Managing L’oréal’s Product Life Cycle: More Than Just Makeup

Founded in 1909, L’Oréal has devoted itself to one business over the century: beauty. Headquartered in Clichy near Paris, the
company has become the largest cosmetics company worldwide, operating in 140 countries with 32 international brands. Its
mother brand, L’Oréal Paris, is the no. 1 beauty brand in the world.

In the increasingly dynamic environment of the cosmetic industry, L’Oréal has to ensure a continuous and sophisticated
management of the life cycle of its products and services to bring new value and appeal to its customers. By tradition, the
makeup market has long been driven by classic mass marketing brands such as Maybelline New York and Max Factor. In
addition, competition is intensified by brands selling directly to customers, such as Avon, and, in particular, low -cost brands
such as Essence and Kiko. While competition is fierce and challenging, the makeup market is growing fast. To a large extent
this growth is driven by so-called makeup artist brands, which are product lines initially used by professionals or named after
famous makeup artists such as MAC, Benefit, and Bobby Brown. There are also many makeup brands that wear the names of
perfume or luxury ready-to-wear brands, such as Shiseido, Chanel, or Yves Saint Laurent.

L’Oréal’s makeup brand L’Oréal Paris has a long tradition of 30 years in the market, and it currently ranks no. 2 in the glob al
market after Maybelline New York. The makeup market encountered a strong growth of 50 percent in the 10 years between
2003 and 2012. Even though L’Oréal’s makeup brand performed better than the market with a significant market share increase,
it was outperformed by the makeup artist brands. With respect to the product life cycle, the L’Oréal makeup brand was close
to the maturity phase, as the competition was fierce, profits were slowing down, and the brand’s customers were aging. An
initial analysis of the market and its competitors indicated that the two fastest growing types of brands—makeup artist brands
and low-cost brands—had something in common: a very large variety of colors that appealed to customers. Although L’Oréal’s
makeup brand was still performing, the company realized that this might not be sustainable enough in the future to compete
with its rivals. By tradition, the brand was particularly strong when it comes to foundation and mascara products but has been
increasingly challenged by the fashionable segment of color variety and selection.

Yann Joffredo, Global Vice-President Cosmetics L’Oréal Paris, emphasized that the traditional market had shifted and that
today’s women shop “looks” rather than products. As a result, conventional channels are no longer the only key in this new
era of internet sales, cross-channel purchasers and connected beauty. Instead of pursuing an exit strategy and dropping out of
the makeup market like Nivea did in 2011, L’Oréal wanted to continue building its makeup brand and avoid the decline stage.
In order to achieve this target, the company looked into various market research reports and conducted a battery of tests. One
study carried out in Europe showed that L’Oréal Paris was seen as a trustworthy brand whose products were highly effective
and innovative, enhancing beauty in an elegant manner while bringing self-esteem to women. However, the study also
discovered that the brand was not seen as the most dynamic and trendy in the industry, particularly when it comes to the
younger generation, who claim that L’Oréal did not offer the right shades. All findings were analyzed in -depth in order to
determine the right strategy with respect to competition and the marketing environment while still hewing close to the
company’s culture and values.

L’Oréal decided to choose a different positioning from the low-cost brands. Without the cost structure that L’Oréal has, with a
team of over 3,800 researchers, the latter would always win the battle of inexpensiveness. Consequently, the idea was to learn
from the makeup artist brands’ success by repositioning the brand and developing an innovative color statement that appealed
to young consumers. L’Oréal Paris established a new strategy platform, moving from a generalist brand to a multi -specialist
one. In 2014, the name of the brand was changed to L’Oréal Makeup Designer Paris.

The value proposition is that the products are developed and endorsed by the greatest makeup artists and spokespeople. The
brand is positioned on three pillars: L’Art du Regard (The Art of Looks), L’Architecture du Teint (The Architecture of
Complexion), and L’Obsession de la Couleur (Color Obsession).

In order to evolve from proposing products to offering an experience, the brand needed to create an interactive relationship
with its audience at all customer touchpoints, offline and particularly online. Therefore, the new positioning and strategy w as
primarily driven by the creation of the revolutionary Makeup Genius App, an easy -to-use smartphone IOS application that
gives customers the ability to “shop” their look instantly.

Thanks to head and expression tracking features as well as face texture 3D analysis, this application enabled users to be the
designers of their own looks through a real-time interactive mirror. In addition, L’Oréal Paris developed a fully integrated
digital approach in order to bring valuable services to consumers, inspiring conversations and building relationships through
social media platforms. The campaign kicked off on three continents, starting in France, the United States, and China in May
2014 and then rolled out to 20 countries. Cyril Chapuy, L’Oréal Paris International General Manager, stated th at the strategy
successfully positioned the company at the vanguard of creativity and fashion. As a result, L’Oréal has grown its followers
tenfold at the global level in the past 2 years. Its Makeup Genius has become the first beauty app in the world and has been
downloaded over 10 million times since May 2014. Since then, the company has started to see a strong acceleration of its
sales. In all, L’Oréal has successfully repositioned and relaunched its makeup brand by managing the prod uct life cycle in a
sophisticated way. By entering a new era of digital beauty through its Makeup Genius App, L’Oréal successfully lives up to it s
ambition of creating tomorrow’s beauty services.