L'Oreal: Market leader in cosmetics
L'OREAL Market leader in cosmeticsPresented by:Nisha Agrawal15DM027
Introduction TheL'Oreal Groupis a Frenchcosmeticsandbeautycompany, headquartered inClichy, Hauts-de-Seine.It is the world's largest cosmetics company, and has a registered office inParis.It has developed activities in the field of cosmetics, concentrating onhair color,skincare,sun protection,make-up,perfumesandhaircare, the company is active in the dermatology, toxicology,tissue engineering, andbiopharmaceuticalresearch fields and is the top nanotechnologypatent-holder in the United States.L'OREAL
History1909-1956 : The first steps, constructing a model1957-1983 : "On the road to the Grand L'Oreal"1984-2000 : Become number one in the beauty industry2001 - Present day : Diversity of Beauty worldwideL'OREAL
Mission Everyone aspires to beauty. L'Oreal's mission is to help men and women around the world realize that aspiration, and express their individual personalities to the full. This is what gives meaning and value to their business, and to the working lives of their employee.
L'OREAL operates through 4 divisions:
Consumer product division L'Oreal Paris, Garnier, Maybelline NY.Professional product division L'Oreal Professional, Matrix, Kerastase.Active cosmetic division Vichy.Luxury product division Lancome, Biotherm, Giorgio Armani, Ralph Lauren
Four key aspects of business model
KSF (Industry Key Success Factor)
Unique productStay close with consumerRepresent slogan by the celebrities or famous movie starsProduct segmentationAffordable price with high qualityGiven discount to attract consumerCategory product based on genderPromoting collaborative innovation
SWOT AnalysisInternal Analysis
Strengths Strong brand portfolio - Its brand lineup includes Body Shop, Garnier, Maybelline, Kerastase and Redken, all of which are recognized globally. Diversified geographic presence - The company, currently has operations in over 130 countries across five continents. Strong R&D capability- L'Oreal has strong research and development (R&D) capability, focused on cosmetology and dermatology.
Less dynamic in natural/organic - L'Oreal has been less proactive in the natural/ organic category, although it has done well to revive The Body Shop. It could benefit from greater penetration in the category.
Opportunities A demographic trend- Growing beauty consciousness especially among the aging baby boomers is an important trend for all cosmetics companies. Cosmetics market in emerging nations- rise for cosmetics companies due to increasing popularity of beauty contests and increasing disposable incomes. ThreatsGrowing popularity of cosmetic surgeryIntense competition- The Company competes in selected product categories against a number of multinational manufacturers.Counterfeiting- Counterfeit products not only deprive the company of revenues, but also dilute its brand image.
PoliticalThe political challenge is that L'Oreal should conform to all the different government leadership styles in various countries it operates within.L'Oreal is obligated to produce safe products that do not contain any harmful substances.L'Oreal has to follow the rules set by Advertising Standards Authority. For example, advertisements cannot be misleading that over-exaggerating the functions of a product.
EconomicalLOreals main consumer products categories are all highly sensitive to global economies of scale and scope.L'Oreal should adapt to all the different economic environments and problems in all countries it operates in. For example in 2004, L'Oreal was affected by the continued weakness of the dollar and other currencies.SocialThe culture of a country consists of the values, attitudes and beliefs of its people.LOreal Recognized by Foundation for Social Change as a "Leader of Change"Recognized for approach to sustainable, responsible and inclusive growth and for creating positive social impacts while reducing environmental footprint.
TechnologicalScientific knowledge of the skin and hair accumulated by L'Oreal for over a century has opened the way to great innovations.Active ingredients, formulation procedures, evaluation technologies.
LegalL'Oreal's legal teams make a vital contribution and shed expert light on legal decisions.Their missions consist mainly in making L'Oreal's business operations legally secure.L'OREAL
EnvironmentalEnvironmental concern is LOreal use natural ingredients mostly which is environment friendly.LOreal manage a programmed of internal audits and establish indicators for measuring and reporting on group performance in terms of the environment.
Porter's five force model
Threat of New CompetitorsStrong distribution network required.High capital requirements.Advanced technologies are required.Geographic factors limit competition.Patents limit new competition.Entry barriers are high.
