1

A PROJECT ON



IN THE SUBJECT

GLOBAL TRADE AND FINANCE

SUBMITTED BY

NAME:

ROLL NO.: DIVISION: A


UNDER THE GUIDANCE OF
PROF.
TO

UNIVERSITY OF MUMBAI
FOR
MASTER OF COMMERCE PROGRAMME
(SEMESTER - I)
YEAR: 2013-14

SVKMS
NARSEE MONJEE COLLEGE OF COMMERCE
&ECONOMICS
VILE PARLE (W), MUMBAI 400056.

2


EVALUATION CERTIFICATE


This is to certify that the undersigned have assessed and evaluated the project on
submitted by student of M.Com. Part - I (Semester I) for the
academic year 2013-14. This project is original to the best of our knowledge and
has been accepted for Internal Assessment.

Name & Signature of Internal Examiner

Name & Signature of External Examiner




PRINCIPAL
Shri Sunil B. Mantri
3

DECLARATION BY THE STUDENT


I, student of M.Com. (Part I) Roll No.: hereby declare that the project
titled for the subject GLOBAL TRADE AND FINANCE submitted by
me for Semester I of the academic year 2012-13, is based on actual work carried
out by me under the guidance and supervision of PROF. I further state that
this work is original and not submitted anywhere else for any examination.


Place:

Date:

Name & Signature of Student



4


ACKNOWLEDGEMENT



5



CONTENT

Sr. No. PARTICULARS

Page No.
CHAPTER I INTRODUCTION

1.1
1.2
1.3


CHAPTER II XXXXXXXXXX

2.1
2.2



CHAPTER III XXXXXXXXXX

3.1
3.2



CHAPTER IV CONCLUSION

4.1
4.2


APPENDIX

5.1
5.2
5.3 Bibliography

6

CHP 1: INTRODUCTION

The continuous liberalization of international trade and the elimination of barriers of
international business leads to a growing competition in the global market. Internationalization
and globalization are phenomena that concern all businesses regardless of their geographical
location, size or purchasing power.

The globalization of world economy results in a convergence of consumer needs, which
leads to an emergence of large homogeneous segments across the national markets. In this
context, we often meet with the term 'global consumer'. The concept of global marketing is
based on targeting the global consumer. A uniform marketing strategy and mass production
allow global companies to achieve economies of scale and therefore a competitive advantage
caused by reduction of costs.

Low costs, strong bargaining power, financial resources and managerial know-how are
the main factors that make global companies more successful than those focusing on local
brands and local consumers. One of the world's leading companies, whose international
marketing is based on a global approach, is the L'Oreal company.

The intention of this article is to analyse the global marketing strategy of the L'Oreal
professional products division and its four major brands, Matrix, Redken, L'Oreal
Professionnel and Krastase.
LOral the leader in the global cosmetics industry
L'Oreal is a global company which is present almost all over the world. Over a
hundred years of its existence, the original French cosmetics company called Socit Franaise
des Teintures Inoffensives pour Cheveux evolved into a multinational corporation, which operates
in 130 countries and has more than 68,000 employees. Its global products portfolio is
represented by 23 global brands which control 15% of the world market of cosmetics.

The market of cosmetics is evolving continuously and is influenced by new trends,
such as growing segment of male cosmetic products, emerging market of nutritional
supplements (nutricosmetics), increasing consumer's knowledge and his demand for a
natural origin of products, ecology and protection of the environment (biocosmetics).
The success of L'Oreal is caused in particular by a substantial investment in research and
development, an excellent exploitation of new trends and a subtle policy of acquisitions
by which L'Oreal strenghtens it's position in the strategic markets. Annualy, L'Oreal
expends about 3-4% of it's total turnover on research and development, which makes this
company number one in R&D in the world. The L'Oreal laboratories have developed
groundbreaking innovations such as the first shampoo without soap, first quick hair
decolorizer, first highlight enhancing shampoo, first hair color without ammonia or an
artificial human skin called Episkin.

An important partner of L'Oreal is the Nestl company, which is also the largest
shareholder of L'Oreal. Global partnership between the two companies resulted in the
foundation of Galderma Laboratories, which deal with dermatologic research and
Innov Laboratories undergoing development of nutricosmetics products.

7

L'Oreal is a cosmetic company, which makes some of the world's biggest beauty
products. L'Oreal's success story begins in 1907. It has been the market leader in the
cosmetics and toiletries market since 2001 (Euromonitor 2005). Their products are sold in
about one hundred and thirty countries worldwide. L'Oreal is divided into four categories -
consumer products, professional products, luxury products, active cosmetics. They mainly
focus on skin care, make-up, hair care and fragrance. L'Oreal includes some important brands
such as Lancme Paris, Garnier, Mabelline, Softsheen Carson, Matrix, and Biotherm. L'Oreal
invests heavily into its research and development which gives them competitive advantage
over its competitors.


Science, The Driver Of Innovation In Cosmetics:
For over a century, L'Oral has built its development on a conviction: only strong
research can create cosmetic products that are capable of generating real results. Its Research
& Innovation model, unique in the cosmetics industry, is organized around three major
entities:

Advanced Research, tasked with continuously enriching scientific knowledge about skin
and hair around the world, and discovering new active ingredients;

Applied Research, which develops formulation systems, which are then played out in the
different families of products;

Finally, Development, which provides the brands with innovative formulas adapted to
their identity and to consumer expectations around the world.

To be closer to consumers around the world, Research & Innovation strengthened its global
presence. It includes 19 research centers worldwide, organized into 6 poles. The European
pole integrates the global center for Advanced Research as well as the 3 global centers that
define, for each of the 3 lines of business - hair, skin care and make-up - a global strategy and
spearhead the portfolio of innovations. These global centers serve as the hub for a network
that includes 5 other regional poles in the United States, Japan, China, India and Brazil. The
mission of these poles? To adapt the global strategy to the specific features of their markets.
But they are also there to invent new products that may become global innovations. In
addition, 16 evaluation centers are tasked with observing and listening to local consumers.
Finally, some fifty scientific and technico-regulatory departments ensure compliance of the
products with local regulations.



