L'oreal Case Study

L'Oreal Nedeland B.V.: Product Introduction

Case Study

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Background Summary:

L'Oreal Group, headquartered in Paris, was the largest manufacturer of cosmetics in the world in 1992. In that year, net profits were $417 million on $6.8 billon in sales, a 12 percent increase over the prior year. To maintain the success of their brand, L'Oreal focuses on introduction of new products in to the marketplace. Product research is center around the company headquarters in France and then marketed to subsidiaries in over 100 countries throughout the world.

In the cosmetics industry, brand life cycles can be short. In order to maintain or increase growth, L'Oreal launches one or two new products each year. Not only does L'Oreal launch these products under their brand name but under the brand names of their family of products including higher end cosmetic company Lancome and their Garnier line.

Problem Identification:

When looking to launch a new Garnier product into the Netherlands, L'Oreal faced the lack of Dutch consumers' knowledge of the Garnier brand name. People in the Netherlands have little awareness of the brand name. The launch of a Garnier product had to have high potential to convert consumers from their current brand to the Garnier brand without taking the consumer away from other L'Oreal products already on the market. If the launch was not successful, the future of the Garnier name in the Netherlands was at stake.

The Netherlands has the fastest growing population of women 25 and over. More Dutch women are working outside of the home, raising the work force percentage of women to 29 percent. Women in the Netherlands are delaying families, getting a job and gaining independence. Women now have a higher disposable income and can spend that money on cosmetics.

Internal & External Factors

SWOT ANALYSIS

Internal

Strengths Weaknesses

1. Largest producer of cosmetics & hair care products

2. High value on R & D

3. Expertise introducing new products

4. Increased profit margins because of the packaging and advertising

5. New product introductions shows market diversity

6. Something for everyone 1. Success measured on customer satisfaction, not profits

2. Decentralized management - financing through the launch country not headquarters

External

Opportunities Threats

1. Specialized in beauty products

2. Aging, growing market

3. Higher disposable income in target market

4. Increasing demand for products

5. Acquisition of new companies and brands

6. Registration of new patents shows future opportunities

1. Increase in competition

2. Economy downturn

3. Cannibalization from their family brands

Analysis

The female population of the Netherlands is 5 million. Almost half of all Dutch women between 15 and 65 years old used skin care products including day creams, cleansers and masks. Some of the things these women look for in cosmetics are natural ingredients and brand loyalty out of fear of allergic reaction.

Currently, there are competing products in the market place for skin care. Launching the Synergie brand by Garnier in the Netherlands using the same adverisiting slogan "The alliance of science and nature to prolong the youth of your skin", would work in the Dutch market since women in the Netherlands are looking for skin care products with natural ingredients. Competition in the market is fierce and competitive.

The competitors for the Synergie line would include multinational Procter & Gamble's Oil of Olaz and L'Oreal's own Plenitude; The regional competitors are Dr. vd Hoog and Rocher. These competitors have similar products with similar price points. Products in the market which cost less include; Nivea Visage