Bs L Oreal

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International management specialization:

Business strategies.

Group members:

Diana Platonova

Maryam Nassiri

Siddarth Arun

Firas Moukalled

Yazeed Kaloti

Rayan Moukalled

20th of May, 2015

How did L’Oréal become world largest beauty company?

In 1907 Shculler started the world´s first synthetic hair color product, which became a lóreal hallmark with a tight combination of production sales and marketing. And 1912 it can be found in Italy, Austria and Netherlands. In 1930s Shuller entered the  hygiene toiletry product for bodu and hair, and invented the first soapless shampoo Dop. Afterwards a pioneer sunscreen, givig loreal as a European leader in hair-coloring and body care products.

After the world war loreal decided to enter the Us market and formed Cosmair to distribute its products to beauty salons. But the American market was unfamiliar with loreal brands and quality and resistant to using it. And managers realized that the French prestige good for perfumes there but less useful in hair products.

L´Oreal was France´s leading beauty company in the early 1980s; however its international presence was limited, especially in north America. This was due the concept of a high Parisian product and the perception of it being expensive. It was premium for too many countries. One big step which is one of the most influential step loreal took was entering the US market and ewanting to be number 1 in the market; it has done so by acquiring many established and successful beauty companies in the US. These acquisitions enabled Loreal in segmenting its products to three main ones;

1-Consumer Products division for hair-care, skin-care, make-up perfume using mass maket retailers at competitive prices.

2-Professional Product division for beauty professional salons and hairdressers.

3-Luxury Product prestige products sold in specialty selective stores, travel stores and its own shops.

The major strategy of which made loreal the leading beauty in the world is the acquistions of major brands such as Lamcome, Redken, Maybelline, Softsheen, Carson, Matrix and Kiehls among others that it acquired such Ralph Lauren fragrances. This would go more in detail in the next question.

Another factor was the research and development of loreal, this department gave loreal the competitive advantage among its competitors. And loreal invested in this more than any other competitor was filing about 500 patents a year, has a portfolio of more than 20000 patents.  In addition the R&D was also cutting down their manufacturing costs.

The international marketing team is very effective is  a somehow integrated with R&D for development and improving of products according to the market demand. However without affecting the key factors of the brand that make it successful.  In addition they work to secure the position of the brand and its image. Also with their global approach when the market in region  need to be adapted the ads would target them more.

Last but not least the recruiting of loreal employees; loreal seeks indviduals with ambition to innovate and does not limit them to certain company bureaucracies, in the contrary it empowers its employees, and encourage internal promotions.

What was the role of acquisitions?

The role of acquisitions is to strengthen the power of loreal in the market and making and was the major factor that made loreal the position it is today; leading. The main roles were, have more broad price range from cheap to luxury. Serve most demographics and ethnicities. Have distribution channels when entering new markets. Diversify their products. Serve broad range of ages. Help better distribution. Examples of acquisition with the strategy used:

-Redken (mid-priced) was well known for its network in extensive salon educators . Redken reassessed the hair care division of loreal.

-Maybelline was third leading US make up brand. Had little presence outside the US. But at time of acquistions it lost focus. However loreal brought back what made Maybelline famous. And introduced to the international market.

-SoftSheen and Carson for ethnic care products especially African American,; which spend the most money on hair products in the Us but represent only 20% of the population however still a big segement. And had good penetration in South Africa too. This acquisition made loreal develop the LOreal ethnic Skin and Care Research institute and was the only of kind facility in the world.