WELBrand in focus - L'Oreal

Branding Strategy of L'Oreal has enabled the company to spread its' business
not only in Europe and America but also in Asia. L'Oreal Branding Strategy
has achieved success throughout the world. Now-a-days the company is
successfully producing and selling different cosmetic products, hair care and
skincare products in almost over 150 countries of the world. This has been
possible because of the well established Brand Name andBrand Image of
L'Oreal. L'Oreal has been successful in promoting a worldwide Brand Identity
only because of the company's powerful and efficient Branding Strategy. This
successful Global Branding Strategy of L'Oreal helped the company to increase
its significant levels of revenue.

“L’Oreal” formed in France, Paris, brings the sophistication and elegance

consequent from its French heritage to women and men all over the world.
L’Oreal Paris offers leading-edge products that out-perform the competition to
people who care more about the way they look. The passion for innovation,
performance, style and a sense of premium is sum up in the customers money
spending worth and also it’s' philosophy. The core values are supported by
strong investment in scientific research and technology.
The L’Oreal Group total turnover by the Paris franchise making it the
company's largest division in the world. Today there are strongly established
L’Oreal Paris brands across all of the key areas of the beauty market, including
the Plnitude skincare range, Elvive hair care and Studio Line styling products.
Other brands include L’Oreal Paris Color Cosmetics, Elnett, Rcital, Excellence,
Fria, Perfect Blonde, Open, Casting and L’Oreal Kids. The Consumer Products
Division in the Europe is dedicated to offering consumers innovative, high
technology beauty products from global brands at competitive prices. This is
delivered through a global strategy combined with a local understanding of the
needs of women and men of all ages.
The L’Oreal Group has three international brands named as L’Oreal Paris,
Garnier and Maybelline that offer hair care, sun care, hair coloring, skin care
and make-up products. All of these available from mass market retail outlets
such as supermarkets, drugstores and leading chemists throughout the world.
L’Oreal Paris remains the finest mass-market brand. It is offering consumers
reachable luxury for skin care through providing its consumers leading-edge
products that outshine the competition. “Garnier”, on the other hand, Europe's
no1 brand for natural beauty products in hair care category that offers a
complete collection for healthy hair. Similarly, Maybelline offer world class
quality for on screen requirements.

The L’Oreal Group performance is marvelous due to its distribution channel

too. The company focuses on “go native” strategy mean hire local firms in
every country to distribute its products. Secondly, “First landing” strategy that
is first commercialization is bad thing if the product is not available in a
particular place. It has two bad impacts on the company: one would be if
product is not at a particular place and company runs there commercials the
negative word-of-mouth generate due to the consumers effortless struggle to
search the product. The other is the huge advertising budget shatter due to
pointless direction. The company by itself monitor, control and evaluate its
channel performance especially distributors. The company follow same
marketing mix foe the whole world with a little bit variation according to the
economic conditions of a certain country. L’Oreal is known for its strong
control over its promotion, place, price and packaging strategy, which is
decided from the headquarters. For these points, only minor product adaptations
are made in different countries such as labels’ languages. All controls are very
frequently checked to comply with prices and selling places of the group
marketing strategy.

INTRODUCTION:

We want people everywhere to have easy access to our products through a

presence in In 2005, the $18.89 billion L'Oreal group was the largest and the
most successful cosmetics company in the world, with over 17 international
brands. L'Oreal was ranked 49th by the Business Week Interbrand survey
conducted in August 2004. Its brands were valued at $5902 million ($5600
million in 2003). L'Oreal sold makeup, perfume, and hair and skin care products
to both men and women in 150 countries. The group reported its
18th consecutive year of double-digit growth in December 2004. Since 1989,
L'Oreal's sales had grown at a compounded annual rate of 12% to $1.7 billion.

"L'Oreal combines the double-digit top-line growth of a hot technology

company with the bottom-line comforts of a well-run bank. What sets L'Oreal
apart is its consistency over time."1 - pointed out an observer.

A decade ago, about 75% of the company's $5.5 billion annual sales were from
Europe, the bulk of it in France. In 2004, 85 % of L'Oreal's consolidated sales
were in markets outside France.

