L’Oréal’s global brand management strategies
L’Oreal has emerged as a global brand within a period of 100 years. In such 100 years, the company had taken several brand management strategies that resulted in efficient performance and helped in recognition of the company as a global brand. Those strategies turned a single product prepared by a French chemist into a multi brand company.
Hence, as per my view, yes, the strategies inherited by the L’Oreal were primarily responsible for its impressive financial performance and its amazing brand recognition. The reason for this was that the company always tries its best to make sure that each one of its brands will have its own brand image and also takes care that any of its products will not overlap with any other product or company.
The company started its operations with an innovative hair color formula which was developed by a French chemist named Eugen Schueller in 1907. This formula was named as “Aureole”and this formula never damages the hair while coloring it. This uniqueness made it different from other hair coloring products that uses relatively harsh chemicals. Schueller started producing these products on his own and sold the products to Parisian Hairdressers (L’Oreal).
Research and development: in 1909, Schueller set up his company and named it “ Societe Francaise de Teintures inoffensive pour cheveux”. From the starting only Schueller laid more emphasis over the Research and innovation. The idea behind providing so much importance to research and innovation was to develop new and better products.
Advertising: in 1920, three in-house chemist were appointed by the company and started covering the countries like Holland, Austria and Italy. In order to market his products, he adopted the strategy of Advertising by using promotional posters made by famous graphic artists like Paul Colin, Raymond Savignac etc (Saxena, 2005). Also in 1957, after the death of Schueller, the deputy Francoise Dalle, took over the charge over the company and adopted a brisk technique of advertising through showing their products in Films commercials during a movie being screened in the theatres.
Campaigning: Schueller, in 1937, started a campaign known as “Clean Children” and also created a Jingle “Be nice and clean, Smell good”. This Jingle becomes a very pompous one in France. Moreover, in 1972, the company launched a legendary campaign with the philosophy of providing a high Quality products at an affordable price. The slogan of this campaign was “Because I’m worth it”
Internationalizing: in 1963 L’Oreal became a publicly traded company which posed a risk towards the owners of the company. Thus, Dalle began taking steps to internationalize the company’s ownership structure so that the company would not undergo the government control. Finally, in 1973 half of the stock of the company was sold to Gesparal which is a France-based manufacturer of personal care products. The other half was provided for sale to the public. However, later 49 percent of Gesparal was sold to Nestle and the rest 51 percent was held by the daughter of Schueller – Bettencourt (Universe).
Differentiation: the profit margins in cosmetic industries are quite low because of a lack of differentiation among the products of the various companies. The company finally took a decision of differentiating its products by attaching the slogan of the campaign organized in 1972- “Because I’m worth it”. However, this slogan was indirectly turned into a new message “I’m willing to pay more”. This resulted in an increase in the profits of the company.
Distribution: the company between 1990 and 2002 started distributing its products with the help of agents and consignments to US, South America, Russia and the eastern countries. The company emerged as a large cosmetic selling company having a variety of each and every cosmetic products.
These strategies and factors helped the company in achieving better performance of the company. We can prove it by the changes in the consolidated financial statements of the company. The company in the last five years has achieved:
An increase a sale from 10537 million in 1997 to 14288 million in 2002 that reflects the worldwide consumer preference towards the company’s products.
Secondly the profits were increased by the 2 times. The profit in 1997 was 722 million, which reached to 1464 million in 2002. This reflects the efficiency of the company within a stipulated period of 5 years.
The dividends of the company are also increased from 165 million to 433 million that shows that the shareholders are also earning a significant amount with the operations of the company.
Developing of new innovative products with strong Development & Research Department with a lot of know how. They expanded into important national markets and invested in new facilities. Adding glamour to its brand to make it more appealing and famous was another factor in its worldwide known performance.