8

Objective Of The Study



1. To analyze L'Oral as a company
2. To analyze L'Oral with reference to the various strategic management techniques
3. To discuss the approach to promoting diversities
4. To analyze the marketing strategies
5. To analyze the brand image of L'Oral


9

CHPT 2: RESEARCH METHODOLOGY







PRIMARY SECONDARY
QUESTIONNAIRE METHOD WEBSITES
NEWSPAPER ARTICLES



The primary data used in this project is questionnaire method. The purpose of this questionnaire
is to find out if LOreal has a good brand image and how cosmetic products should be marketed.
The questions are prepared for the consumers to know their views on the LOreal products.

The secondary data is found from newspaper articles of times of india, business today and many
more. Other information has been derived from many websites such as www.loreal.com,
www.loreal-paris.co.uk, www.lorealprofessionnel.com, Wikipedia, etc.

10


CHP 3: COMPANY PROFILE

The LOral Group is the world's largest cosmetics and beauty company. With its registered
office in Paris and head office in the Paris suburb of Clichy, Hauts-de-Seine, France, it has
developed activities in the field of cosmetics. For more than a century, we have devoted our
energy and our competencies solely to one business: beauty. L'Oral has chosen to offer their
expertise in the service of women and men worldwide, meeting the infinite diversity of their
beauty desires. L'Oral is committed to fulfilling this mission ethically and responsibly.

History:
In 1907, Eugne Schueller, a young French chemist, developed a hair dye formula called
Aurale. Schueller formulated and manufactured his own products, which he then sold to
Parisian hairdressers.
On 31 July 1919, Schueller registered his company, the Socit Franaise de Teintures
Inoffensives pour Cheveux. The guiding principles of the company, which eventually
became LOral, were research and innovation in the field of beauty.
In 1920, the company employed three chemists. By 1950, the teams were 100 strong; that
number reached 1,000 by 1984 and is nearly 2,000 today. LOral got its start in the hair-
color business, but the company soon branched out into other cleansing and beauty
products. LOral currently markets over 500 brands and many thousands of individual
products in all sectors of the beauty business: hair colour, permanents, hair styling, body
and skin care, cleansers, makeup and fragrances. The company's products are found in a
wide variety of distribution channels, from hair salons and perfumeries to hyper - and
supermarkets, health/beauty outlets, pharmacies and direct mail.
From 1988 to 1989, LOral controlled the film company Paravision, whose properties
included the Filmation and De Laurentiis libraries. StudioCanal acquired the Paravision
properties in 1994.
Later, in 1993, LOral was faced with problems due to animal rights activists who
constantly protested about the use of animal testing by the company.
LOral purchased Synthlabo in 1973 to pursue its ambitions in the pharmaceutical field.
Synthlabo merged with Sanofi in 1999 to become Sanofi-Synthlabo. Sanofi-Synthlabo
merged with Aventis in 2004 to become Sanofi-Aventis.
On 17 March 2006, L'Oral purchased cosmetics company The Body Shop for 562
million.
L'Oral's famous advertising slogan is "Because I'm worth it". In the mid 2000s, this
was replaced by "Because you're worth it".
Protest group Naturewatch states that L'Oral continues to test new ingredients on
animals. The company states that no animal testing for finished products has taken place
since 1989 and that L'Oreal has invested significantly in alternative methods for chemical
safety testing, though they implicitly acknowledge that they continue to perform animal
testing of ingredients.
In November 2012, L'Oral inaugurated the largest factory in the Jababeka Industrial
Park, Cikarang, Indonesia, with a total investment of US$100 million.
[11]
The production
will be absorbed 25 percent by domestic market and the rest will be exported. In 2010
significant growth occurred at Indonesia with 61 percent increase of unit sales or 28
percent of net sales.
11


L'Oral Mission:

For more than a century, LOral has devoted itself solely to one business: beauty. It is a
business rich in meaning, as it enables all individuals to express their personalities, gain
self-confidence and open up to others.
Beauty is a language.

LOral has set itself the mission of offering all women and men worldwide the best of
cosmetics innovation in terms of quality, efficacy and safety. It pursues this goal by
meeting the infinite diversity of beauty needs and desires all over the world.
Beauty is universal.

Since its creation by a researcher, the group has been pushing back the frontiers of
knowledge. Its unique Research arm enables it to continually explore new territories and
invent the products of the future, while drawing inspiration from beauty rituals the world
over.
Beauty is a science.

Providing access to products that enhance well-being, mobilising its innovative strength to
preserve the beauty of the planet and supporting local communities. These are exacting
challenges, which are a source of inspiration and creativity for LOral.
Beauty is a commitment.

By drawing on the diversity of its teams, and the richness and the complementarity of its
brand portfolio, LOral has made the universalisation of beauty its project for the years to
come.
LOral, offering beauty for all.
L'Oral Ambition:

Beauty for All, Beauty for Each. At LOral, we are convinced that no single and
unique model of beauty exists, but an infinite diversity, changing with the times, through
cultures, histories, individuals. To draw ever greater numbers of women and men to use
our products, is to go forward to meet extremely diverse populations with a vision of the
universalization of beauty.

Observe Local customs of Beauty. At the heart of this project, our Research and
Innovation reinvents itself to create cosmetic products adapted to the very great diversity
in the world. In every part of the world, we have created Research platforms, veritable
centers of expertise in the service of a personalized beauty.

Providing Access to Cosmetic Products. In a market in full mutation, every year

LOral makes new advances toward making the best cosmetic products available to all.
With a portfolio of 27 international brands and an organization planned according to
distribution circuits, we have the ambition to meet the needs of every consumer according
to his or her habits and lifestyle.

