lor al becoming the european shampoo leader
Introduction 3 I/ A quick overview 4 A/ Market’s picture in 1997 4 - The hair care products industry 4 - Main countries for the hair care market 5 - Main actors on the hair care products market 5 - The shampoo market 6 - Customer behaviour : the French example 7 B/ L’Oréal – The group history and strategy: a hundred year 7 old innovative firm - history and global strategy 7 - Elseve in the l’Oréal’s strategy 7 C/ SWOT analysis 8 II/ What strategy for which culture 10 A/ Organisation chart 10 B/ Strategy 12 III/ Implementation requirement 14 A/ Success story 14 - Think global act local 14 - Research & Development 15 B/ Poland or the golden market 15 - Which products? ... 16 - Certain things to look out for 17 C/ The male market potential 17 Conclusion 18 Appendix Introduction “L’Oreal: fighting the shampoo battle”, the case title says a lot. The shampoo division of France’s most successful global companies is in war. ... L’Oreal’s objective is to become the European shampoo leader. ... Shampoos : Shampoo sales represent about 45% of the hair care product sales, with an increase of 9% between 1996 and 1997. The amount of shampoos used in European countries is on the rise ; people are always asking for specific products for their hair, because they’re their hair looks good, they feel better and nicer. ... 7 % of the potential European market. In fact, the launch of 2-in-1 products (shampoo and conditioner) cannibalised the conditioners. ... • Main actors on the hair care products market : - The shampoo market : Each group sells one (or more) shampoo brands, which are fighting on this market. For example, the two most famous brands sold by Procter & Gamble are Pantene and Wash & Go (the first one is the leader of the grooming market). ... Most of the time, the brands are more popular in the country where they come from ; for example, the French brand L’Oréal has 57. ... The main characteristics of each brand : • Pantene : leader of the shampoos market. ... • Organics : shampoo that makes hair strong, healthy and shiny. ... • Ultra Doux : ultra-mild shampoo, targeting all the people in the family ; shampoo for frequent use, made of natural ingredients. ... The study of the French customers behaviour showed that : • The major factor of buying a new shampoo is innovation (for the – 25 years old in particular). ... • The favourite brand is a L’Oréal’s one : Kerastase. • The most used brand is also a L’Oréal’s one : Elsève. ... B/L’Oréal – The group history and strategy: a hundred year old innovative firm - history and global strategy The company started as a hair color manufacturer, but over th decades, it had branched out into a wide range of beauty product. Since it’s beginning, l’oréal policy has been of constant innovation, research and developpement and marketing. - Elseve in the l’Oréal’s startegy: 1971: The first step of l’Oréal in the hair care industry was the launch of a conditioner for damaged hair. The l’Oréal’s strategy was to target a specialised market in order to create a good image. ... The brand was extended into a shampoo line, which was positioned under the same concept: “the shampoo for permed hair”. ... Shampoo had to be gentle and mild enough to be used every day. At first l’Oréal decided to renew all its product range. And then it divided the shampoo market into a great number of segments and offered a wide product portfolio able to cover all the specific segments : shampoo for frequent or less frequent hair. ... 1987: The market registered a new trend: the active ingredient were in fashion since the introduction of the Timotei shampoo. The strategy of l’Oréal was to target new segments y offering products for all types of hair, enriching the formula with different active ingredients. ... 1989: Procter and Gamble launched into the market its successful 2 in 1 shampoo: Wash and go. ... L’oréal is in 1997 in the fourth position. 1995: Procter and Gamble is the European shampoo leader with its silicon-based formula shampoo : Pantene. ... Through this explanation of l’Oréal’s strategy, it’s obvious to see that until this time, l’Oréal was a follower and not a leader. ... C / Swot analysis L’Oréal is a world leader in cosmetics and especially in the shampoo market. In fact, the shampoo business has known a constant development in technologies as well as market structure. We generally talk about “globalisation”, the concentration and acquisitions of brands is the main consequence of this market evolution and pushed L’Oreal in becoming a global player. ... In order to face this threat would a specialized strategy for l’Oréal be an advantage? In 1997, l’Oréal was the world cosmetic leader but realised only 8,4% market shares in shampoo and a small 5,2% in 2-in-1 products. ... But only in France… very good illustration of the different market positions of the actors in different markets Abroad, l’Oréal stayed behind P&G and Unilever in the UK or Henkel in Germany. ... We could explain L’Oréal’s French succes by the group’s huge brand portfolio. We can argue this point with the Italian market : we are leader and it is the only country where we launch the same strategy. ... At this time we must analyse l’Oréal’s position and which risks it faces. Strength The cosmetic leader – Good image (innovation, french…) – R&D – Strong position in home market Weakness – Follower – Low market shares out western Europe – Mature market Opportunities – Development potential on new market – Launch new product – Men’s market Threats – Strong competitors – Lack of flexibility? – R&D costs – Local distribution brands This SWOT is quite ‘light’ – could you use more of the case material to analyse the marketing approach of L’Oréal compared to the competitors, for example, and to get to the key question of the potential use of an umbrella branding strategy across Europe for the company’s shampoo ranges.