Marketing Strategies L’oreal free essay sample

Moreover, L’Oreal UK is also proud about its technological innovation as its backbone for its brands that are all focused on scientific research, hence, it finds its way to encourage science education and support to young talents the recognition of deserving students who are into science studies. These efforts are aimed to encourage need breeds of scientists being developed through global partnerships with the Women in Science Program, and UNESCO (Message from the Vice Chairman, 2013). L’Oreal external environment complements its business because what happens outside concerns its market. Take for instance, the power consumption of competitors have got something to do with â€Å"L’Oreal’s business. The need to reduce energy consumption is taken as a challenge because this factor could affect not just L’Oreal’s competitors but also as a company because the cost of energy has impact on use of materials, lowering of packaging weight, and carbon footprint, intensifying on â€Å"green chemistry†. All of these things have references to L’Oreal raw materials and development of business strategies to make the company competitive, a leading cosmetics and beauty products not just in the United Kingdom but also in the world. Analysis Internal Environment Distinctive Competence L’Oreal United Kingdom assumes diverse roles in promoting marketing strategies. L’Oreal begins with developing its people to have distinctive capabilities that are uniquely developed around their personal experiences, that things they enjoy, and the directions they want to pursue. Together with these are also added abilities taught to them to broaden their skills and knowledge for the short-term and long-term developments of their careers. L’Oreal comes up with high-profile projects to broaden opportunities for them to shine in their respective interests, roles and responsibilities and skills. L’Oreal believes in the potential of the young people to know and learn new things with the Management Training Team. The evolving needs of the business go with them the evolving capabilities of people working behind the company; the ability of the company to motivate them, and to expose them to dynamic, fast-paced and innovative career enable the company to product quality products, innovative and well-researched products. L’Oreal sets demanding goals and eliminates obstacles that hamper growth by focusing on quality and attention to detail; its standards are never compromised; the roles and responsibilities of people are always reviewed to find ways to improve and even exceed expectations; the passion for new projects which speed up energy and infuse flexibility are very distinctively L’Oreal. L’Oreal looks for quality people working for the company across the globe. Considering the very competitive market, finding the right people is based on a combined strategic thinking and daily operational challenges that are pursued with a vision of setting standards to achieve it. Through conducting consumer research to determine new product opportunities, L’Oreal intends to build strong international relationships with the commercial and logistics teams so that by increasing competitiveness, the company is able to develop promotional schemes that ensure smooth supply-chain process (The Scheme, 2013). External Environment- Critical Success Factor L’Oreal UK transacts business with a very dynamic market that has to take into consideration the kind of markets emerging these days. It has to look into the kind of market presence by defining strategy for each of the targeting emerging markets today; it has to think of the importance of partnering with sectors of society that route into emerging markets. Strategies formulated must overcome the lack of reliable information so that the right mindset may be developed to come up with a pricing paradigm so as to allow wide group of shareholders benefiting from these developments. L’Oreal must also be challenged to preserve and nurture the integration process of motivating people to render quality performance. Markets are growing and the demographic and economic statuses are also growing complicatedly; continuing population growth is a reality while sustained development is taking place to improve quality of life and income levels, hence consumer products are also developed to be affordable to a larger population. Western developed economies are considered to offer growth opportunities; countries like Brazil, Russia, India and China are becoming strong countries where opportunities for growth are emerging. It is vital to search on countries where market presences are potentially high. The markets like the US and the UK are examples of markets where quality of infrastructures is important element of the strategy decision. The power of the local brand competition should not be underestimated considering that the market to consider is bigger than the local market; global consumer products are fast becoming acceptable products in the local market because emerging markets are not limited to local, national but also to international level. To better prepare for the bigger market when selling or marketing products like those of the L’Oreal, it is best to take into consideration factors like: ? Political stability, because there are markets that suffer political instability where wars, civil commotion, corruption, economic and political instabilities are affecting the global market; the need to assess them is essential in defining the target market so as the right government intervention could be