GLOBAL MARKETING AND SALES MANAGEMENT
Globalisation, as well as technological implementation, brings rapid change in every sector of business and both of them have a huge impact on the fashion industry. L’OREAL is a popular company which operates its business in a wide range and offers several types of cosmetics for a long period. The cosmetics company has implemented several effective strategies to expand its business in the global market to retain the growth and development of the company.
In addition to that, internationalisation of business is one of the goals of the company as it helps the company to obtain larger revenue with the help of enhanced foreign consumers (Metsola et al., 2020). The company may expand the business in two countries such as the United Kingdom (UK) as well as India and for this reason, the market analysis of these two countries is important for the company.
In this report, the market analysis of the countries with the help of Political, Economical, Social, Technological, Legal and Environmental (PESTLE) analysis as well as other frameworks such as marketing mix and micro environment analysis will be discussed in detail to understand the significance of market analysis for the company.
L’OREAL is a well-known company which is based in France and dominates the international market with its innovative products despite the high competition. In 1909, EugèneSchueller established the company and the company has gone through several phases such as on the road of grand L’OREAL, beauty is a scientific adventure, diversity of the beauty worldwide and so on (L’Oréal. 2022).
The company offers an extensive range of beauty products such as makeup, skincare, hair colour, hair care and many more whereas the company includes different divisions such as L’OREAL Paris, Garnier, NYX Professional and Maybelline New York. L’OREAL has adopted a unique strategy which is universalisation to meet the desire of the consumers based on the differences in needs, desires, and traditions and four divisions with various brands enhance its competency.
L’OREAL is recognised as an uncontested international leader in the international range and the credit for building the international brand image is of resilient management of the company which manages the global-local tensions tactfully (Harvard Business Review. 2022).
According to the company’s annual report, the company has a huge workforce which includes 88,000 employees and the company’s overall sales are approximately 29.9 billion euros in 2019. L’OREAL expands its business in almost 150 countries including Western Europe, North America, Latin America, Eastern Europe, Africa, the Middle East and many more (L’Oréal Finance. 2022). There are huge competitors of the cosmetic company and those companies are Unilever, Chanel, Revlon, Edgewell Personal Care, Estee Lauder Companies and so on (Refer to Appendix 1).
The company has taken a mission to offer its consumers the best related to its product in terms of responsibility, quality, safety and efficacy which helps the company to expand its business on an international level by drawing the attention of the consumers.
|Political||1. The UK is a parliamentary democratic country (Commonwealth of Nations. 2022)
2. A stable nation attracts the attention of the consumers
|Economic||1. The inflation rate of the UK is 0.3 % to boost the purchasing power
2. Stable economic condition due to the Gross Domestic Product (GDP) rate of the UK at 3.19 Trillion (Data.worldbank.org. 2022.)
3. The employment rate of the UK is 75.7% (Ons.gov.uk. 2022)
4. UK economy is independent, developed, mixed
|Social||1. Education Level, Household income and family size-Increasing||Low|
|Technological||1. Technology advanced country (Refer to Appendix 2)||Low|
|Legal||1. Following of Companies Act 2006 (Legislation.gov.uk. 2022)|
|Environmental||1. Strict environmental regulations||High|
Table 1: PESTLE Analysis of the UK
|Political||1. Democratic country (Knowindia.india.gov.in. 2022)||Low|
|Economic||1. The inflation rate of India is 9.6 %and higher than the UK
2. GDP of India (3.17 Trillion) indicates good condition
3. Mixed economy in India
4. Employment rate 35.8%
|Social||1. Education level, family size, population-increasing||Low|
|Technological||1. Technologically less advanced||High|
|Legal||1. Flexible business laws||Low|
|Environmental||1. Comparatively low environmental regulations||High|
Table 2: PESTLE Analysis of India
Consumer analysis is an important part of market research which helps the company to assess the demand of the consumers, identify the target market and implement strategies in the international market.
The Per Capita Income of the population of the UK is 47,620 PPP dollars whereas the per capita income of India is 6,390 PPP dollars therefore, the purchasing capability of consumers in the UK is greater than in India.
