L'Oréal

L’Oréal Paris: bringing “class to mass” with Plénitude

L’Oréal was created in 1907 by Eugène Schueller, a young French chemist who developed a hair dye formula called Auréole, meaning aura of light in English. Throughout 25 brands and 3 strategic business units such as Cosmetics (81% of revenues), Hair color and Skincare (high end & mass market), the world’s largest cosmetic and beauty company expanded a global reach and penetrated the US market in the late 1980’s.

One of the strength the company has regarding its entrance in the US market with the product line Plénitude is the brand reputation and brand awareness. It is a French name, which means exotic and reliable regarding the quality of the product. Thus the company’s strategy of premium strategy would apply perfectly here.

The corporate marketing strategy relies on a “trickle down and fire up” philosophy. The revenues from mass market serve to fund Research & Development for high end products such as Lancôme. Not only did they spend $300M on Research for developing new and better products but also register 300 new patents, which mean the company is continuously launching new products.

As I mention earlier, premium pricing is part of L’Oréal’s strategy. It is all about encouraging favorable perception among buyers, where expensive goes with exceptional reputation, performance, quality and distinction. We can allude to the wine industry where the strategy is exactly the same. The more expensive a bottle is, the more it is sold. In a sense, L’Oréal attempts to “skim the cream” off the top of market. The goal is to maximize profits where buyers are happy to buy more. And as we can see in the qualitative data L’Oréal collected, people care more about the effects of the product than the price in itself. The famous tag-line advertising “Because I’m worth it” matches perfectly with this idea here.

In addition, the company focuses on its brand equity or value by advertising on star product, by...