international marketing
...said “make the boxes so you don’t have to have a chemistry degree to read them”. Another said “the front of the box looks like it should be the back of the box”. The solution to this problem seems to be simpler in concept than previous ones discussed. Make the package less busy. The overall problem that respondents seemed to have was finding out what would work for them. L’Oreal could reduce the information on the front of the box and simplify what it does say. For example, on the Revitalift box (Exhibit 12A), the three bulleted points could be combined into one: firms and smoothes skin. Words like PRO-RETINOL A and PAR-ELASTYL seem intimidating to the average consumer. Instead of making shoppers read the front and back to find out if the product would work for them, put just a few strong descriptive works on the front, and leave the back of the box for the more detailed information. The back of the box can remain as it is. The classiness and femininity of the package design can be retained and still reduce information overload. If the potential customer thinks what is stated on the front of the box is what they are shopping for, then they can read the back of the box to get more detailed information. Another underlying problem of the company can also be easily “fixed” by making the package simpler. Some survey respondents remarked that L’Oreal offered too many products. One of the staples of this company is to offer a wide variety of products that are the highest in quality and technology. The reduction of information, at least on the front of the box, will help counter the idea that L’Oreal offers too many products. By simplifying information on the front of the box, customers will easily be able to decide what is right for them. The large number of products offered in the line will not seem so overwhelming. The timing issue for changing the packaging appearance will most likely be a complicated and elongated process. First, it is important to deplete as much of the current design as possible. Levels of inventory must be monitored because it is important to keep the product on the shelf. Production of new packaging should begin with enough time to counter the inventory depletion. Another option might be to buy back the old inventory from the middlemen. Both of these methods will incur costs. The first option would include more opportunity costs rather than actual costs. They would lose the possible sales from keeping the old packaging on the shelf. Inevitably, by allowing inventories to decrease, some customers will find the shelves empty, until the new packaging comes. The second option will cause L’Oreal to incur significant recall costs. This would need to be reported in L’Oreal’s financial statements as a note to the buyback of inventory. If workable, L’Oreal could repackage the old product into the new box, which would reduce the overall recall costs. L’Oreal also has a pricing problem. They are priced significantly above their most direct competitors. For example, L’Oreal’s Advanced Wrinkle Defense Cream, which contains 1.7oz., sells for the average retail price of $12.15 in 1995 survey. Oil of Olay’s product, Age Defying Protective Renewal Cream in a 2 oz. size, sells for $7.31. Although the products may not be the same, the apparent value for the money is evident. A consumer will pay a difference of $4.84 for L’Oreal’s product and will receive .3 oz. less. Nivea’s Anti-Wrinkle Cream costs $9.22 for a 1.7 oz. size. This is a $2.93 difference for L’Oreal. The price of L’Oreal’s cleansers is also high compared to Oil of Olay’s cleansers. For L’Oreal’s Hydrating Floral Toner, a consumer would pay $6.94 for a 8.5 oz. bottle. Compared to Oil of Olay, a consumer would pay $3.98 for a 7.2 oz. bottle. The difference here is $2.96, although that is a little high considering that with the L’Oreal toner one would get 1.3 oz. more. L’Oreal is more competitive when it comes to daily moisturizers. There is only a $. 52 difference in L’Oreal’s Active Daily Moisturizer price over Oil of Olay’s Original Beauty Fluid for the same size package. There are two possible solutions to this problem. L’Oreal can either lower their margins or further justify their higher price. (Oddly enough, L’Oreal has a much higher mark-up on its daily moisturizers than does Oil of Olay (51% vs 12%), a smaller mark-up on its cleansers (26% vs 48%), and a very similar mark-up on its treatment moisturizers (38% vs 44%)). Because we do not know the cost structure of L’Oreal and what their mark-ups must cover, we will focus on further justification of L’Oreal’s higher prices. Members of the L’Oreal team support their premium pricing philosophy but agreed with across-the-board price cuts in 1995 and 1996. L’Oreal must make their higher price worth it by focusing their promotions on advocating this higher price philosophy. They must get across to consumers that the higher price reflects the higher technology used at L’Oreal to further the Plenitude line. The premium pricing that L’Oreal uses helps to reinforce the ideals of quality and performance. This is evident in their price skimming. Going along with the higher technology idea it is important to emphasize the “Class to Mass” idea. The L’Oreal Plenitude products that consumers find on drug store shelves are of department store quality with reasonable prices. Women can indulge themselves “Because you’re worth it”. This element would follow the timing of changing the advertising to focus on the justification of the line, rather than the newest product. Another problem that L’Oreal faces is the image it created when it entered the US market. Based on advertising research, L’Oreal changed its position to “Reduces the Signs of Aging” from “Delays the Signs of Aging” which was used in the French market. Although this was better for US consumers, it placed the brand as one catering to an older population. Consumers will not look to the Plenitude brand unless they want to reduce their signs of aging. This creates a difficultly with appealing to younger markets that are not concerned with age defying. This is one that is hard to go back on. If they want to position themselves to effectively compete against Oil of Olay and others, it is important to offer the younger target market what they are looking for. Part of the solution that we are suggesting for L’Oreal goes with what we see as an opportunity for the company. If