To Accelerate the Localization of their Products. To win over another one billion
consumers around the world is an ambitious project that motivates all our teams. An
adventure that is economic but also human, it calls for a rapid increase in our numbers
and an accelerated transformation of the enterprise in all its aspects, research, production,
marketing, teams in sales, human resources, administration.
12


CHP 4: CONCEPTUAL FRAMEWORK
4.1 PEST Analysis for L'Oreal
A) Political Factors
The political challenge is that L'Oreal should conform to all the different government leadership
styles in various countries it operates within. L'Oreal faced a decline in the dermatology branch
led by its Galderma brand due to new legislations governing drugs (Euromonitor, 2005). The EU
law affects L'Oreal. L'Oreal is restricted in their use of certain kinds of chemicals, such as
Phthalates which is carcinogenic (The Rules Governing Cosmetic Products in the European
Union). L'Oreal is obligated to produce safe products that do not contain any harmful substances.
Also, legislation for advertising is also affecting L'Oreal. L'Oreal has to follow the rules set by
Advertising Standards Authority. For example, advertisements cannot be misleading that over-
exaggerating the functions of a product (The Control of Misleading Advertisements Regulations
1988).
B) Economic Factors
L'Oreal should adapt to all the different economic environments and problems in all countries it
operates in. For example in 2004, L'Oreal was affected by the continued weakness of the dollar
and other currencies (L'Oreal Annual Report, 2004). Due to the factors such as rates of economic
growth, there was a sharp and unforeseeable drop in consumer spending in Europe which
affected L'Oreal's result in 2004 (L'Oreal Annual Report, 2004). Inflation in UK due to rise in oil
prices could mean that people have less disposable income to spend on L'Oreal's luxury products.
L'Oreal must adapt to the fluctuating exchange rates as it operates on a global scale. Market
structure affects a company's strategy. L'Oreal is involved in a monopolistic market, where there
are many competitors producing similar products. (Brassington & Pettitt, 2004). Therefore,
L'Oreal is affected greatly by its competitors on pricing, promotion, place and products. L'Oreal
has to differentiate itself from competitors in terms of the 4Ps in order to attract customers. E.g.
Vichy offers product that protects hair against sun-light, this is an innovative product which
helps L'Oreal differentiates itself from the keen competition.
C) Socio-cultural factors
L'Oreal have to be in line with the changing consumer life styles. L'Oreal has to be aware of all
its customer tastes, beliefs and awareness issues in each of the markets it operates in so that their
advertising will be sensitive to these differences. L'Oreal has to take into account the religious
and cultural factors when advertising in different countries. L'Oreal should focus more on the
changing customer preferences as many customers prefer more organic and natural products. For
example L'Oreal was forced to withdraw its advertising campaigns in the UK for its cellulite
treatment Perfect Slim, because it had a physiological effect rather than a cosmetic (Soaps,
Perfumery and Cosmetics, 2005). L'Oreal is also involved in a number of charitable and socially
aware initiatives around the issues of health and wellbeing, for example L'Oreal Professional
Products signed an agreement with UNESCO with regard to a joint HIV/AIDS education
programme (Euromonitor, 2005).
13


D) Technological factors
L'Oreal uses technology to develop new products and also invests heavily on its research and
development (Euromonitor, 2005). It uses e-commerce as a means to distribute products, such as
Lancme which provides consumers with the benefit of online shopping (Euromonitor, 2005).


4.2 The Marketing Mix for the Luxury sector of LOral
A) Product
The luxury product division of L'Oreal develops prestige brands offering skin care, fragrances,
make up and hair care. The various brands it offers are Lancme, Biotherm, Helena Rubinstein,
Giorgio Armani, Ralph Lauren, Cacharel, Kiehl and Shu Uemura. L'Oreal invests heavily into its
research and development, therefore the above brands are known for their innovation,
performance and quality (www.loreal.com). Every product benefits from the ground-breaking
work of the Group's scientific research teams based in France, the USA and Japan
(www.loreal.com). Packaging has become a key development area for L'Oreal as part of its
research and development function, for example, Ralph Cool fragrance from Ralph Lauren uses
bright pink packaging to attract the 15-25 year target market (Euromonitor, 2005). Customers buy
luxury products as it is high quality and offers good service.
B) Price
The luxury products are in the premium priced category. In order to inspire their customers that
their products are the highest quality, they ensure to use the highest quality raw materials and
offer the best service. The luxury products are high priced and are similar to its competitors.
Although the luxury products sector has not been generating good profits, its brands such as
Biotherm and Lancme have had good sales.
C) Place
These products are distributed through large department stores and travel retail outlets, their main
aim is to add value and with great prominence on customer service (Euromonitor, 2005). They
are placed more exclusively in order to make the customers feel they are differentiating
themselves from mass retailing products. L'Oreal also uses e-commerce to distribute its products
such as Lancme which presents the customers with the benefit of online shopping (Euromonitor,
2005).
D) Promotion
These products are promoted through advertising, public relations and sponsorships. L'Oreal
invests heavily in marketing. Brands such as Biotherm, Lancme, Ralph Lauren advertises
through magazines such as Glamour, Marie Claire etc where testers of skin cream and perfumes
are attached free of charge. They also advertise through television. In large department stores,
luxury products such as Lancme's Aquafusion - free testers are given to the customers to
14

promote their products. For example, for Lancome's PR campaign, Lancme taxis were used to
give celebrities free lifts to the after show party of the Colour awards in London.
E) People
L'Oreal recruits talented individuals with a difference (www.loreal.com). They provide
professional training for their staffs. In the large department stores where L'Oreal markets the
luxury products, high qualified staffs are employed to give professional advices to customers,
aiming at building rapport between service provider and customers and maintaining customer
loyalty.
F) Process
The well trained staff offer one to one services, for example care to the consumer's individual
needs. Further, the ability to purchase L'Oreal's luxury products via internet reduces queues at
physical locations.

G) Physical Evidence
This is with regard to ambience of the retail stores and boutiques where L'Oreal sells their luxury
products. For example, Lancme boutiques are well designed with easy access to all the products
and well qualified staff at every counter to help with any customer queries and also to provide
professional advice. Also their boutiques are decorated with bright and eye-catching posters of
the various products ranges. The staffs are smartly dressed and have a friendly manner and are
enthusiastic, polite and helpful.