developed to arrest the stress or negative complications of situations in the market; ? Infrastructure status is essential, too, in determining the quality, connectivity, and reliability of roads, trains and ports where these are essential support systems and infrastructures that help promote a good market presence for companies like L’Oreal. The reliability of water and utilities is a huge consideration in identifying the right market for the products; ? Quality and reliability of local manufacturing — is also essential because a local supply and manufacturing bases of sufficient quality can be basis for leverage for products that are globally distributed or manufactured; ? Legislative and regulatory environment — what are considered legal constraints in terms of import or local manufacture or buy or build because these have impact on companies that invest its resources in other countries for the purpose of increasing their global presence; ? Consumer understanding is also essential so that sufficient insight into local consumers behavior will facilitate target segments of the population. Bowmans Strategy Clock Given an open market of many players that offer competitive products or services, L’Oreal must be able to prepare its environment in order to gain competitive advantage over their competitors. Using the Bowmans Strategy, L’Oreal must know how to position its products and services with the following criteria: ? Position 1: Low Price Low Value. This principle follows concept that a company offers low price of products, it is expected of it to produce low quality products. To overcome value of products or services, L’Oreal has to deal with its pricing method that is to produce quality products would mean to produce products using right price; ? Position 2: Low Price. L’Oreal is not selling its products at lowest possible price to balance the low margins with high volumes. This approach is not wise for L’Oreal to take because this could only trigger war that benefits customers. Because competition is tough, L’Oreal has to consider sacrificing profitability for the sake of making its products affordable to its market. By attracting large markets would enable the company to share its presence with others in the market by offering products at low prices. By offering quality products at low prices would help the business widen its presence and reach over the long-term. ?Position 3: Hybrid. It is positioning a â€Å"moderate price-moderate value† approach; this either uses lowest price nor the highest quality. It actually strikes a balance between price and quality, and establish a reputation of providing products with reasonable quality at fair prices (Nayab, 2013). L’Oreal may consider using this approach to take a balance treatment between selling its products at no so low prices yet is able to produce quality products because the prices of the products have allowed L’Oreal to balance of the gap between cost of producing the product as against the quality of products the company has to keep up to maintain its reputation for producing quality products. ?Position 4: Differentiation. L’Oreal has to consider this strategy of offering high value products, either at higher prices to compensate for the low volumes of such products, or at low prices in the expectation that greater market share would compensate for the low margins. This would help the company improve its base with additional features; it allows the company to brand or send the message across the product that serves particular type or segment; it also allows the company to undertake innovations in terms of developing the products and distributing them to the market because techniques are applied in doing the same process (Nayab, 2013). Position 5: Focused Differentiation. This could be the best approach that L’Oreal has to consider because it provides high value at high or premium prices; it presents the company’s niche category to compensate for lack of volume by high margins. To project high value of products, cultivating this perception is done through advertisements and selectio n of sales outlet that really taps substantial differentiation in the actual product (Nayab, 2013). ?Postion 6: Increased Price – Standard Product. Over the years L’Oreal is known for its high prices but quality products. Increased prices happen because it needs to rake in cash with a long-term move of doing away with the product as part of a wider strategic goal (Nayab, 2013). ?Position 7: High Price-Low Value. This takes place when only one or a few companies offer the product or service, and such goods or service remain in much demand. But companies that offer low value product at high price would not be able to survive in today’s market because of the strong competitive market that searches for products where there are values for money. With low quality for high price makes the company doomed to survive in a very competitive market; ? Position 8: Low Value –Standard Price. This is not going to apply to L’Oreal because if it does, it is only bringing itself to failure as it is extremely as shortsighted business strategy as it exploits customer ignorance to make quick money. Ansoffs Growth Strategies L’Oreal UK may take into consideration using the Ansoffs Growth Strategies in implementing its marketing plan. Business analyst Igor Ansoff has provided the following strategies for business growth: Market Penetration: L’Oreal is still continuing to build its presence to more new locations across the globe. Besides opening new points of presence, it continues to innovate, develop new