International marketing strategies of l'Oreal
International marketing can be defined as the application of marketing strategies, planning and activities to external or foreign markets. International marketing is of consequence to firms which operate in countries and territories other than their home country or the country in which they are registered in and have their head office. The factors influencing international marketing are culture, political and legal factors, a country's level of economic development and the mode of involvement in foreign markets. The reasons why a firm would engage in international markets are numerous, including the maturity within domestic markets or increasing general market share, sales or revenue.
Social norms, attitudes towards buying foreign goods, and the working practices of foreign markets are all cultural factors when opting to invest in foreign markets. Social norms affect business practices, since social norms are one factor in the demand for a product. In the tobacco industry, for example, adolescents in developing countries are often the focus for the marketing and advertisement campaigns due to their vulnerability. Tobacco companies will often use symbols and fabrications in western society associated with smoking as a means of attracting these prospective consumers. A company marketing pork would experience less sales in an Islamic country, than it would in China (which is the world's largest consumer of pork). In Western societies, sexuality and sexual topics are often used in marketing communications (such as advertising, for instance). However, in a comparatively more conservative society (such as India for instance) social attitudes may shun the use of sexual topics to advertise products.
Political and legal factors
The following political/legal factors are of bearing in international marketing:
- Government attitude to business
- The level of governmental regulations, red-tape and bureaucracy
- Monetary regulations
- Political stability
Not all governments are as open to foreign investment as others, nor are all governments equally favorable to business. Typically, a firm may opt to invest in an economy in which the government is more inclined to support business activity in a country. In other words, the "business-friendliness" of a foreign government is paramount in this instance.
Additionally, some economies are more "liberal" and less regulated, by comparison to other economies. Excessive regulations can be a hindrance on a firm, since they contribute to additional costs to a firm. Conversely, regulations can aid in assisting firms, by easing the path of doing business. A firm seeking to invest in foreign markets must gauge the regulatory arrangement of the economy it is looking to invest in. Monetary regulations, akin to the above points, can hinder the ability to do business. A high level of monetary regulations can hamper foreign investment within an economy.
Lastly, the political stability of a country is also a key factor in foreign investment decisions. Nation-states experiencing continual coup-d'etat can appear unattractive to invest in, since the continual changes in political system can compound the inherent risk in investing. Typically, a firm would opt to invest in a country which had a stable mode of government, in which handovers of power were peaceful and non-violent. Even if a country is not a liberal democracy, the level of political stability within a country may supersede the political system (or, more accurately, the perceived immorality of a government's policies/constitutional structure) of a given nation-state.
Level of economic development
The level of economic development of an economy can affect foreign investment decisions. Within the field of developmental economics, differing modes of economic development can be identified. These are:
- Developing economy
- Newly-Industrialized country
- Industrialized country (also known as a developed country, advanced economy or first world economy)
A developing economy has a comparatively low general living standard (as defined by material lifestyle/level of material possession). Moreover, a developing economy may also be at subsistence level, or possess a large share of its Gross Domestic Product in primary industries. Accordingly, a developing country would not be a profitable market for high-end consumer goods, or fast-moving consumer goods commonly found in developed/advanced economies. Exports of machinery (related to the extraction and processing of raw materials) may be viable for a developing economy, due to primary industries possessing a large share of national income.
A newly-industrialized economy is an economy which has experienced high recent economic growth, and thus has experienced a rise in general living standards. Coupled with the rapid economic growth, the emergence of a middle class leads to the development of a consumerist culture in the society. A newly-industrialized economy would consequently possess a small general demand for high-end consumer goods, but not to the extent of an advanced economy. A newly-industrialized economy may export manufactured goods to other countries, and often possess secondary sector industries as a high percentage of its economic output.
An industrialized economy is typically identified via a high Gross Domestic Product per capita, a high United Nations Human Development Index rating and a high level of tertiary/quaternary/quinary sector industries in the context of its national income. Thus, the high general living standard denotes the highest generalized demand for goods and services within all modes of economic development. Commonly, developed/advanced economies are high exporters of high-tech manufactured goods, as well as service sector products (such as financial services, for instance). Other factors in international marketing include:
The greater economic ties/links between economies has presented a prime opportunity for firms trading internationally. The advantages to an international marketing firm are that regulations and costs are lower, which can promote the use of outsourcing to foreign economies. The disadvantages to a firm in a globalised economy include negative public relations resulting from the exploitation of low cost labour, concerns surrounding environmental degradation, etc.
