L’OREAL Cosmetics: Marketing Plan

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30th March 2021

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Table of Contents

Introduction 3

Executive Summary 3

Situation Analysis 4

Distribution Network 5

Product Analysis 5
Features 5
Categories 5

Competitor Analysis 5

Macro Environmental Analysis 6

Financial Analysis 6

Strengths, Weaknesses, Opportunities, and Threat Analysis 6

Goals 7
Increasing Revenue Through Sales 7
Brand Management 8

Marketing Strategy 8

Product Strategy 8

Promotional Strategy 8

Pricing 8

Product Positioning 8

Marketing Research 9

Tactical Program 9

Implementation Plan 9

Budget 10

Controls 10

References 11
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Olay Cosmetics: Marketing Plan

Introduction
Do you know that your skin is one of the most precious parts of the body? Well, it is the only
organ that is in direct contact with the world. Skin is responsible for holding all body fluids and
keeping you away from dehydration. The skin is also a barrier to keep off all deadly microbes
away from our bodies. Without the skin, we could be vulnerable. The skin is also home to
various nerves that help us to feel cold, heat, and also pain. Without nerves, we are likely to get
hurt without knowing.

To maintain healthy skin is not a walk in the park. If you leave your skin to vulnerabilities, it can
age very fast. Well, no one would like to look like a grandma while she is still 20, right? For
those looking for skincare solutions, Olay is always the best solution.

Executive Summary
L'Oréal S.A is an multinational company with headquarters in Clichy. The company also has an
operating office in Paris (France). L'Oréal S.A company specializes in providing skincare
solutions and cosmetics to its worldwide clients. The company history dates back in 20 th . It was
started by Eugene Paul Louis Schueller. Schurller was a Fresh chemist who had passion in
developing beauty products. After many years, the company has evolved to become the largest
cosmetic company in the world.

The company has over 500 brands in the market. They also boast to have over a thousard
individual products in different beauty sectors such as parmanents, hair color, body and
skincare, makeup, clensers and fragnance. The main ingredients that are used by Olay include
glycerin, Vitamin B3(niacinamide), Retinyl Propionate (Vitamin A), Amino Peptides, and
Broad-spectrum sunscreen.

With a piece of deep knowledge about beauty, formulation, performance testing, and various
ingredients, L'Oréal S.A is able to produce products that work magic. The company boasts to
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have different research and development centers from different parts of the world such as US,
China, Japan, India and France. As the company grew, it started margin with different small
companies. For example, in 2006, the L'Oréal purchased a bought another beauty shop known
as The Body Shop for $562. In 2014, L'Oréa bought brand magic holding, a chinese beauty brand
company. The company also aquired over 8% of Nestle company shares for around $5 billion. The
latest announcement is the purchase of Valentino in 2018.

The company realised its major growth in 1987 with the growth of mail order business. It founded a
branch called Le Club des Createus to work on its mail-oder sales of cosmetic products.

L'Oréal's takes advantage of its market share and experience to remain ahead of their competitors.
They use a slogan, “because we are worth it”. Before releasing any product, L'Oréal's does
rigorous testing with women from different parts of the world. It ensures that their products are
capable of delivering long-term and immediate benefits.

L'Oréal's is taking advantage of its large customer base and experience in cosmetic. The company
is targeting a wide range of women who are addicted to maintaining their skins and also keeping
their skin younger. The primary objective of marketing is to increase their market share by 20%
within the USA in the next 10 years and also increasing the annual sales to around $20 billion.

Situation Analysis
To date, there are different cosmetic products from L'Oréal's company in the market. It has most
popular blands in the market which serves people from all over the world. ones include L'Oréal's
Regenerist Micro-Sculpting Cream, L'Oréal's Luminous Whip Face Moisturizer, L'Oréal's Daily
Facials, Puffy Eyes, L'Oréal's Ultimate Cream For Wrinkles, and L'Oréal's Total Effects 7-in-One
Anti-Aging Moisturizer. These products are either chemical, natural, or mineral-based.

