Introduction LOreal was founded by a French chemist to develop and market his new process for haircoloring.

The firms consistent strategy of quality, innovation and geographic expansion increased its sales. Cosmetics represented 81 % of revenues of the firm. It launched a product in moisturiser market of France with a name of Plenitude and it became a hug success. Plenitude was launched in U.S. in 1988 after its success in France. They concentrated all their advertisements on the product line under their star system in which they concentrate all their resources and support on newest product to pull the entire line. During the year of launch they spent $32.5 million on advertisement and 10,000 store events with demonstrations as a result they achieved their sales target. Due to heavy promotion it became quickly No.2 brand in U.S. The sales grew pretty well through 1991, during this time they built consumer franchise, brand equity and good trade relations. By 1995 net sales doubled and spending on advertising and promotion increased from 35.5 million in 1990 to $38.3 million in 1995 as it regularly introduced new products which required support. The brand lost $12.5 MM pre tax for 1995.By 1996 it lost its 2nd position to ponds. They studied and conducted research in U.S. market to find out where they lacked. In late 1995, with some changes in their strategy they launched another product which performed fairly well and increased sales. Now the company was in dilemma whether to change their strategy, communication style or positioning Plenitudes position in U.S. market in early 1996 Company was in loss in late 1995 due to failure of plenitude. After failure of plenitude they conducted surveys & FGDs to know where they lacked. They launched Revitalift known as facelift in a jar in September 1995 under Plenitude brand name by using simple words in advertisement which were familiar to Americans. They followed star system and Revitalift quickly came to represent 20% of plenitude sales in first quarter of 1996.Product performed fairly well, studies showed that it brought many new users to plenitude franchise as 40% of Revitalift buyers had not previously purchased any plenitude product. After the success of Revitalift the company was facing a dilemma regarding their marketing strategies, as in whether they continue star system or not, whether to improve the products offered in daily moisturiser and cleanser category? Or should they adjust tonality of their message? Why has it apparently been less successful in the U.S. than in France when the French success formula was used in the U.S.? Plenitude was launched in France as a high end, superior performance but accessible brand. It was a highly advanced product which was introduced under class of the mass strategy with a single product developed specially for French women. The positioning developed through advertisement and promotion was I am a modern woman who uses only premium quality, technologically advanced product. French women were sophisticated in their use of skin care products and competition was high in the high end market while there were few significant brands in mass market. Initially advertisement was through print ad but it shifted to TV with the addition of more products under the Product line. BY 1987, it became market leader (19.6% share) in moisturiser market.Success formula of France which was used in U.S. was: 1. Technologically superior products 2. Concentrate resources and support on newest star product to pull the product line. 3. Follow the golden rules of advertising:

a. Feature star product b. Provide technologically superiority evidence c. Depict executive women who is up to date and assertive LOreal thought that same formula could lead to success in U.S. also but they forgot that lifestyle, culture, opinion, perception, society of Americans differs from those of French. They changed certain words like Delays sign of aging in advertisement to Reduces sign of aging and they fared well in test market. They launched all three moisturiser, treatment moisturiser and cleanser at once with 14 SKUs under the product line with brand name Plenitude. Main reasons for the failure of plenitude which has been found out from various studies and research conducted by LOreal are: They applied the same success formula in U.S. where as U.S. market is different in terms of culture, society and lifestyle. They launched all the 14 SKUs under the brand Plenitude at once, customers got confused because of sudden arrival of so many products in market. They did not want to study a lot before buying a product, besides it is easier to choose from 3 products than 14. American women do not know much about skin care compared to European women who like technologically advanced products. They felt the products are oily and greasy and does not absorb in their skin unlike other products which get absorbed easily. They pushed all the 14 products to retailers and provided them with one linear foot merchandising unit to provide information to customers regarding products. The information provided was not easy to understand for Americans, they felt it was really complex. They were not familiar with the terms used in the merchandising unit. They could not recognize Plenitude as a brand, most of them think it just as a product of LOreal not a brand. They thought that the price for the products offered was really high when they could get the same thing done at cheap rate. Their products were sophisticated and their advertisements were perceived by Americans as old fashioned and they thought the products are for women of old age (50+) since they had main products which were used to reduce aging signs. They were not able to connect the advertisements with modern women. Name of products were really complicated and did not indicated the use of product because of which customers could not remember the product names and their benefits. Whereas other competitors named their products in simple language like refreshing toner, facial cleansing lotion which were self explanatory. Example of names of Plenitude products: Hydra renewal jar, Excell lotion, clarifying Mask etc (From Exhibit 8A).

Research Conducted by LOreal to understand the Market Mainly three type of research have been conducted by LOreal to understand the US market :

A.

A large scale quantitative survey with 3500 respondents using state-of-art research techniques.

B. Acceptor / Rejector studies utilizing 10 focus groups. A focus group is qualitative research in which a group of people, typically 8-10 in number are brought together for a discussion facilitated by a trained moderator. As noted in the case, group discussions ran about 2 hours each. C. A mock-store study with 50 people who were each interviewed individually and then involved in a small focus group. (10 groups and 5 people each).

Quantitative Analysis Percentage of awareness is highest in Olay which is 96% followed by Ponds 93% and Estee Lauder being 92%. While LOreal lies far behind at 78%. Percentage of people who tried the product is 77% for Olay, 52% for Ponds and 23% for LOreal. Olay has a conversion ratio of 80%, Ponds has 56% and Estee Lauder has 38%, while LOreal again has least conversion ratio of 29% among the major players. Percentage of people who currently use Olay is 34%, Ponds is 16% and Estee Lauder is 11%, while LOreal is as low as 7%. Retention ratio which defines the no. of people who started using the product to those who initially tried it is highest for Olay which is 44, and 31% for Ponds and Estee Lauder, While LOreal is at 30%. Results of Facial Skincare market study which was a large scale telephone and mail survey of over 3500 Women of age 16 to 69 who used one or more Moisturizers at least once a week: According to it consumers were divided into 5 benefit segments: 1. Unconcerned (25% of respondents) Basically buy on price 2. Ingredient Apathetic (17%) Considered with reducing signs of ages; but not so concerned about gentleness or specific ingredients 3. Price conscious socialisers (17%) Worried about looking better but price/value is a concern 4. Stressed out (22%) Not concerned about price; want effective product that reinvigorates skin and reduce signs of aging 5. Age Focused (18%) Similar to stressed out group but with more attention to price and natural ingredients

Here Olay has 66% people from 1,2,3 and 34% from 4,5 as its target market is more towards 1,2,3 LOreal has 54% from 4,5 and 46% from 1,2,3 but the products of LOreal mainly fall for the 4,5 so it should have more people from this group, but its targeting is a little flawed and it puts itself in competition with Olay which is wrong. Both have different target market. The other competitions of LOreal who make similar products like Alpha hydrox have more people around 62% from 4, 5.

Qualitative Analysis Match and Mismatch between the Quantitative and Qualitative findings