l'oreal in china case study solution

L’OREAL Company: Expansion in China Case Study

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Introduction (Problem, Objectives, and Resources)

Case study analysis, feasible recommendations, works cited.

L’Oréal is one of the most famous and purchased cosmetic brands in the world. The company produces many popular brands of cosmetics, perfumes, as well as hair and skincare products, including L’Oreal Paris, Garnier, Maybelline New York, Lancome, Giorgio Armani, Vichy, and others. This Group is represented in 130 countries all over the globe. The given case study focuses on the expansion of the mentioned company in China and presents three essential challenges that it encountered on the way to success. Namely, consolidation with the local market, integration issues, and differentiation may be noted among the problems.

The objectives of this paper are to analyze the case of expansion based on the current literature and provide reasonable solutions to the identified problems along with feasible recommendations. The paper will be based on the critical review of the existing evidence in the field of strategic management and L’Oréal’s brand management. In addition, the resources will include scholarly articles, books, and official websites presenting reliable statistics and any other important data. Such tools as strengths, weaknesses, opportunities, and threats (SWOT) and benchmarking will be employed to present the results of an in-depth analysis.

“Because you are worth it” is a famous phrase used in L’Oréal’s advertisement at the dawn of almost 40 years, and its authorship belongs to the advertising agency of McCann Erickson. Since then, the screen with a beautiful French accent was played by actresses Catherine Deneuve, Jennifer Aniston, Mila Jovovich, Beyonce Knowles, Kate Moss, and others. The men’s L’Oréal line was advertised by the Formula One pilot, Michael Schumacher, and the football player David Ginola (Hong and Yves 117). In 1996, there was an acquisition of Maybelline, a leader of the decorative cosmetics of the mass market in the US, which had strategic importance. It not only positioned L’Oréal as the undisputed leader of the key market all over the world but also turned the corporation into the world leader in the field of makeup tools for mass demand. Moreover, Maybelline was an entrance ticket for L’Oréal to the Asian market, especially in China, where there was a factory of this brand.

To engage consumers interactively with the products, L’Oreal has released the Makeup Genius application, which allows users to do makeup online. Girls use a smartphone as a mirror and try various make-up variations likewise filters on Instagram to find out the best option. This application was already downloaded more than 14 million times. In today’s China, goods and services for personal care, healthy lifestyles, and entertainment are quite popular. Three factors affect consumer behavior, including large families, bad ecology, and general Asian trend for personal hygiene and care. It should be stated that there are more men than women, but the female half of the population makes more purchases.

Traditionally, girls, even the younger generation, use cosmetics. Being in serious relationships, they often buy something for the family, parents, children, and husband. As for the age, the target audience is composed of people from 17 to 36 years old, who are called the generation of two thousand people or the generation of the millennium. This is a young generation of Chinese consumers who are versed in modern technology, who make 66 percent of all purchases on the Internet. All of them use social networks, and they are interested in new ideas as well as trying something new. Currently, L’Oreal Group follows a comprehensive strategy of promotion on Weibo and Wechat platforms.

Issues Underlying the Problem

In partnership with Suzhou Medical College, one of the oldest Chinese universities, L’Oréal created Suzhou L’Oréal Beauty Products. In 1996, the industrial complex of Suzhou began the construction of the plant, which was opened in 1999, while two other factories were opened in the next decade to serve the rapid development of the Chinese market. Furthermore, to accelerate the development of the Garnier brand in China, which is already marketed by the Nutrisse brand, L’Oréal acquired Mininurse in 2003. This local brand, a leader of skincare products of a mass-market, already enjoyed great popularity and a powerful presence in the market. The first means of leaving Garnier were issued under the name Mininurse.

One of the challenges to entering the Chinese beauty market was associated with the overall value of the existing brands. In response to Chinese preference for these brands that take into account the specific nature of Asian skin type, L’Oréal acquired Yue-Sai – an affordable luxury brand of skincare and decorative cosmetics Yue-Sai that personified a modern resident of China and became a successful addition to the collection of the international portfolio of L’Oréal Group. However, the review of the literature shows that the company needed research and innovation to meet customers’ quality expectations and remain in-demand. In this regard, a new research center in China was launched. The main project of L’Oréal’s fourteenth research center in Pudong, near Shanghai, was the achievement of the perfection of knowledge about the skin and hair of the Asian type. Its paramount goal was to develop products that meet the needs of Asian descent around the world as well as the production of real geo-cosmetics that can cover the diversity of cultural and climatic features of Asia.

In August 2001, the face of the French company was the Chinese movie star Gong Li. Ginsheng Lan, PR Manager at L’Oréal in China, stated that over the past five years, the Chinese women’s attitude to beauty had changed dramatically since they began to spend a lot of money buying the products of Western cosmetic giants. The market was developing very fast, showing a growth of 10-20 percent per year. L’Oréal began to conquer the Chinese market in 1997, much later than Japanese cosmetics companies (for example, Shiseido). Fashion ideas are changing rapidly, and if earlier only black hair was considered beautiful, now Chinese women are experimenting with color, and L’Oréal is helping them in this with their products. When in 2002, L’Oréal began its expansion into China, its incomes grew by 61 percent, while the entire cosmetics market of this country grew by only 14 percent.

Today, almost all Chinese consumers use mobile payments every day, and many of them make up to eight payments a day. This is convenient since the payment can be made with one finger, with the help of voice commands, or even codes. There are also many commands for the cancellation of transactions, which provides security. The international brands that have already entered the Chinese market should focus their efforts on maintaining and developing the image of the brand through social media. Without this, one cannot be competitive in the market.

Desirable Solutions

To resolve the mentioned problems, L’Oreal also launched its largest Asian plant in China. Namely, the French manufacturer of cosmetics and perfumery, L’Oreal opened a new plant, the production facility of which was worth 200 million yuan ($32 million) and was located in Hubei Province. The plant, which area was about 70 thousand square meters was the largest manufacturing facility of a cosmetic company in Asia. Annually, it produces about 250 million units of cosmetic products and is expected to ensure the growing demand for care products. At the moment, China is the third-largest market in L’Oreal. Earlier this year, L’Oreal reported on the agreement on the acquisition of Chinese Magic Holdings International, specializing in cosmetics, for $ 840 million ( Expansion from France to International Markets ). In addition, the company stated that it is conducting exclusive discussions with the Japanese cosmetics manufacturer Shiseido about buying the cosmetics brands such as Decleor and Carita that belong to it.

By announcing the company’s new commitment to sustainable development, L’Oréal mentioned that a new type of customer has emerged that makes its choice, guided not only by the price of the product or brand but also by environmental friendliness. It seems that consumers are concerned about this because they are increasingly becoming conscious citizens. They have more information that is now open to absolutely anyone, and they understand the danger of depletion of natural resources, reduction of water quantity, environmental pollution, and degradation of biodiversity. In the cities of China, the situation is rather complicated. Therefore, the state of the environment becomes very important. Consumers understand that they are part of the world, and they cannot just forget about it when they make purchases.

Therefore, the consideration of sustainable development and some initiatives in this area is a useful way to attract more customers and also protect the environment. The problem is that there are many products on the market that are called eco-friendly or natural, but they are either quite expensive or not so good. By 2020, L’Oréal expects that 100 percent of its products will be environmentally-friendly or socially-oriented. At the same time, it is not proposed to create a new category of products that will be greener and more expensive, et cetera, but change the way of work. Until recently, the priority was to create effective and safe products of high quality. Now, the company adds one more property that seems to be valuable such as eco-friendly innovations and production.

Implementation Plan

The development of the Internet should be considered as one more factor affecting the company’s strategy. L’Oreal’s consumers have almost completely changed their habits in buying cosmetics and finding information about them. Beauty and everything connected with composing one of the most hotly debated topics in social media. For the company, this opens up new opportunities in interaction with customers. The digital revolution has created an unlimited space for consultations, serving people, and offering them new services. L’Oreal can form a new level of interaction with its consumers, who want to be able to make a purchase anytime and anywhere. The majority of customers still buy in traditional stores, but more and more shopping is tracked through websites and mobile applications. Many of L’Oreal’s brands have e-commerce platforms that present great potential for a serious increase in sales. For some brands, for example, Kiehl’s, the share of e-commerce is about ten percent of the total turnover in the world.

It is additional values that form loyalty to the brand, thus making it successful. The band performs the following functions for the consumer: it provides a value proposition and confidence in the firm’s branded products. In L’Oreal, the essence of the brand is the central idea presented to a consumer. It reflects the most important meaningful signs of the brand, that is, it represents a core of brand content. Therefore, it is advisable to consider the brand as a dialectical unity of its form and content. If the external identifiers shape a form, then the internal identifiers, by which a consumer determines the correspondence of the brand values to their settings, constitute the content of the brand. To ensure brand effectiveness, the company needs to strive for compliance between the form and content of the brand. Modern successful brands are empirical brands that are the result of empirical marketing. In empirical marketing, the emphasis is transitioned to the experiences of a client, which generates values of the sensory, emotional, cognitive, and behavioral nature.