Different customers have different perceptions when it comes to types of products in the market.
They tend to get drawn to a specific product attribute and benefits derived from a specific brand.
For example, they perceive that organic products are the best and more beneficial for skincare
compared to chemical products. Other people are torn between describing cosmetic products as
luxury or utility products. The cosmetic industry itself also has placed the products in different
categories such as skin care, make-up, oral care, hair care, and hygiene products. Different
brands also distinguish themselves by what they produce. L'Oréal's cosmetic company has a wide
variety of consumers looking for natural products. "Natural" in the sense that, there is no
evidence of artificial ingredients, color, or fragrance. Most consumers in this category include
traditional cosmetic users. Such people are conscious about what makes the product. L'Oréal's
will target specific segments such as the society responsible class, skin Care conscious, adult
women, and teen girls. Most of L'Oréal's customer base is in the health-conscious class. Here is
how L'Oréal's addresses the different targeted audiences.

Targeted Audience Customer Need Features/ Benefits

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Skin Care ● No harmful ● Natural product

ingredients ● The oil is free from
● Having healthier skin chemicals

Socially Responsible ● Helps people to solve ● For every product

different social sold, 5% of the profit
problems in society. is sent to the Skin
Cancer Foundation.

Women ● Maintain natural Look ● Different varieties

● Daily usage with different
● Maintain Young Face ingredients.
● Can be used every day
without harming the
skin.

Teen ● Prevent Acne During ● Variety of products

Puberty depending on the type
● Maintains Young skin of skin.
● Products with
different colors,
flavors.

Distribution Network
Since L'Oréal's has customers from different parts of the world, it will use independent
distributors who will link up with different wholesale and retail stores operating in different
locations. By doing so the company will avoid much competition from other brands who rely
mostly on delivering their products directly to boutiques and other retail stores. The company
will focus on having its products in stores that are known to sell mostly organic products. They
include beauty salons, Mass outlets, Natural food stores, Pharmacies, Drug stores, etc. As the
company gains more acceptance worldwide, it will shift to direct marketing via e-commerce sites
and also open stores in strategic locations depending on the customer base.

Product Analysis
Features
Natural Products - No artificial fragrance or color, Free from Mineral oil and Parabens.

Categories
Different categories of product from L'Oréal's company include; Micro-Sculpting Cream,
L'Oréal's Face Wash (4 skin types - dry, very dry, oily), L'Oréal's Face Pack (depending on utility
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i.e Skin lightening, Anti-aging), L'Oréal's Luminous Face Moisturizer categorized depending on
the time of use ( night and daytime lotions), Toner (universal with all skin types), L'Oréal's Body
oils categorized depending on the oil type (olive, coconut, etc), and L'Oréal's BB Cream which
comes in different shades (medium, light and dark).

Competitor Analysis
L'Oréal's company has exceptional products that keep its name ahead of competitors. However,
the cosmetic industry is subjected to rapid changes in trends and consumer tests/preferences.
There are various brands in the market that offer various skin care products. They include Beauty
Industry, Avon, Chanel, Bobbi Brown, Estee Luder, M.A.C, Smashbox, and Neutrogena.

In spite of the stiff competition in the industry, L'Oréal's believes that they have what it takes to
create a competitive brand image and remain competitive in the targeted market. The main areas
of competition include sales, product differentiation, distribution model, and marketing strategy.
Loyal customer base, distribution expertise, and focused marketing put L'Oréal's company at a
competitive advantage.

Macro Environmental Analysis

Political Factors

● Different Industry-specific rules regulate the production of cosmetics.

Economic Factors

● The ability of consumers from different backgrounds to afford to buy the products.
● The economic environment of customers from different countries.

Social Factors

● a shift in family patterns in the targeted market

● population change

Technological Factors

● Development of various innovations aimed at optimizing production

● Evolution in biotechnology

Environmental Factors

● Different licensed regulating the industry

● Tough trade regulations in different countries
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Financial Analysis
The cosmetic market has seen significant growth in the last 3 years. By 2025, it is estimated to
reach $800 billion at a 7% annual growth rate. Skincare products are enjoying the largest market
share to date (Business Wire, 2015). In 2021, the value of the cosmetic market is around $100
billion (Statista, n.d.). It is fuelled by the rise in consumer income, high product awareness,
change in customer lifestyle, and also the introduction of technology in marketing. The global
demand for cosmetics will keep rising each year.

