L'Oreal Global Brand Local Knowledge

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REV: JULY 29, 2011

REBECCA M. HENDERSON
RYAN JOHNSON

L’Oréal: Global Brand, Local Knowledge

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You need a global brand, which is then adapted to the key markets on the key continents in order to offer consumers the right and relevant products, which is what unive ersalization is all about.1

— Jean-Paul Agon, CEO, 2010

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Since its founding in 1909, L’Oréal tightly couple d innovation and speed to market with i
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expansion of its geographic and consumer base.2 L’Oré al believed that launching new innovative products on a regular basis was key; the company typi cally outspent competitors on research and i
development (R&D). In 2010, L’Oréal spent 3.5% of reven ue on R&D, while Procter & Gamble (P&G) spent 2.7% and Revlon 1.7%.3 While Revlon founder Char les Revson was credited with the claim that the beauty industry sold “hope in a jar,” L’Oréal aimed to sell the “science of beaut in a jar,”4 and in ty

2010, held 612 patents. L’Oréal, a leading player in the be auty and skin care market with 2010 sales of a
€19.5 billion (half outside of Europe), had been pushing “the boundaries of science to invent beauty and meet the aspirations of millions of women and men . Its vocation is universal: to offer everyone, all over the world, the best of cosmetics in terms of qu ality, efficacy and safety, to give everyone ,

access to beauty by offering products in harmony with t heir needs, culture and expectations.”5 The company’s 66,600 employees supported and managed 2 3 global brands across 130 countries. Its 38 factories produced 5.7 billion units in 2010. L’Oréal br ands offered hair coloring and hairstyling products, cosmetics, skin care products, and fragrances a cross professional salon brands, mass-retail brands, and luxury brands.6 L’Oréal sold cosmetics through a variety of channels, including department stores and other retail locations, duty free shops, online and via direct marketing to professionals in the beauty industry.7

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Selling the Science of Beauty around the World
In 1907, L’Oréal started with an innovation when Fre nch chemist Eugène Schueller developed a hair-color formula known then as “Aureole” (“halo” in Fr ench). He formulated and manufactured his own synthetic hair dye products which he sold to Paris

sian hairdressers. François Dalle, who took
over at Schueller’s death in 1957, was widely credited w ith initiating the concept of selling beauty through several channels that corresponded to consumer s’ psychographic and psychological profiles in addition to their perceived purchasing power. Ho wever, L’Oréal’s international reach was hampered by the perception of Parisian beauty products a s being expensive and out of reach.

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Upon becoming CEO in 1988, Lindsay Owen-Jon es focused on five core businesses and a
technologies (hair color, hair care, skin care, color cosmeti cs, and fragrances) and drove to make them r
________________________________________________________________ ______________ __________________________________ _
Professor Rebecca M. Henderson and Research Associate Ryan Johnson of th e Global Research Group prepared this case. This case was developed from published sources. Unless otherwise noted, information in this c ase comes from th e company’s official website. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serv e as endorsements , sources of primary data, or illustrations of effective or ineffective management.

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