4.3 SWOT analysis for L'Oreal
A) Strengths
High market profile strategies:
One of the strengths of the luxury category is that they have high profile marketing
strategies which help them to reach the targeted audience (Euromonitor, 2005).
E- Commerce:
Investment into e- commerce has benefited its luxury product such as Lancme e-shop
and Le Club des Createurs de Beaute (Euro monitor, 2005).
Growth of premium brands:
Despite economic uncertainty in many markets, the growth of luxury products is stable
(Euromonitor, 2005).
B) Weaknesses
Distribution:
One of the weaknesses of the luxury product is that they sell through smaller and more
exclusive channel such as large departmental stores as compared to the other sector
(Euromonitor, 2005).
Target market:
15

Another drawback of the luxury division is that they mainly produce products targeting
the female sector.
Dependant on Western Europe:
According to L'Oreal's annual report its sales is too dependent
on Western Europe and North America with weak market share in dynamic and emerging
market.
Sales:
L'Oreal's luxury products division had good sales in skin care, make-up, but the sales of
perfumes were not satisfactory as compared to Clarins (Euromonitor, 2005)

C) Opportunities
Successful launch of new products:
L'Oreal has made several acquisitions in 2004, such as Japanese brand Shu Uemura and
China's Mininurse and Yue Sai. This provide an opportunity to gain access into Asia
Pacific as well as development of products produced specifically for the South East Asian
Skin (Euromonitor, 2005)
Expansion into emerging markets:
L'Oreal has been expanding its operations into Eastern Europe, Asia pacific, Africa, China
and India. For example the acquisition of Soft Sheen and Carson which is mainly targets
all ethnic groups, particularly of non white skin and has been successful in US and South
African markets. (Euromonitor, 2005)
Market Segmentation:
L'Oreal targets new groups such men as it has launched its new men grooming products.
(Euromonitor, 2005)
Market for mature woman:
L'Oreal continues to benefit from the world's changing demographic as the number of
mature woman grows with nourishers/anti-agers products becoming increasingly popular
(Euromonitor, 2005)
Urbanisation:
L'Oreal benefits from the growing global urbanisation and drives demands for product in
the mass market for products such as Garnier (Euromonitor, 2005).
Men's grooming products:
L'Oreal has launched various products specially targeting the men category. They have
launched products such as Redken for men and L'Oreal's Paris men expert to compete
with Procter and Gamble's merger with Gillette.
D) Threats
Chinese ban on direct sale:
Chinese market is considered to be one of the biggest markets for L'Oreal in the future,
but the ban imposed by the government on direct sale due to the scandals from "pyramid
selling" lost a lot of market share. Even though the ban has been removed the authorities
and the government still discourages direct sale. (Datamonitor,
2005)
Harmful ingredients in cosmetics:
L'Oreal uses many harmful ingredients in their products. For example alpha-hydroxyl acid
which is used in different moistures and tones can cause skin cancer (Data monitor, 2005).
Due to the fact that the L'Oreal brand is very technological driven and consumers being
16

aware of the health risks, more people prefer products containing more natural and
organic ingredients (Brand strategy, 2005)
Competition:
Procter and Gamble: Procter and gamble's merger with Gillette is one of the threats to its
global share due to the fact that L'Oreal does not have an involvement in oral hygiene and
is trying to increase its presence in men's grooming products (Euro monitor, 2005).
Nivea Threatens L'Oreal:
Global competitor brands like Nivea threatens L'Oreal's skin care products as L'Oreal
needs to emphasis more on its advertising campaigns in order to create awareness and
maintain the interest of its consumers over the time.
Government regulations:
L'Oreal is at risk of bending government regulations regarding packaging of its products.
Failure to abide these regulations could have serious consequence for its growth in the
future (Euromonitor, 2005).

4.4 Boston Matrix of L'Oreal and its competitors

A) Star position

One of the top competitors of L'Oreal is Procter and Gamble. In the BCG matrix it is placed in
the "star position" because Procter and Gamble is one of the global leaders in the cosmetic
industry (www.pg.com). P&G's merger with Gillette shakes up the cosmetic and the toiletries
market. They launched several men's grooming products.The company believes in branded
products and services of superior quality and value that improves the lives of the world's
consumers (www.pg.com). As a result they built strong leadership sales, profits and value
creation, allowing the company to expand properly (www.pg.com). Thus we place this
competitor of L'Oreal in this position because it shows high industry growth rate and high relative
market share.

B) Cash cow

L'Oreal believes in gaining in depth understanding of the hair and skin care products through its
research and development divison. The reasons for its boom in the cosmetic and toiletries
industry are its wide portfolio. Positive outlook for the cosmetics and personal care products
market helps L'Oreal to aggravate their sales (L'Oreal annual Report). Its key strengths in the
global cosmetic market are its drive to use technology to develop new products and the resources
given to its research and development (www.loreal.com). The launch of its mass market brands
including Garnier, whose Fructis hair care range has enjoyed extensive geographic growth during
the last financial year. Its anti-wrinkle products, eye contour creams and moisturizers with sun
protection were very successful and helped the company to build a strong position in the cosmetic
industry. Thus we can conclude that L'Oreal is placed in the "cash cow" position in the BCG
matrix.




17

C) Question mark:

Avon cosmetics as a competitor to L'Oreal is placed in the ?question mark' position in the BCG
matrix because the company shows low market shares and they do not generate much cash. As a
result there is large net cash consumption (Porter, 1998). One of the reasons for the lack of
market share and the growth of the company is that, they suffer from a weak inconsistent image
and they have less brand recognition as compared to other multinational brands (Euromonitor).

4.5 Competition and price positioning

The most important competitors of LOreal on the professional products market in the
Czech Republic are Wella, Schwarzkopf, Londa and Indola brands. Worldwide, it is
especially Schwarzkopf (Henkel) and Wella (Procter&Gamble).

The brands of L'Oreal have the highest price and positioning on the market.
Krastase is positioned as an exclusive brand for the most demanding customers. The second
most expensive brand is Redken. Third place is represented by the L'Oreal Professionnel
brand. Fourth place belongs to Biolage product line, which, although a part of the portfolio of
Matrix, has a different positioning than other products of this umbrella brand. The fifth
place is represented by Matrix, an affordable brand for most hairdressing salons.

