L'Oreal Analysis

L’Oreal has achieved remarkable success in emerging markets. Two strategies that help explain their success are 1.) The ability to cater to diverse populations as emerging markets open, and 2.) The extensive research and development (R&D) put into these emerging markets.

In 1988, L’Oreal CEO Lindsay Owen-Jones focused on making the brand global and promote its various national brands everywhere (Henderson/Johnson, p.5). However, as more markets emerged and became more complex, L’Oreal had to change its strategy and learn to adapt their global products, performance, and price to local and regional markets and their needs. L’Oreal’s new CEO, Jean-Paul Agon, believed that each market was distinct from each other and that their brands needed to be sold to a particular type of customer in a particular way. This put a lot of marketing and development responsibility on regional teams. Another diverse population tool included various brands catering to the needs of low, mid, and high end consumers. For example, L’Oreal created premium brands like Yves Saint Laurent and Lancôme strictly for high end consumers, and Garnier to low end consumers (Henderson/Johnson p.16).

Because the company was committed to many diverse populations, L’Oreal had to invest in extensive R&D for their brands. They normally invested more in R&D compared to their competitors, spending 3.5% of revenue on it in 2010; Proctor and Gamble spent 2.7% and Revlon spent 1.7% (Henderson/Johnson, p.1) L’Oreal has 18 research and 12 evaluation centers around the world. These centers try to understand the local level of consumers. L’Oreal was innovative in creating “geocosmetics” to study beauty trends around the world and deliver products that would excel in certain regions (Henderson/Johnson p.11). The company also invested heavily on research projects, including R&D on Lancôme’s Genefique, which took 10 years of research and multiple patents. (Henderosn/Johnson, p. 16).