Many cosmetic brands are popping up recently, perhaps, due to the increasing consumers of products that beautify and enhance the physical appearance of a person. Even though the market is already full of the said cosmetic brands, the company L'Oreal Groups could still be considered as the leading supplier of cosmetics and hair-color. This studyis a brief overview of the marketing concepts and strategy of the said company. The company profile will be presented to be able to give a clearview of the market to which the company belongs to. An internal and external (SWOT) analysis of the company will also be provided inthis paper. Another area will bespecificallydevoted to the implementation of the marketing strategy of the company as well as the ethicalissues raised by these marketing strategies
Before the facial cosmetics, L'Oreal was known as a hair-color formula developed by French chemist Eugene Schueller in 1907. It was then known as"Aureole". Schueller formulated and manufactured his own products which were sold to Parisian hairdressers. It was only in 1909 that Schueller registered his company as "Societe Francaise de Teintures Inoffensive pour Cheveus,"the future L'Oreal. Scheuller began exporting his products, which was then limited to hair-coloring products. There were 3 chemists employed in 1920. In 1950, the research teams increased to 100 and reached 1,000 by 1984. Today, research teams are numbered to 2,000 and are still expected to increase in the near future. Through agents and consignments, Scheuller further distributed his products in the United States of America, South America, Russia and the Far East. The L'Oreal Group is present worldwide through its subsidiaries and agents. L'Oreal started to expand its products from hair-color to other cleansing and beauty products. The L'Oreal Group today markets over 500 brands and more than 2,000 products in the various sectors of the beauty business. Such includes hair colors, permanents, styling aids, body and skincare, cleansers and fragrances. Indeed, the L'Oreal Group have reached the peak that all cosmetic brands sought after. Many factors contribute to the success of the Company. These will be discussed further in the proceeding parts of this study.
L'OREAL SWOT ANALYSIS
The ongoing success of the L'Oreal Group is without if not for the ingenuity of the concept of their vision as a team. L'Oreal Chairman and CEO Lindsay Owen-Jones considers passion as the key to the well-renowned accomplishment of the said Company. The primary strength of the Company is the continuing research and innovation in the interest of beauty which assures that the L'Oreal Cosmetics offers the best to their consumers. Their dedication to their continuous research makes them the leader in the growing cosmetics industry despite the competition in the market.
Strength of the L'Oreal Groups is the developed activities in the field of cosmetics as well as in the dermatological and pharmaceutical fields in order to put more concentration in their particular activities. The cosmetics activities of L'Oreal are divided to five groups. First is the Consumer Product Division which encompasses all the brands distributed through mass-market channels, ensuring that L'Oreal quality is available to the maximum number of consumers. The Luxury Products Division includes the prestigious international brands selectively distributed through perfumeries, department stores and duty-free shops. The Professional Products Division offers specific hair care products for use by professional hairdressers and products sold exclusively through hair salons. The Active Cosmetics Department creates and markets products for selective distribution through pharmacies and specialist health and beauty outlets. The L'Oreal Group's dermatological activities are linked with Galderma, which is basically a dermatological firm that contributes to the innovation of the L'Oreal Group's products. The pharmaceutical activities of L'Oreal are also handled by Sanofi-Aventis. These divisions and subdivisions ensure the quality that the L'Oreal Group offers to its customers. To further add to the enumerated strengths of the company, L'Oreal's advertising strategy also plays a major part to its growth. Through adapting to the culture of their target market as the main tool of their advertisement, the Company brought L'Oreal products within reach of other women from different parts of the world.
