History

* In 1907 Eugene Schueller, a young French chemist developed an innovative

hair color formula, which he called “Aureole” thus began the history of
L’Oreal.
Company’s principles
* Ongoing research and innovations
* Started with hair coloring products
* Now has cleansing / beauty products
Distribution
* Initially Holland , Austria and Italy,
* Later US, Russia and Far East
* Now present world wide.
* Found in all major drug stores, supermarkets, beauty outlets and even direct
mails.
Brands
* L’Oreal group markets 500 brands and more than 2000 products in all the
sectors of beauty business.

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Big Push: India, The Fastest Growing Market For L’Oreal In Asia-Pacific

Posted online: 2002-03-18 00:00:00+05:30

New Delhi: For the French cosmetics major L’Oreal, today “India is the fastest
growing market in the Asia-Orient-Pacific region for L’Oreal,” Mr Alian Evrard,
zone director, Asia-Orient-Pacific, L’Oreal, L’Oreal mulls second plant in
revealed in an exclusive meeting with The India
Financial Express. The French cosmetics major
L’Oreal is currently exploring
While tightlipped about the numbers, Mr plans to set up its second manufacturing site
in India, Mr Alian Evrard, zone director,
Evrard, but, said that the world’s number one Asia-Orient-Pacific, L’Oreal,
cosmetic company present in about 150 indicated this while speaking to The
countries is slightly ahead of its targets in Financial Express. The plant is expected to
come up in Pune between 2003-04. He,
India. “In terms of growth, we have enjoyed however, did not disclose details about the
treble digit growth until 1999, which was easy size of investment required for such a unit.
because we were new, we had more than 30 According to industry sources
L’Oreal, has so far invested $30
per cent growth during 2000 and 20 per cent million on its local manufacturing plant in
in 2001.” Mr Evrard also admitted that the high Gujarat since 1994. About 80 per cent of its
growth rates of 30 per cent witnessed till 1999 products portfolio sold in the country are
have come down to 20 per cent in the year currently being manufactured locally while
the rest are being imported. The company
2001 due to sluggish economy. “ We expect to also plans to increase the level of exports
keep the rhythm, all we can say is that we are from India from the current 10 per cent to 20
still slightly ahead of our targets. per cent in the next few years.
“Huge investments can be
Impressive numbers notwithstanding, Mr justified by huge volumes,” Mr
Evrard is still not convinced. Said he: “ I thinkEvrard said.
we are still marginal players except in the hair
colour market where we can still double or triple our market share.”
L’Oreal made its debut in India in 1991 with the launch of Ultra Doux shampoo
from Laboratories Garnier. Gradually, L’Oreal expanded rapidly since it
introduced its L’Oreal Excellence line of hair colour in 1997—the first time a
company introduced the concept of hair colour other than black in the country.
The group also decided to develop the fledgling hair dressing and beauty parlour
industry in India with L’Oreal Professional in 1997.
“The crusade for L’Oreal in India was to develop the hair colour market which
was a totally undeveloped market when we came in. I think this is the crusade we
are winning since this is area were we are the leaders/experts by far,” Mr Evrard
said.
So what has been the winning formula to stay on top in a fiercely competitive
industry? According to him, a simple strategy. “Introduce new, different and
better products,” and added, “we strongly believe that its never too late to enter a
market if you have new, different and better products. Which is easy said but it’s
tough.”
“However in India, the challenge is in the relevance, we have to propose different
products conveying the allure of different cultures,” Mr Evrard said. Towards that,
L’Oreal, may venture further ahead. It may consider launch of its acquired hair
care brand Soft Sheen aimed at African Amercian women in India, eventually to
use it as a springboard for expanding into India. “There certainly is a market for
such products but we have to find the right technical solution,” Mr Evrard said.
Luxury division, not yet
A careful strategist, L’Oreal feels the retail environment in India is not suitable to
launch its luxury products range such as Lancome, Ralph Lauren perfumes and
others. “It’s a matter of time but as as long as there’s adequate distribution
support and improved retail environment, these brands cannot be launched here.
L’Oreal Luxury products division manufactures prestigious brands for global
reach.
In India, L’Oreal till now was present through its two divisions L’Oreal Consumer
and L’Oreal Professional. While the former is further split into three segments—
L’Oreal Paris; Maybelline New York and Laboratories Garnier, the latter is
responsible for carrying out its hair colour and salon business in India.
The company early this year added a new division called ‘Active Cosmetics
Division’ to tap the emerging market of dermo-cosmetics in the country.
The new division, plans to take on the skin care category with its Vichy range of
products sold exclusively through pharmacies in 48 countries across the world.