4.6 International brand policy

Four major umbrella brands fall under the professional product division:
L'Oreal Professionnel, a leading premium brand from France, the vehicle of new
technological breakthroughs in the field of hair colouring,
Krastase, an exclusive premium brand, the flagship of L'Oreal in the field of hair
care. Its image is based on innovation, individualized care and an original three-phase
process of application,
Matrix, an affordable brand designed for the typical consumer, with a strong
position in the United States,
Redken, a premium brand whose image is based upon the country of origin,
United States, and New York.
4.6.1 Matrix

The Matrix brand was founded 1980 by an American hairdresser Arnie Miller. Miller
wanted to offer hairdressing salons a clear range of products that would allow them to grow
further and, at the same time, express their own talent and creativity. Within a few years, Matrix
became the number one brand on the professional hair cosmetics market in the United States
and Canada. The brand was overtaken in 1992 by a pharmaceutical company, Bristol-Myers
Squibb, from which it was bought by L'Oreal in 2000.
The brand's vision is: "The Matrix allows all professional hairdressers to turn a passion
for beauty into personal success". The mission states that Matrix is "a leading and iconic
brand of professional hair care with a commitment to partnership, innovation and support
activities". The fundamental principles of Matrix are simplicity and fun, reliability, trust,
and availability only in hairdressing salons.
18

Matrix products are designed especially for small and medium-sized hairdressing
salons that desire to use affordable professional products. An advantage of the brand is a
strong business background and leading position in the U.S., which is a proof of quality and
reliability of products.
A) Product
The number of product lines under the Matrix umbrella brand is quite high. Product
lines are designed in a manner that their application is simple and safe, but comprehensive and
with immediate results. Matrix product lines include hair dyes as well as hair care
products (shampoos, conditioners) and styling products. The most famous brand products are
Socolor.beauty, Amplify, Sleek.look, Curl Life, and Matrix Men. Slightly apart from these
product lines stands Biolage, a brand of natural hair care products, which has a different
positioning and figures among the more expensive product line. The packaging is colourful
and attractive and is in conformity with the brand's principles - fun and professionalism. The
packaging of Biolage products highlights their natural composition.

B) Price
Lower cost is one of the characteristics of Matrix products. It is the least expensive
brand of L'Oreal professional products division. Therefore, Matrix can achieve a wide
distribution. The price is influenced by the price of the competitors (in particular
Schwarzkopf, Wella and Londa). The quality and price of Matrix products is higher than
those of italian brands or Schwarzkopf, but lower than Wella or other brands of L'Oreal.

C) Distribution
The distribution of Matrix is based on its original objective, which is the availability of
products for salons of all sizes and purchasing power. Matrix products are sold through well-
established hairdressing wholesalers. Matrix offers its distributors a business model that
allows them to be involved and participate in sales. The role of the distributor lies not only
in storage, shipment and sale of Matrix products, but also in providing information, organizing
training events and gaining new clients through its network of sales representatives, to whom
Matrix pays 75-85% of salaries. Matrix products are intended exclusively for hairdresser.
Selling products to final consumers is prohibited, even under the threat of financial sanctions.
For this reason, there is no official online sales channel.


D) Communication
The communication is based on the typical red color which attracts attention.
As Matrix products are available in hairdressing salons only, communication takes
primarily the form of push strategy and is targeted at hairdressers. Marginally, it is
focused on the end-consumers, particularly through PR and advertising campaings.
Advertising takes the form of advertisements in fashion magazines and journals for
professional stylists, such as Us Weekly or InStyle. PR is built up in life styles magazines as
Elle and Cosmopolitan. Matrix emphasizes its leading position on the U.S. market, as well as
overall company values such as protection of the environment or diversity. The sales
promotion is focused on merchadising, i.e. direct presentation of goods in premises of
wholesales, and on providing samples to hairdressers. Matrix also organizes training
programs and events for hairdressers. The biggest event of this kind is the Matrix Global
Academy in New York, designed for hairdressers from around the world. Personal selling
through sales representatives plays an irreplaceable role in the communications mix of
Matrix. The task of the sales representatives is to present and explain the advantages of Matrix
19

products. The website of Matrix is aimed at professional hairdressers. Among others, the
pages contain offers of training courses and advices about the application of products to
various types of hair, about hair colouring and styling, etc. The pages also contain a set of
professional hair care and colour videos, Matrix CRAFT TV. Matrix is established in social
networks like Facebook, Twitter, YouTube and Flickr.


4.6.2 Redken

Redken is a premium and relatively expensive brand of the L'Oreal professional
products division. The brand was founded in 1960 by a model Paula Kent and her
hairdresser Jheri Redding. The brand name comes from the initials of the two family names
(Redding and Kent). Redken builds its image on a scientific approach to beauty and its
slogan is Beauty through science. Redken gradually gained a strong position on the U.S.
market and later on in other countries. In 1993 it was bought by L'Oreal. The company
has thus extended the portfolio of its professional products division and expanded its scope
to the strategic U.S. market. After an earthquake in 1994, the seat of Redken has moved
from Los Angeles to its original location on Fifth Avenue in New York, which is
sometimes presented as a part of the brand's name (Redken 5th Avenue NYC). The
fundamental values of Redken are fashion, science and inspiration. Its mission is to help
hairdressers to learn better, earn better and live better.
A) Product
Redken offers a comprehensive portfolio of hair care products. It contains hair
colouring products such as Color Fusion or Shades EQ and decolourizers Up to 7 and Lift
5/15. Hair care products line covers the needs of all types of hair. "Prescribing" by the hair
stylist is based on a diagnosis of hair. For instance, All Soft products are designed for
dry/brittle hair, Color Extend is designed for coloured hair, Extreme for hair spoiled due to
excessive lightening, waving or mechanical damage as a result of brushing. Intensive care
treatment Redken Chemistry is a specific feature and competitive advantage of the brand. Redken
responds to the growing segment of men's cosmetics and offers a line of professional hair care
products for men called Redken For Men. The portfolio of Redken also contains styling products
such as Rewind 06, Quick Dry 18, 10 and Gutsy Rough Paste 12 (world's best-selling product
of Redken). Redken products are built on three fundamental principles: acidic pH, protein
and water. They have a high-tech positioning. Hair care products are delivered in coloured
packages with a typical shape. Colour coding allows an easier understanding and recognition of
product lines. Packaging design of styling products (hair sprays, gels, etc.) is silver. Silver
color should give these products an industrial tinge, the large numbers on the packaging shall
reflect the energy and rhythm of New York and also indicate the degree of fixation that each
product provides. Packaging of Redken for Men has a different shape and is decorated in dark
gray, while individual products are distinguished by particular color headline. The packaging
therefore primarily points out that it is a product for men.
B) Price
Redken is a high-tech brand and therefore has a premium positioning and the prices are
relatively high. Technologically advanced products have a higher price, while basic hair care
products (shampoos, conditioners) are more affordable. Pricing strategy is not completely
standardized. For example, in the Czech Republic, Redken has been implementing the price
skimming strategy, but along with the development of Internet and growing consumer
awareness, it is not maintainable in long term. For this reason, Redken has - particularly within
the European Union - a problem of parallel imports. For example, the price of some products in
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Germany, Austria and especially in the U.S., is lower than in the Czech Republic, resulting in
the so-called gray import of these products to the Czech Republic.