Perhaps one of the weaknesses that a big company faces is the decentralized organizational structure. This is also part of the difficulties that L'Oreal is facing. Due to the many subdivisions of the Company, there is also the difficulty in the control of L'Oreal. This slows down the production of the Company because of the need of giving reference to the other Board members and directors of the Company. L'Oreal will also have a difficulty in finding out what division is accountable for the possible pitfalls of the Company. Another weakness that L'Oreal faces is their profit. The profit margin of L'Oreal is comparably low than that of the other smaller rivals. While L'Oreal projects certain rise in digits as their profit, the result does not usually meet the expectations (Sang, 2003). Perhaps, this is also due to the high-end advertising and marketing as well as the width of the Company. Finally, the coordination and the control of the activities and image in the worldwide market are also viewed as a weakness in the part of L'Oreal. Due to its worldwide marketing strategy, there are also dissimilarities brought about in the campaign of L'Oreal products as to what image they are to project.
The L'Oreal Company concentrates on cosmetic products that enhance women of all ages. The growing demand for beauty products gives L'Oreal the opportunity to focus in their field of specialization, particularly on hair styling and color, skincare, cosmetics and perfumeries. Being the leading cosmetic brand gives them the edge for their well-known image. Opportunity also emanates from their growing market that ranges from the affluent, the aging and also the masses of the developed countries. Another opportunity that L'Oreal must take advantage of is their greater market share because of the numerous patents registered by the Company. This enables them to have the top of the line products only to their name and therefore would lead costumers only to them for they could not find any of the said cosmetics in other brands.
A threat to the L'Oreal group is also the growing competition within the field of cosmetic brands. Due to the ongoing addition to the field of cosmetics, there is still the danger that other brands could surpass the profit of L'Oreal. Another threat to the Company is the economic downturn that is quite evident in other countries. Such could thus hurt the possibility of higher profit for the company. Most products of L'Oreal are within the reach of the citizens of developed countries, but L'Oreal may have problems reaching out even to the average people from the underdeveloped countries. Also a threat to the L'Oreal Group is the spending habits of consumer and the economic crunch that most countries are experiencing as of present. While the L'Oreal Group may be producing the best of its line, people may find that their products are not of their basic needs and would skip buying L'Oreal products. However, with the growth of the market, the damage could be far from taking place.
COMPANY MARKETING STRATEGIES
Customer Satisfaction (Product; Price)
The L'Oreal Group is known for their continuous innovation in order to improve the quality of their products and the services they have to offer to their consumers. Part of their strategic plan is to cater to the best interest of their costumers, in other words, costumer satisfaction. Through giving a wide variety of products, consumers have a whole gamut of products and services that they can choose from and which best serves their preference. The range of their prices caters to the demands of women, from the younger ones to the aging, from the affluent to those with lower budget for cosmetic products. Through constant research and passion for innovation, the L'Oreal Group best caters to the demands of women of different cultures. The Company also sees to it that they know the latest trend, or better yet, set the trend in the market as to attract more consumers.
Control of the Company
A very vital aspect in the success of a company is how their leaders handle and run the business. In fact, the L'Oreal Group is very particular in the governance of the Company. The Board directors and the Board members are well aware of all of their duties required by their respective functions and of their collective mission, for it is in their hands that the Company's future depends on. The Board members are also obliged to act with due care and attention to their duties in order to carry out their responsibilities. Also expected from the Board is the strategic orientation of the control and correct running of the Company. Any transaction of the Board Members may directly affect the L'Oreal groups and so they are expected to act according to what's expected of them.
Worldwide Marketing (Place of Distribution; Promotion)
Part of the L'Oreal Group's strategic plan is the marketing of their products worldwide. From the bloom of L'Oreal during its primary stage, the Company already catered to the demands of women worldwide. In line with this, they are also well aware of the diversities of women around the world. Part of this strategy is to formulate products that suit other women from other parts of the world. Through research and development of their products, the L'Oreal group has already covered most parts of the globe and still got high approval ratings from their clients. Just recently, the L'Oreal Groups received the Diversity Best Practices 2004 Global Leadership Award for embracing diversity, not only in their employees, but also in their consumers (Anonymous, 2004). The Company' taking consideration of women of color is especially appreciated by its consumers for they are also being given the chance to enhance their features and embrace their diversity without having to conform with the traditional concept of beauty, particularly that of the white Caucasian women. The L'Oreal Group also has employees who are considered minorities, such as the women and people of color. Valuing of the people's culture and ideas is important to the L'Oreal Group, in order to best serve the interest of the consumers, the employees and the Company.