L'Oreal's Global Branding

Strategy
• Case Details
• Case Intro 1
• Case Intro 2
• Excerpts

<< Previous
Excerpts
Brand Management
L'Oreal had built a dozen or so mega brands rooted in the local
culture and appealing to different segments of the global market.
Instead of homogenizing the various brands and making them
palatable in myriad cultures, Owen-Jones decided to embody
their (the brands') country of origin, turning what many marketing
gurus considered a narrowing factor into a marketing virtue. As a
senior L'Oreal manager put it, "You have to be local and as
strong as the best locals but backed by an international image
and strategy. We have made a conscious effort to diversify the
cultural origins of our brands."...

Brand Extensions
L"Oreal realized the need for caution in case of brand extensions. The
company extended its brands after doing a thorough research. When
L'Oreal decided to enter the kids shampoo category in 1998, it debated
whether to launch a new brand or go for an extension. The company
realized the L'Oreal name, long associated with women's hair care,
would capture instant credibility with moms. But Kids was really a
child-oriented product. When L'Oreal first unveiled its L'Oreal Kids
shampoo line early 1998, retailers were skeptical. "Retailers say the
value isn't there. We say it is, that the child establishes value. We were
pretty tenacious." - mentioned Carol Hamilton, 45, senior VP-marketing
for the L'Oreal retail division of Cosmair...
Advertising and Promotion
L'Oreal backed its product innovations with the twelfth-largest media
budget in the world. In the late 1980s and early 1990s, "external
charges", which included L'Oreal's advertising and promotions
expenditure jumped from 37% to 47% of sales. L'Oreal increased its
global ad spending to $1.25 billion in 1998, putting it almost on par
with Coca-Cola. L'Oreal had a unique promotion policy for all its
brands. A brand, which sold in mass-market outlets, advertised and
promoted itself in a way similar to brands sold in department stores..
Background Note
L'Oreal, the world's largest cosmetics company
was established in 1907 by a French chemist
Eugene Schueller (Schueller). Schueller had
developed a formula to make synthetic dyes safe
for human hair.

He sold his patented hair dyes to local hairdressers

and beauty salons in Paris. The company's name
was adapted from Schueller's first brand,
L'Aureole, which meant 'halo', in French.

By 1920, Schueller started exporting to other

European countries like Holland, Austria and
Italy. Schueller's successor, Francois Dalle (Dalle)
took the company public in 1963.

Sensing a threat from France's left-wing politicians who were

advocating state control of the nation's top companies, Dalle decided
to internationalize L'Oreal's ownership structure. In 1973, Dalle
persuaded Liliane Bettencourt, Schueller's daughter and L'Oreal's main
shareholder, to dilute her majority stake. Under a complex deal, Swiss
food-products giant Nestle took a 49% stake in a holding company--
with Bettencourt owning the remaining 51%.

The holding company in turn acquired a little over 50% of L'Oreal's

stock. In 1972, L' Oreal launched the legendary campaign "Because I
am worth it," to promote the 'Preference' line of hair color. The
emotional pitch "Because I am worth it," made the consumer feel good
about paying higher prices for L'Oreal products.
Over the next few years, the company's business expanded
considerably. It started distributing its products through agents and
consignments to the US, South America, Russia and the Far East. The
next phase of L'Oreal's growth started under Lindsey Owen-Jones who
had joined L'Oreal in 1969, fresh out of Oxford and the Insead business
school in Fontainebleau (France).

He rose to head the company's Italian operations (1978-1981), where

he caught the eye of his superiors with exceptional performance. He
was then asked to head the strategic US operations. Managing the
company's US operations was not an easy task...

Introduction

In 2005, the $18.89 billion L'Oreal group was the largest and the most
successful cosmetics company in the world, with over 17 international
brands. L'Oreal was ranked 49th by the Business Week Interbrand
survey conducted in August 2004. Its brands were valued at $5902
million ($5600 million in 2003). L'Oreal sold makeup, perfume, and hair
and skin care products to both men and women in 150 countries. The
group reported its 18th consecutive year of double-digit growth in
December 2004. Since 1989, L'Oreal's sales had grown at a
compounded annual rate of 12% to $1.7 billion.
L'Oreal combines the double-digit top-line growth of a hot technology
company with the bottom-line comforts of a well-run bank. What sets
L'Oreal apart is its consistency over time."1 - pointed out an observer.

A decade ago, about 75% of the company's $5.5 billion annual sales
were from Europe, the bulk of it in France. In 2004, 85 % of L'Oreal's
consolidated sales were in markets outside France.

