L'oreal's Case

L'Oreal was started in 1909 by French chemist, Eugene Schueller. This is one of the largest manufacturers of high-quality cosmetics companies in France, which makes some of the world's biggest beauty products. One of the first moves at L'Oréal was to bring more focus to the company through a huge pruning of brands and activities. The company focused on five core businesses and technologies -- hair color, hair care, skin care, color cosmetics, and fragrances. In 1920 its products were available in a total of 17 countries, including the United States. By 2003 L'Oreal products are sold in about one hundred and thirty countries worldwide. It had marketed over 500 brands and consisting more than 2,000 products in the various sectors of the beauty business. L'Oreal owned numerous brands including Kerastase, Garnier, Maybelline, Helena Rubenstein, Giorgio Armani, Lancome, Polo Ralph Lauren, Biotherm, Vichy and La Roche Posay.

L'Oreal Group had developed activities in the field of cosmetics as well as in the dermatological and pharmaceutical fields in order to put more concentration in their particular activities. They had divided their products into four categories which are consumer (54.8 percent), luxury (25.1 percent), Professional (13.9 percent) and active (5.5percent). Those are the percentages cosmetics sales in 2003. The Consumer Products Division is dedicated to offering all consumers its high technology products at competitive prices through mass-market retailing channels. The Division's brands develop hair care, skincare, make-up and perfume products that meet the aspirations of all of its customers. In contrast with the prestigious brands of the Luxury Products Division offer consumers top of the range products. Clients of selective retail outlets (department stores, perfumeries, travel retail outlets, and the brands own boutiques) receive personalized advice at the point of sale, enabling them to choose the products best suited to their needs. The Professional Products Division is at the service of hairdressers worldwide. These complementary brands meet the requirements of salon professionals in colorants, hair care, texturing and styling formulas and provide salon customers with a wide range of innovative, high-performance products. And the last is the Active Product Division, where in this division they created and marketed brands of cosmetics and dermatological products for selective distribution through pharmacies and specialty health and beauty outlet. The major brands in these division were L'Oreal Paris, Biotherm, Giorgio Armani, Lancome, Shu Uemura, Polo Ralph Lauren Blue and L'Oreal Professional.

It can be seen that the company had achieved major market share growth in the first half of 2003, where Consumer Products Division (9.3 percent) with the launch of innovative products such as Couluer Experte colorants and Double Extension Mascara. As company launched of Luo and Equa from the Professional Products Division achieved 8.8 percent growth. While the Luxury Products Division managed to maintain growth of 0.2 percent due to the sensitive of the economic slowdown, this success came from new products by Lancome and Polo Blue by Ralph Lauren. The Active Products Division continued its international rollout and improves its market shares in Europe with a growth rate 10.9 percent, with the successful of Myokine facial skincare from Vichy and the skin redensifier Inneov Fermete in five European countries.

Although the group was the number one in U.S. cosmetic market, but it faced tough competition from Estee Lauder and Procter & Gamble. Therefore, in order to achieve and maintain their market sales growth, the company believed that diversification, innovation and acquisition are the most effective strategy to expand their business globally. Moreover, L'Oreal had provided products unique and different from their competitors by dominating in their market and build brand equity and profitable growth. In addition, the company also focusing more on ethnic groups and gender in their market strategy and trickle down technology over time from high-end outlets to mass markets. In addition, as a market