With the development of technologies, it becomes increasingly difficult for companies to maintain the functional values of brands for a long time as the benefits-oriented on functional properties become relatively simple to copy. Without a strong brand, a company cannot move forward. Therefore, one should ensure seamless communication with customers on all possible platforms. A consumer expects companies to be available at three in the morning on Sunday in his favorite application, for example. Companies that plan to sell their products to the Chinese market from other countries should start building relationships with the local bloggers and opinion leaders. The SWOT table can be created to summarize the analysis (see Figure 1).

The potential implementation plan may be based on the method of benchmarking. An important feature that determines the conduct of business in the context of globalization is the intensification of competition. A significant challenge for L’Oréal is the search for new ways and tools to improve competitiveness as a strong competitive position is a basis for its successful operation in the long term. Benchmarking helps to identify problems in the organization of the company’s activities and areas of backwardness as well as identify ways to overcome them. In this case, L’Oréal itself can serve as a standard, and its practices will be used for subsequent implementation. It is useful to apply benchmarking to improve business processes, the characteristics of their products, reduce costs, and achieve the best performance indicators based on a benchmark comparison of their activities with that of other leading companies.

Benchmarking implies comparing a company’s activities with those of others that have the best practices in the areas of business that are of interest. The first stage refers to the collection of the required information. This phase involves not only the collection of qualitative and quantitative data but also the study of the content of the market along with processes or factors that explain productivity (Hill et al. 109). Identifying potential partners for benchmarking is another step in the research phase. It is more coherent to apply the experience of enterprises operating under similar conditions, steadily setting high goals for themselves. To identify a potential partner, several methods may be used to find who best satisfies the needs of consumers and have the best processes to be evaluated. The most obvious would be to look for the industry leaders among direct competitors. The difficulty of this situation is that some companies are not yet ready to share the experience with their competitors and did not realize that such a procedure is mutually advantageous.

The next stage of benchmarking is the analysis of information. This stage puts forward great demands on the creative and analytical abilities of the participating sides in the process of analysis of superiority, thus promoting awareness of the similarities and differences and understanding their relationship (Hill et al. 110). In addition, it is necessary to identify effects that can complicate comparisons and falsify results. The purposeful implementation of the information received, namely, not only the implementation of the developed opportunities for improvement but also further development of the organization of the enterprise should be followed. In this case, the point is not copying yet creating an incentive for further innovative development of the company.

The analysis of only one category of data will not give a complete picture of the company’s activities, while every indicator should be compared with a similar one of the partner company’s performance. In this regard, there are two questions: how critical is the dissimilarity between the compared companies, and how much technology does the partner apply (Hill et al. 109). In case the data regarding the partner firm can be compared with similar data on the initiating company, the benefits of the results obtained are great. Even if the initiator company outperforms the partner on most indicators, there will always be something to be learned. Nevertheless, as a partner in benchmarking, it is more logical to choose a company that exceeds in this or that field of activity. Repeating the analysis results in an adjusted manner completes the process of benchmarking.

Legal and Ethical Considerations

The media and current literature support the image of a growing high-potential cosmetics market in China, but its effectiveness does not always depend only on the size. The customers should not only want to buy but also have to have money for this. Although there are many buyers in China, and their incomes are rising, many people remain below the poverty line and are unable to acquire what they want. First of all, it is clear that the aspirations of customers are growing, the desire is ahead of opportunities, and the traditional areas of modernization are not always applicable. Taking into account the vastness of China’s territory, ethnic diversity, and a rapid pace of change, it should be noted that China’s traditional culture is not respected all the time and in all places. Today, Chinese business ethics should instead be seen as a so-called “pot” of modern Western ideas and traditional Chinese values with several paradoxes. The ethical considerations should consider the superficial Western framework that is built on deeply entrenched Confucian values, while the goals of economic efficiency are created by people who are oriented towards the ideology and the traditions of social responsibility.

As for legal considerations, it is rather important to register the product and then export it. Contacting Chinese representatives and getting a license for a product from the State Food and Drug Administration (SFDA) requirements. Now, China has simplified rules for the import of goods into the country, which allows foreign retailers to sell their products on the territory of ten free trade zones without passing checks and customs clearance. According to the law from June 30, 2014, ordinary cosmetics testing on animals, which is produced and sold in China, becomes optional. However, there is no answer to the question of whether products are to be sold in China, but it is evident that Chinese law no longer forces to test cosmetics on animals. In the article of Humane Society International, it is explained that the changes in the Chinese legislation of 2014 will largely affect all cosmetic companies. According to these changes, some products are not required to be tested on animals by law, but this does not guarantee that they will not be tested. Companies can also decide to test animal cosmetics in China because this is legal.

Speaking of my role as a researcher of the given case study, I would like to emphasize that my role is mainly theoretical. Namely, I can analyze this case and apply various strategies in an attempt to suggest some relevant strategies and use appropriate tools. At the same time, this may provide essential grounds for conducting scholarly research regarding the current situation of L’Oréal in the Chinese market. The review of the existing evidence demonstrates that the company moves forward and tries to follow the current trends in social, economic, and cultural issues. Therefore, it seems that the new research would contribute to the theory of strategic management associated with the expansion to foreign markets.

Lessons Learned

In my point of view, this assignment is rather useful as it provides the opportunity to understand and interpret a real-life situation on the example of L’Oréal’s acquisition of the Chinese cosmetic brands. I have learned that it is significant to pay attention to a full range of factors that may either improve or weaken the company’s condition in terms of a foreign market. I have understood that it is essential to figure out what attracts the Chinese as their cosmetic tastes and needs are different from Western addictions. For example, Europeans and Americans prefer to purchase artificial tan cream, and the Chinese adore bleaching (Xie and Zhang 540). In other words, all the local specific cultural, ethical, and legal peculiarities are to be taken into account.

More to the point, this assignment allowed integrating information presented by the case study and those obtained from the recent evidence. Based on the credible sources, I have suggested several strategies to resolve the problems outlined in the case and also offered several recommendations on how L’Oréal may enhance its positions in China, focusing on technology, social media, and brand awareness. It should be stressed that writing the report about this case study required following a specific format that is important for an academic style.

In conclusion, one should emphasize that L’Oréal is a large and promising company that operates in the field of cosmetics. On the Chinese market, it encountered both challenges and opportunities, which may foster its expansion and improve the positions. Consolidation with the local market, integration issues, and differentiation problems were revealed in the course of the analysis. It was determined that the company should follow the current trends and apply technology and innovation to remain competent and competitive. Brand management strategies and social media coverage were recommended as the relevant ways to resolve the above problems. More to the point, it should be stressed that proper investigation of the local customer preferences may significantly contribute to the expansion of this cosmetics company.

Given the mentioned issues and solutions, it is possible to suggest several recommendations that may improve the performance of L’Oréal in the Chinese beauty market. The company should change a lot in production, focusing on the concept of products as well as the choice provided to customers. It seems that this is what is now expected from manufacturers all over the world. Since it strives to increase the number of loyal consumers, people who buy this product should be fully confident that they make a responsible choice. China is an extremely important beauty market for the whole world. L’Oreal in China has been present for many years and it is successful there. What is important, the market has great potential as there is a tradition of beauty.

Speaking about new consumers, in the presentation of the company for employees and investors, one may note the statement that the company should follow the current changes in the world. In particular, one of the economic trends such as the formation of the middle class, the main request of which is a good and affordable product. With the recent development of countries such as Mexico, China, Brazil, and others, a middle-class stratum appears in them, and people need access to good products as buying safe and effective cosmetic products is a very simple way to improve the quality of life. Therefore, the company should gain an audience by being where customers are looking for the identified cosmetic products.

There is a huge offer of different brands on the market, every year it becomes more difficult to stand out, and a consumer seems to be simply disoriented. To manage to compete, L’Oreal should understand that this is the price of this game – in free markets people have a choice. The cosmetic industry provides the widest range of products, which is generally good, but a brand can be successful only if it is a product of high quality. Without this, it can be popular for a very short period. Therefore, it is necessary to constantly focus on research, innovation, and science to constantly improve and anticipate customers’ expectations. For example, environmental friendliness and as well as skin reconstruction may be recommended as the areas for development. Some part of turnover should be invested in research and development more than competitors can do. This will allow being sure that by trying products, a consumer will return to them again.

Another recommendation may be formulated as follows: be active on the Internet. It is possible to run a blog and write articles regularly to allow consumers to receive the latest news promptly. The posts should inform about the company and its products, and also contain reviews of satisfied customers to prove that the brand can be trusted. Activity in social networks is another part of this recommendation as the Chinese do not part with their smartphones, and they need innovation and authenticity. Of the 630 million Internet users in China, about 90 percent use social networks to gather information about brands. The most popular social networks in China are Weibo microblogging and WeChat messenger, which have a news line. This popular platform will allow turning the target audience into the brand’s followers.