In the late 1990s and early 2000s, when the Asian and the Latin American
economies were considered too risky, and several international companies
performed poorly, L'Oreal had surged ahead.

As an analyst put it, "L'Oreal is the only real global leader in every segment of
the industry."2Whether it was selling Italian elegance, New York street smarts,
or French beauty through its brands, L'Oreal had reached out to a wide range of
customers across incomes and cultures. Under Lindsey Owen-Jones (Owen-
Jones), L'Oreal's CEO for 17 years, L'Oreal had fine-tuned its global branding
strategy.

As Owen-Jones' term at L'Oreal drew to a close, industry observers wondered if

his successor, Jean-Paul Agon (Agon), would be as deft as Owen-Jones in
managing L'Oreal's complex brand architecture and delivering profits. L'Oreal
also faced new challenges with companies like Procter & Gamble (P&G)
deciding to give a special thrust to their beauty products. Would L'Oreal be able
to hold on to its seemingly invulnerable position in the global cosmetics
market?

L'Oreal, the world's largest cosmetics company was established in 1907 by a

French chemist Eugene Schueller (Schueller). Schueller had developed a
formula to make synthetic dyes safe for human hair.

He sold his patented hair dyes to local hairdressers and beauty salons in Paris.
The company's name was adapted from Schueller's first brand, L'Aureole,
which meant 'halo', in French.

By 1920, Schueller started exporting to other European countries like Holland,

Austria and Italy. Schueller's successor, Francois Dalle (Dalle) took the
company public in 1963.

Sensing a threat from France's left-wing politicians who were advocating state
control of the nation's top companies, Dalle decided to internationalize L'Oreal's
ownership structure. In 1973, Dalle persuaded Liliane Bettencourt, Schueller's
daughter and L'Oreal's main shareholder, to dilute her majority stake. Under a
complex deal, Swiss food-products giant Nestle took a 49% stake in a holding
company--with Bettencourt owning the remaining 51%.

The holding company in turn acquired a little over 50% of L'Oreal's stock. In
1972, L' Oreal launched the legendary campaign "Because I am worth it," to
promote the 'Preference' line of hair color. The emotional pitch "Because I am
worth it," made the consumer feel good about paying higher prices for L'Oreal
products.

Over the next few years, the company's business expanded considerably. It
started distributing its products through agents and consignments to the US,
South America, Russia and the Far East. The next phase of L'Oreal's growth
started under Lindsey Owen-Jones who had joined L'Oreal in 1969, fresh out of
Oxford and the Insead business school in Fontainebleau (France).

He rose to head the company's Italian operations (1978-1981), where he caught

the eye of his superiors with exceptional performance. He was then asked to
head the strategic US operations. Managing the company's US operations was
not an easy task...

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."...

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...

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...
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...

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)...

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...

L'Oreal: The Beauty of Global Branding

The French giant stays on top by selling cultural cachet as well as
cosmetics

It's a sunny afternoon outside Parkson's department store in Shanghai, and a

marketing battle is raging for the attention of Chinese women. Tall, pouty
models in beige skirts and sheer tops pass out flyers promoting Revlon's new
spring colors. But their effort pales in comparison with L'Oreal's eye-catching
show for its Maybelline brand.

To a pulsing rhythm, two gangly models in shimmering lycra tops dance on a

podium before a large backdrop depicting the New York City skyline. The
music stops, and a makeup artist transforms a model's face while a Chinese
saleswoman delivers the punch line. ''This brand comes from America. It's very
trendy,'' she shouts into her microphone. ''If you want to be fashionable, just
choose Maybelline.''

Few of the women in the admiring crowd realize that the trendy ''New York''
Maybelline brand belongs to French cosmetics giant L'Oreal. In the battle for
global beauty markets, $12.4 billion L'Oreal has developed a winning formula:
a growing portfolio of international brands that has transformed the French
company into the United Nations of beauty. Blink an eye, and L'Oreal has just
sold 85 products around the world, from Redken hair care and Ralph Lauren
perfumes to Helena Rubinstein cosmetics and Vichy skin care.

