increase brand and company awareness and to
manage and protect our long-term reputation.
Nowadays a brand or company’s reputation accounts for 75% of its value, and
persuasion and influence are becoming ever-more central to customer purchasing
decisions. The challenge for brands and companies is to stand out from the crowd
with an effective communications strategy that keeps its audiences engaged.
The most interesting about L`Oreal umbrella is that all the brands have a
different type of communication with customers, even independent communication
brands. For example, luxurious brands have a communication which tend to seduce
the customers with the precious and the value of the products. Giorgio Armani has
like slogan “It speaks for you”, which shows that any perfume Armani can show the
elegance and precious of the brand, giving to the buyer the social status wanted.
On the other hand, Vichy and La Roche Posay try to promote the idea that
healthy of the skin is more important than any make-up “better life for sensitive skin”.
About the social networks that L`Oreal is using are all the trend social networks
like Facebook, Instagram, Youtube and Twitter. Every brand under L`Oreal umbrella
has his own social networks pages. It should be mentioned that every brand has his
own social media team which is very active on internet and answer or solving the asks
from customers.
In the same time, brands express their communication to the customers through
advertising, commercials, the colour they used for the stands on the shop, even the
models that they use in their commercials. The message from all the presented ways
represent the indirect message.

Design Label
7
 The term designer label refers to clothing and other personal accessory items
sold under an often prestigious marquee which is commonly named after a designer.
L`Oreal umbrella has some brands of designer like Giorgio Armani, Lancôme, Yves
Saint Laurent, Cacharel,, Diesel, Viktor & Rolf and Ralph Lauren. Usually, these
designers are producing clothes. Beside clothes they are having brand names products
like watches, shoes, perfume and jewelleries. All these brands are luxurious brands
and it represents the premium brands from L`Oreal umbrella. In the same time, these
brands are internationals.
Another interesting point about these luxurious brands is that they have a
longer cycle than the economical brands. For example, if one of the economical
brands from L`Oreal is not having good selling anymore, managers can take out from
use the brand, but about the luxurious brands, they have a long life. Giorgio Armani
Brand has 43 years of existence and its very successfully.
Why people buy expensive products from famous brands? There is a famous
theory that present a connection between the aspiration to social statuts and buying
expensive products from designer brands. In this way, people who want a higher
social statuts will tend to buy these kind of products for feeling accepted by the
people around like having a good position in the society. The same theory presents the
idea that people can become addicted by buying brand designer products just for
feeling accepted by the others. In the same time, this addiction can has like a
consequence depression or another health problems. An interesting point about this
problem is that many of the people who are buying this kind of products don`t trust in
themselves and they cannot accepted themselves.

Promoting sellers
L`Oreal is using different tehniques for improving their selling around the
world. One of the methods used by the company is the ``selling in groups`` and has an

8
efficient effect on the customers because they are encouraged to buy different
products. In this way, they can stop the declin of a particulary product.
The last research about the products it`s showing that the most selled products
are hair products like hair painting, shampoo, conditioner and hair mask. On this
market segment, the selling for these products are growing with 30% per year,
because the products can be find everywhere like supermarket, hypermarkets and
small shops. Because L`Oreal is a famous brand, they try to intensify the loyality
customers process and keeping the existing clients. In this way the company is using
like a selling method 1+ 1 or they are giving a voucher with a promotion of 50% for
the next shopping.
Another method is promoting at the place of selling. This implies a lot of
tehniques that try to attract the attention of the customers to a particulary place with
L`Oreal products. In the same time, the sellers from the shop try to give more
informations about the products to the customer or give to him/her some testers of the
products or even some magazine. The biggest disadvantage is that this kind of
promoting selling has big costs, because it implies the salaries of the sellers and the
cost of the testers and magazine. This method can attract the occasional and the
unloyal types of customers.
Other method used by L`Oreal management is organizing promotional
competitions, which can create interest for customers. The main aim of this method is
to increase the sellings throught direct stimulent. An example it can be a competition
like: “You should buy L`Oreal Casting Crème Gloss and send the code from the back
of the box to the number 34435 and you can win a set of dermatological cosmetics
from Vichy”.
The advantage of this method is that involves in a directly way the costumer in
the process of wining the competition. In the same time it can stimulate the ‘buy
again’ for the costumers. Through this method can maintain the loyal or the rutin
customer and it can attract even the occasional clients. The disadvantage is that some
9
clients can present interes on a specifical time( during the competition), after the
clients can buy other products.
There is another kind of competition used by L`Oreal with the dermatological
products and the premium products for the hair. This competition is looking like: ``
Cut the voucher from the magazine and send it to the address x and you can win a
Clearsonic the last model for a professional cleaning of your face.``
Merchandising is other famous method used by L`Oreal, especially with the
luxurious brands. This method is using a lot of tehniques which present in the best
conditions the products. Another tehniques is the strategic placement of the products
in the view of the customers. In the same time, L`Oreal is using the technique of put
the shampoo close to the conditioner from the same series. This thing can stimulate
costumer to feel the need that the effect of shampoo will be effective just if it will use
with the conditioner.

Travel Retail
The travel retail distribution channel is a strategic market for the development
and visibility of L`Oreal brands, and contributes to the quest of one billion new
consumers. Travel retail contributes to maximize the exposure of travellers from
around the world to L'Oréal brands, to increase customer loyalty but also to recruit
new customers.
An ideal location to come into contact with highly qualified consumers, travel
retail is for Kiehl's, for example, one of the markets that has most contributed to the
brand’s growth. Its counters give the ability to recruit new consumers: more than 20%
of travellers discover there the American accessible luxury brand's experience.
Explaining this new phenomenon: the democratisation of travelling. In the New
Markets, the middle class is keen to travel. This new influx of travellers transforms
the travel retail market, which is evolving from a business model focused exclusively
on luxury towards a more diversified offer.
10
 The creation of the Travel Retail Division, which gathers all divisions' brands,
demonstrates the group's confidence in the huge potential of this distribution channel.
Thanks to the notoriety and diversity of its brands portfolio, L'Oréal is well-positioned
to offer travellers from all over the world all the products they want, whatever their
beauty rituals or their purchasing power.
The travel retail's consumers are global shoppers: they are not only shopping
where they live but wherever they are, both in their local and destination markets and
when travelling.
To meet with the aspirations of these travellers, whether they be Brazilians, Chinese,
Russians or Middle Eastern, L'Oréal is developing a personalised approach, according to
languages.

Corporate Social Responsability

Since 2009, the international “Beauty for a Better Life” programme has been
helping socially and economically disadvantaged people reintegrate into society by
providing.help.

Another campaign of CSR is “Girls in Science” which helps the girls to

develop a career in sciences.

L`OREAL is offering scholarships for the students on the master degree.

What they have to do is to planning a marketing campaign for L`OREAL brand. The
projects that agree with the management can win the big prize.

11
Sources

1. www.loreal-finance.com/fr/
2. www.loreal.ro

12