Opinion leaders are popular bloggers and stars who advise about the skincare and selection of a suitable product. To make the company’s positions even more stable, it is possible to consider concluding a partnership with them. If the leader of opinion tells about the brand, it will become a well-known brand among numerous followers. For example, the Chinese are deeply in love with the British actress Emma Watson, who is the face of the Lancôme brand. She has fair skin, and all Chinese women want to be like her. When expanding to the Chinese market, it is important to know exactly what the target audience is. By examining customers’ needs and expectations, it is essential to regularly update information about the brand along with the current trends.

Expansion from France to International Markets . 2018. Web.

Hill, Charles WL, Gareth R. Jones, and Melissa A. Schilling. Strategic Management: Theory: An Integrated Approach . Cengage Learning, 2015.

Hong, Hae-Jung, and Yves Doz. “L’Oreal Masters Multiculturalism.” Harvard Business Review , vol. 91, no. 6, 2013, pp. 114-118.

Tao, Zhigong. L’Oreal: Expansion in China. Harvard Business Review . 2018. Web.

Xie, Qinwei, and Meng Zhang. “White or tan? A Cross-Cultural Analysis of Skin Beauty Adv ertisements Between China and the United States.” Asian Journal of Communication , vol. 23, no. 5, 2013, pp. 538-554.

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IvyPanda. (2021, May 30). L'OREAL Company: Expansion in China. https://ivypanda.com/essays/loreal-company-expansion-in-china/

"L'OREAL Company: Expansion in China." IvyPanda , 30 May 2021, ivypanda.com/essays/loreal-company-expansion-in-china/.

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IvyPanda . 2021. "L'OREAL Company: Expansion in China." May 30, 2021. https://ivypanda.com/essays/loreal-company-expansion-in-china/.

1. IvyPanda . "L'OREAL Company: Expansion in China." May 30, 2021. https://ivypanda.com/essays/loreal-company-expansion-in-china/.

Bibliography

IvyPanda . "L'OREAL Company: Expansion in China." May 30, 2021. https://ivypanda.com/essays/loreal-company-expansion-in-china/.

L’Oréal in China: Marketing Strategies for Turning Around Chinese Luxury Cosmetic Brand Yue Sai

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Restricted Material for Instructors

The case shows the challenges that even very successful multinational firms experience when doing business in China. Specific topics discussed include: 1. Functional vs. emotional branding. Can all brands become “passion” brands? Should they? 2. Effects of country of origin, national pride, traditions and cultural beliefs in today’s China. 3. Marketing “masstige” (affordable luxury) brands. How to leverage brand heritage while staying current and relevant in a fast-moving market.

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European Competitiveness

L’Oréal in China: Marketing Strategies for Turning Around Chinese Luxury Cosmetic Brand Yue Sai (Chinese)

By Haiyang Yang , Pierre Chandon

L’Oréal in China: Marketing Strategies for Turning Around Chinese Luxury Cosmetic Brand Yue Sai (French)

Haiyang Yang

Pierre Chandon

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L’Oréal China – Case Study

L’Oréal was created in 1909 in the personal care industry in France. The company’s operations involve the production of various cosmetics and beauty items. The firm has managed to enter the global beauty and cosmetic market. L’Oréal ranks as the largest cosmetic organization worldwide. L’Oréal has adopted internationalization as one of its business strategies in order to maximize its profits.

Market Analysis: L’Oreal in China

L’Oréal has earned its place as a leader in the country’s beauty market where it sells 25 brands, has opened one research and innovation center, a training center, two plants in Yichang and Suzhou, and 5 distribution centers. L’Oréal has introduced most of its brands in the Chinese market such as Maybelline New York and Lancôme. In order to market its products successfully in the Chinese market, L’Oréal has adopted the concept of localization in its marketing processes.

Key Players of the Chinese Cosmetics Market

A large number of multinational cosmetics companies have entered China over the past twenty years. Some of the major players include Procter & Gamble, L’Oreal, Shiseido, Amway, and Unilever.

According to Qianzhan , foreign brands such as Procter & Gamble and L’Oréal accounted for approximately 50% of the market share in the cosmetics industry in China. Domestic firms (Chicmax, Pechoin, and JALA Group) occupied 17.97% of market share. However, it’s expected to grow because, from 2014 to 2017, the market share of Pechoin increased from 1.4% to 2.3%, and that of Chando increase from 1.3% to 1.7%. Read full post here: Top leading Cosmetics Brands in China and full strategy analysis

L’Oreal Strategy to conquering the Chinese Cosmetic Market

Buying out local brands brands.

In order to penetrate the Chinese market, L’Oréal adopted the concept of standardization, by the introduction of Yue-Sai in 1992. The product was initially owned by Yue Sai Kan and was specifically targeted towards Asian women. To meet the beauty and skincare needs amongst Asian women, L’Oréal identified Yue Sai as a potential brand that was designed for the Asian market, consequently, L’Oréal purchased Yue Sai.

The acquisition was in line with the firm’s mission, being “beauty for all”. The group later acquired another Chinese brand known as Mininurse , developing a strong market position in China through the acquisition and licensing of national brands.

After acquiring Yue Sai, L’Oréal undertook a complete product improvement and development in an effort to ensure that the product aligns with the Chinese skin consumer needs. This move led to the introduction of the Vital Essential line in 2007. The product was developed using Ganoderma mushroom extracts. In China, this mushroom is considered to have medicinal value and such a move illustrates the firm’s commitment to align its products to the Chinese culture.

Read too: Guide to China High-end Cosmetics Marketing

Market Targetting, segmentation, and strategic positionning

L’Oréal is very much aware of the importance of market targeting, segmentation, and positioning. In the process of entering the Chinese market, L’Oréal segmented the market by age as its core demographic market variable. During its initial market entry phase, the firm adopted a concentrated market targeting strategy. A concentrated targeting strategy entails selecting a specific market segment and concentrating the marketing efforts on the identified segment.

A concentrated targeting strategy enables organizations to understand the consumers’ motives, needs, and satisfaction levels. L’Oréal targeted women as the core customers to target. China has undergone significant transformation especially in regard to personal care and beauty over the past few decades.

The younger Chinese generation is more receptive to beauty and cosmetic products as compared to the older generation as is evidenced by the increase in consumer spending. Consumption of beauty and cosmetic products has increased significantly among young male and female consumers. It is estimated that the Chinese cosmetics and beauty market is growing at a rate of 13% annually and it is estimated that the country will continue growing at a rate of 10%.

L’oreal communication in China

L’Oréal ensured that aspects of Chinese traditional medicine were integrated into the process of producing YueSai items. The Chinese appreciate their cultural heritage and culture being integrated into their consumption process. Some of the elements that they hold in high esteem are related to health, medicine, and food.

The main marketing communication methods included advertising and public relations. In its advertising process, the firm has adopted the press and television as the main marketing communication channels. In a bid to reposition Yue Sai on the Chinese market, L’Oréal allocated a substantial number of its funds in its marketing communication budget.

The amount was used in its marketing processes especially through television and print media. The advertising campaign featured Du Juan, a renowned Chinese supermodel. In a bid to attract potential customers, the firm ensured that a high level of creativity and effective design was integrated into the television commercials. During the advertising campaign, the firm adopted the tagline “I hold my future in my hand.” The other slogan adopted included “I look forward to every day with confidence.” Consequently, the firm was in a position to appeal to the Chinese women’s emotions.

In its effort to create awareness through public relations, L’Oréal contracted renowned Chinese personalities and celebrities to endorse its products. Some of the major personalities included singers, athletes, actors, and actresses. 80% of the firm’s marketing communication efforts were focused on skincare products and 20% on makeup. The firm had not adopted an effective public relations channel as it had not adopted new media platforms especially Weibo, which is a very famous social media platform commonly used in China.

Targeting the Younger Chinese Cosmetics Consumers

The Chinese cosmetics market is changing at a quick rate and the young consumers, whose choices are drastically different from those of the previous generation, are becoming the driving force of this market. Young Chinese women wear make-up and eagerly track the latest trends. In recent years, L’Oréal China started targeting a younger audience by implementing a series of marketing campaigns directly aimed at them.

L’Oreal Paris announced Yuan Wang (18) Chinese idol, member of the boy band TFBoys, with nearly 40 million followers on Weibo, as its newest Chinese brand ambassador in 2018. Wang fans bought L’Oreal products worth more than 13.93 million yuan in March 2018, following the teen idol becoming the endorser for L’Oreal’s beauty.

Loreal on Chinese Social Media & Kols Campaigns

L’Oréal leverages social media, like Weibo, WeChat , to reach Chinese customers. Most of L’Oréal’s brands have their own official accounts on Weibo with a large number of followers. L’Oréal created a social media campaign with #我的选择我值得拥有(#I deserve it) to advertise their Women’s Day promotions through Weibo. In this campaign, women fans were encouraged to share their feelings and stories by uploading images to social media platforms Weibo using hashtags #我的选择我值得拥有. Also, many celebrities like Li Gong, Zhilei Xin (Chinese famous actresses) are joining the campaign to share their own words with Weibo users, which attracts more fans to participate and express their comments. There are around 24.8 million reads and 470 thousand discussions on Weibo #我的选择我值得拥有 topic.