Impeccable Advertising (Promotion)
During the early days of advertising, L'Oreal commissioned promotional posters from various graphic artists to publicize the Company's products. The 1950s brought about a new advertising medium, particularly the movies. L'Oreal made its on-screen debut during this period and in 1953 won an award advertising Oscar, the first in a long series of awards. Today, L'Oreal takes on actresses or different personalities of all ages that best exudes the vision of the Company. Famous personalities enable average individuals to relate to their personal lives, that they can look as good, and so ensures higher sales.
There are two ethical issues that will be the particular concern of this analysis. The first to be addressed is the advertisements and promotion of the L'Oreal Group using the image of the traditionally beautiful women. The issue here is whether or not the advertisements of L'Oreal groups, while it does attract many consumers, affect the purchaser's view of beauty and what he/she must do to achieve this level of beauty. Blair (1994) stated that in the context of advertising, the female viewer is continually forced to look at herself through traditionally male eyes, to fit her personal history and her body into that money-making construct known as "woman." An analysis of advertisements for and about women shows that femininity continues to be one of consumer capitalism's most marketable commodities, selling as well as cars, cigarettes, and alcohol, though certainly the image of the female body is used to sell these products as well. The more beautiful the woman is, the more people will respond to the ad. There is greater possibility that a female consumer will respond to an ad with an attractive model because, as mentioned earlier, the belief that at some point she will achieve the same glowing skin or flawless complexion just like the celebrity or model in the ad. The ad then serves as an image of the positive response to her beauty, most especially by the opposite sex. Through achieving a beautiful physical appearance, just like the advertisement, women will gain more love, respect and power. This poses as a possible problem for the L'Oreal Group. While it is inevitable that the Company use the concept of the beautiful women, they should also start thinking about being more ethically responsible for what they are coming up with. Perhaps, this is shown in one of their ads where they depicted women of all age to pose for their products. From this view, L'Oreal could be said to be making effort in defying the concept of beauty as young, instead conceptualizing beauty as ageless. It would thus be helpful to quote Moore (2004) as a reminder to advertisers: "Advertising is not just about the things we buy. It's how we feel about things, including ourselves. That's what makes it interesting." Also, L'Oreal makes an effort to avoid common view on women by awarding women in the field of science. Five women were awarded by L'Oreal-UNESCO for Women in Science Awards whose distinguished careers in the material sciences have contributed greatly to advancing our understanding of the world and how it works. L'Oreal's shot on giving women more place in the field dominated by men is clearly an effort on their part to change the image of women as more than objects of beauty. Another ethical issue that may be raised is on animal testing. Despite high regard for quality, L'Oreal is the fifth to cosmetics company that has decided to halt animal experimentation. It ceased this practice in October 1993 (Emert, 1994). L'Oreal abandoned animal testing after four years of letter-writing, demonstrations and advertisements aimed at the company. People for Ethical Treatment of Animals (PETA) is locked in quiet negotiations with a number of companies that may be rethinking their testing policies since Paris-based cosmetics giant L'Oreal agreed to an animal test ban in October. This shows the influence of L'Oreal on the ethical decision of other companies. Also, the L'Oreal Group's decision would uplift their image and even attract more consumers. Perhaps, L'Oreal has indeed been a successful company. There are a few fall backs that have been mentioned such as the low profit margins, a decentralized organizational structure and even the growing competition in the cosmetic market. L'Oreal must then place more effort in being able to reach out to their consumers. The Company has shown endurance and perhaps it would be risky but rewarding to try a more diverse approach in their advertising, showing real women in their promotions. Also, it would be helpful to widen their advocacies for the minorities and oppressed group of people.
