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Maybelline Cosmetics is an American company owned by L'Oreal that produces and sells makeup products globally. They are headquartered in New York City and their manufacturing facility is located in Little Rock, Arkansas. L'Oreal purchased the company in 1996, which gave L'Oreal access to a more mass market audience in cosmetics. Maybelline New York is the number one cosmetic brand globally -- sells in 90 countries and has products in most every major mass-market retailer in the world. Maybelline's annual sales exceed $1billion with over 50,000 employees (Maybelline Sales, Inc., 2012).
Competitive Comparison - Revlon is also an American skin care, cosmetics and personal care company headquartered in New York City. Revlon corporation has revenues in excess of $1.3 billion with 7,000 employees worldwide. Revlon has continued to acquire brands like Max Factor, sometimes selling then to larger firms, but continuing a pattern of mergers. Revlon is active in many philanthropic organizations and for a time dropped fashion models to focus on motion picture stars (Revlon Corporate Home, 2012).
Estee Lauder is also located in New York City, with sales of just over $7 billion in annual sales and just over 30,000 employees. EL is more upscale than Maybelline, which L'Oreal can easily counter with similar brand names. EL sells its product in higher end department stores across the world and a chain of stand-alone retail outlets. Besides makeup, though, EL offers fragrances for men and women, specific products for men and all skin types at their Clinique counter, and was one of the first U.S. based companies to enter the Soviet Union in 1981. The company is still family owned, controlling about 70% of voting shares (Estee Lauder Companies 2011 Annual Report, 2012)
Maybelline is the low-price leader between Maybelline, Revlon and Estee Lauder, and the product designed to appeal to more of an entry level, or price conscious, consumer. It is difficult to completely separate Maybelline from L'Oreal now, there are many global cross over sales that impact the brand's identity, as well as a number of outlets that carry one part of the L'Oreal line but remain ambivalent on others. Note in Figure 1 that Maybelline has the lowest brand value in comparison (38%), but clearly the segment outperforms Revlon. Estee Lauder's performance is also based on the breadth of their line, more personal care and ancillary products:
Figure 1- Brand and Enterprise Value (as percentage)
This graph shows a comparison of brand values and enterprise values, allowing absolute brand value and proportion of business value based on brand, which is an indicator of how hard a brand is working.
Figure 2 -- Brand/Enterprise Value vs. Brand Rating -- This shows the relationship between brand rating and how hard it is working for that business unit.
(Source: Brand Finance Comparison Tool, 2012)
Organizational Overview- Maybelline is a wholly owned subsidiary of L'Oreal, the largest cosmetics company in the world. Its executives report to the L'Oreal Group, which utilizes Maybelline as a gateway product to place products into major mass marketing avenues at reasonable prices, hoping to get consumers into the branded habit of using an L'Oreal product.
Organizational Functions- From an organizational point-of-view, L'Oreal handles the broad marketing and distribution issues for all its subsidiaries, but counts on Maybelline to interface directly with its production facilities and to then ensure that the adequate distribution channels remain in place. Maybelline had both a strong presence in the North American market and had expanded globally when acquired by L'Oreal. The power of Maybelline's organizational functions is its dominance in the mass-retail market, particularly Wal-Mart, K-Mart and Target. The organizational functions in sales and marketing allow Maybelline to tie their base product lines into more sophisticated and lifestyle brands. Maybelline's organizational functions as a group within L'Oreal speak to an appeal for all ages, ethnicities, and demographics. This is done in an advertising paradigm by using multicultural models and spokespersons, sponsoring events that celebrate diversity, and provide inroads into Asian and Europe. Even after consolidation with L'Oreal, Maybelline continues to hold about 1/3 of the North American affordably priced cosmetics market, and about 20% of the growing global markets.
Organizational Design- The organization design of the company is set up to target over 1 billion new customers in emerging markets within four major areas that cover sales, marketing, research and development, internal logistics, and distribution. These are:
Using resources to provide products for a diversity of beauty, not a standard. Link product offerings to cultures and personalities with extremely diverse populations. Beauty is not uniform, but rather adaptation and accessibility.
Use global resources and structures to observe and enhance local beauty needs and customs. Reinvent using research as a regional product rather than a global product. Market globally in broad strokes, regionally in customization.
Use structure to facilitate access to cosmetics products. Maybelline is one of 27 international brands, but the organizational structure, supply chain management, and distribution from L'Oreal should mimic the goal of reaching all consumers, regardless of demographics or psychographics. Use infrastructure to create and enhance the idea of globalism.
Accelerate regionalization of expertise -- Winning 1 billion customers is an ambitious project that is a multi-disciplinary endeavor. This requires the organizational structure to have distribution units in place, to rapidly deploy expertise where it is needed, and to use human resources appropriately and both tactically and strategically. To build the brand of tomorrow we must innovate and market the product of today (L'Oreal Annual Report, 2011).
Conclusion -- Maybelline is designed to be both an introductory product and a price-value leader for L'Oreal. An average Maybelline product is available in lower price venues than Revlon or L'Oreal, but higher than Elle 17. Maybelline sits between budget and premium brands and tends to drive premium imagery at a price point lower than many other imported brands" (Pinto, 2012). In addition, Maybelline is not really targeted to the same demographics as Revlon, Estee, or even L'Oreal. Their organization structure, from manufacturing to branding and marketing, is focused on moving into new product categories in a global market place and focusing on the 15-35 age group, or until the woman can afford higher priced lines (then hopefully transitioned to L'Oreal). Women of this age group can find Maybelline products in low price, big-box stores (Maybelline Sales).
Structurally, Maybelline must adhere to sales goals based on their contribution margin from L'Oreal. Maybelline realized that market growth and the global expectations of their niche would require a more refined strategy. The company realizes that they have a marketing challenge in that they must improve loyalty because customers, particularly younger customers, tend to use multiple brands for their needs. Looking at margin, production, and global demand, Maybelline needed to leverage its top worldwide ranking in mascara to boost the business in categories with smaller shares, foundation for example. Many consumers are also unaware of technical considerations based on skin types. To manage this challenge, and as an example of utilizing form and structure within the organization, Maybelline developed a direct marketing campaign that creates relevancy through emotional, rational, and relationship characteristics. This campaign, a series of three 20-page booklets, allows complete customization and pushed utilizing organizational structures to further brand and increase share (B2Me Marketing, 2012).
Additionally, and part of the structure of the new company, Maybelline is poised for future growth in line with a digital presence reflecting innovation, inspiration and instruction. The new Maybelline.com is more than a sales site -- it uses lessons to teach global consumers tools and techniques to enhance their beauty look (e.g. color, individual shade, shapes, etc.). Based again on the needs of the organizational structure, this port is a destination, an online-community in which consumers engage and share tips, learn, and become more fashion conscious (Maybelline.com Receives a HUGE Makeover, 2012).
Modern business evolves…[continue]
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