Marketing Excellence
Much of the company's early international expansion
is credited to Sir Lindsay Owen-Jones, who transformed
L'Oréal from a small French business into an international
>> L'Oréal
cosmetics phenomenon with strategic vision and precise
When it comes to globalizing beauty, no one does it brand management. During his almost 20 years as CEO
better than L'Oréal. The company was founded in Paris and chairman, Owen Jones divested weak brands, in-
more than 100 years ago by a young chemist, Eugene vested heavily in product innovation, acquired ethnically
Schueller, who sold his patented hair dyes to local diverse brands, and expanded into markets no one had
hairdressers and salons. By the 1930s, Schueller had dreamed of, including China, South America, and the former
invented beauty products like suntan oil and the first Soviet Union. His quest was to achieve diversity and "mest
mass-marketed shampoo. Today, the company has the needs of men and women around the globe, and make
evolved into the world's largest beauty and cosmetics beauty products available to as many people as possible."
company, with distribution in 130 countries, 27 global Today, L'Oréal focuses on five areas of beauty ex-
brands, and more than $30.8 billion in sales.
pertise: skin care, hair care, makeup, hair coloring,
TAPPING INTO GLOBAL MARKETS CHAPTER 8
243
and perfume. Its brands fall into four different groups: In Japan, for example, L'Oréal developed Wondercurl
(1) Consumer Products (52 percent of sales, includes mass- mascara specially formulated to curl Asian women's
marketed brands like Maybelline and high-technology eyelashes, which are usually short and straight. Within
products sold at competitive prices through mass-market three months, Wondercurl mascara had become Japan's
retailing chains), (2) L'Oreal Luxe (27 percent of sales, in- number one selling mascara, and young women lined up
cludes prestigious brands like Ralph Lauren perfume that outside stores to buy it. L'Oréal continued to research the
are available only in premium stores, department stores, market and developed nail polish, blush, and other cos-
or specialty stores), (3) Professional Products (14 per- metics aimed at this new Asian generation.
cent of sales, includes brands such as Redken designed L'Oréal believes its future lies in emerging areas such
specifically for professional hair salons), and (4) Active as Asia, Africa, and Latin America, where it expects to
Cosmetics (7 percent of sales, includes dermo-cosmetic find millions of new customers over the next few years.
products sold at pharmacies, drugstores, and medi-spas). Marc Menesguen, L'Oréal's managing director-strategic
L'Oréal believes precise target marketing-hitting the marketing, explained, "Our projection for 2020 is that
right audience with the right product and message at the 50% to 60% of sales will be coming from [emerging]
right place is crucial to its global success. Owen-Jones markets." As a result, new research centers have popped
explained, "Each brand is positioned on a very precise up in these countries, and the company is working ag-
[market] segment, which overlaps as little as possible with gressively on understanding these consumers' needs and
the others."
developing beauty products to satisfy them.
The company has built its portfolio primarily by pur- Well known for its 1973 advertising tagline-
chasing local beauty companies all over the world, revamp- "Because I'm Worth It" - L'Oréal is the leader in beauty
ing them with strategic direction, and expanding the brand products around the world. The company spends ap-
into new areas through its powerful marketing arm. For ex- proximately $5 billion in advertising each year, making
ample, L'Oréal instantly became a player with 20 percent it the third-largest advertiser. As Gilles Weil, its head of
market share) in the growing ethnic hair care industry when luxury products, explained, "You have to be local and as
it purchased and merged the U.S. companies Soft Sheen strong as the best locals, but backed by an international
Products in 1998 and Carson Products in 2000. L'Oréal image and strategy."
believed the competition had overlooked this category be-
cause it was fragmented and misunderstood. Backed by a
Questions
deep portfolio of brands and products, SoftSheen-Carson
is now the market leader in the ethnic hair care industry. 1. Review L'Oréal's brand portfolio. What role have local
L'Oréal also invests significant money and time in its and global marketing, smart acquisitions, and R&D
22 local research centers around the world. The com- played in growing those brands?
pany spends 3.5 percent of annual sales on R&D, more 2. What are the keys to successful local product
than one percentage point above the industry average,
researching and innovating products that meet the local
launches like Maybelline's Wondercurl in Japan?
needs of each region.
3. What's next for L'Oréal on a global level? Who are its
Understanding the unique beauty routines and needs biggest competitors? If you were CEO, how would
of different cultures, climates, traditions, and physiologies is you sustain the company's global leadership?
critical to L'Oréal's global success. Hair and skin greatly dif- Sources: Andrew Roberts, "L'Oréal Quarterly Sales Fire Most since 2007 en Lugory Perfume
fer from one part of the world to another, so L'Oreal listens tilberborg ikninenWork Aprl 22, 2010; Richard Tomlinson, L'Oréal's Global Makeover
to and observes consumers across the globe to gather a Fortune, September 30, 2000; Chroen Carvajal. Terrational Busine; Prinping be the Cameras
deep understanding of their beauty needs. L'Oréal scientists Howary, Forbes: Nievember 27, 2000; lack Nett, how L'Oreal Pan Winter Wienegun Shares
study consumers in laboratory bathrooms and in their own Best Practions around the Globe," Albertising Age, June 11, 2012; L'Orial, www.boreal.com
homes, sometimes achieving scientific beauty milestones.