Thanks to this strategy, masterminded by L'Oreal Chief Executive Lindsay

Owen-Jones, the French company has not only enjoyed a decade of double-digit
growth but has pioneered new ground rules for staying on top in a fiercely
competitive industry. L'Oreal's net profits rose 12% in 1998, to $768 million,
while its stock has soared 900% in the '90s.

L'Oreal's success is proof that when done right, global branding can speed
growth in mature consumer-products companies even when global markets
themselves are shaky. Asia's economy is a mess, Latin America is tottery. Other
worldwide marketers, such as Procter & Gamble Co., are suffering partly as a
result. But L'Oreal is surging in markets stretching from China to Mexico. Its
secret: conveying the allure of different cultures through its many products.
Whether it's selling Italian elegance, New York street smarts, or French beauty
through its brands, L'Oreal is reaching out to more people across a bigger range
of incomes and cultures than just about any other beauty-products company in
the world. That sets L'Oreal apart from one-note marketers such as Coca-Cola
Co., which has just one brand to sell globally.
L'Oreal's strategy positions it beautifully to profit even further when the middle
class begins to grow again in emerging markets. Says Veronique Adam, analyst
at J.P. Morgan Securities Inc. in Paris: ''L'Oreal is the only real global leader in
every segment of the industry.''

For Owen-Jones, the trick will be staying ahead in the game as his powerful
rivals seek to play the global branding game. From giant P&G to niche players
such as Los Angeles-based cosmetics maker Stila, L'Oreal's competitors are
hustling to catch up. ''We want to become more of a global company like
L'Oreal,'' says Yoshikuni Miyakawa, a general manager of the cosmetics-
marketing division of Shiseido Co., Japan's No. 1 cosmetics company. Already,
Shiseido is dominant at home and now expanding around the world.
Meanwhile, the French company is No. 10 in Japan, trailing rivals such as
Clinique and Estee Lauder.

ELECTRONIC THREAT. As Owen-Jones races to expand international sales

of his products, he must be careful that his brands don't blur together for
consumers. Yet another threat may come from the electronic world. An
Amazon.com of the beauty business could shake up the industry in unexpected
ways--just when L'Oreal is experimenting with its own retail formats.

Owen-Jones knows the risks--the 53-year-old CEO is always asking himself

what aggressive marketer, what hot fragrance could steal share from L'Oreal.
Glancing at shelves in his Paris office lined with L'Oreal's latest products, he
notes: ''I'm never satisfied and never convinced we are winning. I try to
convince my people we might not be.''

That healthy doubt is just one of the ways L'Oreal's chief has kept his company
on top. Known by his rivals as a marketing whiz, he loves to prowl the aisles of
department stores, quizzing customers and salespeople alike on every aspect of
the beauty business. On his latest visit to China, he stopped two women on the
street and asked whether they used L'Oreal products to color their hair. When
the women said they had their hair done in a salon, Owen-Jones escorted them
to the nearest store selling L'Oreal products and offered them hair-color kits for
free.
The knowledge he gains in the street helps him keep his executives sharp.
Owen-Jones is known for raking his managers over the coals in meetings,
hammering them with skepticism. ''He tries to destabilize you to see if you are
capable of defending your ideas,'' says a senior L'Oreal executive.

At the same time, Owen-Jones--known simply as ''O-J''--has used his own

multicultural background to the company's advantage. Owen-Jones was born in
Wales, studied at Oxford and Paris, married an Italian, and has a French-born
daughter. Although his first job was selling shampoo in Normandy in 1969, he
has spent half his professional career outside France and all of it outside Britain.
''I've tried to be a hyphen between France and English-speaking countries,'' says
Owen-Jones, who speaks four languages. ''We have made a conscious effort to
diversify the cultural origins of our brands.''

That philosophy has proved key to L'Oreal's success. While many companies
seek to homogenize their brands to make them palatable in myriad cultures,
Owen-Jones has taken L'Oreal's products in the opposite direction. He wants
them to embody their country of origin. So he has turned what many marketing
gurus consider a narrowing factor into a marketing virtue.