According to the data from World Bank 65% of the consumers in the UK are recognised as loyal consumers which is above the global average of 61% (Datacommons.org. 2022). On the other hand, after the pandemic, there is a sharp decline in purchasing behaviour of consumers in India which affects the sales of the company, though the market share of the company in India is 28%-30% (News and News, 2022).
Competitor analysis refers to the process which helps to figure out market share, features, pricing, strengths, and weaknesses and so on to retain the position of the company ineffectively. The competitors of the company in the UK are Benefit cosmetics, MAC, Bobbi Brown, Rimmel London, Clinique, Estee Lauder, and many more which creates a real threat for the company.
In India, the competitors of the company are Lakme, Procter and Gamble (P & G), Unilever, MAC, and Avon and the company implement several strategies to retain its position in the highly competitive market. Along with that, the company has several brands which is the strength of the company as those brands help the company to attract consumers according to their demand in an effective way.
Market entry strategy is one of the important marketing strategies which helps the company to launch a product or service in a foreign market there are several types of market entry strategies such as joint venture, exporting, franchising, strategic alliances, acquisition and many more.
In the UK the company may choose a joint venture as a market entry strategy and for this reason, the company may collaborate with Rimmel London to obtain success in expanding the market in the highly competitive market in the UK. There are some advantages of joint ventures such as utilising the distribution network of the company, sharing profit and loss, sharing expertise, access to technology and many more.
In contrast to that, the company may implement exporting in the country of India as a market entry strategy to launch products or services in the Indian market. L’OREAL may choose export as the strategy helps the company to become less dependent on a single company and huge production leads the company to earn desirable profit in the future. In addition to that, exporting also provides immense support to avoid the operational costs and helps to get the support of Governments overall exporting is recognized as a popular market entry strategy.
Segmentation refers to the process of identification of consumers based on demography, psychology, geography, and behaviour and the company implements strategy accordingly. In the UK and India, the company targets both rural and urban consumers to enhanceits sales and retain its position in the highly competitive market.
The company has identified the audience based on segmentation and the process is called targeting which is part of the marketing strategy to boost the sales of the company. The company has targeted 19 to 65 years of people for different products which consist of makeup, skincare, and hair care products of the company in both the UK and India.
In the UK, approximately 39% of females belong to 19-65 years whereas approximately 28% belong to the female population in India between 20 to 65 years (Populationpyramid.net. 2022). Additionally, evaluating the demand of the targeted consumers helps the company to implement required marketing strategies to draw the attention of the consumers based on the contemporary situation.
Positioning is the process through which the company makes its position unique in the highly competitive market and in this case the company has taken discriminate positioning strategies for India and UK.
In the UK the company may take more initiatives regarding the environment as it satisfies the demand of the consumers in the UK and helps to create values among the target consumers of the brand. On the other hand, in India, the company may follow ethical considerations for manufacturing the products as per standards as well as selling products at reasonable prices to reach the targeted audience.
On a specific note, effective marketing strategies provide required support to the company to maintain its brand image in different nations as well as among high competition and fuel the pace of progress.
In the UK, L’OREAL has opted for alternative packaging solutions that may be termed sustainable to produce cosmetic bottles instead of plastic to be paper. L’OREAL in the UK has been slowly progressing towards the Adaptation of paper bottles and designing in the UK market as a business strategy to bring innovative packaging and gain sustainability among consumers.
The adoption of paper bottles for the products has been a business strategy to reduce the environmental footprint of L’OREAL products in the market (Aishwariya and Meenambika, 2021). In the UK, the brand has focused on providing efforts to reduce the packaging intensity by introducing lightweight materials and introduced refill packages along with the products to induce recyclable capacity of the products.
In the UK, L’OREAL has used recyclable raw materials and used innovative formulas to eliminate the packaging for solid products by the use of paper packaging. This initiative has helped the company to gain the packaging of 48% of the renovated products that have contributed to the improvement of the environmental profile by reducing environmental footprint and consumer value in the market (Withisuphakornet al., 2019).
Figure 1: Sales growth in UK L’OREAL in 2019
(Source: Withisuphakornet al., 2019)
L’OREAL has made considerable partnerships with brands in the creation of recyclable packaging and products to gain consumer value and increase brand image in the UK market. In October 2020, L’OREAL partnered with LanzaTech and Total and announced the production of cosmetic plastic bottles created from recycled plastics as an effort to reduce industrial carbon emissions (Bellomo and Pleyers, 2021).
