Strategy of L’Oreal

L'Oreal was created in 1907 by a French chemist: Eugene Schueller. The latter developed a synthetic formula, called Aureole, to dye hair. He then created his own formulas, manufactured his products and marketed them to Parisians hairdressers. In 1909, after registering the articles of the future group L'Oreal, he undertook research on beauty in general. The foundations of what will become the group had already been laid: innovation and research on beauty. In 1912, the group opened abroad. In addition to France, the products were marketed in Holland, Austria and Italy. In 1920, the company had 3 researchers as against 100 in 1950, 1000 in 1984 and 3000 as of today. During the 30s, L'Oreal expanded its range of products: the company sells skin care products and sun creams. After the Second World War, the company diversified its products and brands to gradually include all types of cosmetic products. Thus, little by little, the group was interested in the whole beauty-hygiene sector. Today, the group L'Oreal is present in all the countries of the world and offers global brands in all sectors of beauty: coloring, makeup, skin care, perfumes, hair products, ethnic products.

[...] Weaknesses For several years L'Oreal saw its sales stagnated due to the fact that the number of its competitors increased and a slowing down of the economy could be seen in its key markets. Its growth is significantly lower than some of its competitors such as Shiseido and Estee Lauder. L'Oreal is under-represented in certain markets, such as Japan with only market share which can be explained by its late entry in this niche. This proves that the company has problems to adapt quickly to changing market conditions. [...]

[...] The different levels of strategy implemented at group level Company strategy L’Oreal applies: - A policy of diversification with the existence of a large portfolio of important brands, - Internationalization strategy with access to many foreign markets and an important geographic coverage of the group, mainly thanks to acquisitions, - A policy of innovation with a major stress on research and development so as to become a pioneer in the market, - A strategy of differentiation with a policy on important brand and consequent advertising efforts - A strategy of integration. [...]

[...] Indeed, producing small quantities, we can not achieve economies of scale by applying a strategy of volume. That is why the price of manufacture of these brands is high. However, these alternative brands do not require as much advertising costs for example, compared to a brand of mass consumption, which greatly reduces communication costs. This bipolarization of the market should grow according to some estimates this would leave the players of average reputation weakened. Thus, L'Oreal has no concern in relation to this market trend since it enjoys a great reputation. [...]