Loreal

The Beauty of Global Branding c.1999

Amy Batchu :: Stuart School of Business :: Spring 2009

''urban American chic''

"pioneered new ground"

''dares to sell hair color other than black''

1996

1997

"stable meets streetwise"

"radical experiment"

1998

1999

2000

1907

2009

($758 MIL.) Maybelline

L'Oreal Excellence

$768 MIL.

96 year-old Brand

Retail Operation

Acquires American brand

Expands rapidly in India

Profits rise 12%

Relaunches Helena Rubinstein in world city centers

Opens New York spa

Organization History Amy Batchu :: Stuart School of Business :: Spring 2009

Aspirational Beauty Inclusiveness

MISSION: At L’ORÉAL, we believe that everyone aspires to beauty. Our mission is to help men and women around the world realize that aspiration, and express their individual personalities to the full.

This is what gives meaning and value to our business, and to the working lives of our employees.

We are proud of our work.

Organization Core Values Amy Batchu :: Stuart School of Business :: Spring 2009

Individual Expression

VISION: • Recognize that two beauty cultures are prominent--French and American, empires thrive best by embracing both • Place effort towards diversifying the cultural origins of our brands so they embody their country of origin • Explore acquisition targets elsewhere in Asia, as a springboard for expanding into Africa • Be the coolest of luxury brands

GOALS: • Promote their U.S. origins of all Maybelline products • Push the brand into more than 70 countries • Mix and manage stable upscale beauty with streetwise new products

Organization Core Values Amy Batchu :: Stuart School of Business :: Spring 2009

COMPETITORS

"a fiercely competitive industry" P&G Clinique Estee Lauder.

Stila Shiseido Co. Beiersdorf

PRODUCTS

"a transforming trendy portfolio" 23 global brands* 628 patents filed* Maybelline The Body Shop Express Finish Ralph Lauren Fragrance Diesel Fragrance

MARKETS

"The United Nations of beauty" 130 countries* Exploring acquisition targets elsewhere in Asia Expanding in India, to prepare for Africa Ranks No. 1 in Mexico with a 28% spurt in sales *Figures from 2008

Organization Scope Amy Batchu :: Stuart School of Business :: Spring 2009

OPPORTUNITIES

STRENGTHS Reaching out to more people across a bigger range of incomes and cultures

Branding globally can speed growth in mature consumer-goods companies

Embracing healthy doubts to stay on top

Profiting on middle class growth, emerging markets

Allowing cross-fertilization

Conquering Japan's $25.4 billion cosmetics market

WEAKNESSES

THREATS

Possesses a poor market position in Japan

Leading globally in every segment Possible entrant, Amazon.com of the industry of the beauty business

Diesel and Ralph Lauren fragrances are the only masculine marketed brands

Asia's economy is a mess, Latin America is unstable

Cannibalizing mature brands by introducing new products

Japanese brand, dominant at home and expanding

Attack from big and small competitors

SWOT Analysis Amy Batchu :: Stuart School of Business :: Spring 2009

Problem

CORPORATE: Need to stay ahead in the game as powerful rivals seek to play the global branding game

Advice

Should leverage knowledge in other industries Should get out of global brand game Should develop e-commerce /distribution

Logic

Must capture insights to sell and profit from non competitors Must understand the global brand game is becoming homogenous Must realize the changing sales models and customer expectations

Challenges & Recommendations Amy Batchu :: Stuart School of Business :: Spring 2009

Problem

CORPORATE: Need to stay ahead in the game as powerful rivals seek to play the global branding game

Advice

Should leverage knowledge in other industries Should get out of global brand game Should develop e-commerce /distribution

CORPORATE: Need to manage its evergrowing stable of upscale beauty brands while mixing it with street-wise new products Should slow down with the acquisitions Should, if needed, acquire masculine brands

Logic

Must capture insights to sell and profit from non Must not rely on external growth competitors in a global market, Must understand the global brand game is becoming homogenous Must realize the changing sales models and customer expectations

Must offer masculine products if the mission states "to help women and MEN"

Challenges & Recommendations Amy Batchu :: Stuart School of Business :: Spring 2009

Problem

CORPORATE: Need to stay ahead in the game as powerful rivals seek to play the global branding game

Advice

Should leverage knowledge in other industries Should get out of global brand game Should develop e-commerce /distribution

CORPORATE: Need to manage its evergrowing stable of upscale beauty brands while mixing it with street-wise new products

Need to penetrate Japan's market, regulations, protectionist distribution system and strict scrutiny by health and safety authorities

Should slow down with the acquisitions

Should research Japanese business myths/barriers to doing business, analogous situations in other industries

Should, if needed, acquire masculine brands

Logic

Must capture insights to sell and profit from non Must not rely on external growth competitors in a global market, Must understand the global brand game is becoming homogenous Must realize the changing sales models and customer expectations

BUSINESS:

Must offer masculine products if the mission states "to help women and MEN"

Must learn the way of the east in business etiquette and regulations, apply similar methods to African market

Challenges & Recommendations Amy Batchu :: Stuart School of Business :: Spring 2009

radical experiment knowledge gained in the street

INNOVATION 67,662 employees

130 countries cosmetics

men and women consumers Lindsay Owen-Jones

PEOPLE

dermatology

STRUCTURE The Body Shop

executives

coolest of luxury brands

PRODUCTS urban American chic street-wise

5 Dimension Analysis Amy Batchu :: Stuart School of Business :: Spring 2009

FINANCIALS double-digit growth

stock soared 900%

EFFECTIVE

goal: push brand to 70+ countries success: brand exists in 130 countries

EFFICIENT

human: Street knowledge passed to executives financial: Body Shop (3.9%) sales physical: North America 23% sales, (22%) production

GROWING

"decade of double-digit growth" "stock has soared 900% in the '90s"

STABLE

Proceed with Caution: "cross fertilization" "healthy doubts" "radical experiment"

Overall Evaluation Amy Batchu :: Stuart School of Business :: Spring 2009

Organization History ''urban American chic''

"pioneered new ground"

''dares to sell hair color other than black'' 1996

1997

Aspirational Beauty

"stable meets streetwise"

Inclusiveness

"radical experiment" 1998

1999

Individual Expression

2000

INNOVATION

OPPORTUNITIES

Amy Batchu :: Stuart School of Business :: Spring 2009

STRENGTHS PEOPLE

STRUCTURE

Reaching out to more people across a bigger range of incomes and cultures Embracing healthy doubts to stay on top Allowing cross-fertilization

Branding globally can speed growth in mature consumer-goods companies Profiting on middle class growth, emerging markets Conquering Japan's $25.4 billion cosmetics market

WEAKNESSES

PRODUCTS

FINANCIALS

THREATS

Possesses a poor market position in Japan

Leading globally in every segment of the industry

Possible entrant, Amazon.com of the beauty business

Diesel and Ralph Lauren fragrances are the only masculine marketed brands

Asia's economy is a mess, Latin America is unstable

Cannibalizing mature brands by introducing new products

Japanese brand, dominant at home and expanding

Attack from big and small competitors

5 Dimension Analysis

...leverage knowledge in other industries ... get out of global brand game ... develop e-commerce/ distribution ... slow down with the acquisitions, if needed, acquire masculine brands ...

Organization Overview EFFECTIVE EFFICIENT GROWING STABLE