products so as to continually introduce products that meet the growing and changing market demands depending on the kind of markets there are that are willing to welcome L’Oreal products. By increasing market share, L’Oreal must be able to increase its market share by improving products, updating and building new products or improving existing products that meet the changing preferences or demands of the market globally. New product development: This is a good approach for L’Oreal when introducing new products in the market, either existing or new. Market development: This is what L’Oreal is doing because it continues to create or develop new markets for its product lines especially now that it is opening new markets in different countries. What it does too is to modify its products that suit the new market overseas. Diversification: L’Oreal has to resort to this strategy because it has to deal with its existing business yet it needs to pursue this strategy when penetrating new markets that are highly attractive. Conclusion L’Oreal has to further study the nature of its business in relation with its customers, company and competitors. To study its customers, L’Oreal needs to focus on the potential customers that it may go business with. This can be done by setting objectives by segmentation based on different ways the products are used. L’Oreal has to study well the potentials of its company as a whole. By evaluating its strengths and weaknesses, its opportunities and threats, it can come up with a short-term and long-term plan that will best manage the challenges of the company and its business. L’Oreal also has to study well its competitors because its marketing plan will depend on the kind of competitors it has to compete with in the market. L’Oreal has to capitalize on its image, it profitability and cost structure differences to make it different from its competitors. Question 1: Keeping the company as the leader in beauty products also poses a lot of other challenges like how can it stay to be the leader when as a company’s operation and even its production processes could possibly be detrimental to the environment? Globally, L’Oreal has been committed to take the necessary steps to reduce the environmental footprint of its products in observance of its products whole life cycle. With 2015 as the target year to achieve its commitment, L’Oreal takes the benefit of sustaining innovation from its production at their factories to distribution of its products to distribution centers. It has also focused its efforts in finding creative and efficient solutions. The Company also recognizes the value of its own people who are working together as groups that are totally committed to innovation so that it can offer cosmetics that match consumers’ extremely diverse aspirations and purchasing power (Annual Report 2011, 2013). The principles of sustainable development are now integrated well at the heart of L’Oreal’s research and development efforts because of the evolving profound economic and societal transformation, which compels it to behave in such a way that economic performances and quality of products have to be in place. The leaders, on the other hand, within the organization, have behaved in such a way that they behave in integrated ethics which are also incorporated in the strategic planning. L’Oreal becomes a global company because of its exemplary companies worldwide. It also observes ethics for it has strong values in managing and conducting their operations. It values integrity, respect, excellence, courage and transparency hence companies that deal with it are also encouraged to keep similar standards as those of the L’Oreal. LOreal finds for itself the value of contributing projects that would help the public in general and this is done by engaging long-term sponsorships and partnerships. It is social commitment in making international corporate programs for Women in Science, and in partnership with UNESCO. These programs are aimed at promoting the role of women in conduction scientific research and the resulting effect would redound to the creation of new vocations worldwide (Sponsorship and Philanthrophy, 2013). L’Oreal has its offices and distribution centers based in the United Kingdom with locations in London, Manchester and Leeds. It deals with its external markets like the hairdressers from around the world. With an estimated number of 5,000 hairdressers from all levels of profession, L’Oreal welcomes them to finish professional courses as provided and facilitated by around 100 UK airdressers. Moreover, to cater to its growing demand for diverse markets, it has developed other products like hair care, hair colour, skincare, cosmetics and fragrances to meet the needs of its consumers and professional markets. L’Oreal has even promoted its other luxury brands like Landcome, Kiehl’s pharmacy product Vichy and La Roche Posay and High Street, and other favo rite brands L’Oreal Paris, Maybelline and Garnier (Company Overview, 2013). Considering that L’Oreal has become a leading player in the beauty and skin care competing other known brands like Revlon, Avon, Procter Gamble and Estee Lauder, its global presence and broad portfolio of brands from professional salon to mass retail brands, set it apart from the rest. Its growing economies in China and India all the more have strengthened its place in the global market making its business fundamentals sound, healthy, and promising (Trefis Team, 2013). L’Oreal’s global presence has helped increase its global market share considering that all consumer segments and