Extended Business Project of LOREAL COMPANY
L’Oréal Company is a key player across the globe in the cosmetics industry. The Company was founded in 1909 by Eugene Schuler who was a very young and creative chemist. It is a global company operating in 140 countries and is characterized by 82,900 employees. Moreover, it has granted over 35000 patents and over 500 patents are effectively registered every other year. Its initials assignment was on the hair dyes that Eugene Himself formulated, manufactured as well as offered to hairdressers in Paris City. Its headquarters are in France and the principal business is to manufacture the cosmetics. Some of the products manufactured by the company include the hair color, make up, skin care as well as the perfume. Such clearly implies that the company purely dedicates itself in ensuring that beauty for both males and females is achieved. The company has been in the industry for over 10 decades. In the year 2016, the Women Wear’s Daily Magazine ranked it as number one in the list of world’s top cosmetics companies. This was a big milestone achieved by the company because it would proactively improve the company sales figures.
In the year 2015, the company’s annual returns indicated that it had the highest sales with US $29.94billion and was closely followed by Unilever which had US $21.66 billion. The other competitor was Procter and Gamble whose sales were double lesser than L’Oréal. L’Oréal had muscled its way to the top giants in the cosmetic industry because of the fact that it actually done more than the other companies in the industry. The following concentrate on the competitive hedge of L’Oréal alongside its SWOT analysis as well as the company’s marketing mix in a bid to examine their current position in the retail industry (Mohammad, 2012).
L’Oréal marketing team goes extra miles in ensuring that every loophole is sealed hence the competitors have zero chances of acquiring its market share. It ensures that the digital initiatives as well as the marketing efforts fully achieve the desired output. Moreover, close review of the initiatives is enhanced to ensure that all the objectives of the programs are attained.
L’Oréal is a well-established company manufacturing cosmetics across the globe. The company main competitors are Unilever, Procter and Gamble that are fully equipped with huge financial musles. Therefore, boreal has to ensure that its game is quite above the peer’s thereby ensuring win for its products. A slight fall in the services delivery clearly implies that the company would be out won by the competitors who are eager take a chunk of the company’s market share. The fact that the company plays in a big league ensure that the company is in position to meet all customers need without hesitation.
At the initial stages, Eugene crafted an organizational culture hence crafting research and innovations which are genes of L’Oréal. The period between 1909 and 1956 which the company’s initial stages was composed of constructing a model. Eugene employed his knowledge in chemist to craft new ideas that eventually produced fist hair dye which was just a blending of harmless chemicals. During those times, dye was regarded as an outstanding breakthrough. In addition, he supplied a variety of colors to the market whereby the most common utilized was henna and mineral salts to achieve a quite artificial look.
The company name was renamed boreal in 1925 hence promoting the consumers to adjust their lives very much. The period 1957 to 1983 the company was expanding across the globe which was prompted by the acquisitions. Despite its formations in 1909, the company financial performance was still below average hence need to boost its sales. The company had to make decisions in regard to merging with companies across the globe. The merging strategy was illustrated when the company acquired the other strategic brands and grounding for a spectacular growth that would see the birth of a group. Moreover, the emblematic products were forced to join the merger (Tutuko, 2017).
The company’s motto, “Savoir saisir ce qui commence” which implied that the organizations had a primary objective of seizing new opportunities clearly directed the company during the period of 1957 to 1983. The Lancome whose brand was a fantastic perfume, skincare as well as the makeup brand was acquired in 1964. At this stage L’Oréal was strategizing itself to build a luxury cosmetic empire. In 1965, L’Oréal purchased Garnier which successful facilitated it control a vas portfolio comprising the organic haircare products. There was another acquisition of Biotherm which strategically aided the company in their research efforts to their skin filed. In 1973 L’Oréal expanded its growth through acquiring Synthelabo that dealt in dermatological and dermopharmaceutical services (Tutuko, 2017). The company continued with its acquisition strategy as in 1976 it bought the mascara brand Ricils effectively joining the make up production segment. Moreover, it had effectively entered into an agreement with Nestle that accorded L’Oréal international development which enabled it penetrate to Asia through the markets in Japan. A research and development center who’s primarily concentrated on hair care as well as the skin care whose products were in with the japan taste and preferences.
