Loreal Swot

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  • Topic: Cosmetics, L'Oréal, Personal care
  • Pages : 45 (13413 words )
  • Download(s) : 266
  • Published : April 22, 2009
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6. Strengths, Weaknesses, Opportunities and Threats

STRENGTHS

• Percentage penetration of fragrances and some cosmetics, particularly lipstick, is high.

• Many women use more than one fragrance.

• There is a high brand loyalty but a willingness to try new products.

• The leading competitors are huge multinationals with the necessary resources to spend on research, development and advertising.

• Either from vanity or insecurity, many consumers readily succumb to marketing hype.

• Older women retain a pride in their appearance, and men and younger children are also more interested in fashion, cosmetics and fragrances than in the past, thus expanding the potential market.

• The UK has a growing population and an ageing one that tends to have the resources to spend on expensive products.

• The wearing of premium fragrances and cosmetics, particularly those bearing the names of international fashion houses, has an indulgent feel and, like other luxury consumer goods, part of their attraction lies in high prices and exclusivity.

• Profit margins, particularly on the ingredients of fine fragrances, are high.

• Products are indisputably glamorous and can be packaged, displayed, advertised and marketed in such a way to exploit this.

• Products are available in many outlets; the choice is extensive and the price range is also wide.

WEAKNESSES

• Competition is fierce in both manufacturing and retailing in both the premium and mass markets.

• Sales are seasonal to a great extent, as they tend to be centred on Christmas, Valentine's Day and Mother's Day.

• Considerable investment is necessary to bring new products to the market and to maintain their high profile.

• The failure rate of new cosmetic products and fragrances is high in such a competitive market.

• The safety and efficacy of products is constantly under scrutiny, and cosmetics and fragrances must comply with increasingly high standards.

• The price and availability of raw materials can fluctuate. For example, severe flooding in Malaysia in November 2007 could affect the supply of palm oil used widely in personal care products.

• Products are non-essential and expenditure is discretionary to a great extent.

• Products can fall quickly out of vogue in a fashion-led market.

OPPORTUNITIES

• Manufacturers are increasingly looking to the emerging markets of Brazil, Russia, India, Mexico and the People's Republic of China (PRC) for expansion plans. Eastern Europe is also seen as having considerable potential.

• There is an opportunity to significantly increase the retail sales value of mass-market ethnic cosmetics, with more investment in advertising and marketing and new product innovation.

• There is seemingly no end to the number of `celebrities' endorsing fragrances such products have proved to be particularly popular, as many consumers seek to buy into the glamour of fame.

• It is a lucrative sideline for fashion houses to extend their brands into fine fragrances and premium cosmetics.

• New formulations incorporating anti-ageing ingredients are in great demand by the UK's ageing population, who prove willing to pay premium prices.

• Manufacturers and retailers alike are increasingly jumping onto the `green bandwagon', by introducing organic and natural-ingredient products.

THREATS

• Premium cosmetics and fragrances are a prime target for counterfeiters. Companies spend considerable sums protecting their upmarket brands.

• The growing involvement of grocery chains in non-food sectors is continuing to exert downward pressure on prices of mass-market cosmetics and fragrances.

• Scare stories regularly appear in the media about side effects of cosmetic ingredients.

• Discounting premium cosmetics and fragrances can damage the very...
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