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L’OrÃ©al in China: Marketing Strategies for Turning Around Chinese Luxury Cosmetic Brand Yue Sai Case Solution & Answer

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This Case is aboutÂ BRANDING

PUBLICATION DATE: May 07, 2013 PRODUCT #: INS291-PDF-ENG

Yue Sai is L’Oreal’s distressed Chinese high-end brand. Alexis Perakis-Valat, the new CEO of L’Oreal China, has made it a point of honor to turn the brand around. He has requested the brand’s new general manager, Stephane Wilmet, to develop a turnaround strategy that can re-establish L’Oreal’s standing as the planet’s finest cosmetic marketer in China. Yue Sai’s advertising manager, Stephane Wilmet and Ronnie Liang, must reconsider everything from the value proposition down to its media, cost, merchandise, and supply strategies of Yue Sai. Please go to the dedicated case site http://cases.insead.edu/loreal-china/ (copy and paste the url into a browser) to view advertisements and video interviews.

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L'oreal: expansion in china change management analysis & solution, hbr change management solutions, strategy & execution case study | zhigang tao, li dongya, case study description.

The world's leading cosmetics companies are competing with--and buying--local cosmetics firms for a share of China's vanity cash. French cosmetics giant L'Oreal is grabbing a major share of the Chinese make-up market. The company recently announced its acquisition of Chinese cosmetic brand Yue-Sai. The surprising announcement came just 45 days after L'Oreal made a successful bid for Raystar Cosmetics (Shenzhen) Co. Ltd's skin-care brand, Mininurse, at the beginning of the year. L'Oreal has been very successful in China's high-end and middle-segment cosmetic markets. The recent two acquisitions, however, indicate that L'Oreal is focusing more on the mass market and shows its determination to step up the pace of its growth in China. It also indicates how red-hot the cosmetics trade has become in China. What competition is situation L'Oreal facing? How can L'Oreal retain its leading position in China? Is it through more acquisitions or improving on its own products? What will be the impact of the future tariff reduction?

Change Management, Emerging markets, Growth strategy, Mergers & acquisitions , Case Study Solution, Term Papers

Order a L'Oreal: Expansion in China case study solution now

What is Change Management Definition & Process? Why transformation efforts fail? What are the Change Management Issues in L'Oreal: Expansion in China case study?

According to John P. Kotter – Change Management efforts are the major initiatives an organization undertakes to either boost productivity, increase product quality, improve the organizational culture, or reverse the present downward spiral that the company is going through. Sooner or later every organization requires change management efforts because without reinventing itself organization tends to lose out in the competitive market environment. The competitors catch up with it in products and service delivery, disruptors take away the lucrative and niche market positioning, or management ends up sitting on its own laurels thus missing out on the new trends, opportunities and developments in the industry.

What are the John P. Kotter - 8 Steps of Change Management?

Eight Steps of Kotter's Change Management Execution are -

1. Establish a Sense of Urgency
2. Form a Powerful Guiding Coalition
3. Create a Vision
4. Communicate the Vision
5. Empower Others to Act on the Vision
6. Plan for and Create Short Term Wins
7. Consolidate Improvements and Produce More Change
8. Institutionalize New Approaches

Are Change Management efforts easy to implement? What are the challenges in implementing change management processes?

According to authorlist Change management efforts are absolutely essential for the surviving and thriving of the organization but they are also extremely difficult to implement. Some of the biggest obstacles in implementing change efforts are –

Change efforts are often made by new leaders because they are chosen by board to do so. These leaders often have less trust among the workforce compare to the people with whom they were already working with over the years.
Change management efforts are made when the organization is in dire need and have fewer resources. This creates silos protection mentality within the organization.
Change efforts create an environment of uncertainty in the organization that impacts not only the productivity in the organization but also the level of trust in the organization.
Change management is often a lengthy, time consuming, and resource consuming process. Managements try to avoid them because they reflect negatively on the short term financial balance sheet of the organization.
Change efforts are often targeted at making fundamental aspects in the business – operations and culture. Change management disrupts are status quo thus face opposition from both within and outside the organization.

L'Oreal: Expansion in China SWOT Analysis, SWOT Matrix, Weighted SWOT Case Study Solution & Analysis

How you can apply Change Management Principles to L'Oreal: Expansion in China case study?

Leaders can implement Change Management efforts in the organization by following the “Eight Steps Method of Change Management” by John P. Kotter.

Step 1 - Establish a sense of urgency

What are areas that require urgent change management efforts in the “ L'Oreal: Expansion in China “ case study. Some of the areas that require urgent changes are – organizing sales force to meet competitive realities, building new organizational structure to enter new markets or explore new opportunities. The leader needs to convince the managers that the status quo is far more dangerous than the change efforts.

Step 2 - Form a powerful guiding coalition

As mentioned earlier in the paper, most change efforts are undertaken by new management which has far less trust in the bank compare to the people with whom the organization staff has worked for long period of time. New leaders need to tap in the talent of the existing managers and integrate them in the change management efforts . This will for a powerful guiding coalition that not only understands the urgency of the situation but also has the trust of the employees in the organization. If the team able to explain at the grass roots level what went wrong, why organization need change, and what will be the outcomes of the change efforts then there will be a far more positive sentiment about change efforts among the rank and file.

Step 3 - Create a vision

The most critical role of the leader who is leading the change efforts is – creating and communicating a vision that can have a broader buy-in among employees throughout the organization. The vision should not only talk about broader objectives but also about how every little change can add up to the improvement in the overall organization.

Step 4 - Communicating the vision

Leaders need to use every vehicle to communicate the desired outcomes of the change efforts and how each employee impacted by it can contribute to achieve the desired change. Secondly the communication efforts need to answer a simple question for employees – “What it is in for the them”. If the vision doesn’t provide answer to this question then the change efforts are bound to fail because it won’t have buy-in from the required stakeholders of the organization.

Step 5 -Empower other to act on the vision

Once the vision is set and communicated, change management leadership should empower people at every level to take decisions regarding the change efforts. The empowerment should follow two key principles – it shouldn’t be too structured that it takes away improvisation capabilities of the managers who are working on the fronts. Secondly it shouldn’t be too loosely defined that people at the execution level can take it away from the desired vision and objectives.

L'Oreal: Expansion in China PESTEL / PEST / STEP & Porter Five Forces Analysis

Step 6 - Plan for and create short term wins

Initially the change efforts will bring more disruption then positive change because it is transforming the status quo. For example new training to increase productivity initially will lead to decrease in level of current productivity because workers are learning new skills and way of doing things. It can demotivate the employees regarding change efforts. To overcome such scenarios the change management leadership should focus on short term wins within the long term transformation. They should carefully craft short term goals, reward employees for achieving short term wins, and provide a comprehensive understanding of how these short term wins fit into the overall vision and objectives of the change management efforts.

Step 7 - Consolidate improvements and produce more change

Short term wins lead to renewed enthusiasm among the employees to implement change efforts. Management should go ahead to put a framework where the improvements made so far are consolidated and more change efforts can be built on the top of the present change efforts.

Step 8 - Institutionalize new approaches

Once the improvements are consolidated, leadership needs to take steps to institutionalize the processes and changes that are made. It needs to stress how the change efforts have delivered success in the desired manner. It should highlight the connection between corporate success and new behaviour. Finally organization management needs to create organizational structure, leadership, and performance plans consistent with the new approach.

Is change management a process or event?

What many leaders and managers at the L'oreal Cosmetics fails to recognize is that – Change Management is a deliberate and detail oriented process rather than an event where the management declares that the changes it needs to make in the organization to thrive. Change management not only impact the operational processes of the organization but also the cultural and integral values of the organization.

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L’Oréal in China: Marketing Strategies for Turning Around Chinese Luxury Cosmetic Brand Yue Sai (Chinese) Chinese Harvard Case Solution & Analysis

Home >> Marketing HBS Case Solutions >> L’Oréal in China: Marketing Strategies for Turning Around Chinese Luxury Cosmetic Brand Yue Sai (Chinese) Chinese

L’Oréal in China: Marketing Strategies for Turning Around Chinese Luxury Cosmetic Brand Yue Sai (Chinese) Chinese Case Solution

Alexis Perakis-Valat, the brand-new CEO of L'Oréal China, has actually made it a point of honor to turn the brand around. He has actually asked Stéphane Wilmet, the brand's brand-new basic supervisor, to come up with a turn-around strategy that will bring back L'Oréal's credibility in China as the world's finest cosmetic online marketer.

Pedagogical Goals:

Can all brand names end up being "enthusiasm" brand names? Marketing "masstige" (budget friendly luxury) brand names. How to utilize brand heritage while remaining appropriate and present in a fast-moving market.

This is just an excerpt. This case is about Marketing

published: 28 May 2014

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Case Description of L'Oreal: Expansion in China Case Study

Case Authors : Zhigang Tao, Li Dongya

Topic : strategy & execution, related areas : emerging markets, growth strategy, mergers & acquisitions, what is the case study method how can you use it to write case solution for l'oreal: expansion in china case study.