In the late 1990s and early 2000s, when the Asian and the Latin
American economies were considered too risky, and several
international companies performed poorly, L'Oreal had surged ahead
As an analyst put it, "L'Oreal is the only real global leader in every
segment of the industry."2Whether it was selling Italian elegance, New
York street smarts, or French beauty through its brands, L'Oreal had
reached out to a wide range of customers across incomes and cultures.
Under Lindsey Owen-Jones (Owen-Jones), L'Oreal's CEO for 17 years,
L'Oreal had fine-tuned its global branding strategy.

As Owen-Jones' term at L'Oreal drew to a close, industry observers

wondered if his successor, Jean-Paul Agon (Agon), would be as deft as
Owen-Jones in managing L'Oreal's complex brand architecture and
delivering profits. L'Oreal also faced new challenges with companies
like Procter & Gamble (P&G) deciding to give a special thrust to their
beauty products. Would L'Oreal be able to hold on to its seemingly
invulnerable position in the global cosmetics market?
L'Oreal's Global Branding Strategy - Next Page>>
Corporate Structure
L'Oreal was organized as a clutch of small profit centers, some with as few as ten employees.
The company's work culture encouraged audits and budget meetings to focus less on the spilled
milk of the past, and more on leading indicators of how things would look at year-end.

These meetings encouraged discussions to find out which overlooked products showed signs of
life but were undercapitalized and which products were not matching expectations and needed
pruning. The structure allowed L'Oreal to move fast...
Competition
L'Oreal faced competition from various formidable rivals. On one side,
cosmetic majors like Revlon and Avon and Nivea vied for shelf space.
On the other, there were the giant FMCG companies like Unilever and
P&G. There were also local competitors like HLL-Lakme in India, Dark
and Lovely in Africa, and the erstwhile Shu Umera in Japan (L'Oreal
later acquired this brand)..
Future Outlook
As Owen-Jones raced to expand international sales, he realized the
need to ensure that his brands did not confuse consumers, leading to
brand cannibalization. Owen-Jones also faced uncertainty surrounding
the company's future. Bettencourt, 79, had indicated she did not want
the arrangement with Nestle to change in her lifetime. Nestle had
promised to respect her wishes. But after her death, it was not clear
whether Nestle would be as compliant with her only child, Francoise.
Nestle had about $13 billion tied up in L'Oreal, and with 26% of its
shares, it could launch a takeover bid...

New products, aggressive marketing on

L’Oreal’s agenda
Lalitha Srinivasan
Posted: Saturday, Jan 10, 2009 at 2217 hrs IST
Updated: Saturday, Jan 10, 2009 at 2217 hrs IST

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Mumbai: L'Oreal Group, the 17-billion euros global leader in cosmetics, is

charting out a long-term growth strategy for its wholly-owned subsidiary L’Oreal
India. To start with, L’Oreal India is planning to extend its distribution network and
product portfolio to sustain its competitive edge in the beauty business.
To take on rivals like Hindustan Unilever Ltd’s Lakme, the company is planning to
invest in mass media advertising as well as ground events to woo new
consumers. Incidentally, L’Oreal India has just appointed cine star Sonam
Kapoor as its new brand ambassador for the Indian markets.
On the company’s growth plan, Dinesh Dayal, chief operating officer, L’oreal
India, said, “Our strategy is to recruit more faithful customers to our brands
through innovative products and categories. Our objective is that each of our
brands attains and maintains their leadership positions in each of the segments.”
At present, L’Oreal’s major brands include Garnier, L’Oreal Paris and Maybelline
in the consumer products sector.
According to Dayal, the company has lined up a host of new launches in January
2009. “We have combined our insights on Indian consumers and their needs with
the force of our global R&D,” he said. The company files more than 600 patents
each year internationally, he noted. L’Oreal India’s launches in 2009 include
Ralph Lauren’s fragrance for women and Lancomes’s Oscillation. As part of its
growth strategy, L’Oreal will be increasing its distribution in a phased manner, in
line with demand. “Advertising is a core component in demonstrating the quality
and performance of our products and we will continue to invest in line with our
growing business,” said Dayal.
He said that the company has appointed Sonam Kapoor as an additional L’Oreal
Paris spokesperson for the Indian Market alone. “She will complement our
international brand ambassador Aishwarya Rai,” he explained.
Meanwhile, L’Oreal’s arch rival, HUL, has announced that its board has approved
the licensing of Lakme and Lever Ayush brands to a separate subsidiary
company, Lakme Lever Private Limited. This company will evaluate options
towards developing a uniquely different, new business model for this opportunity,
with singularity of purpose and dedicated focus.
“With increasing competition, the branded cosmetics and skincare sector in India
will witness a pitched battle for market share in the next few months,” said a
Mumbai-based industry analyst.
Blueprint for growth
&#149; L’Oreal is planning to invest in mass media advt and ground events
&#149; It has appointed Sonam Kapoor as its...
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