L'Oreal's work with Maybelline is a prime example. In 1996, L'Oreal acquired

Maybelline for $758 million and began a complete makeover of the brand,
including moving the headquarters from Memphis, Tenn., to New York City.
The key: figuratively stamping ''urban American chic'' all over Maybelline
products to promote their U.S. origins. In 1997, for example, Maybelline rolled
out a radical new makeup line, heavy on risky colors such as yellow and green,
dubbing it Miami Chill. And when L'Oreal marketers discovered that the
moderately successful Great Finish nail enamel dried in one minute, they
changed the name to Express Finish--and sold it heavily as a product used by
urban women on the go.

The makeover was a hit. Maybelline's share of the nail-enamel market in the
U.S. has climbed from 3% to 15% since 1996. Altogether, over the past three
years, Owen-Jones has almost doubled Maybelline's sales, from $320 million to
$600 million, and pushed the brand into more than 70 countries. Sales outside
the U.S. market now make up 50% of total revenues.
Maybelline's success exemplifies the L'Oreal blueprint. The company has
pursued the same basic approach with Ralph Lauren fragrances and Redken hair
care. ''It's a cross-fertilization,'' says Guy Peyrelongue, head of Cosmair Inc., the
U.S. division that oversees Maybelline.

TWIN HUBS. The Maybelline deal has prompted a change in management,

too. Recognizing that two beauty cultures are prominent--French and
American--Owen-Jones figures L'Oreal's empire will thrive best by embracing
both. So after buying Maybelline, he decided to galvanize L'Oreal's Paris
operations by setting up a second creative headquarters in New York, complete
with R&D as well as marketing and advertising teams. ''We set up a counter-
power in New York with people that have a totally different mind-set,
background, and creativity,'' he says.

The two creative hubs tap into the same fundamental research but compete in
marketing. Although he admits it's a recipe for tension, ''a charged atmosphere
is exactly what I'm looking for,'' he says. One example: L'Oreal is preparing a
rollout of hair care products by Redken, a U.S.-based brand it acquired last year,
into the French market, even though Redken will directly compete with the
long-established L'Oreal Preference line. Most CEOs would be afraid of
cannibalizing their established brands by introducing newcomers. But Owen-
Jones says the competition will inspire both the Redken and Preference
marketing teams.

The pressure is on L'Oreal to keep reaching higher as the company faces attacks
from rivals big and small. ''Global branding is something we are all interested
in, we are all pursuing,'' says Revlon CEO George Fellows. Revlon has had
little in the way of worldwide efforts until recently--and it's not the only
cosmetics maker ramping up globally. Germany's Beiersdorf, which owns the
well-known Nivea skin care and cosmetics brand, is betting on a new anti-aging
cream to help build its presence even more both in Europe and the U.S. ''This is
war,'' declares Rolf Kunisch, chief executive of the Hamburg-based cosmetics
company.

Beiersdorf has already stolen a march on L'Oreal by beating it to the market

with its Nivea Kao brand of strips used to clean pores. Worldwide, Nivea ranks
No. 1 in mass-market face cream, with an 11% share, slightly ahead of L'Oreal's
Plenitude, according to market researcher ACNielsen Corp. The Germans aren't
the only problem: P&G's Oil of Olay skin cream is going head-to-head with
L'Oreal's Plenitude around the globe.

As the competition intensifies, Owen-Jones is likely to continue making

acquisitions. He has purchased five companies in six years. The company is
actively exploring acquisition targets elsewhere in Asia. Already huge in
established markets such as Europe and the U.S., L'Oreal is venturing further
afield. Last year, the company acquired Soft Sheen, a U.S. line of hair-care
products aimed at African-American women. Owen-Jones intends eventually to
use it as a springboard for expanding into Africa. L'Oreal is expanding rapidly
in India since it introduced its L'Oreal Excellence line of hair color in 1997--the
first time a company dared sell any color other than black. In Mexico, L'Oreal
ranks No. 1, with a 28% spurt in sales last year.