C) Distribution
Redken products are intended solely for hairdressing salons. Its worldwide
distribution is based on sales representatives, which is the same case as for LOreal
Professionnel and Krastase brands. In some countries, such as the Czech Republic,
however, Redken does not use agents. The reason is that L'Oreal took over Redken from a
local distributor, which operated on a different principle. There is no official online sales of
Redken products. Distribution of Redken is presented as a rather selective one. In addition
to hairdressing salons which are using multiple brands, there are also special salons using
only Redken hair care products, which bear the name "5th Avenue". The number of these
salons is not high. There is also a special kind of hairdressing salons which are called Redken
Loft and cooperate with Redken at the highest possible level. Loft is a modern concept of salon
that fully integrates the core values of Redken. Redken Lofts occur worldwide.

D) Communication
Redken is trying to build a worldwide image of an exceptional and innovative
urban brand which creates new trends and connects top fashion with business. The characteristic
color of Redken is black combined with white and various tones of gray. Redkens
communication campaign is strictly global. In case of hairdressing salons, Redken uses
the slogan "Get Inspired. Be part of it". This slogan is not translated to national languages as
the translation could be rather detrimental. In case of end-customers, Redken uses the slogan
"Get Inspired. See your stylist". Contrarily, this phrase is translated into national languages.
The brand builds its image on the U.S. origin and the affiliation to L'Oreal is not mentioned. A
strength of Redken on the American market is a close cooperation with fashion magazines
(advertising and creation of new collections). Redken also actively participates in New York
Fashion Week. The communication is especially targeted at hairdressers, but its purpose is
also to maintain brand awareness. PR of Redken is built through sponsorship of some
fashion events and cooperation with world leading designers in fashion shows and
presentations of new collections. Sales promotion of Redken includes a sophisticated
merchandising. Redken offers hairdressers a modern promotional equipment, such as special
stands, banners and lighting systems. Much attention is devoted to the development
of selling skills of hairdressers. Redken offers a range of specialized workshops and e-
learning sessions. Hairdressers are given advices about how to distribute promotional materials
and products in the hairdressing salon, so that their profits are maximized. Other
promotional materials are business cards, postcards, posters, graphic templates of gift
vouchers, loyalty cards and e-mails. Redkens global website is of high quality and contains
useful information for both end-users and for hairdressers and stylists. Redken achieves
excellent results in terms of web visibility through cooperation with the world's largest search
engines.

4.6.3 L'Oral Professionnel

Along with L'Oreal Paris, L'Oreal Professionnel is one out of the two global
brands of L'Oreal which contain the name of the company it their name. Unlike Redken, L'Oreal
Professionnel emphasizes the name of parent company and of the home country. LOreal
Professionnel is a strategic and dominant brand of the professional products division,
dedicated to large salons, a vehicle of technological progress and innovation is the field of hair
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colouring. L'Oreal Professionnel builds its image on Paris and everything that it symbolizes
- haute couture, emergence of fashion trends, French elegance and style. The brand is based on
a continuous collaboration between scientists from the laboratories of L'Oreal, who have
expert knowledge, and hairdressers, who are familiar with art, creativity and hair
techniques. L'Oreal Professionnel combines technology with fashion. The basic principles of
the brand L'Oreal Professionnel are "creativity, innovation and partnership."

A) Product
L'Oreal Professionnel products range is very wide and includes all types of hair
care and colouring products. L'Oreal Professionnel is trying to completely cover
the target segment. As mentioned before, most recent technological innovations in the
field of hair colouring are first introduced to the products of LOreal Professionnel brand. The
best-known hair colouring products are Majirel, Richesse, Luocolor and Color Supreme.
Among hair styling products, we can mention Tecni.art. Hair care products portfolio
includes such brands as X-Tense for smooth long hair or Dulcie for long-term shape and
volume.

B) Price
L'Oreal Professionnel has a premium brand positioning and its price is above the
market average. In comparison with Kerastase and Redken, it is an affordable brand. Like
Redken, L'Oreal Professionnel is confronted with the problems of parallel imports in
the Czech republic because of price differentiation on different national markets.

C) Distribution
Unlike Matrix, L'Oreal Professionnel does not use any system of distributors.
However, sales representatives play a key role in its distribution. They are the
intermediaries between salons and LOreal Professionnel marketing departments. It
is necessary to train the representatives and motivate them to be able to deal with the
owner of salons in the same spirit. The information flow continues to individual
hairdressers who communicate with end-consumers. Consumers can then transmit the
information to each other via the aforementioned word-of-mouth. Like other brands,
L'Oreal Professionnel focuses on salons that sell only products of L'Oreal Professionnel. In
the case of Redken, these salons were labeled with "5th Avenue", in the case of L'Oreal
Professionnel, they carry the name "Expert".

