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Loreal International Marketing Strategy Marketing Essay

3185 words (13 pages) Essay in Marketing

5/12/16 Marketing Reference this

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The purpose of this report and its study is concentrated to have a glimpse and understanding of International marketing strategy. In this report, I will discuss the issue encompassing L’Oreal and its global marketing strategy. The subject concentration in this report limits its analysis on the theme of ‘International Marketing Strategy’ of L’Oreal, and how the company as a global MNC in cosmetic manufacturing and sales is strategized globally. For the purpose of this work, L’Oreal is selected because the company has its market presence in almost all part of the globe. Its products and the quality that it offers to consumers are also assumed to be one of the greatest strength of the company. In terms of the sales figures as well, the company is well ahead in the leader stage.

Thus, taking this backgrounds into consideration, it is thus clarified that the attempt of this work is theoretical in nature, which means that research analysis overall is secondary in nature and does not involves primary research. Data required for the research is gathered from relevant source as feasible to justify the case assumption. It is also important to note that international marketing strategy and its literature also is being used extensively as a resource, so as to understand the concepts and its theoretical meaning. In doing, it facilitates a research on the subject matter that is in-depth to some extent and logically sounds in its presentation. Structurally, the paper is arranged in streamlined manner starting with the introduction about the company, so as it gives us the glimpse about the company overall. It is followed by defining the meaning of global marketing strategy, so as the attempt of this work is streamlined and specifically meets the objective criteria of the research subject defined above.

Introduction

L’Oreal international is a group of companies with its branches and subsidiary companies scattered across the globe. L’Oreal is considered to be one of the biggest cosmetic manufacturers in the world today. “L’Oreal SA Paris is the world number one cosmetic company specializing in the development and manufacturing process of hair care, hair color, skin care, color cosmetics and fragrance for consumer and professional market.” (James S O’Rouke, 2011, p. 362) In terms of its sales figure and market presence globally, L’Oreal as a corporation is tremendously huge.

The company was founded many decades back. According to the data that can be gathered, it is believed that L’Oreal was founded by “French chemist named Eugne Schueller in the year 1907. The said chemist and founder of L’Oreal is also a renowned inventor of first ever hair colorant or dye in its synthetic nature, which revolution the beauty and salon industry.” (L’Oreal)

The company was founded “in France and has many interesting history attached to it when viewed from a cultural perspective. In the early part of 1910, women in Paris were very obsessed with hair coloring and dye. Given the hypes in such aspects, French chemist Fugne Schueller invented the first every hair dye in synthetic. And since then the foundation of L’Oreal happened, and it was a time that the company never looked back. It is also interesting to note that the company was finally incorporated on 1939” (FundingUniverse) Starting from the year 1907, “today L’Oreal is the world largest cosmetic company marketing 500 brands and more than 2000 products in all areas of the beauty business.” (James S O’Rouke, 2011, p. 362)

These fact sheets give a clear precise glimpse of the company since its founding days. As we have detailed, L’Oreal given the change in market structure and globalization impact has adopted in the best way, to ride the tide of competition and to stand ahead in the race for the number spot in the cosmetic and beauty industry. When we observe with the present time, products and merchandise of L’Oreal brand can be found in every corner of the globe, and in almost every retail outlets. Its brand is so famous that even most of the saloons across the world prefer L’Oreal hair colorant than any other products. This is interesting indeed to observe, given that the company started from the humble background.

Thus, it would be interesting to analyze the overall feature of L’Oreal marketing strategy and its internal presence. However, before we make an attempt in the respect, it is prudent also to understand the meaning of what defines ‘global marketing strategy’ in context of international business and its management components. The following paragraph details the discussion related to global marketing strategy and its meaning.

What is the Meaning of Global Marketing Strategy?

To begin with, we should note the established facts that globalization and its impact have had a tremendous appeal in the world economy. With the impact of globalization, more and more corporation are going international, given that the market is huge, so is the risk as well as business return. The economic liberalization as we understand is one subject of globalization. There is no doubt in that regard. It also an established facts that today management and its processes overall is more concerned with the intricacies of the internal market and its components.

Hence, when viewed from this respect it is understood that global marketing strategy encompasses the management process and its practicality has a lot to do with strategizing and policy formulation that focus their attention in the international market, through many variety and forms, such as merger, acquisitions. However, it would be wise though to have a glimpse and understand global marketing strategy from a scholastic point of view. In that sense, Jean-Pierre Jeannet, H.David Hennessey (2005) defined “global marketing strategy and management as the process involving a coherent, unified and integrated marketing strategy for a product or services against the entire global market opportunity.” (Jean-Pierre Jeannet, 2005, p. 6) This definition gives a clear definite point as to what composed the meaning of global marketing strategy. The meaning of such a marketing strategy is like with any other marketing strategy. The only difference is that global marketing strategy is more focused and unified in a sense, and its purpose also is aim to met the entire global market opportunity.