Almost all of the case studies contain well defined situations. MBA and EMBA professional can take advantage of these situations to - apply theoretical framework, recommend new processes, and use quantitative methods to suggest course of action. Awareness of the common situations can help MBA & EMBA professionals read the case study more efficiently, discuss it more effectively among the team members, narrow down the options, and write cogently.

Case Study Solution Approaches

Three Step Approach to L'Oreal: Expansion in China Case Study Solution

The three step case study solution approach comprises – Conclusions – MBA & EMBA professionals should state their conclusions at the very start. It helps in communicating the points directly and the direction one took. Reasons – At the second stage provide the reasons for the conclusions. Why you choose one course of action over the other. For example why the change effort failed in the case and what can be done to rectify it. Or how the marketing budget can be better spent using social media rather than traditional media. Evidences – Finally you should provide evidences to support your reasons. It has to come from the data provided within the case study rather than data from outside world. Evidences should be both compelling and consistent. In case study method there is ‘no right’ answer, just how effectively you analyzed the situation based on incomplete information and multiple scenarios.

Case Study Solution of L'Oreal: Expansion in China

We write L'Oreal: Expansion in China case study solution using Harvard Business Review case writing framework & HBR Strategy & Execution learning notes. We try to cover all the bases in the field of Strategy & Execution, Emerging markets, Growth strategy, Mergers & acquisitions and other related areas.

Objectives of using various frameworks in L'Oreal: Expansion in China case study solution

By using the above frameworks for L'Oreal: Expansion in China case study solutions, you can clearly draw conclusions on the following areas – What are the strength and weaknesses of L'oreal Cosmetics (SWOT Analysis) What are external factors that are impacting the business environment (PESTEL Analysis) Should L'oreal Cosmetics enter new market or launch new product (Opportunities & Threats from SWOT Analysis) What will be the expected profitability of the new products or services (Porter Five Forces Analysis) How it can improve the profitability in a given industry (Porter Value Chain Analysis) What are the resources needed to increase profitability (VRIO Analysis) Finally which business to continue, where to invest further and from which to get out (BCG Growth Share Analysis)

SWOT Analysis of L'Oreal: Expansion in China

SWOT analysis stands for – Strengths, Weaknesses, Opportunities and Threats. Strengths and Weaknesses are result of L'oreal Cosmetics internal factors, while opportunities and threats arise from developments in external environment in which L'oreal Cosmetics operates. SWOT analysis will help us in not only getting a better insight into L'oreal Cosmetics present competitive advantage but also help us in how things have to evolve to maintain and consolidate the competitive advantage.

- Strong Balance Sheet – The financial statement of L'oreal Cosmetics looks strong and will help the company going forward.

- High customer loyalty & repeat purchase among existing customers – L'oreal Cosmetics old customers are still loyal to the firm even though it has limited success with millennial. I believe that L'oreal Cosmetics can make a transition even by keeping these people on board.

- Little experience of international market – Even though it is a major player in local market, L'oreal Cosmetics has little experience in international market. According to Zhigang Tao, Li Dongya , L'oreal Cosmetics needs international talent to penetrate into developing markets.

- Low profitability which can hamper new project investment – Even though L'oreal Cosmetics financial statement is stable, but going forward L'oreal Cosmetics 5-7% profitability can lead to shortage of funds to invest into new projects.

Opportunities

- Developments in Artificial Intelligence – L'oreal Cosmetics can use developments in artificial intelligence to better predict consumer demand, cater to niche segments, and make better recommendation engines.

- Increase in Consumer Disposable Income – L'oreal Cosmetics can use the increasing disposable income to build a new business model where customers start paying progressively for using its products. According to Zhigang Tao, Li Dongya of L'Oreal: Expansion in China case study, L'oreal Cosmetics can use this trend to expand in adjacent areas Emerging markets, Growth strategy, Mergers & acquisitions.

- Age and life-cycle segmentation of L'oreal Cosmetics shows that the company still hasn’t able to penetrate the millennial market.

- Customers are moving toward mobile first environment which can hamper the growth as L'oreal Cosmetics still hasn’t got a comprehensive mobile strategy.

Once all the factors mentioned in the L'Oreal: Expansion in China case study are organized based on SWOT analysis, just remove the non essential factors. This will help you in building a weighted SWOT analysis which reflects the real importance of factors rather than just tabulation of all the factors mentioned in the case.

What is PESTEL Analysis

PESTEL /PEST / STEP Analysis of L'Oreal: Expansion in China Case Study

PESTEL stands for – Political, Economic, Social, Technological, Environmental, and Legal factors that impact the macro environment in which L'oreal Cosmetics operates in. Zhigang Tao, Li Dongya provides extensive information about PESTEL factors in L'Oreal: Expansion in China case study.

Political Factors

- Political consensus among various parties regarding taxation rate and investment policies. Over the years the country has progressively worked to lower the entry of barrier and streamline the tax structure.

- Little dangers of armed conflict – Based on the research done by international foreign policy institutions, it is safe to conclude that there is very little probability of country entering into an armed conflict with another state.

Economic Factors

- According to Zhigang Tao, Li Dongya . L'oreal Cosmetics should closely monitor consumer disposable income level, household debt level, and level of efficiency of local financial markets.

- Inflation rate is one of the key criteria to consider for L'oreal Cosmetics before entering into a new market.

Social Factors

- Consumer buying behavior and consumer buying process – L'oreal Cosmetics should closely follow the dynamics of why and how the consumers are buying the products both in existing categories and in segments that L'oreal Cosmetics wants to enter.

- Demographic shifts in the economy are also a good social indicator for L'oreal Cosmetics to predict not only overall trend in market but also demand for L'oreal Cosmetics product among its core customer segments.

Technological Factors

- Proliferation of mobile phones has created a generation whose primary tool of entertainment and information consumption is mobile phone. L'oreal Cosmetics needs to adjust its marketing strategy accordingly.

- 5G has potential to transform the business environment especially in terms of marketing and promotion for L'oreal Cosmetics.

Environmental Factors

- Consumer activism is significantly impacting L'oreal Cosmetics branding, marketing and corporate social responsibility (CSR) initiatives.

- Environmental regulations can impact the cost structure of L'oreal Cosmetics. It can further impact the cost of doing business in certain markets.

Legal Factors

- Health and safety norms in number of markets that L'oreal Cosmetics operates in are lax thus impact the competition playing field.

- Intellectual property rights are one area where L'oreal Cosmetics can face legal threats in some of the markets it is operating in.

What are Porter Five Forces

Porter Five Forces Analysis of L'Oreal: Expansion in China

Competition among existing players, bargaining power of suppliers, bargaining power of buyers, threat of new entrants, and threat of substitutes.

What is VRIO Analysis

VRIO Analysis of L'Oreal: Expansion in China

VRIO stands for – Value of the resource that L'oreal Cosmetics possess, Rareness of those resource, Imitation Risk that competitors pose, and Organizational Competence of L'oreal Cosmetics. VRIO and VRIN analysis can help the firm.

Resources	Value	Rare	Imitation	Organization	Competitive Advantage
Track Record of Leadership Team at companyname	Yes	Yes	Can't be imitated by competitors	Yes	Providing Strong Competitive Advantage
Vision of the Leadership for Next Set of Challenges	Yes	No	Can't be imitated by competitors	Not based on information provided in the case	Can Lead to Strong Competitive Advantage
Ability to Attract Talent in Various Local & Global Markets	Yes, L'oreal Cosmetics strategy is built on successful innovation and localization of products	Yes, as talent is critical to firm's growth	Difficult to imitate	To a large extent yes	Providing Strong Competitive Advantage

What is Porter Value Chain

Porter Value Chain Analysis of L'Oreal: Expansion in China

As the name suggests Value Chain framework is developed by Michael Porter in 1980’s and it is primarily used for analyzing L'oreal Cosmetics relative cost and value structure. Managers can use Porter Value Chain framework to disaggregate various processes and their relative costs in the L'oreal Cosmetics. This will help in answering – the related costs and various sources of competitive advantages of L'oreal Cosmetics in the markets it operates in. The process can also be done to competitors to understand their competitive advantages and competitive strategies. According to Michael Porter – Competitive Advantage is a relative term and has to be understood in the context of rivalry within an industry. So Value Chain competitive benchmarking should be done based on industry structure and bottlenecks.

What is BCG Growth Share Matrix

BCG Growth Share Matrix of L'Oreal: Expansion in China

BCG Growth Share Matrix is very valuable tool to analyze L'oreal Cosmetics strategic positioning in various sectors that it operates in and strategic options that are available to it. Product Market segmentation in BCG Growth Share matrix should be done with great care as there can be a scenario where L'oreal Cosmetics can be market leader in the industry without being a dominant player or segment leader in any of the segment. BCG analysis should comprise not only growth share of industry & L'oreal Cosmetics business unit but also L'oreal Cosmetics - overall profitability, level of debt, debt paying capacity, growth potential, expansion expertise, dividend requirements from shareholders, and overall competitive strength. Two key considerations while using BCG Growth Share Matrix for L'Oreal: Expansion in China case study solution - How to calculate Weighted Average Market Share using BCG Growth Share Matrix Relative Weighted Average Market Share Vs Largest Competitor

5C Marketing Analysis of L'Oreal: Expansion in China

4p marketing analysis of l'oreal: expansion in china, porter five forces analysis and solution of l'oreal: expansion in china, porter value chain analysis and solution of l'oreal: expansion in china, case memo & recommendation memo of l'oreal: expansion in china, blue ocean analysis and solution of l'oreal: expansion in china, marketing strategy and analysis l'oreal: expansion in china, vrio /vrin analysis & solution of l'oreal: expansion in china, pestel / step / pest analysis of l'oreal: expansion in china, swot analysis and solution of l'oreal: expansion in china, references & further readings.

