Business Development Report Loreal Case Study

Loreal Case Study: Business Development Report

Introduction - Loreal Case Study: Business Development Report Loreal Case Study

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1. Company Overview

This research will concentrate on the French personal and beauty care corporation “L’Oréal”. It was created in 1909 by “Eugène Schueller”. With such a diverse portfolio of products, the firm has grown to become the world’s largest “cosmetics company”, focusing on product categories such as “skincare”, “cosmetics”, “makeup”, “haircare”, and “perfume” (Dmitrievna, 2021). The corporation spends more than $1 billion in research and development in 2017 and submitted 498 patents. It sold its “The Body Shop” brand to “Natura Cosméticos” for $1.2 billion in 2017 (Dörner, 2019).

The Company owns a diverse range of consumer brands, including “Loreal Paris”, “Garnier”, “NYX”, “Nicely”, “Dark & Lovely”, “Essie”, and “MG”. Other than these, “Lancome”, “Yves Saint Laurent”, “Giorgio Armani”, “Kiehl’s”, “Urban decay”, “Biotherm”, “it cosmetics”, “Ralph Lauren”, and “Diesel” are all part of “L’Oréal LUXE”. “L’Oréal professional”, “Redken”, “Matrix”, “Decleor”, “Pureology”, and “Kerastase” are all professional brands (Igorevic, 2021).

2. Opportunities for Growth

2.1 Target Market

L’Oréal has classed the market based on demographic criteria, including “L’Oréal LUXE” for “upper middle” and “higher-class” consumers who are distinguished for their intense interest in beauty and makeup , “Dark & Lovely” for “African women”, and professional items for customers offering/enhancing their looks (Sergeevna, 2021). With its 34 brands spanning several product categories, it has established a “differentiation strategy” to attract “middle”, “higher middle”, and “upper-income” class clientele, the most of whom are working people who wish to flaunt their identities (Dmitrievna, 2021).

The firm has positioned itself as the most ethically concerned cosmetics and beauty care company by focusing “universalisation”, which involves addressing the socio-cultural and aspirational variances between various stakeholder groups.

2.2 Competition Landscape

The three chief competitors of L’Oréal include the following:

“MAC”: A well-known cosmetics company, “MAC”, is based in “New York City”. In the realm of professional make-up, it is the top authority. Products for all ages may be found here. Customers and professional makeup artists alike may benefit from MAC’s wide range of products (Amalia, Vita and Rahman, 2019). “Pro Longwear”, “Mineralize” and “Studio” are among of MAC’s most popular products.

“Maybelline”: Cosmetics firm Maybelline is a household name. It encourages women to experiment with various styles and express their individuality. The beauty of women is enhanced by Maybelline’s scientifically-advanced formulations, innovative textures, and trendsetting colours (Amalia, Vita and Rahman, 2019).

“Dior”: “Christian Dior” was a French fashion designer and the creator of “Dior”, one of the world’s most renowned fashion houses. “Groupe Arnault” owns it at the moment. All across the world, one may find their stylish boutiques. Consumer products are at the heart of Christian Dior’s business (Nylund, 2020).

2.3 SWOT Analysis

Strengths

A wide range of cosmetics and beauty products: In terms of cosmetics and beauty, L’oreal is the world’s biggest corporation (Carrilho, 2018).

Superior quality: L’oreal is not merely a department store chain that sells cheap things. With their expansion into the luxury market, they have also added high-end items for those who can afford them (Jain et al., 2021).

Access to the global market:v Many international brands may be found in L’oreal’s extensive portfolio.

Proactive research: Many resources are devoted to research and development at the organisation (Santos et al, 2017).

Weaknesses

Saturation is on the rise: A new hair care product line seems to be launching every day now. Straight hair, curly hair, blondes and certain ethnicities are all competing for attention (Sukma, Lubis and Utami, 2019). L’Oreal is being affected by these areas of the hair care market, despite the fact that they are all minor ones.

Lowering profit margins: As a cosmetics company, L’oreal devotes considerable resources to research and development. If they want to keep their consumers satisfied, they have to do this. It is, however, too pricey (Ragozina, 2019). At least in relation to other companies, they’re losing money.

Divisions are taking longer than expected: Because L’Oreal has such a wide range of products, it need many departments to effectively manage everything (Jiang, Jin and Jin, 2021).

Opportunities

Expansion of the industry: It is easy for L’Oreal to branch out into different areas of the beauty business since consumers are always on the lookout for a new, better product for their skin.

New products can be created: L’Oreal should focus more on developing new items for “niche clientele.” Although L’oreal has a strong focus on curly hair and darker skin tones, they are competing with other firms who specialise in these areas (López-Jauregui, 2021).

More natural and organic: Products that are both beneficial to the body and environmentally friendly are sought after by eco-conscious consumers. Some clients just want items devoid of sulphates, parabens, and silicone. Organic and natural items are in high demand right now. In this area, L’Oreal should devote significantly more attention (Reinmoeller and Giudici, n.d.).

