Case Study: L’Oreal Global Branding Strategy

The L’Oreal group has been the market leader of cosmetics and the beauty industry. The products it
mainly sales are in the fields of cosmetics including, hair color, makeup products, skin care products,
perfumes etc. Company has also launched its several products in the field of dermatology and
pharmacy. The sales and profits are maintained through its wide range of professional consumer
luxury and active products showing a strong through it. It was founded in 1909 by Eugene Schueller
and soon it grown into world’s largest company in the industry. The turnover of the company has
grown over 19 billions euro’s with over 11 percent of growth which considerably indicates the
success of marketing strategies of L’Oreal group. The company market over 70 international brands
along with a number of local brands made specifically for the country it is marketing with the same
international standards and flexibility according to the local needs and requirements that are to be
sold to both men and women over 150 countries. The company has shown enough growth in the
continents of North America and Western Europe with its outstanding performance of twice the
market trend growth of the markets of Asia pacific, Eastern Europe, Latin America, Africa and Middle
East. The global marketing efforts of the company with its smart selling efforts brought the
tremendous amount of success for it. The differences between the different cultures and the needs
of the native people of those different cultures have been quite successfully understood by the
company’s marketing personals. To understand and to answer the cosmetic requirement of the
different types of people in the world the company has setup its five worldwide research and
development center which are established in the different continents like 2 in France, 1 in the US and
1 in Japan and 1 in China in order to make the products manufacturing managed according to the
needs of different culture. L’Oreal group has successfully projected itself as a nice example of a good
multi national corporation that manages its profit with considerable success through the
competitions in the market’s surrounded by the various geographical, social, economical and cultural
risks. The company reached out to the variety of the customers with different economic status and
cultural background in overall different perception through its fine global branding strategies.
Through its selling of different products the company sold different genre of products like Italian
elegance, New York street smarts, French beauty, etc through different glo

L’Oreal’s global branding strategy that’s doing wonders has been actively spearheaded by Owen
Jones himself. Lindsey Owen Jones has been the CEO of L’Oreal for nearly two decades and a
“Honorary President” now, and under his leadership L’Oreal has really fine tuned its global branding
strategy. Interestingly some press reports tell us that he has been seen roaming around streets in
foreign markets to understand the new and existing trends. And without any doubts his interesting
work style seems to work wonders. The branding strategy of L’Oreal has such an impact that L’Oreal
seems to be the only global leader in every segment of the cosmetics industry, right positioning of its
products seems to be the key. Whatever its trying to sell the French elegance or street smartness of
America; is getting good response throughout the world and L’Oreal has been able to reach its
consumers across the national and cultural boundaries.

Owen Jones says: “We have this great strategy back in the head office of how we are going to do it
worldwide. But when you go out and look at what is happening, is there a big gap between your
projections and the reality of what you see and hear? It is so important to have a world vision
because otherwise decentralized consumer goods companies with many brands can fracture into as
many little parts if somebody isn’t pulling it back the other way the whole time with a central vision.”
This really explains why he prefers roaming in the streets for his strategy making rather than sitting in
the boardroom.
Having said all that its quiet evident that the global branding strategy of L’Oreal has paid huge
dividends to the company overall. In order to understand this splendid growth story we need to see
how exactly L’Oreal applied their strategy to the countries that were entirely distinct as far as the
lifestyle, spending pattern and culture is concerned. L’Oreal was started in France, has a good brand
value in the united states of America, is reaping good dividends from India and has a remarkable
presence in Japan. These are different complex societies with different needs, so how exactly L’Oreal
managed to be equally successful in all these places? This question needs some fact finding to be
done on the basis of country specific products and strategies adopted by the cosmetics
conglomerate. That’s what exactly we will try doing in the next section of this case study.

In India 4 billion 7.5 ml sachets are sold every year and that’s a staggering 66% of total shampoo
consumption in India. Most of the urban Indian women (96%) use shampoo, however only 46% use
foundation. For hair care a huge 74% population of Indian women still rely on home remedies, 42%
use henna and 94% use hair oil, as far as the L’Oreal’s sale per person in India is concerned is just 10
cents compared to 28 Euros per person in France. In India skin lightening creams (fairness creams)
constitute more than 50% of skincare market people seem to be crazy for getting for getting fairer.

These facts are self explanatory about the nature of Indian market and it’s clearly stating that the
strategy used in USA or any other European countries is not going to work in India. USA is a mature
market as far as cosmetics consumption is concerned India is an emerging economy with most of the
population below 35 years of age and a huge aspiring middle class. The cosmetics market is growing
approximately at an annual rate of 16% in India, still a long way to go. The youth in urban centers is
very concerned about the image but the larger section is still off the fashion map. Interestingly even
after the success story of corporate India, apparently it’s still a country that is very much community
oriented. The great Indian middle class is aspiring but still has the community driven cultural values
intact.