Zhigang Tao, Li Dongya (2018) , "L'Oreal: Expansion in China Harvard Business Review Case Study. Published by HBR Publications.

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L Oreal Expansion in China Case Analysis and Case Solution

Posted by Peter Williams on Aug-09-2018

Introduction of L Oreal Expansion in China Case Solution

The L Oreal Expansion in China case study is a Harvard Business Review case study, which presents a simulated practical experience to the reader allowing them to learn about real life problems in the business world. The L Oreal Expansion in China case consisted of a central issue to the organization, which had to be identified, analysed and creative solutions had to be drawn to tackle the issue. This paper presents the solved L Oreal Expansion in China case analysis and case solution. The method through which the analysis is done is mentioned, followed by the relevant tools used in finding the solution.

The case solution first identifies the central issue to the L Oreal Expansion in China case study, and the relevant stakeholders affected by this issue. This is known as the problem identification stage. After this, the relevant tools and models are used, which help in the case study analysis and case study solution. The tools used in identifying the solution consist of the SWOT Analysis, Porter Five Forces Analysis, PESTEL Analysis, VRIO analysis, Value Chain Analysis, BCG Matrix analysis, Ansoff Matrix analysis, and the Marketing Mix analysis. The solution consists of recommended strategies to overcome this central issue. It is a good idea to also propose alternative case study solutions, because if the main solution is not found feasible, then the alternative solutions could be implemented. Lastly, a good case study solution also includes an implementation plan for the recommendation strategies. This shows how through a step-by-step procedure as to how the central issue can be resolved.

Problem Identification of L Oreal Expansion in China Case Solution

Harvard Business Review cases involve a central problem that is being faced by the organization and these problems affect a number of stakeholders. In the problem identification stage, the problem faced by L Oreal Expansion in China is identified through reading of the case. This could be mentioned at the start of the reading, the middle or the end. At times in a case analysis, the problem may be clearly evident in the reading of the HBR case. At other times, finding the issue is the job of the person analysing the case. It is also important to understand what stakeholders are affected by the problem and how. The goals of the stakeholders and are the organization are also identified to ensure that the case study analysis are consistent with these.

Analysis of the L Oreal Expansion in China HBR Case Study

The objective of the case should be focused on. This is doing the L Oreal Expansion in China Case Solution. This analysis can be proceeded in a step-by-step procedure to ensure that effective solutions are found.

In the first step, a growth path of the company can be formulated that lays down its vision, mission and strategic aims. These can usually be developed using the company history is provided in the case. Company history is helpful in a Business Case study as it helps one understand what the scope of the solutions will be for the case study.
The next step is of understanding the company; its people, their priorities and the overall culture. This can be done by using company history. It can also be done by looking at anecdotal instances of managers or employees that are usually included in an HBR case study description to give the reader a real feel of the situation.
Lastly, a timeline of the issues and events in the case needs to be made. Arranging events in a timeline allows one to predict the next few events that are likely to take place. It also helps one in developing the case study solutions. The timeline also helps in understanding the continuous challenges that are being faced by the organisation.

SWOT analysis of L Oreal Expansion in China

An important tool that helps in addressing the central issue of the case and coming up with L Oreal Expansion in China HBR case solution is the SWOT analysis.

The SWOT analysis is a strategic management tool that lists down in the form of a matrix, an organisation's internal strengths and weaknesses, and external opportunities and threats. It helps in the strategic analysis of L Oreal Expansion in China.
Once this listing has been done, a clearer picture can be developed in regards to how strategies will be formed to address the main problem. For example, strengths will be used as an advantage in solving the issue.

Therefore, the SWOT analysis is a helpful tool in coming up with the L Oreal Expansion in China Case Study answers. One does not need to remain restricted to using the traditional SWOT analysis, but the advanced TOWS matrix or weighted average SWOT analysis can also be used.

Porter Five Forces Analysis for L Oreal Expansion in China

Another helpful tool in finding the case solutions is of Porter's Five Forces analysis. This is also a strategic tool that is used to analyse the competitive environment of the industry in which L Oreal Expansion in China operates in. Analysis of the industry is important as businesses do not work in isolation in real life, but are affected by the business environment of the industry that they operate in. Harvard Business case studies represent real-life situations, and therefore, an analysis of the industry's competitive environment needs to be carried out to come up with more holistic case study solutions. In Porter's Five Forces analysis, the industry is analysed along 5 dimensions.

These are the threats that the industry faces due to new entrants.
It includes the threat of substitute products.
It includes the bargaining power of buyers in the industry.
It includes the bargaining power of suppliers in an industry.
Lastly, the overall rivalry or competition within the industry is analysed.

This tool helps one understand the relative powers of the major players in the industry and its overall competitive dynamics. Actionable and practical solutions can then be developed by keeping these factors into perspective.

PESTEL Analysis of L Oreal Expansion in China

Another helpful tool that should be used in finding the case study solutions is the PESTEL analysis. This also looks at the external business environment of the organisation helps in finding case study Analysis to real-life business issues as in HBR cases.

The PESTEL analysis particularly looks at the macro environmental factors that affect the industry. These are the political, environmental, social, technological, environmental and legal (regulatory) factors affecting the industry.
Factors within each of these 6 should be listed down, and analysis should be made as to how these affect the organisation under question.
These factors are also responsible for the future growth and challenges within the industry. Hence, they should be taken into consideration when coming up with the L Oreal Expansion in China case solution.

VRIO Analysis of L Oreal Expansion in China

This is an analysis carried out to know about the internal strengths and capabilities of L Oreal Expansion in China. Under the VRIO analysis, the following steps are carried out:

The internal resources of L Oreal Expansion in China are listed down.
Each of these resources are assessed in terms of the value it brings to the organization.
Each resource is assessed in terms of how rare it is. A rare resource is one that is not commonly used by competitors.
Each resource is assessed whether it could be imitated by competition easily or not.
Lastly, each resource is assessed in terms of whether the organization can use it to an advantage or not.

The analysis done on the 4 dimensions; Value, Rareness, Imitability, and Organization. If a resource is high on all of these 4, then it brings long-term competitive advantage. If a resource is high on Value, Rareness, and Imitability, then it brings an unused competitive advantage. If a resource is high on Value and Rareness, then it only brings temporary competitive advantage. If a resource is only valuable, then it’s a competitive parity. If it’s none, then it can be regarded as a competitive disadvantage.

Value Chain Analysis of L Oreal Expansion in China

The Value chain analysis of L Oreal Expansion in China helps in identifying the activities of an organization, and how these add value in terms of cost reduction and differentiation. This tool is used in the case study analysis as follows:

The firm’s primary and support activities are listed down.
Identifying the importance of these activities in the cost of the product and the differentiation they produce.
Lastly, differentiation or cost reduction strategies are to be used for each of these activities to increase the overall value provided by these activities.

Recognizing value creating activities and enhancing the value that they create allow L Oreal Expansion in China to increase its competitive advantage.

BCG Matrix of L Oreal Expansion in China

The BCG Matrix is an important tool in deciding whether an organization should invest or divest in its strategic business units. The matrix involves placing the strategic business units of a business in one of four categories; question marks, stars, dogs and cash cows. The placement in these categories depends on the relative market share of the organization and the market growth of these strategic business units. The steps to be followed in this analysis is as follows:

Identify the relative market share of each strategic business unit.
Identify the market growth of each strategic business unit.
Place these strategic business units in one of four categories. Question Marks are those strategic business units with high market share and low market growth rate. Stars are those strategic business units with high market share and high market growth rate. Cash Cows are those strategic business units with high market share and low market growth rate. Dogs are those strategic business units with low market share and low growth rate.
Relevant strategies should be implemented for each strategic business unit depending on its position in the matrix.

The strategies identified from the L Oreal Expansion in China BCG matrix and included in the case pdf. These are either to further develop the product, penetrate the market, develop the market, diversification, investing or divesting.

Ansoff Matrix of L Oreal Expansion in China

Ansoff Matrix is an important strategic tool to come up with future strategies for L Oreal Expansion in China in the case solution. It helps decide whether an organization should pursue future expansion in new markets and products or should it focus on existing markets and products.

The organization can penetrate into existing markets with its existing products. This is known as market penetration strategy.
The organization can develop new products for the existing market. This is known as product development strategy.
The organization can enter new markets with its existing products. This is known as market development strategy.
The organization can enter into new markets with new products. This is known as a diversification strategy.