Market Strategy and its Setup

Global marketing strategy is more in-depth and broadened in one sense of the term. It is simply a principle of marketing however on a global scale. Setup of global marketing strategy has a lot to do with understanding the nature of global market itself, and most importantly the environment. Business environment across the globe has different economic, social and political influence. Thus, it is believed that selecting a global market target for examples when strategizing is a good idea.

In that sense of the term, we can differentiate global target marketing in three features, “namely standardized global marketing, concentrated global marketing, and differentiated global marketing.” (Keegan, 2002, p. 227)

Discussion

In this section of the report, Global marketing strategy of L’Oreal is concentrated on a cross cultural arena spanning four market destination. They are namely,

Asian Market

European Market

North America Market

The African, Orient and Pacific Region

In each of these four markets, each particular national market is identified. As the case is with Asian market, the concentration of the study and its analysis has given emphasis on Chinese, Thailand and Japanese. When it matter to L’Oreal marketing in Europe, France, UK and Germany they are the hotspot discussion regional market and its range. As far as it goes with North America region, the main market destination to be discussed is US and Canada. Finally, the fourth marketing regions of L’Oreal are Africa, Orient and Pacific Region which includes discussion and analysis of L’Oreal in India, Australia and UAE.

Thus, it would be interesting to trace the segmentation in each regional market base of L’Oreal as discussed below.

Market Strategy and its Setup: Global Marketing Strategy of L’Oreal in Asia

At present L’Oreal is one of the best company in the whole world in the field of cosmetic products. The cosmetic products of the L’Oreal are widely used and specially the hair colour which was introduced by L’Oreal few years ago. L’Oreal is very famous in Asia and their products in Asia are very cheaper than the other companies and are used by majority of people in china, Thailand, Japan etc. L’Oreal is famous and very successful because of their global marketing strategies which are very helpful and also distinct from the strategies used by other companies in this field. L’Oreal in Asia uses the sustainable strategy that is of growing the company as the demands of cosmetic products in the countries like china, Thailand etc is in great amount. This company uses the strategy of suspicious brand management and they also brought the strategy of more suspicious acquisitions. The main problem that a company like L’Oreal faces in Asia is of competition given by the other companies dealing with the cosmetic products. To overcome this problem in Asia these companies use the strategy of selling good quality products at the cheaper rates than the other companies. One of the best strategies of L’Oreal in Asia is of diversification of the brand and the main reason behind this strategy by L’Oreal is to make them palatable in the local cultures. L’Oreal in Asia aims at the management of the global brands with the local variations and this means that their main aim is of becoming a local and not the foreign company in Asia. For example L’Oreal in Thailand has given local names to their stores and most of the employees present in this company, are local people of Thailand. It is because of all these strategies, L’Oreal is very successful in whole Asia. (L’Oreal: Expansion into China, 2008)

Market Strategy and its Setup: Global Marketing Strategy of L’Oreal in European Market

L’Oreal is the only company which uses the strategies which also supports the people in many ways and not only in providing good quality products at cheaper rates. L’Oreal used different strategies of marketing in the European market like they used the strategy of nurturing self-esteem of the people with beauty. In France, L’Oreal created the programs like “Beauty from the heart” for helping the people made helpless by illness or any kind of negative life experiences. In the countries like UK and Germany, many of the women and also the young people regain their confidence and their self image gradually by using the cosmetics which are provided by L’Oreal. In European countries L’Oreal also used the marketing strategies like taking calculated amount of risk etc but most of the strategies are related to the growth of the people mentally and not only for the beauty or the fashion purpose. Various innovative treatment programs are launched by L’Oreal for the young people of European countries and this company also launches the free skincare and make-up workshops for the women suffering from cancer. For example in France a programme named as “La Vie, de Plus Belle” offers the free skincare and makeup for the cancer suffering women in all over the France. This helps them to cope with the treatment’s side effects and it also helps them to retain their self esteem which is very important for a patient. In the European countries L’Oreal generally uses the strategy of the management of brand by which L’Oreal had made a large amount of brands which are rooted in the local culture and which all appeals to the various segments of the global market. By using these social types of strategies for the people of Europe has helped L’Oreal in expanding their business in the whole Europe.