The period 1984 to 2000 saw the L’Oréal company rapid growth hence making it among the best in the beauty industry. At this age the company had successfully acquired stake in the hair care, skin care among others, Therefore, the company was effectively seeking avenue in which it would become the best in the industry. At this point aggressive research and development was being undertaken to understand the customer needs and provide the services to the customers. The period 2001 to date clearly point that L’Oréal Company is embracing diversity in its global growth. At this point the company is very stable and contains very powerful portfolio of brands used both locally and globally. Moreover, L’Oréal has clearly enhanced its competitive advantage majorly thing ensuring that diversity in its global growth agenda was attained as envisioned. For the company to acquire full benefits of sustainable development there are corporate SoCal responsibilities activities that the company is squarely engaged. Such enables people to identify themselves with the brand hence improving its image. The company experienced another merger in 2006 of the body shop in 2006 that created L’Oréal a stiff divergent against the animals tests and encouraged the natural products (Tutuko, 2017).
The company strength clearly lies in the in the research and innovations. Loral has over 34 research and evaluations centers, 44 factories and 153 distributions centers across the globe. The growth of the company clearly it record the highest sales in the industry in comparison to its competitors Procter and Gamble, Unilever among others (Ramesh, & Mendes, 2015).
Competitors’ products Unilever Procter & Gamble
The market audit of L’Oréal Company
In a bid to properly understand the L’Oréal’s market situation and position, it is crucial to investigate the companies SWOT analysis.
|StrengthsThe company is the largest in the cosmetic and beauty industry. The company only focuses on the beauty products other companies usually have a product line on cosmetic and personal care.The company engages in continuous research and development. Customers have dynamic demands that require the company to fulfil hence through the research and development they understand their customers’ demands better as opposed to their peers who do not carry out the research and development. The company has a fantastic product as well as global brand portfolio. L’Oréal ensures that each and every brand it manufactures must focus on each of the core strength otherwise the competitors might hedge it out.The company has global widespread distribution of its products.||WeaknessThe company has numerous sub divisions hence making customer complaints and issues raised remain for a long duration before the solution is attained. The company’s profits margins are relatively lower. Such is attributed to the fact that it invests heavily in research and development hence increasing on operational expenses. The Hair care tend to be a de-growing segment because of the stiff competition. Garnier brand suffers from HUL and P& G as they offer better qualities such as sunsilk and Head and shoulders respectively that are relatively better quality (Santamaría et al., 2017).|
|Opportunities The company has a huge market potential for its product. The underdeveloped are creating a huge market for the company’s product hence the company should strive to acquire some markets share from the products offered. The demand for organic cosmetics is increasing hence since the company produces organic cosmetics it would leverage on the same.||ThreatsThe dynamic nature of the cosmetic industry tend to impact directly on the organizational sales. The organization has a sole purpose of keeping up with times that prove quite challenging task in the industry.The cash crunch because of the fact the organization has a numerous sub brands that must offer a share of the earnings across the many segments.|
Porter’s five forces analysis of L’Oréal
|Bargaining power of suppliers||Low||The success of Loreal cosmetic products has been achieved as it supplies highly demanded cosmetic products.|
|Bargaining power of consumers||High||The buyers of the cosmetic products have numerous as well as durable brands with prices on the market.|
|Competitive rivalry||High||The main competitors are Unilever, Procter and Gamble.|
|Potential entry of new competitors||low||The company has the highest sales and has global market share hence new entry not a big threat.|
|Threat of substitutes||Moderate||The cosmetics industry is very dynamic hence likely to experience substitutes of the products in the market.|
The marketing mix
The secret of success of Loreal’s marketing activities lies on its ability to maneuver thrugh the global market hence acquiring market share. Product diversification clearly assisted the company and is able to deliver according to customer’s specifications (Walz, et al., 2014).
The company has over a 10 decades in the cosmetic industry dealing with brands such as hair care, makeup, hairstyling anti-aging and skin care products.
The channels utilized by L’Oréal for distributions include the whole selling and retail trade across the 153 countries globally.