Bargaining Power of SuppliersLarge number of substitute inputs.Low cost of switching suppliers.High competition among suppliers.Volume is critical to suppliers.Bargaining Power of CustomerProduct is important to customer.Large number of customers.
Intensity of Existing RivalryFast industry growth rateLarge industry size.
Threat of SubstitutesSubstitute product is inferior.Substantial product differentiation.
Competitive Profile Matrix
CPM MatrixEstee LauderProctor & GambleLOreal GroupCritical Success FactorsWRW.ScRW.ScRW.ScBrand loyalty10%40.430.340.4Brand value10%40.430.340.4Advertising10%40.440.440.4Product quality10%30.330.340.4Price10%30.340.440.4Management5%30.1540.230.15Financial position5%20.130.1540.2Market share10%20.230.330.3R&D10%30.340.440.4CSR10%30.320.240.4Global markets10%30.340.430.3100%3.153.353.75
SpecificMeasurableRealisticTimeAchievableLOreals ambition is for the coming years to win over another one billion consumers around the world by creating the cosmetic products that meet the infinite diversity of their beauty needs and desires.
LOreal has set itself the mission to achieve goal by offering all women and men worldwide the best of cosmetics innovation in terms of quality, efficacy and safety.
Based on a comparable structure and identical exchange rates, the sales growth of the LOreal group was+5.4% and the net impact of changes in consolidation was +1.0%.
Maximum recognition for LOreal is given by The French magazine indicates overall champions: LOreal, and pharmaceutical laboratory Sanofi Synthlabo which tie for the number one ranking.
LOreal adventure from its creation more than 100 years ago.1909-1956 : The first steps, constructing a model1957-1983 : "On the road to the Grand L'Oreal"1984-2000 : Become number one in the beauty industry2001 - Present day : Diversity of Beauty worldwideL'OREAL
First quarter 2015 salesLike-for-like, i.e. based on a comparable structure and identical exchange rates, the sales growth of the L'Oreal group was +4.0%.The net impact of changes in consolidationwas +1.2%.Currency fluctuationshad an impact of +8.9%.Growth at constant exchange rateswas +5.2%. If end of March current exchange rates (1 at $1.076) are extrapolated up to December 31, the impact of currency fluctuations would be +9.3% for the whole of 2015.Based on reported figures, the Group's sales at March 31, 2015 amounted to 6.44 billion euros, an increase of +14.1%L'OREAL
L'OREALQUATERLY SALESGROWTH MILLION1ST QUARTER 20141ST QUARTER 2015LIKE-FOR-LIKEREPORTEDBY OPERATIONAL DIVISIONProfessional Products735.2852.63.5%16.0%Consumer Products2,758.93,078.31.7%11.6%L'Oreal Luxe1,460.81,753.77.5%20.1%Active Cosmetics507.4559.27.6%10.2%Cosmetics Divisions total5,462.26,243.94.0%14.3%BY GEOGRAPHIC ZONEWestern Europe2,019.92,100.41.3%4.0%North America1,295.21,622.02.4%25.2%New Markets, of which:2,147.22,521.57.5%17.4%- Asia, Pacific1,166.41,476.15.8%26.6%- Latin America410.9460.210.0%12.0%- Eastern Europe426.8396.69.2%-7.1%- Africa, Middle East143.1188.711.3%31.8%Cosmetics Divisions total5,462.26,243.94.0%14.3%The Body Shop176.4192.44.2%9.1%Group total5,638.66,436.34.0%14.1%
Sales by operational division and geographic zone
After the extensive market research and studying market analysis ranging from pestle, SWOT, BCG, SMART, etc of cosmetic sector, we can conclude that L'Oreal is the market leader in cosmetic industry with annual revenue of 22.98 billion and profit of 2.96 billion.In 2014, L'Oreal was listed 61st among 1200 of India's most trusted brands according to theBrand Trust Report2014, a study conducted by Trust Research Advisory, a brand analytics company.Overall the company is at its maturity stage, performing well and has customer loyalty. Its innovation strategy gives a scope for greater market share and penetration.