Strengths, Weaknesses, Opportunities, and Threat

Analysis
L'Oréal's company has built upon some strength which makes it stand out. However, it has some
weaknesses such as limited budget when it comes to advertisement and other promotional
activities. The main opportunities to explore include tremendous growth in the demand for
cosmetics. L'Oréal's faces few threats such as unwillingness by retail stores to accept the
products.

Strength

High Quality - Products from L'Oréal's stands from the rest when it comes to quality. They are
developed by different experts with high experience. Before a product is released, it must pass
approval from different users worldwide.

Experience - L'Oréal's has been operating for decades. It has survived different trends over the
years. As a result, they are likely to have a better understanding of the market.

Social Responsibility - The customers who purchase L'Oréal's products contributes to the fight
against cancer.

Weaknesses

Competition - L'Oréal's is likely to face significant competition from other big companies
operating in their targeted areas.

Opportunities

Market - According to Michelle Yeomans, Cosmetic industry is growing at a minimum rate of

9.6% (2013). L'Oréal's can take advantage and slack the biggest market pie.

Increased Cosmetic Products Awareness - Currently, customers have improved their buying
capabilities. They are spending more on cosmetics.
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Loyalty - Most cosmetic product consumers tend to stick to a particular brand that keeps
enriching their skin.

Threats

Competition - Some Competitors such a Body Shop and Bare Escentuals have been in the
market for a long time. As a result, they have a strong brand name that can pose a great
competition (Jim Makos, 2014).

Goals
Increasing Revenue Through Sales
The primary goal of each company is to make a profit. With the increased products available,
L'Oréal's company aims at increasing sales. By so doing, its market share will grow. The sales
will grow once the company reaches a wider market.

Brand Management
The company produced products that will have an everlasting impact on customers. As a result,
the brand will remain in the minds of such existing customers. A happy customer is also likely to
do a referral.

Marketing Strategy
The company will use its popular “ Because we're worth it” slogan. This strategy will basically
motivates the buyers since they realize the value for money once they purchase those items. The
company will also aim at focusing on markets with little or no competition. Mostly, the targeted
segment is women of the age between 15 and 60.

Product Strategy
All features in the product analysis section will be available on the companies products. The
company aims at introducing more product lines in future. Different aspects of marketing will be
deployed depending on the nature of the products.

Promotional Strategy
The company aims at finding distribution partners who run well-known pharmaceutical stores,
retail, health, and departmental stores. The actual distribution will involve independent
distributors. The company has chosen this strategy since it is used by only a few competitors in
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the market. L'Oréal's will also use local beauty salons as ambassadors of showcasing their
products to the local customers. After realizing a profit, the company will invest more in
marketing using e-commerce and also direct marketing. It will also employ the power of social
media to reach out to more customers (Tuten & T.L, 2020).

Pricing
L'Oréal's products vary in price. The company will employ a strategy known as a customer
value-base. Since the company has higher and superior quality products, it must not brand itself
as a cheaper option. The price of the products will be a bit higher in the USA and lower in new
international markets. Retail stores will be in a position to take the products at a discounted rate.

Product Positioning
The company will employ a new value proposition called "Organic Beauty". It will differentiate
the products from artificial ones. The customers will be aware that they are getting products
made of organic ingredients. In the marketing part, the company will also convince the
customers that the company is ready to give them products that give them value for money.

Marketing Research
The company will employ an online promotional approach. It will monitor different blogs, social
media posts, online forums, etc. The main aim is to monitor what customers are saying. Such
insights will help us reach more customers and also improve the product. Later the company will
also develop different new distribution outlets with the help of cloud sourcing.

Tactical Program
Touch Points - The main focus is to meet and engage the target market through the primary
touch points. Facebook and twitter are the best place to best the audience. The company will run
premium ads in places where there is a high traffic of audience of similar interest. The company
also plans to run a blog where people with interest in cosmetics can visit, read articles, leave
comments and share. Later, the company will open an e-commerce site where it will start selling
cosmetic products online. The targeted audience is women of age between 15-60.