The company prices are accordance to the forces of demand and supply. However, in some instances, the products have premium prices and the customers are ready to pay for the despite the competition. It also depended on the geographical location and the product demand (Mohammad, 2012).
The aggressive advertising of the product in both print media and television is undertaken across globe.
Competitive advantages of L’Oréal
The company has a global product portfolio which portrays 19.9% of the global cosmetic market. The market has a market portfolio of the 32 global products. The fact that L’Oréal is represented across the seven continent in the universe, such clearly means that almost every person in the global sphere utilizes the L’Oréal product over a given period in time. It is quite clear that the company has hedged on its competitors in terms of the distribution of the product to the customers. The competitors including the Unilever and Procter and Gamble have a huge task to convince the potential clientele why they would need acquire their goods from them and not L’Oréal (Santamaría et al., 2017).
L’Oréal’s image is very well known and highly trusted among due to its quality brand that has remained for the longest time possible. L’Oréal produced are utilized in the high end salons which employ only the professional to offer services to the customers. Moreover, the company’s laboratories that have seen developments of the high end innovations within the company due to the aggressive development in the research as well as innovations. For instance, the first shampoo product without soap was developed by the L’Oréal Company. Other innovations include the first hair color that does not incorporate the ammonia or incorporating the artificial skin commonly referred to as the Episkin. The company has a slogan that says, “Because we’re worth it.” it makes the company staff motivated and work towards attaining the objectives of the organization. In most scenarios customers would like to consumer the organizational products based on the information provided on what the organizations currently offers in the market. In others words the customers would want to be associated with the company brand hence they utilize their products. Such a market niche implies that L’Oréal would actually enjoy such vital benefits despite the huge struggle by the company’s competitors to acquire it. In other cases, customers tend to are ignorant of the new products introduced in the market by the upcoming industries. They would like to stick to their products despite the prices charged and other benefits the companies provide. It is quite clear that L’Oréal developed strong and unique customer loyalty brand in the market. The competitors would actually strive to take a small market share but the brand itself clearly ensures that the customers stick to the organizational product (Walz, et al., 2014).
L’Oréal’s Research and development team on routine activities.
L’Oréal products constitute of very powerful design brands. Its products are designed to meet global needs of all the customers across the globe. They specialize in the make-up products, skin care, and hair care hence effectively taking advantage of all types of consumers. The organization ensures that every customer visiting their premises and stores in any given outlet in any country must get out with L’Oréal product. Unlike the competitors who are not able to match the standards of the organizations. Their products usually contain features of famous celebrities including Beyoncé, Jenniffer Lopez as well as Penelope Cruz in a bid to acquire customer’s attention worldwide. The company understands that the celebrities attract worldwide attention and their fans support is quite enormous, such implies that their customers might make purchase decisions simply by the fact the picture of their favorite celebrities are featured in the photos (Santamaría et al., 2017).
The company only focuses on the beauty products. The company competitors usually have a wide range of products with a product line of the cosmetics and personal care. L’Oréal is able to undertake research and develop innovations in the industry as it would only concentrate on the needs of the cosmetic and beauty product users only. The competitors would only follow what the company is doing in a bid to achieve their sales. Such a niche has seen L’Oréal company make huge sales as compared to its competitors (Ramesh, & Mendes, 2015).
To ensure the spur growth of the L’Oréal product that meet world global customers standards, the company should enhance its research and development team to fasten resolving the customers issues raised before they engage the competitors.
Mohammad, N. (2012). Assessing the feasibility of Unilever’s market potential in beauty salon business.
Ramesh, B., & Mendes, S. (2015). Corporate social responsibility: A study of multinational companies in India.
Santamaría Hernández, M. C., Betancourt Hurtado, M. C., & Corralo Llorente, E. (2017). Company Challenge Project: L’Oréal Brandstorm 2013.
Tournois, L. (2014). Too many products? Reaching the next billion customers of the beauty market. Journal of Business Strategy, 35(5), 3-13.
Tutuko, M. (2017). Analyzing Indonesian Consumer Perception towards German Hair Care Product.
Walz, M., Hingston, S., & Andéhn, M. (2014). The magic of ethical brands: Interpassivity and the thievish joy of delegated consumption. ephemera: theory & politics in organization, 14(1).
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