You are on page 1of 34

L’OREAL NEDERLAND

B.V. PRODUCT
INTRODUCTION
Case Presentation
PRESENTED BY

Anum Humayun
Daniya Ahson
Khola Zaman
Maryam Tariq
Quratulain Zulfiqar
Sidra Ali
Sidra Izhar
INTRODUCTION

1992- L’Oreal group the largest cosmetic manufacturer in the world.


In 1992, L’Oreal had subsidiaries in over 100 countries.
1992
Sales: $6.8 billion (12% increase over 1991)
Net Profits: $417 million (14% increase)
INTRODUCTION
• L’Oreal’s European subsidiaries were in one of the two groups:
Major countries (England, France, Germany, and Italy)
Minor Countries (the Netherlands and nine other countries)
•Innovation was the major critical success factor of the country and all the research was
centered in France.
•Due to short product life-cycles L’Oreal tried to introduce one or two products per year
in each of the L’Oreal world wide markets.
Brands of L’Oreal
Anais Anais Perfumer
The high-end Lancome line of Cosmetics
L’Oreal brand hair care products
Garnier
DUTCH MARKET

• Dutch population
under 23 years old
40% • Heaviest users of
cosmetics and
toiletries.

Fast growing
population segment:
25 or older group
4 th • In per capita
income

Netherlands
• In Per capita

6 th spending on
cosmetics
and toiletries
Dutch Market accounted for only 4% of
total EU sales of cosmetics and
USAGE OF SKINCARE PRODUCTS
BY DUTCH WOMEN

Target
spot
SALES BREAKDOWN FOR
SKIN CARE PRODUCTS

Chains unit
sales 57%

Large
Drugstores
independent
unit sales 82%
Sales unit sales 31%
Breakdown Small
Supermarkets
independent
unit sales 18%
unit sales 12%
HAIR COLORING
MARKET

Semi-permanent
Increase from 12%
to 27% Growth in unit
volume for both
types of colorant =
Permanent
15% per annum
Usage: 73% of
Dutch Women
who colored their
hair
HAIR COLORING
MARKET
Sales breakdown for hair coloring products by
type of drugstore

Food
retailers
Small
independent 3%
Large drugstores
independent
Chain drugstores 20%
drugstore 20%
37%
HAIR COLORANT

Declining

Declining
Rising
Rising
MARKET SHARE OF MAJOR
COMPETITORS IN COLORING
MARKET (1989)

Recital
(L’Oreal
Brand) 33%
Andrelon 17%
Poly
Couleur
21%
Guhl
14%
CONSUMER
BEHAVIOR

Hair colored to achieve


33 warm/ red tones
%
Hair colored to cover gray
hair
Hair colored to lighten hair
color
HAIR COLORING BY AGE

Growth 125%
Growth 43% Growth 72%

Growth 38%
Growth 27%
HAIR COLORING
MARKET RESEARCH

265
women
47% colored every 2-3
months

25% colored every 6


weeks or more often

60% of women used


it to cover gray hair

40% used it for other


reasons
REASONS FOR LAUNCHING
SYNERGIE (DAY CREAM)

• The product line that we have chosen to launch is Synergie


•Skin care market… second largest sector of the Dutch cosmetics and
toiletries market
• Increase in the number of Dutch working women More disposable
income to spend on cosmetics
•Past 5 quarters..unit volume at annual rate of 12%
• Market attractive because dollar sales growing at a rate of 16%
50% of 5 million Dutch women ( between ages 15 and 65) used skin care
product
•Market research result…Participants reacted positively to Synergie concept
boards
•Out of 7point scale ( 7 being most positive)… the mean score for Synergie
was 4.94
REASONS FOR NOT LAUNCHING
BELLE COULEUR

• Market research results: buying intentions decreased after actual


use of Belle Couleur

• Percentage of participants who would certainly not buy the


product increased from 13-32% after using the product

• Negative feedback from women after use: Majority said their hair
was too dark after using Belle Couleur and that it didn’t cover gray

• Dutch women preferred naturally lighter hair colors


TARGET MARGET

Female users
of skin care

Under Above
23 23 50% of 5m
Age 15- = 2.5m
65 40% 60%

Higher
Income 2.5*0.6=1.5
Group 2.5*0.4=1m
m
ESTIMATION

Assumed: 25% Assumed: 10% Assumed: 25% Assumed: 10%


women will buy this women will buy this women will buy this women will buy this

Users of Day Cream Non-users of Day Users of Antiaging Non-users of


Cream Antiaging

2.5*46% = 1.15m 2.5*54% = 1.35m 2.5*3% = 75000 2.5*97% = 2.425m

1.15*25% = 287500 1.35*10% = 135000 75000*25% = 18750 2.425*10% = 242500


per year sales per year sales per year sales per year sales

287500/360 = 798 135000/360 = 375 18750/360 = 52 per 242500/360 = 673


per day sales per day sales day sales per day sales
UNIT SALES

Day Antiagi
Cream ng
Users Users
287500 18750

Non-users Non-users
135000 242500

422500 261250
per year per year
ASSUMPTIONS

• Dutch women will buy day cream 3 times per year


So (422500*3) 1267500 total sales per year
And 1267500/360 = 3520 sales per day

• The sales will increase by 12% every year as the skin care market is growing
at the same rate

• Price of the day cream will be 12 guilder each

• After introducing, the per capita consumption will be 422500/2500000 = 17%


ASSUMPTIONS

• We will initially distribute it through 10% Supermarkets and 90% DrugStores.