L’Oreal has taken this fact very much into consideration while preparing the marketing strategy for
India. A very good example would be the launch of garnier fructis shampoo in India. The concept was
to rely on idea rather than relying on advertising a brand. The idea of getting five times stronger hair
was the central point that created the hype, through “word of mouth” or network marketing. Initially
it was positioned as product for young and teenagers, once the product was established in the
market it tried to change or rather increase the target base by shifting gears. In a recent
advertisement of garnier hair color a daughter is shown advising her mother to try the garnier
product and explaining the benefits. Again it relies on the concept of idea getting spread by “word of
mouth” to another customer segment. This is the best example of marketing in a closed &community
driven society. There is one more remarkable thing about this entire campaign the catch line “take
care”. It shifts the focus from the product to the core value of Indian society “caring about others”
and the entire advertisement becomes more of a good advice rather than publicity.

China is the world’s most populated country in the world and that makes it very clear that it has the
potential of being the biggest consumer market. These days Chinese women are spending on an
average 10 to 15% of their income on cosmetics products, an urban Chinese lady would use 2.2
cosmetics products on an average every morning. Evidently most of them want to be fashionable and
the L’Oreal punch line – ‘if you want to be fashionable, just choose Maybelline’, really seems to work.
Masses are made to believe that this is something that represents America and it ought to be trendy.
Maybelline is the product line for the masses and L’Oreal really uses the tendency of masses to look
towards the USA that’s why the Maybelline products are displayed against the backdrop of shiny
skyline of New York City Chinese women prefer skincare and beauty products. According to a
research by L’Oreal in china women are concerned about the radiance of their skin and prefer skin
nourishing lotions that protect their skin from skin-drying winters. Unlike us customers most Chinese
women like skin whiteners rather than tanning products. It’s a sign of beauty for Chinese women.
Also, the texture of Chinese hair is thicker and more course than typical US Caucasian hair. This
requires different product, and really a different skill set to effectively sell and get these products
moving in China. L’Oreal has dedicated research facilities for these and other issues, and followed up
with more innovations to suit the needs and preferences of Chinese consumers. There is one more
very interesting fact about Chinese cosmetics industry; Chinese women are very concerned about
the ingesting of lipsticks. This is the most interesting food attitude about Chinese women. Now
following its global strategy L’Oreal even took this into consideration and developed lipsticks
containing vitamins; as soon as this was told to the women they were more comfortable in using the
product.

European countries are mostly developed, here L’Oreal has the liberty of publicizing the brand value
rather than focusing on pricing, the benefit to L’Oreal in these markets is that it is already well
established and the brand is well known so it can concentrate on grabbing the attention of
individualistic feminist women. Pricing is not a concern in these markets so L’Oreal can afford to have
punch lines like- “I am worth it” because these punch lines justify the high pricing of the products
and fulfill the feeling of exclusivity of high-end clientele.

Now lets take another example from the European and us markets, L’Oreal brands in these markets
are quiet well established. L’Oreal products have been used there for few generations now; once
young consumer of the L’Oreal brand has started aging and the same street-smart products could not
be positioned to them, they have started becoming the mature citizens; now their priorities have
changed. A recent market report suggests that the new target segment in the cosmetics industry is
40 plus women who once used the teenage cosmetics products. The thrust is on anti-aging products
because it not only adds the new customer base but retains the once teenage customer also.
Customer from the baby boom generation reaches the retirement age and tries to maintain healthy
and youthful look and finds out that their favourite cosmetics brand is still making products for them.
L’Oreal capitalized on their desire to look youthful and started marketing it anti-aging products, it has
signed sixty year-old Diane Keaton to represent the Age Perfect Pro-Calcium skin care line.

Also L’Oreal has signed Scarlett Johansson, Penelope Cruz, Eva Longoria and Beyonce Knowles to
promote specific cosmetics lines according to the age groups. Now this tells us how L’Oreal used the
desire of customers to position its products.

The French conglomerate believes that only two different cultures as far as fashion is concerned, are
dominant, represented by two flagship brands L’Oreal Paris and Maybelline new York. L’Oreal has
been projected as a French origin with elegance, high end presentation and obviously high pricing.
Whereas the Maybelline product line represents the street smart American babe who is looking for
the value of the money.

America seems to be the growth engine of the world, in the cosmetics industry as well. L’Oreal has
understood this and they made a strategy based on the trends in the USA and that’s how Maybelline
came into existence. Maybelline currently is the second largest brand in share of unit sales of
cosmetics products and number one in makeup brands. It claims to be totally consistent with today’s
confident woman. Maybelline products targets three customer segments; youngster (16 to 25), office
lady (26-35) and career women (35 plus). Marketing mix for Maybelline line of products consists of
two main strategies: foreign consumer cultural positioning and symbolic New York City imagery that
women can relate to everywhere. Maybelline promotion include different way of grabbing attention
including promotional coupons, online advertising, sponsorship of fashion shows, signing fashion
icons as spokesperson of the product, free make up consultancy and providing scholarships etc. we
can see as American cosmetic market is a mature market so L’Oreal tries to rely on mature marketing
tactics.