SORRY SHOWING. Most of all, though, Owen-Jones is eager to improve

L'Oreal's poor market position in Japan, whose $25.4 billion cosmetics market
is second-largest in the world. Owen-Jones partly blames L'Oreal's sorry
showing there to market regulations ranging from a protectionist distribution
system to strict scrutiny by health and safety authorities. While its luxury brands
are starting to gain, the company's problem has been selling Maybelline to the
mass market. Only recently did L'Oreal acquire marketing control of
Maybelline from Japan's Kose, a cosmetics maker that owned the rights prior to
L'Oreal's purchase of the U.S. company.

L'Oreal is also taking greater risks with its in-house projects, partly to be sure
each of its brands stands out with its own image. ''That's a big challenge for this
company--to add brands, yet keep the differentiation,'' says Marlene Eskin,
publisher of Market View research reports on the cosmetics industry. The most
radical experiment is the relaunch of the 96-year-old Helena Rubinstein skin
care and cosmetics brand as a hot product providing for the 21st century. The
target is 20- to 30-year-old women in urban centers such as New York, Paris,
London, and Tokyo who want wild colors. ''We've made it the coolest of luxury
brands,'' says Owen-Jones.

To sell the new Helena Rubinstein line, L'Oreal has opened a New York spa--
the first time L'Oreal has tried to run a retail operation. And the target market is
younger and trendier than L'Oreal's typical luxury customers. It's not clear how
well the company will be able to manage its ever-growing stable of upscale
beauty brands while mixing it with street-wise new products. But that's the thrill
of being in the beauty business--what's hot is always changing, and only the
savviest of sellers can keep up with the trends. In this fickle business, Owen-
Jones is trusting that his instincts won't lead him astray.

By Gail Edmondson in Paris, with Ellen Neuborne in New York, Amy Louise
Kazmin in Shanghai, Emily Thornton in Tokyo, Karen Nickel Anhalt in
Hamburg, and bureau reports

L’oreal branding strategy in india

L'Oreal Group, the 17-billion euros global leader in cosmetics, is charting out a
long-term growth strategy for its wholly-owned subsidiary L’Oreal India. To
start with, L’Oreal India is planning to extend its distribution network and
product portfolio to sustain its competitive edge in the beauty business.

To take on rivals like Hindustan Unilever Ltd’s Lakme, the company is

planning to invest in mass media advertising as well as ground events to woo
new consumers. Incidentally, L’Oreal India has just appointed cine star Sonam
Kapoor as its new brand ambassador for the Indian markets.

On the company’s growth plan, Dinesh Dayal, chief operating officer, L’oreal
India, said, “Our strategy is to recruit more faithful customers to our brands
through innovative products and categories. Our objective is that each of our
brands attains and maintains their leadership positions in each of the segments.”

At present, L’Oreal’s major brands include Garnier, L’Oreal Paris and

Maybelline in the consumer products sector.

According to Dayal, the company has lined up a host of new launches in

January 2009. “We have combined our insights on Indian consumers and their
needs with the force of our global R&D,” he said. The company files more than
600 patents each year internationally, he noted. L’Oreal India’s launches in
2009 include Ralph Lauren’s fragrance for women and Lancomes’s Oscillation.
As part of its growth strategy, L’Oreal will be increasing its distribution in a
phased manner, in line with demand. “Advertising is a core component in
demonstrating the quality and performance of our products and we will continue
to invest in line with our growing business,” said Dayal.

He said that the company has appointed Sonam Kapoor as an additional L’Oreal
Paris spokesperson for the Indian Market alone. “She will complement our
international brand ambassador Aishwarya Rai,” he explained.

Meanwhile, L’Oreal’s arch rival HUL, has announced that its board has
approved the licensing of Lakme and Lever Ayush brands to a separate
subsidiary company, Lakme Lever Private Limited. This company will evaluate
options towards developing a uniquely different, new business model for this
opportunity, with singularity of purpose and dedicated focus.

“With increasing competition, the branded cosmetics and skincare sector in

India will witness a pitched battle for market share in the next few months,”
said a Mumbai-based industry analyst.

Blueprint for growth

L’Oreal is planning to invest in mass media advt and ground events

It has appointed Sonam Kapoor as its brand ambassador for Indian markets

The co’s major brands include Garnier, L’Oreal Paris and Maybelline in the
consumer products sector.