In the category of DrugStore we will distribute 30% through Chains, 50%
Large Independents, 10% Small Independents.

• Marketing Expense will be 10% of the sales, from which 60% will be of pull
strategy and 40% of push strategy

• Research and Development will be 5% of the sales

• Cost of goods will be 10% of the sales

• Distribution cost will be 5% of the sales


FORECAST FOR DAY CREAM

Years 1993 1994 1995 1996 1997


Unit Sales of Day 1267500 1419600 1589952 1780746 1994436
cream
Dollar Sales of Day 15210000 17035200 19079424 21368952 23933232
Cream
Cost of Goods Sold 1521000 1703520 1907942 2136895 2393323
Gross Profit 13689000 15331680 17171482 19232057 21539909
Marketing Expense 1521000 1703520 1907942 2136895 2393323

R&D 760500 851760 953971 1068447 1196662


Distribution Expense 760500 851760 953971 1068447 1196662
Total Operating 3042000 3407040 3815885 4273790 4786646
Expense
Profits 10647000 11924640 13355597 14958266 16753262
SLOGAN

“Synergie is a natural skin care


line for young women who care
about healthy skin”
DISTRIBUTION

Retailers gaining power due to:


•Increasing competition amongst themselves
•Development of chains with their central buying
offices
•Increase in new brands with little differentiation from
brands currently on the market
•Increase in retailers offering their own private-label
products
CRITERIA USED BY
RETAILERS

• Evidence of consumer acceptance


– In terms of “Synergie”, The market for skin care
products showed an increasing buying trend
especially in the category of day creams, hence,
retailers were interested in selling this brand
CRITERIA USED BY
RETAILERS

Manufacturer Advertising and Promotion


•The advent of an innovative and technologically
advanced skin care system seemed attractive to retailers,
which increased the prospects of selling in a retail store
CRITERIA USED BY RETAILERS

Introductory Monetary Allowances


•Both the products were placed in the rage of medium to high
priced alternatives available in the market
•However, the value and perceived benefit to consumers was
much higer
•As a result, the superior quality and emphasis on the USPs
of both the brands led to the development of value addition
that new consumers desired, hence, an attractive choice of
brand for retailers
L’OREAL DISTRIBUTION
CHANNEL

•Drug Chains and Supermarkets were increasing in importance.


•57% of the unit sales of skin care products are from drugstore
chains, while 39% of Dollar sales of skin care products are from
Large independent Drugstores.
•Supermarkets account for 18% of unit sales and 11% of Dollar
sales of skin care products.
•This was due to the fact that a higher level of awareness and brand
preference was needed for individuals to purchase from these stores.
•Also, a variety of variants within the same product line could
easily be introduced in drug chains and supermarkets.
PROMOTION

• Promotion will be done through the manipulation of the


marketing mix except product which cannot be altered
• Those methods should be used which are both economical and
cost effective
• Test marketing is expensive hence an alternate method will be
used

• As it is highly sold, people will purchase it and automatically


try the free sample
• We can have posters and Bill boards
PROMOTION

• If they like the sample it will create demand for the day cream
• Testers can also be put along with the product incase some one
did not try the sample
• As it is expensive it can be geographically placed in stores
where those customers come who can afford the product
• We can make TV advertisements which should tell the
consumers how to use it and when to use it
• It can also be promoted through being placed at seminars or
exhibitions where the target market comes, appreciates the
variety and sales are further boosted as demand increases.
PLENITUDE (LOREAL)

Price:
Prices should be kept same as Dutch women go for value. Price would reflect its quality and
brand image can be retained.
Distribution:
This anti-aging crème should be placed in cosmetics section of large stores and to retain its
brand image it should have different section and placed where viewership if customers is high.
Promotion:
1. In large malls, skin tests of customers can be done to let them know that which type of anti-
aging crème would suit their skin.
2. Celebrity endorsements in ads would increase its value and image in the eyes of
consumers. Print ads and TV ads would be the effective medium to reach large number of
people.
3. With the purchase of anti-aging crème, toner or small bottle of lotion can be offered to
women which they can keep in their bags.
Product:
Natural ingredients can be used and packaging should have all the ingredients written on it. It
should be available in different sizes.
RECITAL (HAIR COLOUR)

To increase sales of existing hair colour product of Loreal, following steps can be taken
Price:
Pricing should be kept slightly lower than newly launched products.
Product:
Lighter shades should be introduced as Dutch women were more towards using lighter
shades colours.

Distribution:
1.Sales in drug stores were high so it should be placed on those shelves where incidence
rate is high.
2.There should be availability of greater number of shades at larger stores and less and
more selling shades should be placed in small stores.
Promotion:
3.Hand gloves, hair cap, applicator and conditioning shampoo should be offered with its
purchase.
4.Celebrity endorsements and TV ads would be the most effective way of promoting it.

You might also like