Marketing Excellence
morning. In 2002, he plunged into Times Square from a
crane to announce his new mobile phone business. In
>> Virgin Group
2004, he appeared at a New York City nightclub wearing
flesh-colored tights and a strategically placed portable
Virgin roared onto the British stage in the 1970s with the CD player to introduced a line of hip techie gadgets called
innovative Virgin Records, the brainchild of entrepreneur Virgin Pulse. Branson has attended press conferences
Richard Branson, a high school dropout who signed dressed in an astronaut's suit and angel's wings, driven
unknown artists and began a marathon of publicity that across the English Channel in an amphibious car, and
continues to this day. The flamboyant Briton sold Virgin even bared his bottom to the press when Virgin Atlantic
Records in 1992 and has gone on to launch more than landed in Canada for the first time. His good-natured
400 companies worldwide whose combined revenues humor and flamboyant personality attract media attention
exceeded $24 billion in 2012.
and customer admiration around the globe. Reports say
The Virgin name—the third most respected brand Virgin's press coverage equates to $1.6 billion in media
in Britain and the Branson personality help sell the value per year.
company's diverse portfolio of branded air travel, rail- Although Branson avoids traditional market research,
roads, financial services, music, mobile phones, cars, he stays in touch through constant customer contact.
wine, publishing, and medical devices. The Virgin Group When he first set up Virgin Atlantic, he called 50 custom-
looks for new opportunities in markets with underserved, ers every month to chat and get their feedback. He ap-
overcharged customers and complacent competition. peared in airports to rub elbows with customers, and if
Branson explained, "Wherever we find them, there is a a plane was delayed, he handed out gift certificates to a
clear opportunity area for Virgin to do a much better job Virgin Megastore or discounts on future travel.
than the competition. We introduce trust, innovation, and Virgin Unite is a nonprofit foundation that tackles
customer friendliness where they don't exist."
global, social, and environmental problems with an entre-
Some marketing and financial critics have pointed preneurial approach. A team of scientists, entrepreneurs,
out that Branson dilutes the brand and covers too many and environmental enthusiasts work with Virgin to rein-
businesses. There have been some fumbles: Virgin Cola, vent the way we live and work to help make people's
Virgin Cosmetics, Virgin Vodka, and Virgin Brides have lives better." Virgin Green Fund is a private equity firm
all but disappeared. But despite the diversity, all Virgin investing in renewable energy and resource efficiency
Group's brands stand for quality, innovation, and fun. sectors. Virgin established the Earth Challenge in 2007 to
Branson is a master of the strategic publicity stunt and award $25 million to any person or group who develops
knows photographers will turn up if he gives them a good a safe, long-term, commercially viable way to remove
reason. When he took on stodgy British Airways in 1984, greenhouse gases from the atmosphere. Submissions
he wore World War l-era flying gear to announce the for- are being reviewed by a team of scientists, professors,
mation of Virgin Atlantic. The first Virgin flight took off laden and environmental professionals.
with celebrities, media, a brass band in full swing, waiters Now knighted by the Queen of England, Sir Richard
from Maxim's dressed in white tie and tails, and free-flowing never does anything small and quiet. He once said,
champagne. The airborne party enjoyed international press "Lavish praise on people and people will flourish; criticize
coverage and millions of dollars' worth of free publicity. and they shrivel up." This philosophy has led him to many
When Branson launched Virgin Cola in the United successes both in business and in life. Whether looking
States in 1998, he steered an army tank down New for a new business, generating publicity in his charac-
York's Fifth Avenue and blew up a Coca-Cola sign, gar- teristic style, or encouraging research to help the planet,
nering interviews on network TV news shows the next Branson does it with a bang.
686
PART 8 CONDUCTING MARKETING RESPONSIBLY FOR LONG-TERM SUCCESS
Questions
Sources: Peter Ekind, "Barson Gets Grounded Fortune February 5, 2007.pp. 13-14, Alan
Deutschman, "The Enlightenment of Fichard Branson, Fast Company, September 2006, p. Andy
1. How is Virgin unique in its quest to be a socially respon- Serwer, D. Bran's Profits: Equal His Joie de Vivrel." Fortune. Odober 17, 2006, p. 57; Kary
sible and sustainable company?
Capell with Wendy Zelner, Tichard Branson's Next Big Adventure, " Businesdeck, March 3, 2004
pp. 44-46; Melanie Wek, "Red Baron," Forbes July 3, 2000, pp. 151-60, Sam Hil and Glenn
2. Discuss the contradiction between Virgin's negative Hikin. Radical Marketing Now York: Harperikusiness, 1999): "Baron Pledges Three Billion Dollars to
environmental impact (via air and rail) and the green Does lidard Baruan ileally Oum? The Guardian, January 7, 2012, Carmine Gisli, "The Key to a
message and communication efforts behind endeav- Inting Helationship in Business and in Marriage. Forte, April 10, 2014; Virgin, www.virgin.com
ors such as the Earth Challenge.
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