During 2008 they formalised their long-standing and strong consumer policies and commitments into a comprehensive Corporate Consumer Responsibility vision. This vision outlines their commitments to consumers in the following seven key areas:
Innovative products and continuous improvements in product efficacy
L'Oréal has always based its development on cutting edge research. Today they consider innovation to be a primary driver of customer satisfaction. L'Oréal is determined to make sure that consumers are completely satisfied with their products. This means first and foremost that products must fulfil their purpose. Consumers do not continue to buy products that let them down or fail to meet their needs. They assess the efficacy of every product, and they are committed to launch those that bring a real result that is perceptible by the consumer.
There is an increasing demand among mainstream consumers for their regular brands to come with environmental and social responsibility "built in". As a result, L'Oréal strives to integrate sustainable values into the DNA of its brands. This process is already happening within their R&D and Packaging Departments, and it will progressively become a more important element in the way that their marketing teams work. To this end, they are committed to:
- carry out regular and detailed research into what aspects of sustainability consumers most want integrated into their products, and share the results with their marketing teams,
- encourage marketing teams to take environmental and social factors into account in product development, packaging design, marketing, and advertising,
- use appropriate channels to help consumers understand environmental and social issues, and give them information on issues such as product disposal and recycling, sustainable consumption, and the impacts of products on the environment,
- work with industry to build a standard carbon labelling system that meets the requirements of consumers.
L'Oréal is committed to advertising responsibly. Their Code of Business Ethics commits us to the following:
- ensure that all advertising and promotional material is based on proven performance and scientific data,
- give a fair and truthful description and visual representation of their products and their effects,
- endeavour to ensure that the purpose and correct usage of their products are readily understandable by consumers,
- be sensitive to the possible reaction of religious, ethnic, cultural or social groups to their advertising,
- ensure that they do not undertake product placement with any outlets (TV or radio programmes, magazines or digital media) whose strategy for attracting an audience relies on exploiting violence, pornography or encouraging offensive behaviour or hatred toward others. Such strategies are contrary to L'Oréal's principles,
- take great care to ensure their actions are consistent with the L'Oréal spirit if they are envisaging advertising to children and young people.
Transparency and care
L'Oréal is committed to the integration of the principles of accessibility and transparency into all their dealings with consumers. Consumers should always have easy access to the advice and information they need, as well as effective mediation mechanisms when this proves necessary. They aim to have a corporate Consumer Advisory Department (internal or outsourced) in each country or zone, staffed by highly trained individuals who have an expertise in haircare, skincare, make-up and communication. To date, they have 331 specialist Consumer Advisers in more than 50 countries where they have a subsidiary. These departments also serve all the other countries where their products are sold. Their Consumer Advisory Departments advise and receive feedback which they then use to build value into their products. Their teams aim to do this by:
- helping consumers to address issues they may have using their products,
- providing feedback to the rest of the company about consumer experiences with their products in order to improve theirr products and learn more about their consumers. L'Oréal appointed a Director of International Consumer Affairs in 2007. This position helps them to achieve their aim of providing the best advice, support and education to their consumers.
They are working to improve the in-house and external training undertaken by their managers and advisers to ensure that they give the best possible service.
Availability of products
L'Oréal products are distributed through many different channels according to products type and nature: non-selective distribution channels (the mass market), selective and exclusive distribution channels, franchise networks, direct sales and lastly mail order and e-commerce. As a pioneering manufacturer, L'Oréal believes that internet sales are a complementary channel to reach consumers, still in a relatively early stage of development. We also believe that the existence of selective distribution network is indispensable to the existence of our industry and the preservation of the image and economic value of high-end branded products. From an economic point of view, the importance of investment in brand image and in highly sophisticated capital and labour intensive distribution networks is only viable if its intangible value is protected from free-riding. Sharing best practice with industry and stakeholders
They believe that Corporate Consumer Responsibility (CCR) could be approached in the same way as Corporate Social Responsibility (CSR ): via a process of sharing best practice and dialogue with stakeholders to work together towards improvement. We will participate pro-actively in relevant industry groups to share best practice, and ensure that where changes need to be industry wide, we are leading by example and encouraging our peers to make sure that these are effectively implemented. We will also pro-actively engage with consumer organisations. We will listen to their concerns, explain our position, and take action, whenever needed.