In India, L’OREAL has added the creation of smaller packaging of products in an attempt to be desirable to the poorer consumers in the market to gain market share increase as well as improve brand image. The company has been moving through an effective marketing strategy of smaller packaging of products to gain the advantage of attracting less wealthy consumers in the Indian market (Khan et al., 2022).
In the Indian market, consumers are more inclined toward buying sachet-sized items regarding shampoos and conditioners making the profitability for the brands in the market. In addition to that, L’OREAL has started the sale of small tubes and sachet-sized shampoos and conditions as part of the products in the Indian market to gain an advantage in the competitor market in India.
According to Jean-Christophe Letellier, Head of L’Oréal’s Indian business, the company may not have existed in the Indian market without the market strategy of the introduction of smaller packages of products (globalcosmeticsnews.com. 2022).
L’OREAL has made a move to satisfy the larger consumer group in India and the dominant consumer trend needs smaller packaging of products in size to meet the enthusiasm of the hair products sold by the company through sachets. This innovative market strategy through flexible packaging was one way to increase the market share of only 4% of L’OREAL’s Garnier hair care range in the Indian market to 14.4% (Andersen, 2019).
Figure 2: Increase in revenue of L’OREAL in the Indian market
(Source: Andersen, 2019)
In the UK, L’OREAL has used the premium pricing strategy as a part of the pricing strategy in the UK market to gain the value of the products and the brand itself to the targeted consumer base. Many of the L’OREAL products belong to the high-quality product group in which the brand uses a premium pricing policy for the products in the UK market. In the consumer products division which has been distributed to the retail chains and channels making the products available to the UK consumer market, L’OREAL earns huge profits from the division.
Moreover, L’OREAL has professional products which are available at salons in the UK, so the consumers use products that are not priced very high (Dmitrievna, 2021). The Luxe division of L’OREAL products is made available in the supermarkets in the UK, along with a premium pricing strategy making the brand and the products accessible and desirable to UK consumers.
The products that are being sold to the consumer through a premium pricing strategy, allow the consumers to be ready to pay a premium amount for the products owing to the quality of the products that have been advertised (Jyothi and Venkateswarlu, 2020).
In India, the pricing strategy that has been used by L’OREAL is the maintenance of value-added pricing policies for the products to increase brand value in the Indian market. Some brands under the L’OREAL products have used the pricing strategy to cater to the needs of the middle-class section of society by making the products reasonable so that Indian consumers may afford the products (Chakrabarty, 2021).
L’OREAL has been trying to price the products in India by keeping them comparable to the competitors in India by increasing the number of stock-keeping units in the Indian market. The pricing strategy of value-added pricing of the L’OREAL products in India has helped the company to offer high-quality products to the c consumers as compared to the Local brands.
The value-based pricing strategy is kept to the minimum as the local consumers may be able to buy the products that have been sized down, as well as be able to enjoy the quality of the product that has been provided by L’OREAL (Umut, 2020).
In the UK, L’OREAL makes sure that the company has a vast distribution channel and network that enables it to have a strong market to deliver different product divisions to be distributed among the consumers. In the UK, L’OREAL’s distribution channel includes the brand’s stores and online sales platforms.
Moreover in the UK, the products are made available to consumers to use through cosmetic stores, retail outlets, pharmacies and various e-commerce websites. The distribution channels along with direct selling initiated by the company in the UK have helped L’OREAL to grow the company’s presence in the UK market. The direct-to-consumer approach taken by the company has provided an opportunity for the consumers of the brand to get unique experiences in both online and offline stores that have been backed up by personalized products and exclusive services given by L’OREAL.
The exclusive experiences provided to the consumers in the UK market that offers personalized services have been intended for all the distribution channels in the UK that are through department stores, salons and more (Solomon and Mrad, 2022).
In India, L’OREAL has presented the county as a wholly-owned subsidiary of L’OREAL S.A, at present having 14 distribution channels with brands which are available to the mass market channels in India. In Pune, Maharastra the company has set up a manufacturing unit, where the main products of the company are manufactured (Refer to Appendix 3).