In the early 20th century, even American society was not very much open to makeup and skin care
products. People thought that only sinful women should wear makeup but eventually with the
economic independence that the American women gained; makeup and cosmetics started coming
into mainstream. Cosmetics apparently became the symbol of new self belief that the American
women was beaming with; and remember even Maybelline claims to be totally consistent with
today’s women, there are several other punch lines like ‘maybe she’s born with it’, ‘maybe it’s
Maybelline’, all the punch lines keep the self confidence of women in center as if its not the make up
but its the attitude that has to be worn. That’s why women of every nationality and culture started
identifying herself with the product and this became the symbol of the 21st century woman.

The mindset and the lifestyle of the customer are heavily impacted by the culture. Culture is defined
by different norms, values, interactions, language and others personal components shared by groups
of people across the world. It is a social phenomenon which defines people’s interests, thoughts and
other behaviors they may exhibit in the social life. From one country to another, humans have
evolved and developed different types of expressions, beliefs and behavior which can be difficult to
understand for someone who does not belong to the same culture. Culture is the way how the
members of a particular group interact with each other on the sharing of the available means, now
that determines what is going to be the need for a particular product in that society, that also
decides whether a particular advertising strategy will work or not and how exactly that will be
interpreted by the target customers. In different markets consumer requirements and consumer
behavior may vary. Cultural aspects deeply impact the consumer behavior; the impact may be direct
or indirect. The culture distinction creates the consumer behavior difference, as it can be noticed
between the Asian and European continent where the culture and the behaviors are very different.

Being a global organization L’Oreal certainly needs to understand the cultural differences and
position its products accordingly otherwise the results may be far more different than they are at this
moment. The thrust has to be on hitting the right customer with the right product. This can be
possible only if one has a deep knowledge of local culture and beliefs. A very interesting example
would be of lipstick use in china; according to a research only 3% women use lipstick for makeup. The
reason that was supposed to be behind this low percentage of lipstick use is even weirder; women in
china have concerns about ingesting lipstick. L’Oreal conducted a survey to see whether this is just an
age old saying or it holds some truth, based on the findings it came up with a lipstick that had
vitamins in it and in turn the demand for L’Oreal vitamin lipsticks increased.

Another example could be real handy; in India long hair is considered necessary for a woman to be
considered beautiful. L’Oreal considered this fact while launching its shampoo product in India and it
focused on publicizing the fact that using the garnier fructis shampoo helps in getting long and strong
hair. This strategy made the product very popular in India.

In china or India people like to have fair complexion. In Asia, women take special care of their skin.
People want radiant skins and lotions that can nourish their skin against sun, whereas in the United
States people would rather buy tanning cream. On basis of this knowledge L’Oreal can position their
whitening creams in India and the interesting part is the way the advertisements could be
interpreted .the way the advertisements for the fairness creams are made in Asian countries these
can be interpreted as racial advertisements in the USA but in Asian countries that seems to be quiet
usual. Now that’s where the knowledge of the culture and beliefs comes handy and helps avoiding
unnecessary problems. From a business point of view, companies have to adapt themselves to the
culture of each country in which they want to have business in.

Because of the differences of culture between countries, companies need to adjust their products
and services according to the local demands. This will help them to create and develop a brand
image across the globe that is based on a large number of globally recognized products. L’Oreal was
able to be successful in these markets because it adapted to ground realities of the particular market
yet it followed a standardized strategy. If we consider the marketing mix of Maybelline, it has two
pronged strategy – one for the foreign markets another is the global street-smart image of the
American chic. The global street smart image of New York chick can be admired in almost all the
urban centers, be it India, china or Brazil. However there has to be a right mix of local flavor as well.

The most important part of the L’Oreal’s strategic plan is opportunity hunting or the marketing of
their products worldwide. From the initial days it already started catering to the demands of women
worldwide. In order to do that efficiently they were expected to be well aware of the diversities of
women across the globe. Once they knew the diversities their job was to come up with different line
of products suitable to the women from all parts of the world. Innovation has been the keyword for
L’Oreal and this was made possible through constant research and development over the years. The
group has already covered most parts of the world and still striving to cover more. In order to do so
L’Oreal group has to keep respecting other peoples identity, ideas and culture. L’Oreal has to keep
valuing different cultures and nationalities to get their brand value up and it seems that they have
been doing it really well.

The success story can continue further because even today products of L’Oreal touches the cultural
values instilled in potential customers mind. L’Oreal just doesn’t sell the product it makes the
customer buy the idea of dreaming big but still remaining rooted to the core cultural values. It has
carefully devised its global marketing strategy and customized it to the local needs, and that’s the
reason people from Africa to Europe and America to Australia are using the L’Oreal products.