International Marketing STUST, GMBA

FOCUS NANTAI Anissa Emil Jessie

1. INTRODUCTION The group L’Oreal was created at the beginning of the 20 th century by the French chemist Eugene Schueller. L’Oreal has become one of the most powerful companies in the cosmetic industry. With its registered office in Paris and head office in the Paris suburb of Clichy Hauts-de-Seine, France, it has developed activities in the field of cosmetics. Concentrating on hair colour, skin care, sun protection, make-up, perfumes and hair care. The company is active in the dermatological, tissue engineering and pharmaceutical fields and is the top nanotechnology patent-holder in the United States.

1. INTRODUCTION World presence: -In 130 coutries in all over the world Employees. -27 global brands. L’Oreal brands : Lancôme Yves Saint Laurent Giorgio Armani Biotherm Cacharel Diesel Maison Martin Margiela Viktor & Rolf Ralph Lauren Kiehl's Shu Uemura

1. INTRODUCTION STOW Analysis StrengthsWeaknesses 1. Increasing Diversity In Workforce 2. Strong Brand Name For L’Oreal 1.Accuse Of Using Banned Chemicals 2.Co-branding with Mininurse. OpportunitiesThreats 1. Brand 2. New Innovations and Products 3. Acquistions Or Mergers 4. Appearance Mentality 5. Beauty industry in China is exploding!!! (Urban women spend 10% of their income on beauty product) 1. Lower Prices From Competitors 2. Competition For L’Oreal

2. CURRENT SITUATION L'Oréal SA's growth in China is booming, a contrast to the slowdown in spending many consumer-goods makers are experiencing in the world's biggest growth market. Launched on to the Chinese market in 1992  Mininurse. It has achieved sales of 40 million euros in It is one of the top three skincare brands in China with 5% market share. L’Oréal was announced as one of the 2012 World’s most Ethical companies by the Ethisphere Institute. L’Oréal taps into Indonesian market  It has opened the largest factory in Cikarang & has targeted 1 billion Asia Pacific customers. L’Oréal also focuses in social networking  Twitter, Facebook & Instagram (1 billion social network users)

2. CURRENT SITUATION Luxury products make up one-third of L’Oréal’s sales in China, which is more than the unit’s 27 % contribution of €5.57bn, to total group sales. L'Oreal is "well prepared to outperform the market in 2013, and to achieve another year of sales and profit growth," said L'Oreal Chief Executive and Chairman Jean-Paul Agon, in a statement.

3. QUESTIONS Was the Mininurse acquisition really worth the wait and the effort for L’Oreal? PROS In 1992: Mininurse was introduced in the chinese market. In 2003: Acquisition of Mininurse by L’Oréal profit of 40 million euros. Mininurse has become one of the top three skincare brands in China, with 5 % of the market occupation. This brand has a excellent image based on quality & accessibility of its products. This acquisition represent a great opportunity to accelerate the growth of L’Oréal in the chinese market. The chinese market is a strategic market.

PROS Mininurse target young women with a natural style. Present in the Chinese market since 1997, l ’Oréal has realised 113 millions euros in The group in China has a growth of 66% in The group L’Oréal has implanted its main strategique brand in the chinese market  LEADER POSITION -L’Oréal Paris en coloration premium -Maybelline for make-up -Vichy in Pharmacy -Lancôme in selective distribution Mininurse completed L’Oréals brand portfolio, So, it has help to move quickly into the chinese consumer skincare market. Mininurse: 90% of brand recognition in China & network of 280,000 outlets, so it’s an opportunity for L’Oréal!!!

CONS Mininurse, originally a Chinese skincare brand that was acquired by L'Oreal Group in 2003, seems to be fading away in the Chinese market. Some industry insiders and Chinese customers are questioning L'Oreal's real purpose in the acquisition. Some even doubt that it (acquisition) is a platform by which L'Oreal promotes it own brand, Garnier, in China, which has a similar product positioning to Mininurse. Many promising local Chinese brands, after being acquired by overseas companies, lose their essence {popularity}, and Mininurse is only one of them. The legitimate purpose has never been to eliminate this brand, (said Paolo Gasparrini, president of L'Oreal China). The company took four years to finally acquire Mininurse, hoping the transaction could help L'Oreal expand in China.

CONS But it is true that L'Oreal did not achieve the initial goal in developing Mininurse. Soon after L'Oreal acquired Mininurse in 2003, it had already started to lose a small portion of its distributors, for sales were shrinking. Mininurse's management approach before the acquisition was quite different from L'Oreal's, which also justifies its transparizing in the market.

3. QUESTIONS 2) What might have been the drivers behind Mininurse’s market share drop? Was the Mininurse-Garnier co-branding a strategic mistake? The drivers behind Mininurse’s market share drop was thee Co-branding between Mininurse & Garnier. The goal of this co-branding was to… 1. The Garnier name would bring international technology credentials & bolster Mininurse’s brand equity. 2.To project to consumer that Mininurse has changed  The brand has been “Refreshed & Revitalized” 3.It was a new phase in the delivery of the brand. 4.Mininurse has the experience & backing of laboratory Garnier. However, It was a strategic mistake because of… 1.Communication  The re-launch was communicated through Mininurse webside  confusion in the head of Chinese consumers. 2.Confusion in the segment targeted “haircare segment” or “health segment”. 3.Target market  were defined as “young adults” 4.Sales strategy  emerging rivals didn’t give Mininurse a break & low-end image didn’t seem to appeal to the potential young ladies.

Mistake… Costumers start to use Garnier rather than Mininurse! The consequence… Co-branding lead Mininurse brand to go down in the Chinese market! Solution… To repositionne Mininurse brand in the chinese market to gain their previous customers & to make improveent in their brand. Moreover, Mininurse was dissolved in China’s market… Mininurse products were quite similar to Garnier’s products. The cosmetics markets in China was growing very fastly. The MNC “P&G”, Shisheido was making acquisition with other local brands. Some of Mininurse supplier quit after L’Oréal acquired Mininurse. FDA (Food & Drug Administration) issues warning to L’Oréal over ‘misleading’ ads  In 2002, L’Oréal claimed its skin creams could “boost the activity of genes or stimulate cell regeneration”! But  Any product that is intended to affect the structure or function of the human body is classified as drug.

3. QUESTIONS 3) What is your prescription to revitalize Mininurse? Should L’Oreal discard the Garnier endorsement? Should the brand be repositioned? Mininurse should rebrand their product. They should also change their packaging, to differentiate them self from Garnier. L’Oréal should not discard the Garnier endorsement because Customers were not aware about new product from Garnier. Mininurse should repositionne its brand in the chinese market to gain their previous customers & to make improveent in their brand.