Renewal Purchase - It is also known as repeat purchase. The goal of the company is to keep hold
of existing customers by encouraging them to keep buying their products. The second time
customers will be getting hefty discounts.

Order Value Increase - The company can put attractive deals on the items. For example, once
you buy an item worthy $200, you will get a gift voucher of $20. By so doing, it will attract more
customers and also help them enjoy the value of their money.
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Implementation Plan
For the company to reach total 800 million sales in the next 10 years, it needs to maintain an
annual sale of around $30-$50 million.

Here is the action plan.

First - 5th year

Increasing market presence. It is possible through running different campaigns aimed at reaching
more customers. The company also needs to contact more women from different races across the
grobe to test their product samples. The company also needs to partner with more distribution
companies. The aim is to have a customised way of reaching different markets across the globe.
Olays will also launch a campaign aimed at convincing local saloons within the USA to try their
products. There will be a group of independent representatives hired specifically to gather more
insights from product users and table positives suggestions that will help the company improve
the products. Once the company establishes its presence, it will come up with more competitive
product lines. It will add completely new beauty products to their portfolio.

5th - 10th Year

Introduction of speciality stores. Once the company gets recognition in the whole world. It will
now start setting and operating their own stores. Such stores will be branded the name of the
company. Customers will get a variety of products under one roof. L'Oréal's will also deploy
consultant people to offer free consultation services within such speciality stores. The company
also aims at restructuring its website to be more engaging. There will be an introduction of a blog
where the company will be updating targeted audiences on the new products. The blog will have
options of leaving likes, comments and also ability to share in different social media platforms
such as Whatsapp, Facebook, Instagram and Twitter. The company will also invest more on
markets within Africa and Asia where competition is fair. Finally, the company will come up
with their own ecommerce site. Customers will be in a position to purchase products directly
from the manufacturer eliminating exploitation brought by middlemen. It will also run different
affiliate programs with popular websites and blogs (Duffy & D.L, 2005). They will post ads on
such sites. Since those sites have a great traffic from different parts of the world, they are likely
to convert some readers to warm leads.

Budget
The whole marketing expense of those ten years is approximately 10 billion USD. It will involve
both internal and external marketing efforts. Higher promotional activities will increase the
marketing expenses. The budget also takes into account the unforeseen situations such as
inflation. The company used both Objective-and-Task method and percentage of sales to come
up with the budget (West et al., 2009). Here is the annual promotional budget and expected
annual sales.
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Projected Sales in 1st - 5th year(usd) 300 million

Percentage increase in sales 20%

Projected Sales in 6th -10th year 500 million

Percentage increase in sales 10%

Marketing Budget in USD 10 billion

Controls
Olay will have different control measures aimed at monitoring brand awareness, customer
satisfaction, product quality and brand image. It will enable the company to quickly react and
solve any problem that might occur. It will also monitor both monthly sales and monthly
expenses to ensure they are at per with the company goals.
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References

Business Wire. (2015). Research and Markets: Global Cosmetics Market 2015-2020:

Market was $460 Billion in 2014 and is Estimated to Reach $675 Billion by 2020.
Retrieved from http://www.businesswire.com/news/home/20150727005524/en/Research-
MarketsGlobal-Cosmetics-Market-2015-2020-Market

Duffy, D. L. (2005). Affiliate marketing and its impact on e‐commerce. Journal of Consumer
Marketing.

Jim Makos. (2014). SWOT Analysis Examples for Every Business Situation.

Retrieved from http://pestleanalysis.com/swot-analysis-examples/

Statista. (n.d.) Value of the color cosmetics market worldwide in 2014 and
2020 (in billion U.S.dollars). Retrieved from
http://www.statista.com/statistics/538169/globalcolor-cosmetics-market-value/

Tuten, T. L. (2020). Social media marketing. Sage.

West, D., & Prendergast, G. P. (2009). Advertising and promotions budgeting and the role of
risk.

European Journal of Marketing.