The choice of strategy depends on the analysis of the previous tools used and the level of risk the organization is willing to take.

Marketing Mix of L Oreal Expansion in China

L Oreal Expansion in China needs to bring out certain responses from the market that it targets. To do so, it will need to use the marketing mix, which serves as a tool in helping bring out responses from the market. The 4 elements of the marketing mix are Product, Price, Place and Promotions. The following steps are required to carry out a marketing mix analysis and include this in the case study analysis.

Analyse the company’s products and devise strategies to improve the product offering of the company.
Analyse the company’s price points and devise strategies that could be based on competition, value or cost.
Analyse the company’s promotion mix. This includes the advertisement, public relations, personal selling, sales promotion, and direct marketing. Strategies will be devised which makes use of a few or all of these elements.
Analyse the company’s distribution and reach. Strategies can be devised to improve the availability of the company’s products.

L Oreal Expansion in China Blue Ocean Strategy

The strategies devised and included in the L Oreal Expansion in China case memo should have a blue ocean strategy. A blue ocean strategy is a strategy that involves firms seeking uncontested market spaces, which makes the competition of the company irrelevant. It involves coming up with new and unique products or ideas through innovation. This gives the organization a competitive advantage over other firms, unlike a red ocean strategy.

Competitors analysis of L Oreal Expansion in China

The PESTEL analysis discussed previously looked at the macro environmental factors affecting business, but not the microenvironmental factors. One of the microenvironmental factors are competitors, which are addressed by a competitor analysis. The Competitors analysis of L Oreal Expansion in China looks at the direct and indirect competitors within the industry that it operates in.

This involves a detailed analysis of their actions and how these would affect the future strategies of L Oreal Expansion in China.
It involves looking at the current market share of the company and its competitors.
It should compare the marketing mix elements of competitors, their supply chain, human resources, financial strength etc.
It also should look at the potential opportunities and threats that these competitors pose on the company.

Organisation of the Analysis into L Oreal Expansion in China Case Study Solution

Once various tools have been used to analyse the case, the findings of this analysis need to be incorporated into practical and actionable solutions. These solutions will also be the L Oreal Expansion in China case answers. These are usually in the form of strategies that the organisation can adopt. The following step-by-step procedure can be used to organise the Harvard Business case solution and recommendations:

The first step of the solution is to come up with a corporate level strategy for the organisation. This part consists of solutions that address issues faced by the organisation on a strategic level. This could include suggestions, changes or recommendations to the company's vision, mission and its strategic objectives. It can include recommendations on how the organisation can work towards achieving these strategic objectives. Furthermore, it needs to be explained how the stated recommendations will help in solving the main issue mentioned in the case and where the company will stand in the future as a result of these.
The second step of the solution is to come up with a business level strategy. The HBR case studies may present issues faced by a part of the organisation. For example, the issues may be stated for marketing and the role of a marketing manager needs to be assumed. So, recommendations and suggestions need to address the strategy of the marketing department in this case. Therefore, the strategic objectives of this business unit (Marketing) will be laid down in the solutions and recommendations will be made as to how to achieve these objectives. Similar would be the case for any other business unit or department such as human resources, finance, IT etc. The important thing to note here is that the business level strategy needs to be aligned with the overall corporate strategy of the organisation. For example, if one suggests the organisation to focus on differentiation for competitive advantage as a corporate level strategy, then it can't be recommended for the L Oreal Expansion in China Case Study Solution that the business unit should focus on costs.
The third step is not compulsory but depends from case to case. In some HBR case studies, one may be required to analyse an issue at a department. This issue may be analysed for a manager or employee as well. In these cases, recommendations need to be made for these people. The solution may state that objectives that these people need to achieve and how these objectives would be achieved.

The case study analysis and solution, and L Oreal Expansion in China case answers should be written down in the L Oreal Expansion in China case memo, clearly identifying which part shows what. The L Oreal Expansion in China case should be in a professional format, presenting points clearly that are well understood by the reader.

Alternate solution to the L Oreal Expansion in China HBR case study

It is important to have more than one solution to the case study. This is the alternate solution that would be implemented if the original proposed solution is found infeasible or impossible due to a change in circumstances. The alternate solution for L Oreal Expansion in China is presented in the same way as the original solution, where it consists of a corporate level strategy, business level strategy and other recommendations.

Implementation of L Oreal Expansion in China Case Solution

The case study does not end at just providing recommendations to the issues at hand. One is also required to provide how these recommendations would be implemented. This is shown through a proper implementation framework. A detailed implementation framework helps in distinguishing between an average and an above average case study answer. A good implementation framework shows the proposed plan and how the organisations' resources would be used to achieve the objectives. It also lays down the changes needed to be made as well as the assumptions in the process.

A proper implementation framework shows that one has clearly understood the case study and the main issue within it.
It shows that one has been clarified with the HBR fundamentals on the topic.
It shows that the details provided in the case have been properly analysed.
It shows that one has developed an ability to prioritise recommendations and how these could be successfully implemented.
The implementation framework also helps by removing out any recommendations that are not practical or actionable as these could not be implemented. Therefore, the implementation framework ensures that the solution to the L Oreal Expansion in China Harvard case is complete and properly answered.

Recommendations and Action Plan for L Oreal Expansion in China case analysis

For L Oreal Expansion in China, based on the SWOT Analysis, Porter Five Forces Analysis, PESTEL Analysis, VRIO analysis, Value Chain Analysis, BCG Matrix analysis, Ansoff Matrix analysis, and the Marketing Mix analysis, the recommendations and action plan are as follows:

L Oreal Expansion in China should focus on making use of its strengths identified from the VRIO analysis to make the most of the opportunities identified from the PESTEL.
L Oreal Expansion in China should enhance the value creating activities within its value chain.
L Oreal Expansion in China should invest in its stars and cash cows, while getting rid of the dogs identified from the BCG Matrix analysis.
To achieve its overall corporate and business level objectives, it should make use of the marketing mix tools to obtain desired results from its target market.

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Home » Management Case Studies » Case Study: L’Oreal International Marketing Strategy

Case Study: L’Oreal International Marketing Strategy

L’oreal is the world’s biggest cosmetics and beauty products company. Basically it’s a French based company and its headquartered in Paris. It is focusly engaged in the field of production and marketing of concentrating on hair colours, skin care, perfumes and fragrances, make up and styling products. L’oreal products also based on dermatological and pharmaceutical fields. Their products are made for Individual and professional customers. This company operates over 130 countries like Asia, America, East and West Europe through 25 international brands.

The success of L’Oreal lies in the fact that the company succeeded in reaching out to the customers of different countries of the world, across different income ranges and cultural patterns, giving them the appropriate product they are worthy of. The area of expertise of L’Oreal being that it succeeded almost in every country that it entered. The strategies of L’Oreal was varied enough to help it and stop itself from restricting itself in a single country. L’Oreal sold its product on the basis of customer demand and country want rather than keeping the product identical across the globe. It built ample number of brands or mammoth brands entrenched to the restricted culture and which appealed to a variety of segment of the universal market instead of generalising the brand and edible in innumerable culture. L’Oreal went on to being a local product in every international market. The brand extension of L’Oreal also came in the same sector or the same segment of market . L’Oreal believed in growing its expertise in the segment it is conscious of rather than going into a completely new sector of market.

L'Oreal International Marketing Strategy

International marketing strategy is more in-depth and broadened in one sense of the term. It is simply a principle of marketing however on a global scale. Setup of global marketing strategy has a lot to do with understanding the nature of global market itself, and most importantly the environment. Business environment across the globe has different economic, social and political influence. Thus, it is believed that selecting a global market target for examples when strategizing is a good idea.

International marketing strategy of L’Oreal is concentrated on a cross cultural arena spanning four market destinations. They are namely, 1.) Asian Market, 2.) European Market, 3.) North America Market and 4.) The African, Orient and Pacific Region.

Marketing Strategy of L’Oreal in Asia

At present L’Oreal is one of the best company in the whole world in the field of cosmetic products. The cosmetic products of the L’Oreal are widely used and specially the hair colour which was introduced by L’Oreal few years ago. L’Oreal is very famous in Asia and their products in Asia are very cheaper than the other companies and are used by majority of people in china, Thailand, Japan etc. L’Oreal is famous and very successful because of their global marketing strategies which are very helpful and also distinct from the strategies used by other companies in this field. L’Oreal in Asia uses the sustainable strategy that is of growing the company as the demands of cosmetic products in the countries like china, Thailand etc is in great amount. This company uses the strategy of suspicious brand management and they also brought the strategy of more suspicious acquisitions . The main problem that a company like L’Oreal faces in Asia is of competition given by the other companies dealing with the cosmetic products. To overcome this problem in Asia these companies use the strategy of selling good quality products at the cheaper rates than the other companies. One of the best strategies of L’Oreal in Asia is of diversification of the brand and the main reason behind this strategy by L’Oreal is to make them palatable in the local cultures. L’Oreal in Asia aims at the management of the global brands with the local variations and this means that their main aim is of becoming a local and not the foreign company in Asia. For example L’Oreal in Thailand has given local names to their stores and most of the employees present in this company, are local people of Thailand. It is because of all these strategies, L’Oreal is very successful in whole Asia.

