LOral was founded in Paris over 100 years ago by a young chemist, Eugene Schueller, who sold
Question:
L’Oréal was founded in Paris over 100 years ago by a young chemist, Eugene Schueller, who sold his patented hair dyes to local hairdressers and salons. By the 1930s, Schueller had invented beauty products such as suntan oil and the first mass-marketed shampoo. Today, the company has evolved into the world’s largest beauty and cosmetics company, with distribution in 150 countries, more than 84,000 employees, 34 global brands, and over €26 billion in sales. Well known for its 1973 advertising tagline—“Because I’m Worth It”—L’Oréal is the leader in beauty products around the world. The company spends approximately €4 billion in advertising each year, making it the third largest advertiser in the world.
Much of the company’s early international expansion is credited to Sir Lindsay Owen-Jones, whose strategic vision and precise brand management transformed L’Oréal from a small French business into an international cosmetics phenomenon. During his almost 20 years as CEO and chairman, Owen-Jones divested the firm of weak brands, invested heavily in product innovation, acquired ethnically diverse brands, and expanded into markets no one had dreamed of, including China, South America, and the former Soviet Union. His quest was to achieve diversity, “meet the needs of men and women around the globe, and make beauty products available to as many people as possible.”
L’Oréal has a richly endowed portfolio of international brands that responds to the diverse needs of consumers the world over. Its brands are grouped into four divisions based on the profile of its target customers:
Consumer Products produces 52 percent of sales and offers a wide range of competitively priced, mass-marketed hair-care, makeup, and skin-care products. Its brands include L’Oréal Paris, Magic, Garnier, Maybelline New York, African Beauty Brands, Essie, Nyx Professional Makeup, and Niely. These brands are distributed in mass-retailing channels, including hypermarkets, supermarkets, drugstores, and traditional stores.
L’Oréal Luxe makes up 27 percent of sales and offers upscale skin-care, makeup, and perfume brands that include Lancôme, Giorgio Armani, Yves Saint Laurent Beauté, Biotherm, Kiehl’s, Ralph Lauren, Shu Uemura, Cacharel, Helena Rubinstein, Clarisonic, Diesel, Viktor&Rolf, Yuesai, Maison Margiela, Urban Decay, Guy Laroche, Paloma Picasso, Atelier Cologne, House 99, It Cosmetics, and Proenza Schouler. L’Oréal Luxe products are available at department stores, cosmetics stores, travel retail stores, as well as own-brand boutiques and dedicated websites.
Professional Products is responsible for 14 percent of sales and offers professional-quality products to hairdressers and skin care professionals. Brands include L’Oréal Professionnel, Kérastase, Redken, Matrix, Pureology, Shu Uemura Art of Hair, Mizani, Decléor, Carita, Biolage, and Seed Phytonutrients. These brands are distributed to hair care and skin care salons worldwide.
Active Cosmetics, which accounts for 7 percent of sales, is the world leader in dermocosmetics. Its brands include Vichy, La Roche-Posay, Skinceuticals, Roger & Gallet, Sanoflore, and CeraVe. These highly complementary brands are developed and endorsed by health professionals—dermatologists, pediatricians, cosmetic doctors—to meet a range of skin-care needs from normal to blemish-prone. The Active Cosmetics brands are sold in health care outlets worldwide, including pharmacies, drugstores, and medi-spas.
L’Oréal believes that precise target marketing—hitting the right audience with the right product and message at the right place—is crucial to its global success. Owen-Jones explained, “Each brand is positioned on a very precise [market] segment, which overlaps as little as possible with the others.”
The company has built its portfolio primarily by purchasing local beauty companies all over the world, revamping them with strategic direction, and expanding the brand into new areas through its powerful marketing arm. For example, L’Oréal instantly became a player (with a 20 percent market share) in the growing ethnic hair-care industry when it purchased U.S. companies Soft Sheen Products in 1998 and Carson Products in 2000 and merged them. L’Oréal believed the competition had overlooked this category because it was previously fragmented and misunderstood. Backed with a deep portfolio of brands and products, SoftSheen-Carson is now the market leader in the ethnic hair-care industry. L’Oréal also invests significant money and time in its 20 research centers grouped into six regional hubs in the United States, Japan, China, India, Brazil, and South Africa. The company spends close to €900 million on R&D, more than one percentage point above the industry average, researching and innovating products that meet the local needs of each region. Understanding the unique beauty routines and needs of different cultures, climates, traditions, and physiologies is critical to L’Oréal’s global success. Hair and skin differ greatly from one part of the world to another, so L’Oréal listens to and observes consumers across the globe to gather a deep understanding of their beauty needs. L’Oréal scientists study consumers in laboratory bathrooms and in their own homes, sometimes achieving scientific beauty milestones. In Japan, for example, L’Oréal developed specially formulated Wondercurl mascara to curl Asian women’s eyelashes, which are usually short and straight. Within three months, Wondercurl mascara had become Japan’s number-one-selling mascara, and girls excitedly lined up in front of stores to buy it. L’Oréal continued to research the market and developed nail polish, blush, and other cosmetics aimed at this new generation of Asian girls.
Expert Answer:
1 A Created in Paris around 1909 by Eugene Schueller a young chemist LOral has developed into one of the worlds largest cosmetic companies In approximately 140 countries LOral currently markets and ma... View the full answer