Threats

Abrupt changes: Makeup and beauty products are an ever evolving subject with every company trying to come up with new products every month. In order to survive the intense competition, when acompany tries various innovations, the others try to do something similar, thus leading to a never-ending cycle of experimentation (Kpoku, 2021). With such practices, the players in this industry face abrupt changes.

Cash flow issues: Products from L’Oreal are numerous. Profits are also broken down into these many categories. Yet in the events such as economic recession, the business may be in trouble (Jiang, Jin and Jin, 2021).

2.4 Identification and Elaboration of the Best Opportunity for Growth

From the discussion under the “opportunities”, it is evident that there are three options available to L’Oreal for growing its business even further. Considering the current trend in the industry in which L’Oreal operates, it is suggestible that it should go for the option of expanding its organic and natural product range (Romero et al., 2018). With each passing day, more and more customers of makeup companies are gradually gravitating towards natural and organic products due to the various advantages they have got to offer. Customers are concerned about their skin and hair’s health and safety (Dini and Laneri, 2021). Organic skincare products are less prone to trigger allergic reactions, inflammations, or irritations since they don’t include harsh chemicals like parabens. Antioxidant vitamins are more abundant in organically cultivated plants than in conventionally grown plants. The users’ skin and body will benefit as a result since their organic components are free from herbicides and pesticides (Amberg and Magda, 2018).

Furthermore, an organic skincare product’s active components make up to to 95 percent of its total weight. On the other hand, active chemicals comprise up less than 10% of synthetic skin care products. For the most nutritional advantages, customers mostly choose natural and organic products for skin care purposes. It is well known that natural organic substances such as coconut oil and honey may soothe, hydrate and nourish the skin (Lin et al., 2018). Shea butter and aloe vera have also been shown to be effective in this regard. It may take longer for organic skincare products to show effects but they’re less likely to irritate the skin in the long term.

Finally, customers nowadays are aware of the need to help create a more sustainable environment, and L’Oreal’s natural and organic product line provides them with the opportunity to do so (Romero et al., 2018). When they buy organic Skincare products, they are helping the movement to stop animal testing in the industry by purchasing cruelty-free goods. Hence, by launching a new range of natural and organic products, L’Oreal will also be able to satisfy customers by giving them an opportunity to contribute in the direction of stopping animal-cruelty (Dini and Laneri, 2021).

3. Funding Plan

In order to launch the suggested product range for growing its business, L’Oreal would need a funding of £1 million. This would be sufficient to cater to the process of research and development, manufacturing, marketing and promotion, and final distribution of the new range across the various regions of the United Kingdom. The company would procure the capital by making an investment worth the mentioned value.

4. Financial Goals

First Quarter	Second Quarter	Third Quarter	Fourth Quarter
Sales 1:	£50,000	£60,000	£65,000	£75,000
SET UP COSTS TOTAL
Direct Costs:
Materials.	£7,000	£7,000	£7,000	£7,000
Stock.	£5,000	£5,000	£5,000	£5,000
Additional Staffing	£3,000	£3,000	£3,000	£3,000
TOTAL Direct Costs:	£15,000	£15,000	£15,000	£15,000
Fixed Costs:
Salaries 1	£10,000	£10,000	£10,000	£10,000
Rent.	£1,000	£1,000	£1,000	£1,000
Staff Wages.	£2,000	£2,000	£2,000	£2,000
Energy Costs	£1,000	£1,000	£1,000	£1,000
Phones.	£300	£300	£300	£300
Freight & Postage	£100	£100	£100	£100
Stationary.	£200	£200	£200	£200
Promotion & Ad.	£1,000	£1,000	£1,000	£1,000
Accountant	£200	£200	£200	£200
Legal	£200	£200	£200	£200
Transport	£180	£180	£180	£180
Insurance	£450	£450	£450	£450
Maintenance	£300	£300	£300	£300
Computers.	£150	£150	£150	£150
Misc.	£100	£100	£100	£100
TOTAL:	£17,180	£17,180	£17,180	£17,180
Sub Total: Fix + Direct Costs.	£32,180	£32,180	£32,180	£32,180
Net Profit: Sales – Sub total	£17,820	£27,820	£32,820	£42,820

From the above-presented financial projection, it is apparent that if L’Oreal makes an investment worth £1 million, it will be able to generate a revenue of £2,50,000 and its net profit in a year would be £1,21,280. The projections also imply that the demand of the newly launched product range will only increase with time and the quarterly revenue will progressively increase. Hence, the business growth plan is most likely to yield positive results for L’Oreal in terms of not only enhanced brand image, customer satisfaction but also financial performance.