D) Communication
L'Oreal Professionnel is seeking to gradually build its long-term PR and to occur near
fashion centers. Twice a year, LOreal Professionnel introduces Color Collections, a
collection of fashionable hairstyles and colors, which presents a combination of global
fashion trends and technological knowledge. L'Oreal Professionnel also organizes
L'Oreal Color Trophy, a public hairdressing contest of talents. New trends of L'Oreal
Professionnel are presented in French Inspiration Show, a fashion show which is broadcasted
live on the Internet. The Internet is becoming an increasingly important way of brand
communication with hairdressers and end-consumers. L'Oreal Professionnel web pages have a
uniform global design and are focused primarily on image building. For this reason, do
not contain too many details. All L'Oreal brands are also trying to exploit the phenomenon of
social networks such as Facebook, Twitter and Youtube. The strongest brand in this regard is
Redken, which is due to socio-cultural reasons which arise from its American origin.
Maintaining brand awareness is also done through the press. Articles about L'Oreal
Professionnel appear in magazines like Elle, Vogue, Harpers Bazaar, Dolce Vita, etc.
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4.6.4 .Krastase

Kerastase was founded in 1964 by the CEO of L'Oreal, Franois Dalle. The brand's
name comes from a combination of the words Keratine (keratin protein) and Extase (Ecstasy).
Kerastase has always been presented as a highly technologically advanced brand that brings hair
perfection and splendour. Core values of the brand are top technology, hairdressing expertise
and individual care of customers. Kerastase reflects the latest research of L'Oreal laboratories in
the field of hair care. An excellent expertise of hairdressers who work with Kerastase
products is guaranteed by severe criteria of selection. Kerastase hair care is based on a fully
individual approach to every customer. Kerastase products have an excellent reputation
and belong to the category of luxury products.
A) Product
Product policy of Kerastase is based upon the fact that salons do not only sell products
themselves, but especially the rituals associated with their application. The application
process consists of diagnosis, determination of the most appropriate care, and application
through a hair massage. This is an important distinguishing factor and a strength of
Kerastase. Kerastase products fall uniquely under the field of hair care. Throughout the
world, a partnership with L'Oreal Professionnel is maintained. LOreal Professionnel
provides Kerastase salons hair coloring and other services. Krastase brand includes eight
core product lines. It is Nutritive for dry and sensitized hair, Reflection for protection and
long lasting shine, Specifique for special scalp problems, Soleil for hair exposed to sunlight,
Noctogenist for tired hair, Nutrients, a supplemental nutrition of hair, Rsistance for
weakened or damaged hair and Biotic for protection of natural hair.
B) Price
Krastase is a luxury brand with a very high positioning, so the price of products is very
high. It is the most expensive brand of the professional products division, and one of the most
expensive brands at all. For instance, on the Czech market there is only one more expensive brand
of hair care, Alterna. High cost is currently one of the possible weaknesses and competitive
disadvantages of the brand, as cheaper brands represent a potential threat.
C) Distribution
The distribution of Krastase products is highly selective. Krastase can be
distributed only in salons that use L'Oral Professionnel hair-colouring products (i.e. in the
salons "Expert"). Education and training of hairdressers is a crucial aspect, since the hair care
is prescribed to customers completely individually. A bad hairdresser could easily damage
the reputation the brand, therefore the selection criteria are very strict. Krastase also uses a
network of sales representatives to communicate with the management of hairdressing
salons. The highest level of cooperation with hairdressing salons is represented by the
concept of "Krastase Institute" salons. These are very luxury salons which embody
Krastase core values and positioning.
D) Communication
Krastase has a very good image, which is one of the strengths of the brand. As in
the case of other brands, the word-of-mouth plays a crucial role. Therefore, Krastase focuses
on merchandising techniques at the point of sale. It provides salons with posters, leaflets and
booklets, special racks and wall decorations. Promotional materials use scientific symbols such
as molecules. An interesting promotional tool is a special standardized form for hairdressers, on
which they establish diagnosis for their customers. Articles about Krastase appear in fashion
magazines like Marie Claire, Harpers Bazaar, Elle and InStyle. Krastase also uses opinion
leaders such as celebrities and famous hairdressers. Krastase website is aimed at both
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hairdressers and end-consumers. They are visually uniform and translated into many
languages, including Czech. However, the quantity of information varies considerably. In the
area of Internet communication, there is also the use of several blogs and social networks.



4.7 LOral Approach in Promoting Diversities
Diversity is an important issue for LOral. It consists of recognizing, accepting, valuing
differences and capitalizing on them to accelerate the company's growth. As the undertaking has
multiple dimensions, LOral prefers to talk about diversities in the plural. In this field as in
others, the group started by taking initiatives, then measured the progress made to professionalize
and extend the approach on an international scale.
For LOral, measuring is an essential part of the approach, because it makes it possible to steer
the policies being implemented in the area of diversity and in this way, to make progress in these
areas. The group accelerates the deployment of its Diversities policy and its corporate values
wherever it has a presence and whenever it opens new subsidiaries.
A) The roll-out of Diversity Charters in different countries
The signing of the Ethics Charter in 2000 and of the Global Compact in 2003 were LOral's first
commitments to promoting non-discrimination and respect for individual differences. With the
signing of the Diversity Charter in France in 2004, and action plan was defined, supported in
2006 by the creation of a global diversity network in the subsidiaries. Since then, several
Diversity Charters have been signed in the European subsidiaries: Belgium (2007), Germany
(2008), Spain (2009).Over recent years, LOral has stepped up its approach by being directly
involved, alongside other partners, in the creation of national diversity charters. This has been the
case in Italy, in collaboration with the Sodalitas association in 2009, in Sweden in 2010 and in
Poland in 2012. This process continues and is growing. In parallel, the group's commitment has
spread in France to other dimensions of diversity, such as professional equality, parenthood,
social background or even age: the creation of the Parent-Friendly Charter (2008), the "Plan
Espoir Banlieues" (2008), and company agreements relating to the employment of Seniors
(2009).
B) The Diversities Policy 2010-2015
LOral's ambition is to become the recognized world leader in the management of diversities.
This leadership ambition incites us, in order to be effective, to focus our policy on three strategic
lines of action: human resources, marketing/communication and purchasing; working in priority
on three issues: gender, disabilities and social and ethnic background. Defined in this way for the
period 2010-2015, the group policy from now on involves all the subsidiaries. With a shared goal,
it prioritizes action to facilitate a rapid and global deployment.



