Problem Identification
Many
types of
products
Premium
pricing
strategy
Brand
utilization
Rethink
all
aspects
“Too
French”
for US
“Star”
system
• How to further
improve on
Plentitude’s
current
operations in
US?
• How to
introduce a new
product
(Revitalift-Eye)
into existing
product line?
L’Oreal Background
• L’Oreal started in Clichy, France in 1907 by Eugene
Schiller
• Annual revenue of 53.4 billion French Francs in
1996 ($1.09 billion US) from over 2000 products
• Owns 25 global brands
– Cosmetics
– Hair color
– Skincare
• High-end: Lancome, Biotherm
• Mass market: Plenitude
L’Oreal Background
• Cosmetics represent 81% of revenues
• $300 million spent on research & 300 new
patents worldwide in 1996
• Acquired Maybelline to broaden participation
in the mass market
• Combining hair care & cosmetics division
Case Background
•
•
•
•
•
Plentitude line launched in 1982
Very successful in the French market
Strong introduction in US market
US sales grow up until 1991
After 9 years in the US, sales become stagnant
in the US
Plentitude Line
• Launched in France in 1982
• Positioned as:
– High end
– Superior performance
– Accessible (Class to Mass strategy)
L’Oreal Marketing Strategies
• Golden Rules of
Advertising
– Focus advertising on
star product
– Provide evidence of
technological
superiority
– Depict an executive,
up-to-date and
assertive executive
woman
• “Trickle Down and
Fire Up”
– Revenue from mass
market products to
fund their R&D for
high end products
– “Maintain premium
pricing to reinforce
quality and
performance”
Plentitude US Launch
• Test launch in Atlanta & Dallas in ’88 under
“class to mass” strategy
• Positioning was to “reduce signs of aging”
• L’Oreal brand recognition was critical to selling
products
• Used same “star” philosophy formula as used
in France
SWOT Analysis
Strengths
•Innovative technology
•L’Oreal brand recognition
•Product potential with Revitalift line
•Mature skin market segment
•Great research & development
department
•Experience in consumer cosmetic products
Opportunities
•Large US market
•Opportunity to tap into younger consumer
segment
•Many channels for L’Oreal product
•Revise pricing/marketing strategy to
increase consumer appeal
•Opportunity to develop mature market
with Revitalift product
Weaknesses
•No differentiation in daily
moisturizer/cleanser market
•High advertising costs
•Lack of profitability
•Consumer behavior in US unknown
•Unattractive product cover
•No awareness in US market
Threats
•Competition with Olay’s similar product
•Consumer loyalty to competitor product
•Expensive product image
•Lack of acceptance from younger market
•Domestic products more widely known