Market Strategy and its Setup: Global Marketing Strategy of L’Oreal in North American Market

North American markets are considered as a perfect place for the companies like L’Oreal, Olay, ponds etc. The best business of L’Oreal comes from the market of US. The reason for this much success is that L’Oreal uses very good global marketing strategies in North America and the other countries like Canada etc. One of the successful strategies of L’Oreal in US market is brand extensions which includes the extensions of the brands after doing a complete research. For example when L’Oreal launched a shampoo for kids they firstly made a complete research and also debated about the new launch or for an extension. In US and Canada L’Oreal uses the strategy of frequent advertisements and promotions. As we know in the present scenario proper advertisements and promotions are very important for any company because people follow the promotions and due to which the demands of the products like hair colour increases at a very rapid rate. We can clearly understand the advertisement and the promotions of L’Oreal through their media budget. L’Oreal has the twelfth largest media budget in the world which is much more than the other companies of this field. For example in the late 1990’s the expenditure of L’Oreal advertising and promotion was jumped from the 37% to around 47% of the total amount of sales. The global ad spending of L’Oreal was increased to $1.25 billion which was on par with the company named as coca cola. The best thing about this company is that they have a separate and very distinct policy of promotion in the market of US. Matrix is the number one brand of L’Oreal in US and the main reason behind the success of matrix is the frequent and distinct advertisement and promotion of the cosmetic and the hair products. The people of countries like Canada like to use new products that mean they like changes in their product after some interval of time. So by keeping this thing in mind L’Oreal uses the strategies of modifications which mean they modify their existing products according to the latest tastes and fashion of the local people. According to latest surveys of the people of L’Oreal company, majority of the profits of this company is because of US and these perfect strategies used by this company in US is the reason behind this type of success specially in north American market. (Helping vulnerable people)

Market Strategy and its Setup: Global Marketing Strategy of L’Oreal in Africa, Orient and Pacific Region

Like other countries in the world L’Oreal is also very successful and equally famous in Africa and pacific region. L’Oreal entered into the market of India in the year 1997 and at that there was not much awareness about the sniff of structure in the industry of hairdressing. In the countries like UAE and Australia, proper and the organized education was totally absent and perfect and well trained hairdressers were also not present at that time. Despite of all these problems L’Oreal in India made some of the strategies and one of the best strategies of L’Oreal is that they launched various technical training centers and they even opened a club of only the hairdressers. IN UAE, L’Oreal products which were professional began selling through parisienne salons while the other companies have begun retailing their range of hair color to power growth. L’Oreal uses a global marketing strategy of launching its successful brands all around the world. For example in February of this year only, L’Oreal made an announcement of the arrival of the matrix which is the number one brand of L’Oreal in US to India, UAE etc with a reason of adding range of hair products to their existing products at affordable prices. The main thing about this company is that they make strategies according to the local culture of different countries and not uses the same strategies in every country. Because of all these strategies, L’Oreal gains a huge profit from Europe every year. (L’Oreal’s Global Branding Strategy)

Understanding of different cultural distinctions for international market

For L,Oreal knowledge of variant Culture is of great importance so as to make a company acquire a firm base in the market of any country. In order to succeed it is very essential for a company to understand the different cultural distinctions between the different cultures.

When an MNC explores any market for selling its specific services or product it has to focus majorly on the purchasing power of the customers, their tastes and preferences , than only they can succeed.

All marketing related activities and promotional strategies are designed taking into consideration the Cultural Background of the particular region where the company is planning to launch its products and the Services.

If any company fails to take into consideration any cultural aspect and the other related factors that it might affect the company to stay for a longer time and would be thrown out of the market and the region. Even the geographical factors plays a very important role that Loreal should take into consideration in order to have feasible trade , as the landscape and conditions of transport might differ in every region, which leads to decide whether to use air , road or any other mode.

The same reward schemes, motivational methods, desired working environments, etc also cannot be the same for different employees working for the company in the different nations and thus it also needs the understanding of different aspects of the impacts of the cultural differences.

Proper analysis of the Macro and the Micro Environmental factors should be done in order to study how much technological and economical and politically that country is sound in order to carry out trade with them.

Whether its an Asian Market, European market, North American Market or the Pacific Region , everywhere the culture differs in terms of varied factors.

So it becomes the responsibility of the Company to do a proper scanning of these factors in order to have their longer stay in the region so that they can attain a Top most Competitive position by adapting to various regions cultural factors in their Global marketing Strategies.

Therefore the major things that should be kept in mind for L’Oreal while doing globalised business is to form an effective global strategic team for defining the trading policies to work in any country. The strategy of globalization should encompass of major factors like cultural differences, economic policies of the country etc. moreover the varying lifestyles of the peoples and the rapidly changing economies even should also be kept in mind.

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