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Marketing Excellence Much of the company's early international expansion is credited to Sir Lindsay Owen-Jones, who transformed L'Oral from a small French business into an international >> L'Oral cosmetics phenomenon with strategic vision and precise When it comes to globalizing beauty, no one does it brand management. During his almost 20 years as CEO better than L'Oral. The company was founded in Paris and chairman, Owen-Jones divested weak brands, in- more than 100 years ago by a young chemist, Eugene vested heavily in product innovation, acquired ethnically Schueller, who sold his patented hair dyes to local diverse brands, and expanded into markets no one had hairdressers and salons. By the 1930s, Schueller had dreamed of, including China, South America, and the former invented beauty products like suntan oil and the first Soviet Union. His quest was to achieve diversity and "meet mass-marketed shampoo. Today, the company has the needs of men and women around the globe, and make evolved into the world's largest beauty and cosmetics beauty products available to as many people as possible." company, with distribution in 130 countries, 27 global Today, L'Oral focuses on five areas of beauty ex- brands, and more than $30.8 billion in sales. pertise: skin care, hair care, makeup, hair coloring, TAPPING INTO GLOBAL MARKETS CHAPTER 8 265 and perfume. Its brands fall into four different groups: In Japan, for example, L'Oral developed Wondercurl (1) Consumer Products (52 percent of sales, includes mass mascara specially formulated to curl Asian women's marketed brands like Maybelline and high-technology eyelashes, which are usually short and straight. Within products sold at competitive prices through mass-market three months, Wondercurl mascara had become Japan's retailing chains), (2) L'Oreal Luxe (27 percent of sales, in number-one selling mascara, and young women lined up cludes prestigious brands like Ralph Lauren perfume that outside stores to buy it. L'Oral continued to research the are available only in premium stores, department stores, market and developed nail polish, blush, and other cos- or specialty stores), (3) Professional Products (14 per metics aimed at this new Asian generation. cent of sales, includes brands such as Redken designed L'Oral believes its future lies in emerging areas such specifically for professional hair salons), and (4) Active as Asia, Africa, and Latin America, where it expects to Cosmetics (7 percent of sales, includes dermo-cosmetic find millions of new customers over the next few years. products sold at pharmacies, drugstores, and medi-spas). Marc Menesguen, L'Oral's managing director-strategic L'Oral believes precise target marketing-hitting the marketing, explained, "Our projection for 2020 is that right audience with the right product and message at the 50% to 60% of sales will be coming from [emerging] right place-is crucial to its global success. Owen-Jones markets." As a result, new research centers have popped explained, "Each brand is positioned on a very precise up in these countries, and the company is working ag- [market segment, which overlaps as little as possible with gressively on understanding these consumers' needs and the others." developing beauty products to satisfy them. The company has built its portfolio primarily by pur Well known for its 1973 advertising tagline- chasing local beauty companies all over the world, revamp "Because I'm Worth It" - L'Oral is the leader in beauty ing them with strategic direction, and expanding the brand products around the world. The company spends ap- into new areas through its powerful marketing arm. For ex proximately $5 billion in advertising each year, making ample, L'Oral instantly became a player (with 20 percent it the third-largest advertiser. As Gilles Weil, its head of market share) in the growing ethnic hair care industry when luxury products, explained, "You have to be local and as it purchased and merged the U.S. companies Soft Sheen strong as the best locals, but backed by an international Products in 1998 and Carson Products in 2000. L'Oral image and strategy." believed the competition had overlooked this category be- cause it was fragmented and misunderstood. Backed by a Questions deep portfolio of brands and products, SoftSheen-Carson is now the market leader in the ethnic hair care industry. 1. Review L'Oral's brand portfolio. What role have local L'Oral also invests significant money and time in its and global marketing, smart acquisitions, and R&D 22 local research centers around the world. The com played in growing those brands? pany spends 3.5 percent of annual sales on R&D, more 2. What are the keys to successful local product than one percentage point above the industry average, launches like Maybelline's Wondercurl in Japan? researching and innovating products that meet the local needs of each region. 3. What's next for L'Oral on a global level? Who are its Understanding the unique beauty routines and needs biggest competitors? If you were CEO, how would of different cultures, climates, traditions, and physiologies is you sustain the company's global leadership? critical to L'Oral's global success. Hair and skin greatly dif- Sources: Andrew Roberts, "L'Oral Quarterly Sales Rise Most since 2007 on Luxury Perfume, fer from one part of the world to another, so L'Oreal listens Bloomberg BusinessWeek April 22, 2010; Richard Tomlinson, "L'Oral's Global Makeover, to and observes consumers across the globe to gather a Fortune, September 30, 2002, Doreen Carvajal, "international Business; Primping for the Cameras deep understanding of their beauty needs. L'Oral scientists in the Name of Research," New York Times, February 7, 2006; Richard C. Morais, The Color of Beauty," Forbes, November 27, 2000, Jack Neff, "How L'Oreal Zen Master Menesguen Shares study consumers in laboratory bathrooms and in their own Best Practices around the Globe, Advertising Age, June 11, 2012, L'Oral, www.loreal.com. homes, sometimes achieving scientific beauty milestones