Although in India, a less amount of products are manufactured as most products are imported from other countries. The brand has been able to gain success in India as credit has been given to the distribution policies and the supply channels that L’OREAL India has created. In India, L’OREAL has manufacturing plants in Pune and Himachal Pradesh along with Research and Innovation (R & I) Center and Advanced Research Center in Mumbai and Bengaluru which provides the company with leverage in the distribution channels in India.
In the distribution channels, in India, L’OREAL has chosen the E-commerce platform as a form of distribution channel that has led to 17% of the sales in India growing by increasing the mass market expansion strategy by the brand (Malviya, 2022). As India offers a whole new level of consumer recruitment opportunities, L’OREAL has chosen Ecommerce which has been able to increase the huge number of outlets and network of distributors in the country to reach the final points in sales.
For the increase in the brand value among the consumers in the market, L’OREAL uses adaptation to culture as one of the business strategies in carefully studying the target markets. The promotional strategy that is used by the company in the UK is by nurturing the self-esteem of the people with beauty.
In the UK, many women’s promotions are done where many young women are showcased to gain confidence and self-image gradually by using the LOREAL products. Along with that, in the UK various treatment programs are launched by the company for young women who are suffering from cancer to gain the chance of launching free skincare and make-up products through the workshops held by LOREAL.
For example, in France, a programme named “La Vie, de Plus Bella” has been started which offered free make-up and skin care products to women all across France who suffered from cancer. This has been one of the successful promotional strategies used by L’OREAL to gain consumer interest in the UK market (Loreal-international-marketing-strategy, 2022).
In the UK, the diversification among the products is showcased in the promotional strategy used by the company through advertisements, billboards and hoardings of the brand that help in bringing the launches of the new products closer to the consumers. In the UK, the company also promotes through ad campaigns on social media platforms such as Youtube, Instagram, and Twitter to raise awareness about the products that are offered by L’OREAL, especially for the men’s range (Vancottem and STEILS, 2021).
In India, LOREAL being a global brand uses strong slogans such as “Because we’re worth it” which acts as a strong message to attract consumers in the Indian market. The brand also utilises an aggressive promotional marketing strategy by focusing on independent, strong, young achiever women in the Indian market. In India, actors such as Sonam Kapoor, Aishwarya Rai Bacchan, and Katrina Kaif are the brand ambassadors for L’OREAL who have been included as the brand face for most of the prints,
TV ads and digital advertising platforms to reach the targeted audience (Refer to Appendix 4). Furthermore, in India, LOREAL also emphasises the mouth-to-mouth marketing strategy which has become one of the renewed promotional strategies popularised in India. In India, LOREAL has merged with Project CARE which cultivates the consumers by the performance in various social welfare activities in areas such as Child Health,
Safety, Education and the environment. Additionally, In India LOREAL also included a promotional strategy with noble causes to gain the attention of the consumers by collaborating with BEAUTIFUL BEGINNINGS, by providing skills training to the uneducated group of women from disadvantaged sections of the society to gain opportunities to work in beauty salons.
The promotional activities and campaigns by L’OREAL have managed the company to acquire a huge market in India which has helped in serving the company with sales as well as fulfilling social issues in the country.
It may be concluded that, in the UK, LOREAL has chosen standardization to bring consumer value to the market, by following global standards. However, in India, the company has chosen the notion of Adaptation to gain the attention of the Indian consumer and increase its value in the market.
In terms of the UK, L’OREAL has taken the right choice of maintaining standardization as in the Western nations such as the UK, the global pricing, marketing, and product differentiation have helped the company to gain a considerable number of consumers in the UK market. In India, the choice of adaptation instead of standardization has been the right call as the difference in culture and consumer behaviour has been necessary to gain a considerable share in the market in India.
The study that has been 4P’s theory as explained above may help L’OREAL to understand the consumer behaviour of India more, in terms of cultural aspects that may help the company to gain better audience support in future. In the UK, through the 4 P’s theory, it may be stated that the inclusion of sustainability in the product packaging in the products of the UK, may help the company to gain consumer interest in the UK market.
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