24

C) Main actions

Diversifying our sources of recruitment to look for and acquire talents that represent
greater cultural and social diversity.

Reduce the difference in salaries between men and women to the point that they
disappear.

Nurture the emergence of talents of women at the top level of the organization.

Enable and promote the employment of people with disabilities, in compliance with
national laws or by going beyond them.

Make LOral products accessible to all consumers.

Practice a responsible purchasing policy, especially one that acts against exclusion.


4.8 L'Oreal's Global Branding Strategy

4.8.1 Brand Management
L'Oreal had built a dozen or so mega brands rooted in the local culture and appealing to
different segments of the global market. Instead of homogenizing the various brands and making
them palatable in myriad cultures, Owen-Jones decided to embody their (the brands') country of
origin, turning what many marketing gurus considered a narrowing factor into a marketing virtue.
As a senior L'Oreal manager put it, "You have to be local and as strong as the best locals but
backed by an international image and strategy. We have made a conscious effort to diversify the
cultural origins of our brands."...
4.8.2 Brand Extensions
L"Oreal realized the need for caution in case of brand extensions. The company
extended its brands after doing a thorough research. When L'Oreal decided to enter the kids
shampoo category in 1998, it debated whether to launch a new brand or go for an extension. The
company realized the L'Oreal name, long associated with women's hair care, would capture
instant credibility with moms. But Kids was really a child-oriented product. When L'Oreal first
unveiled its L'Oreal Kids shampoo line early 1998, retailers were skeptical. "Retailers say the
value isn't there. We say it is, that the child establishes value. We were pretty tenacious." -
mentioned Carol Hamilton, 45, senior VP-marketing for the L'Oreal retail division of Cosmair...
4.8.3 Advertising And Promotion
L'Oreal backed its product innovations with the twelfth-largest media budget in the world.
In the late 1980s and early 1990s, "external charges", which included L'Oreal's advertising and
promotions expenditure jumped from 37% to 47% of sales. L'Oreal increased its global ad
spending to $1.25 billion in 1998, putting it almost on par with Coca-Cola. L'Oreal had a unique
promotion policy for all its brands. A brand, which sold in mass-market outlets, advertised and
promoted itself in a way similar to brands sold in department stores...


25

4.8.4 Corporate Structure
L'Oreal was organized as a clutch of small profit centers, some with as few as ten
employees. The company's work culture encouraged audits and budget meetings to focus less on
the spilled milk of the past, and more on leading indicators of how things would look at year-end.
These meetings encouraged discussions to find out which overlooked products showed signs of
life but were undercapitalized and which products were not matching expectations and needed
pruning. The structure allowed L'Oreal to move fast...
4.8.5 Competition
L'Oreal faced competition from various formidable rivals. On one side, cosmetic majors
like Revlon and Avon and Nivea vied for shelf space. On the other, there were the giant FMCG
companies like Unilever and P&G. There were also local competitors like HLL-Lakme in India,
Dark and Lovely in Africa, and the erstwhile Shu Umera in Japan (L'Oreal later acquired this
brand)...
4.8.6 Future Outlook
As Owen-Jones raced to expand international sales, he realized the need to ensure that his
brands did not confuse consumers, leading to brand cannibalization. Owen-Jones also faced
uncertainty surrounding the company's future. Bettencourt, 79, had indicated she did not want the
arrangement with Nestle to change in her lifetime. Nestle had promised to respect her wishes. But
after her death, it was not clear whether Nestle would be as compliant with her only child,
Francoise. Nestle had about $13 billion tied up in L'Oreal, and with 26% of its shares, it could
launch a takeover bid...

4.9 LOral Paris Brand Ambassadors
As the top beauty Brand sold in retail outlets, LOral Paris makes the most innovative
products accessible to everyone. Its ambassadors embody a certain beauty ideal summed up in the
legendary signature: Because youre worth it.
With 50 products sold every second worldwide, L'Oral Paris offers from all continents
male and female beauty products of all types (makeup, skin care, hair care, styling, hair color and
men), from the excellence of its Research Laboratories. The worldwide success of legendary
franchises such as Color Rich lipstick, Revitalift skin care, Elnett hairspray, Preference hair color
or Hydra Energetic skin care for men, reflect the brands unique expertise from the greatest
beauty experts. Including Christophe Robin for hair color, Stphane Lancien and John Nollet for
haircare and styling, Jolle Ciocco for skin care, Tom Bachik, manicurist to the stars, or Orrea
Light, Color Designer.
L'Oral Paris shares a unique vision of beauty, supported by 35 diverse international
ambassadors, icons such as Jennifer Lopez, Beyonc Knowles, Freida Pinto, Jane Fonda, Eva
Longoria, Julianne Moore, Liya Kebede, Gong Li or Hugh Laurie. The exceptional careers and
charismatic personality of LOrals ambassadors resonate in the motto "Because you're worth
it", a truly universal message of empowering beauty for the last 40 years. Each year, L'Oral Paris
26

magnifies its beauty ambassadors and worldwide celebrities from nearly 20 international red
carpets, including the Cannes Film Festival, for which LOral Paris has been the Official
Makeup Artist for the last 16 years. The Film Festival provides the constantly renewed
opportunity to highlight the superiority and expertise of its products accessible to every
consumer.













CHP 5: DATA COLLECTON AND ANALYSIS

Q1.

We come to know that 90% of people have used LOral products in the last one year.
This shows that people prefer using LOral products and trust the products.

Q2.

This graph depicts that how frequently a normal person uses LOral product.

















CHP 6: CONCLUSION