it is important to have customers other than those who want age defying effects, it is necessary to make it accessible to them. They have sought out media targeted to younger audiences. Their presence is felt in the most recent issue of Glamour magazine. It is amazing that just over ½ of the magazine was filled with ads. This shows how important the ads are to stand out among all of the rest. L’Oreal caused a problem for itself when it released its skin care line of products into America. It did this without considering a target market fully. Consumers had no clue as to what product was for young women, middle-aged women, or older women, so they were left to come up with their own conclusion. The consumers’ conclusion came to be that it was for older women. As a result, L’Oreal has lost the sales of the younger women for not actually targeting the market specifically. Although this is not a total loss to L’Oreal, it has many products that it could break down and target at certain age groups of women. L’Oreal’s Plenitude line has a product with qualities to benefit older women. As women get older they lose moisturizers in their skin, which causes rough skin and wrinkles. This is why L’Oreal should target older women from the age of 50 and up with the moisturizer products. Their product would better benefit this group because it provides the needed moisturizers that older women want. Also, according to the case, consumers felt that their product was being targeted at older women. Since this is the situation, L’Oreal should take their existing product and package it towards the older women along with making it price effective. As early of 1995, L’Oreal’s Plenitude line was priced from $6.97 to $15.19 in chain drug stores, where as the other competitors were lower in prices except for in treatment moisturizers where Ponds, Nivea, and Neutrogena were all in the range of $6.22 to $15.20. In order for L’Oreal to return to the top of the market in this product segment, they must consider looking at their prices and changing them to be more competitive. Next, L’Oreal should take their non-oil base products and specifically target those women from age 30 and under. This would make younger customers aware that L’Oreal has moisturizers that will not make their skin feel oily or have a gross feeling, as said in the acceptor/rejecter studies. Also, they must make this visible to the young consumers. They could do this by redesigning their packaging. The packaging should come right out and say what the product is, in this case non-oil base moisturizer, and what it can do for the consumer. Then it could take other information and place it inside the packaging as well as inform the consumer about other products they carry. As of now, L’Oreal has started to target women who are moving into their 20’s. They are doing this with a product line called HydraFresh. This new line is supposed to protect the eye area of the face from the effects of stress, sleep deprivation, and environmental irritants. This line has non-oil base cleansers and moisturizers for young women with oily skin and oil base cleansers and moisturizers for young women with dry skin. This shows that what we feel L’Oreal should do is being done (New Advances Newer Looking Skin). Another example is L’Oreal’s hair product line, which has been very successful for them because they target the product towards age groups. In L’Oreal Uses New Age Approach, Targets New Age Group For Open, they are targeting 15 to 25-year-old women for a new product that they are coming out with. This will most likely be successful with for them because they already hold the number 1 and 2 spot for selling brands in the market. If this can work for their hair products, they should take what they learn and use it towards their Plenitude line. Not only should L’Oreal target these groups for particular products, but also it should target the women between 30 and 50 with its anti-wrinkle creams and its creams that firm the face. Around this age your face begins to lose its firmness and begins to form wrinkles on the face. These products that could benefit these women in this age group should be targeted at them. Again, this targeting would cause new packaging for its products to show specifically what its for and what it can do for the consumers. It would also benefit L’Oreal in the present, because there is a large market segment due to the baby boomers approaching or in this age group. With targeting these specific groups it could almost cut down on the number of products and either increase the price or cut it. They could do this by bundling their products for each targeted group. It is much more convenient for a consumer to buy products together instead of buying one product that does this, then another product that benefits the product they just bought. L’Oreal could stick their moisturizers, cleansers, and creams together that would benefit each targeted group. By doing this it could charge a higher price, but making it look like consumers are receiving a better deal by receiving three products for one price. On the other hand, it would take away some unnecessary products, which would save L’Oreal money. Then they could charge a price that will be more competitive for consumers. A prime example of why L’Oreal should do this is by looking at their new product line HydraFresh. In order to get the best results of their product HydraFresh Circle Eraser, the website shows four steps that you should use. For these four steps you have to use three different products before using the HydraFresh Circle Eraser. That could be very costly to the consumer and confusing to try and find all the right products needed. If they bundled up the products and charged one price for all of them, this would be much easier on the consumer. The L’Oreal brand name is a huge opportunity that the company should exploit and take what it has to offer. They have already established the brand name by their cosmetic and hair color products that were huge successes in the U.S. In the Acceptor/Rejector study that was done in April and May of 1996, consumers said they only recognized the name L’Oreal, and really ignored the Plenitude name or found it unnecessary or confusing. The comments made were like, “I tell people I use L’Oreal. I didn’t know Plenitude was the brand name.” and “This is L’Oreal.” ““Plenitude” doesn’t really mean anything – that could be gone and ...