Case Study L’Oreal

L’Oreal is the largest cosmetic manufacturer in the world since 1992 and contributes sales to more than 100 countries. L’Oreal invested heavily in research and development with the faith: innovation was the critical success factor. L’Oreal was at a stage of making critical decision to introduce Synergie skin care line and Belle Couleur permanent hair colorants which were successfully marketed in France, to Nederland market. These two products were under the family brand name, Laboratories Garnie, the largest provision of L’Oreal.

Their introductions to the market were under pressure as Garnie was not very well known in Nederland. The failure of market these products will cause potential problems for future Garnie product introductions. To be market successfully in Nederland, the products have to offer unique, desire, and identifiable differential advantages to Dutch consumers. Dutch Market Dutch is a small but very potential market. With 15 millions of small population, there were significant increases of women working outside the home, delaying of childbirth and rising of income.

As a result, women in Nederland had more disposable income and more of them using it to buy cosmetic for use on a daily basis. In European Union, the Nederland ranked fourth in per capita income, however, only 6th in per capita was spent on cosmetics and toiletries. The main customers were those under 25 years old. However, the fastest-growing population segments were the 25 or older groups. Synergie Synergie product line is a facial skin care’s products made with natural ingredients. Synergie product positioned as reliably providing natural colors with the advertising line “Natural Colours, covers all gray”.

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L’Oreal goal for developing new products was to introduce only product that had differential advantage with evidence of consumer acceptance. It did not want to gain distribution with excessive reliance on trade deals or high than normal retail gross margins. L’Oreal was perceived as offering high-quality, innovative products, supportive with good in-store merchandising. Bella Couleur Bella Couleur is a line of permanent hair colouring products. The three quarters of Dutch Woman coloured their hair by using permanent colorant. For Dutch women, colouring has become more a fashion statement then just to cover gray.

As there were more and more women working outside home, home colouring would increase since it is more convenient.

Problems of entering Nederland Market

1. Competition of medium price products: Dutch woman shopped for values of products. Synergie products are expensive and they only being sold through personal service perfumeries (custom sale).
2. Competitor .The main competitors, Guhl’s and Anderson increase market share in1986-1989. In late 1980’s Guhl changed its distribution strategy and started selling the brand on drug chains. As a result, Guhl become aggressive in its marketing through large independents.
3. Customers’ buying behavior: Dutch women tend to be loyal to their current brands to avoid problems might cause by new product. As a result of consumers’ loyalty, it increases the resistance of switching to new product. Dutch woman typically purchase a facial cream only once or twice a year and have an increasing interests in products with “natural” ingredients.  Dutch woman are not as familiar with technical product description like the French. They perceived as a technical product and believed its use was very risky. Considering the new brands, first and current customers carefully read package information and ask personal advice.
4. Advertisement The higher spending of advertisement was necessary to develop brand awareness, ideally brand preference.

Analysis of Problems

L’Oreal was a leading seller for current market entry, but the share market was declining. According to the sample test, the buying intentions increased once the market price had revealed. But it decreased after the actual uses. The actual participants, who would probably not buy the product after using it, increased from 13%-32%.

Some negative evaluation of Belle Corleur was due to the fact that Dutch woman tended towards naturally lighter hair colour, and the French towards darker shades. France Belle Couleur was formulated to give a classical conservative dark blond colour with extra reflections or lightening effects. However, the products had not been modified for the Dutch test. The brands needed to be presold since, unlike independent drugstores, there was no sale assistance. However, none of the hair colouring products had a clear advertising positioning statement describing customer benefits.

The percentage of woman was not known, nor was the trends in the usage of this method known. Dutch consumers might see the major suppliers of cosmetics and toiletries. But the worries that lied have is that the selling efforts, which is needed in selling the L’Oreal brands in Dutch market. Also at the same time introduce not just one, but two brand name product lines. Generation of alternative solutions Products As per feedback on price, products with wider price range can target on mass market/medium price product market. All the products need to break down to easy term which is easy to understand by simple wording.

Market and Advertising

Expand the market by making it into an open market, which means all the products are available to all different markets. This can be enhanced by advertising with clear statement; and prove to the customers the specifics benefits that they could get by purchasing the products. Advertise the products through woman magazines; attractive ads that can catch the consumers’ attention and also make them interest towards the products. Advertisement on media such as Tv to show the products concepts and the result of the products after the actual use and customers’ benefit.

Market Monitoring

Monitor the trends to see the changes in the market. From then all the market researches could be done to find the best solution to solve the problem. Personal advertise for better customer service To have personal presold at places for product selling in drug stores, supermarkets, etc. Customers need information whenever they purchase the new products. They all want to know what contains inside the products and the benefits that they could get after purchasing the products. So it is important that customers receive a proper guide through the product line, in order to achieve the customers’ interests towards the products.

Promote the products at professional clinics like skincare clinics, or hair salon. After the customers get their facial done, they might decide to purchase the facial products, after they have been advised and advertised by the clinic advisor. Convince customers to switch their brands into something else is hard. In this case, advertisement and unique about the products are the main keys to attract the consumers’ attention and interests. Synergie For the Synergie line, they done the concept tests, but when they reveal the price out to the market, many people have been declined the products.

It could due to the fact that the price is too high for the consumers to purchase the products. By lower the price, it could give the company the advantages of getting the interests towards the products. Consumers tend to purchase the products if the product price is at the low price. Belle Couleur When consumers purchase products, they want their product is worth the cost that they paid for. Products need to be totally valued with the quality of its products; and also all the statements about the products need to be a right fact and provide exactly what the qualities placed on the statements/outcomes.

There were some negative evaluations on Belle Couleur products line; due to the facts that the products provided fault information, which lead to mistaken by the consumers about the products’ qualities. I. e. different target market has different reaction towards the product line. They don’t have the same or even the similar reaction towards the same products. For example, those Dutch customers tended to like lighter hair colour, when the French customers prefer the darker shades. Due to the market researches of the two product lines, they all get recommended to promote two lines at once.

Instead of promote two lines at once, L’Oreal Netherlands can promote one by one; which means that they can promote each one to see how the consumers react to the products. From then, they can decide whether the second product line is necessary needed to be promote out to the market. It can save them the costs in promoting, and also their budget won’t be at waste in advertisement and promotion. It could count as monitoring the current market to see the changes under different circumstances. The product range can be sold at the different locations, such as drugs store and supermarket. Therefore, the advertisements and promotions in these places are necessary in order to catch the consumers’ attentions and interests.

Customer Service

There are numbers of consumers that afraid of purchasing new products, due to the fact that they have bad previous experiences with different products. It is important that marketers can come up with the product’s concepts that provide the trustworthy information to the customers; also it is more important that those provided information can lure away the fear that consumers have, when they purchase for new products.

Towards competitions In the global markets, it is impossible for other competitors not copy other products. Stopping it is totally outrages. But every company always have their key ingredients for their products. They always have a backup plan for what they are going to do in the future, if something bad happens. Marketing plan designed Effective monitoring and control system created

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