beauty products expands its new geographies and products not to mention the fact that its merger projects with its competitors have even gained further share in the markets. In terms of advocacy, L’Oreal is reputed to have fought for important external environment issues such as protecting its good reputation as a growing company by ending the conduct of animal testing. Business for L’Oreal has not been always smooth sailing. It also had its fair share of discrimination lawsuits on institutional racism; it also had experienced widespread condemnation when it conducted its campaign about its product performance while carrying the slogan â€Å"Because I’m worth it† and later on was replaced by â€Å"Because you’re worth it†, then eventually changed to â€Å"Because we’re worth it† in order to motivate consumers to patronize L’Oreal and yet it carried a stronger message to consumers that consumers are involved in promoting the L’Oreal philosophy and lifestyle of providing consumers satisfaction with its products in the market. Question 2: How effective are L’Oreal’s marketing strategies and how can they further enhance their strategies? Considering that L’Oreal is considered as a giant cosmetics brand, it has developed its own effective marketing strategies that support every innovation it has introduced in the market and at the same time continually develop marketing plans the achieve global growth and development for the Company. Jean-Paul Agon, the companys chief executive believes that the beauty category could further expand by 3% and 4% worldwide (L’Oreal shifts marketing model, 2013). Despite of the many challenges happening in the market, and even the many uncertainties in the global market, L’Oreal has found the key to maintaining its market share. It studied well the behavior of the consumers in times of difficulties; it is able to come up with strategies that steal the sales of its competitors which boosts the size of the industry. Stealing the sales is synonymous to getting the market share of competitors in order to project positive place in the market. This would mean increasing not just market share but also the growth. Effective marketing strategies include projecting the totality of the company’s growth; it is seeing what is going on in other countries like those in the Western Europe and North America. With L’Oreal’s wide range of complementary brands in a diverse portfolio, its brands can be sold in different channels, divisions, and price levels. Moreover, through innovation, L’Oreal has always something new and better to offer its market, which extends new ways to drive up sales. Re-innovating products is also something that is supportive of the Company’s marketing strategy. L’Oreal ‘s business is continually growing that it is faced with new business challenges of making it a multi-billion flagship brand that offers products in many beauty categories. It is a leading cosmetics and skincare company in several segments: 12% of the market is skin care which is within beauty care at $90 billion and growing in excess of 5% year-on-year. It has the leading market share in fragrances (at 9%) and makeup segment (at 19%). Within hair care, the second largest segment with beauty care, L’Oreal (at 22%) market share comes a close second to Procter Gamble, with double the share of Unilever, the third largest player in the segment (Trefis Team, 2013). L’Oreal also focuses on the Southeast Asian market by studying well the nature of its markets in India, Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam. Considering that the beauty market in Asian countries is growing fast, it is but right that L’Oreal strategizes its marketing efforts in building up its market in this region. Another marketing strategy being developed by L’Oreal is to develop new innovative ‘Hair care and Styling† products or product range that will attract more of its professional consumer markets. L’Oreal can maximize its market potentials, too by integrating its marketing strategy that utilizes digital knowledge, marketing skills in this real-life business competition so as to capture as many consumers as there are in the market. L’Oreal also made use of content marketing by discovering new, emerging musicians and their styles as it partnered with the Rolling Stone (Gutman, 2013). It searched for new artists in the country and this way, L’Oreal developed a series of content around its program by engaging the artists to connect with its consumers in building stronger affinity and emotional connection (Gutman, 2013). L’Oreal also made use of the digital marketing. Using this marketing strategy, it enables the Company to increase its marketing capability as well as sales even if there is increasing overall marketing or advertising spending. The digital marketing become effective because it has continuously gained the share of void through all types of media tools. Building partnership with TV and print companies, the digital linkage becomes easier to start up and create huge impact in terms of effective marketing schemes. With the digital marketing, it has actually changed the dynamics of marketing as it serves as catalyst on areas where most of the marketing spending is identified or allocated (Neff, 2012). Digital marketing is not limited to linking with TV and print media but is bolstered but how effective marketing can also be done in partnership with digital forms of advertising like partnering with You Tube, providing various how-to videos, and other digital innovation, not discounting the use of Facebook digital features, too (Neff, 2012).