ACTIONS OBJECTIVES AND ACHIEVEMENTS TYPE OF COMMUNICATI ON INVOLVED PLANS FOR 2009
- "The Way they Work" Their Code of Business Ethics describes their values and requires that all employees align group practices to these values.
- Consumer relation services
- Ensure consumers are aware of the dangers of overexposure to the sun and explain the new pictograms on sun care products
- Approval of technical arguments in communication by external organisations and explanation of the logos used
In the 50 countries where L'Oréal has a subsidiary, 300 specialists answer consumers' questions about product use, provide advice and log their comments, enabling them to respond better to their expectations. More than 1.3 million contacts with consumers were logged in 2008. Free phone numbers, post, Internet Reassess contact systems with consumers to improve accessibility.
Garnier has developed, in partnership with the Association of European Cancer Leagues (ECL) in eight European countries, awareness actions for consumers about the dangers of overexposure to the sun, reaching more than 10 million people. The brand has undertaken to promote the new pictograms recommended by the European Union to raise consumer awareness about responsible behaviour in the sun.
Ushuaïa Bio brand: all communication is approved by Ecocert; information is systematically provided to consumers about the logos on the packaging, in TV films, press, and POS equity. Advertising, communication, point of sale and packaging.
Promotion of responsible behaviour to consumers
- Ensure hairdressers and their clients are aware of AIDS prevention
- Generate public awareness of the lack of women in science
- Generate consumer awareness of the need to sort waste packaging
- Generate public awareness of the need to protect natural heritage
- Generate public awareness of the need to protect biodiversity
Their "Hairdressers against AIDS " programme in partnership with UNESCO. Hairdressers against AIDS website, educational kit, press campaign Carry the operation forward, boosting both its scope and visibility.
Their "For Women in Science" initiative in partnership with UNESCO. Events, press, non-advertising films, consumers Continue annually.
Garnier set up a partnership with Eco-Emballages to prompt consumers to recycle packaging as per labels on Fructis bottles, with each new launch. In October 2008, Garnier pledged to reduce the weight of its plastic packaging by 15% by 2012 in agreement with the French Ministry for Ecology. Packaging, website (www.garnier.com) Extend this selective sorting awareness action to include Ultra Doux shampoo and bodycare products.
The Ushuaïa brand has partnered with the French Forestry Bureau (ON F) to establish a large biological reserve in the Estérel Forest (France). Press, website Continue the partnership.
L'Oréal Paris has entered into partnerships in Europe to protect bees, save plant biodiversity and sponsor the "Bees: environmental sentry" programme introduced by the French Union of Beekeepers. Press, events Continue these initiatives.
In 2009, support the Apimondia conference of the world's leading beekeeping stakeholders and raise awareness on the issue.
L'Oréal sells more than 4.6 billion individual products each year—each and every purchase is the result of a free choice by a consumer or by a professional using their products (beauty salons). This is certainly a source of pride but even more a call for responsibility. They have to do their best in order to deserve the consumers' confidence. This is why they are committed to satisfying and empowering the consumer further. During 2008 they formalised their long-standing and strong consumer policies and commitments into a comprehensive Corporate Consumer Responsibility vision.
Branding Strategy of L'Oreal has enabled the company to spread its' business not only in Europe but also in Asia and Latin America. In the year 2005, the Brand L'Oreal was ranked first among all the cosmetics companies of the world.
L'Oreal Branding Strategy has achieved success throughout the world. Over the years, the company is successfully producing and selling different cosmetic products, haircare and skincare products in almost 150 countries of the world. This has been possible because of the well established Brand Name and Brand Image of L'Oreal.
L'Oreal has been successful in generating 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 earn significant levels of revenue in the past years.
In short, it can be said that, reason behind the success of Brand L'Oreal lies in the fact that the company succeeded in reaching out to the customers of different countries of the world, across different income ranges and cultural patterns.
- International Marketing with PowerWeb by Philip R. Cateora, John Graham, Hardcover, Publisher: McGraw-Hill/Irwin
- Global Marketing Management by Masaaki Kotabe, Kristiaan Helsen, Hardcover: 720 pages, Publisher: Wiley
- http://www.getinternationalclients.com/guide-4-build-your-international-marketing-strategy/ .html