L'oreal Case Study

Due to the rapid growth in the economy, Chinese consumers increasingly looked for more sophisticated premium products in many categories such as beauty and skincare.

The appearance in China of some of the best brands allowed:

introduction of extensive portfolios of high quality brands and products

marketing expertise

financial resources

cutting edge r&D

2010: top 5 companies (P&G, Loreal, Shiseido, Unilever and Amway) VS strong local competition (Shanghai Jahwa, Jala, etc)

3 Types of distribution channels:

History: For long times, cosmetics didn’t exist in China and so Yue Sai had to educate the consumers about the beauty products and routines. However, this was an opportunity since the customers were open minded, free preconceptions.

China was primarily a skincare market. Didn’t use much make up, or perfumes.

Customers: younger generation. However old had negative association among consumer in china while in America and Europe a brand’s longevity was associated with prestige.

Chinese prouder of its nation over time and started to have interest in products with a local heritage and boosting preferences for domestic brands. The perception that chineses had about reputation for quality, safety and r&d capabilities improved. In cosmetics this was particularly true, because almost everyone of them, including the international brands were manufactured there.

CHALLENGE: Chinese continued to associate luxury with foreign brands. How quickly would customers accept Chinese luxury brands?

Chinese consumers were increasingly sophisticated about brands and products in the beauty and skincare categories. They could distinguish between premium and those aspiring to be perceived as that. They were aware of each brand, and they look for a premium one. A Western name and image were no longer enough to attract Chinese consumers.

L’Oréal

China is the third-largest market for L’Oréal. Considering beauty and skincare in China, Loreal is the second largest company. Nº1 in the luxury segment.  Major brands are all present in china.

Established Research and Innovation Centre in Shanghai, and manufacturing centers close that produces most of its mass and professional brands.

Luxury brands, with exception of Yue Sai are still imported.

Yue Sai

 Aim to create, produce and sell the best beauty and skincare products to Asian women, and become the first global cosmetics brand from china.

There were no reason why Chinese women had access only to foreign products that had not been designed for their specific type of skin and beauty.

- secured distribution in department stores, trained china’s first beauty advisors, developed range od red lipsticks and basic skincare products designed for Asian skin. → ICON in China.