5. Sales and Marketing Activities

To ensure that marketing activities are both efficient and cost-effective, the technique of social media marketing will be used. This would be the optimal solution, considering the high volume of individuals who use various social media platforms throughout the day and the networks’ global reach (Arrigo, 2018). Additionally, these campaigns will aid in the dissemination of audiovisual and written marketing, as well as in the interaction with new and existing consumers, resulting in increased levels of customer engagement and satisfaction. Finally, the cost of the social media campaign would be far cheaper than the expense of traditional marketing channels such as print media, television, and so on (Chatterjee and Kar, 2020).

The firm would establish official Facebook and Instagram profiles and publish well-developed promotional content illustrating the concept and unique attributes of the culinary items it would sell. Customers will be surveyed regarding their thoughts on the new product line’s idea. Positive customer comments will be highlighted, while negative input will be addressed (Shareef et al., 2019). Through the web pages, a relationship will be built with the clients, ensuring that their communications are answered to as quickly as feasible. The remainder of the approach will be detailed in the following marketing mix:

Elements	Analysis
Product	The company will offer a high quality range of makeup and beauty products made up with natural and organic ingredients.
Place	The official L’Oreal stores will have these products, and other than this, they will also be distributed through large number of retailers across the UK. Finally, the products will also be available on the company’s official ecommerce platform, and also other online shopping platforms such as Amazon.
Price	The strategy of premium pricing will be followed to set the price range of the new range of high-end products.
Promotion	The central channel of marketing and promotion will be social media. Along with this, a certain portion of the marketing will be done through print media as well, in the form of posters and banners.

The product will be released in London, the city with the biggest concentration of the company’s target audience. Prior to the debut, news will be distributed via marketing channels, and special “first-day” deals and discounts will be made available. Prominent figures from the entertainment industry, including actors and actresses, models, artists, athletes, singers, and business leaders, will be asked to attend and provide crucial comments.

6. Team Needs

In order to ensure that the L’Oreal is able to successfully grow its business through its launch of the new organic and natural product range, it needs to train its team very effectively. The following steps must be taken by the company to train its workforce for streamlining the process of launching the new range of products:

Handling the basic right

L’Oreal should ensure that its development and marketing departments collaborate with sales to provide noteworthy instances of the following:

• Promotional materials
• Analysis of competitors
• Sales manuals
• Lists of prices
• Demos
• Electronic books or whitepapers

Explaining the nuances to the development, sales and marketing teams

The fact that the sales, development, and marketing teams all speak vastly disparate languages is a fact. To ensure a seamless product launch, L’Oreal should assist in facilitating improved communication amongst all departments involved (Salonen et al., 2021). One thing it can do is include its sales force early in the process. They are likely to have valuable insight and will be more prepared when the new product emerges.

Provide sufficient training before the product launch

Training at L’Oreal needs to be codified and made more exciting. Powerpoint presentations should be phased out in favour of an online collection of training courses, quizzes, and videos. A mobile vendor should be selected by the organisation to guarantee that sales reps can access information while on the go (Rivas, Quyen and Rivas, 2017). Research shows that 41 percent of salespeople are unaware of what materials to use, how they should be used, or when they should be used (Panagopoulos et al., 2018). Therefore, L’Oreal must use training to equip its employees with the answers they seek. L’Oreal must.

Reinforcing training

L’Oreal has to provide continual product launch training for its sales representatives until their skills are rock solid (Good and Calantone, 2019). The company should record their pitches and compare results over time utilising video recording technology in order to confirm that they have reached a certain degree of skill (Alaei et al., 2018). When this is done, the organisation should do evaluations, have feedback sessions, and even share some of the best videos with the rest of the workforce as learning opportunities.

Offering incentives

Incentives are a certain way to get salespeople excited about a new product launch. A competition, a raise in commissions, or even the granting of prizes might be used to motivate people to work harder (Johnson and Sohi, 2017).

7. Key Recommendations and Conclusion

The preceding sections of the report evince that it order to grow its business, the chosen company L’Oreal should consider launching a new rage of natural and organic products to grow its business even further, for this would be the most lucrative option for it. The plan has included every relevant aspect including the funding plan, the financial projections, the sales and marketing approaches as well as the ways of fulfilling the needs of its team members in relation to the new product launch plan. From the above discussion it is apparent that L’Oreal should take the following steps in order to ensure a successful business growth strategy:

• The company should take advantage of the current demand of natural and organic makeup and beauty products and launch a new range of high-end products made up of such ingredients to satisfy the customers’ expectations
• It is suggestible that the company should make the necessary investment by itself instead of taking a loan from a commercial bank, as the chances are that it would result in a high level of profit as evident from the financial projections
• Instead of relying too much on traditional channels of marketing, which are costlier, it should emphasize on digital marketing, specifically social media marketing
• It should distribute its new products well and make them available across the country, including physical and online stores
• It should train its development, sales and marketing department well very before the product launch implementing the steps suggested above.

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