Marketing Strategy of L’Oreal in European Market

L’Oreal is the only company which uses the strategies which also supports the people in many ways and not only in providing good quality products at cheaper rates. L’Oreal used different strategies of marketing in the European market like they used the strategy of nurturing self-esteem of the people with beauty. In France, L’Oreal created the programs like “Beauty from the heart” for helping the people made helpless by illness or any kind of negative life experiences. In the countries like UK and Germany, many of the women and also the young people regain their confidence and their self image gradually by using the cosmetics which are provided by L’Oreal. In European countries L’Oreal also used the marketing strategies like taking calculated amount of risk etc but most of the strategies are related to the growth of the people mentally and not only for the beauty or the fashion purpose. Various innovative treatment programs are launched by L’Oreal for the young people of European countries and this company also launches the free skincare and make-up workshops for the women suffering from cancer. For example in France a programme named as “La Vie, de Plus Belle” offers the free skincare and makeup for the cancer suffering women in all over the France. This helps them to cope with the treatment’s side effects and it also helps them to retain their self esteem which is very important for a patient. In the European countries L’Oreal generally uses the strategy of the management of brand by which L’Oreal had made a large amount of brands which are rooted in the local culture and which all appeals to the various segments of the global market. By using these social types of strategies for the people of Europe has helped L’Oreal in expanding their business in the whole Europe.

Marketing Strategy of L’Oreal in North American Market

North American markets are considered as a perfect place for the companies like L’Oreal, Olay, ponds etc. The best business of L’Oreal comes from the market of US. The reason for this much success is that L’Oreal uses very good global marketing strategies in North America and the other countries like Canada etc. One of the successful strategies of L’Oreal in US market is brand extensions which includes the extensions of the brands after doing a complete research. For example when L’Oreal launched a shampoo for kids they firstly made a complete research and also debated about the new launch or for an extension. In US and Canada L’Oreal uses the strategy of frequent advertisements and promotions. As we know in the present scenario proper advertisements and promotions are very important for any company because people follow the promotions and due to which the demands of the products like hair colour increases at a very rapid rate. We can clearly understand the advertisement and the promotions of L’Oreal through their media budget. L’Oreal has the twelfth largest media budget in the world which is much more than the other companies of this field. For example in the late 1990’s the expenditure of L’Oreal advertising and promotion was jumped from the 37% to around 47% of the total amount of sales. The global ad spending of L’Oreal was increased to $1.25 billion which was on par with the company named as coca cola. The best thing about this company is that they have a separate and very distinct policy of promotion in the market of US. Matrix is the number one brand of L’Oreal in US and the main reason behind the success of matrix is the frequent and distinct advertisement and promotion of the cosmetic and the hair products. The people of countries like Canada like to use new products that mean they like changes in their product after some interval of time. So by keeping this thing in mind L’Oreal uses the strategies of modifications which mean they modify their existing products according to the latest tastes and fashion of the local people. According to latest surveys of the people of L’Oreal company, majority of the profits of this company is because of US and these perfect strategies used by this company in US is the reason behind this type of success specially in north American market. (Helping vulnerable people)

Marketing Strategy of L’Oreal in Africa, Orient and Pacific Region

Like other countries in the world L’Oreal is also very successful and equally famous in Africa and pacific region. L’Oreal entered into the market of India in the year 1997 and at that there was not much awareness about the sniff of structure in the industry of hairdressing. In the countries like UAE and Australia, proper and the organized education was totally absent and perfect and well trained hairdressers were also not present at that time. Despite of all these problems L’Oreal in India made some of the strategies and one of the best strategies of L’Oreal is that they launched various technical training centers and they even opened a club of only the hairdressers. IN UAE, L’Oreal products which were professional began selling through parisienne salons while the other companies have begun retailing their range of hair color to power growth. L’Oreal uses a global marketing strategy of launching its successful brands all around the world. For example in February of this year only, L’Oreal made an announcement of the arrival of the matrix which is the number one brand of L’Oreal in US to India, UAE etc with a reason of adding range of hair products to their existing products at affordable prices. The main thing about this company is that they make strategies according to the local culture of different countries and not uses the same strategies in every country. Because of all these strategies, L’Oreal gains a huge profit from Europe every year.

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Welcome to Beauty Packaging

L’Oréal Experiences Slow Beauty Market Growth with Struggles in China

The company’s global beauty market is growing at 4.5%, slower than the forecast of 5% earlier this year.

L’Oréal Experiences Slow Beauty Market Growth with Struggles in China

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L’Oréal CEO Sees Slower Beauty Market Growth as China Struggles

The L'Oréal Paris flagship store in Shanghai.

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L’Oréal SA expects slower growth for the overall beauty market this year, according to its CEO, as weakness in China weighs on sales after years of rapid gains.

Nicolas Hieronimus told investors at a JPMorgan event in Paris that he now sees the global beauty market growing between 4.5 percent and 5 percent this year from a previous forecast of 5 percent earlier this year, a L’Oréal spokesperson told Bloomberg News.

Hieronimus blamed the downward revision on a flat market in China, the representative added. The country had long been a growth engine for L’Oréal, with consumers snapping up its high-end cosmetics offerings.

Shares of L’Oréal fell as much as 5.1 percent in Paris and closed 3.4 percent lower. They’ve lost 6.2 percent so far this year.

Rivals also slipped, with Estée Lauder Cos. down as much as 2.8 percent in New York and Nivea maker Beiersdorf AG closing 2.5 percent lower in Frankfurt.

L’Oréal in April reported a 9.4 percent gain in like-for-like sales during the first three months of the year, which had allayed some concerns about the state of the beauty business. The company’s next quarterly update is set for July 30.

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Three Step Approach to L'Oreal: Expansion in China Case Study Solution. The three step case study solution approach comprises -. Conclusions - MBA & EMBA professionals should state their conclusions at the very start. It helps in communicating the points directly and the direction one took. Reasons - At the second stage provide the ...
L'Oréal in China|Marketing|Case Study|Case Studies
France based L'Oréal entered China in 1996 after the government relaxed the norms for foreign investment in the country. It formed a subsidiary named L'Oréal China and began its operations in 1997. The case details how the products of L'Oréal China gained popularity in the country. Encouraged with its early success, the company introduced more international brands in China in order to gain ...
L Oreal Expansion in China Case Analysis and Case Solution
The case solution first identifies the central issue to the L Oreal Expansion in China case study, and the relevant stakeholders affected by this issue. This is known as the problem identification stage. After this, the relevant tools and models are used, which help in the case study analysis and case study solution.
L'Oreal Expansion In China Case Study Solution Analysis
The case study analysis and solution, and L'Oreal Expansion in China case answers should be written down in the L'Oreal Expansion in China case memo, clearly identifying which part shows what. The L'Oreal Expansion in China case should be in a professional format, presenting points clearly that are well understood by the reader.
Case Study: L'Oreal International Marketing Strategy
L'Oreal went on to being a local product in every international market. The brand extension of L'Oreal also came in the same sector or the same segment of market. L'Oreal believed in growing its expertise in the segment it is conscious of rather than going into a completely new sector of market. International marketing strategy is more in ...
loeral.pdf
CASE STUDY L'OREAL IN CHINA -YUE SAI DUDAKULA Gulshan 1. Choose the right value proposition Let's look at the value proposition « modern Chinese women ». Over time, there wa s and still is an increase of the "modern Chinese women". Indeed, since the founding of the People's Republic of China, many bad habits have been abolished, such as bounding feet, concubines for men and parent ...
Solved Case study Distributing L'Oréal in China The current
Question: Case study Distributing L'Oréal in China The current marketing campaign of L'Oréal in China crosses many product areas. The distribution of the many products offered by the L'Oréal Group has meant a variety of issues must be contended with. The L'Oréal Group's entry into China has been part of the company's global ...
SOLUTION: L Oreal In China Case Report
For a short duration Cosmetic market in China has been saturated with various firms. Yue Sai needs to position its brand and employ particular ... Post a Question. Provide details on what you need help with along with a budget and time limit. Questions are posted anonymously and can be made 100% private.
L'Oréal Experiences Slow Beauty Market Growth with Struggles in China
At a Paris event, Hieronimus told investors at JPMorgan he sees the global beauty market growing this year between 4.5% and 5% from a previous forecast of 5% earlier this year. So far L'Oréal has lost 7.8% of shares this year, according to Bloomberg. Estée Lauder Companies has also experience a ...
L'Oréal CEO Sees Slower Beauty Market Growth as China Struggles
Hieronimus blamed the downward revision on a flat market in China, the representative added. The country had long been a growth engine for L'Oréal, with consumers snapping up its high-end cosmetics offerings. Shares of L'Oréal fell as much as 5.1 percent in Paris and closed 3.4 percent lower. They've lost 6.2 percent so far this year.