L'Oréal business model and operations

Applying Global Strategies at the Local Level: A Case Study of L'Oreal

As the marketplace continues to become internationalized, some companies are searching for ways to improve their marketing function by identifying opportunities to apply more cost-effective broad-based strategies while others are looking for ways to fine-tune their marketing messages for localized markets. One company that encountered a number of challenges in this area in recent years was L'Oreal when it sought to penetrate the European shampoo market by leveraging its high quality product and brand recognition of its existing product lines. Although every company's experiences will be unique, the obstacles encountered by L'Oreal during this marketing initiative are characteristic of many companies' experiences in positioning their products in new markets. To identify these challenges and obstacles and how L'Oreal responded, this paper provides a critical analysis of Franch and Quintana's case study of L'Oreal (B): "Locally Adapting Elseve's Global Strategy," followed by a summary of the research and important findings in the conclusion.

Review and Analysis

To what extent is the French experience applicable to the other European markets discussed in the case?

The complex French marketing dilemma described in the case study by Franch and Quintana highlights the fundamental differences in markets that are encountered from country to country, even neighboring countries that share a lengthy border and a largely shared history such as France and Germany. The French experience described in the case study is marked by a number of consumer preferential factors, but these challenges are common enough when companies seek to penetrate new foreign markets anywhere. In reality, though, L'Oreal was faced with a unique and highly complex situation in the French market in terms of developing appropriate pricing regimens for its various product lines, responding to changes in consumer preferences for different shampoo preparations and their applications, as well as increasing its market share of younger women and men in general.

The case study also made it clear that even the best market research is relatively transient in its relevance, and what may be applicable today may not be relevant in the near future. The case study made it clear that the marketers at L'Oreal were meticulous in their analysis of the European market and their targeted countries, but the authors also emphasize just how challenging it can be to apply this data in a meaningful fashion to a dynamic marketplace. In this regard, Franch and Quintana (2000) cite several examples of how innovations in product development and formulation by L'Oreal and its competitors had created corresponding new demand for these products in its different markets. Consequently, not only were there significant cross-cultural differences involved in country-specific marketing strategies, there were constant shifts in consumer preferences within the European market in general and within different countries in particular. The differences between France, Germany, Spain and the UK that were identified in the case study therefore suggest that the French experience is applicable to these other countries in terms of industry-specific factors wherein important and powerful cross-cultural differences in consumer preferences affect the type of marketing strategies that are used, and these issues are discussed further below.

Are there any market specifics that may suggest a different strategy for each of the markets?

A number of market specifics were identified in the case study, including consumer preferences for the types of shampoo and conditioners that were offered and whether they provided the desired outcome (German consumers wanted products that made their thin hair appear fuller, for instance). Similarly, the widely held perception of the company's products as being associated with feminine cosmetics in France, for example, largely limited its premium brands to older women. Likewise, Franch and Quintana emphasize that consumers in different European countries have different hair-washing practices, and while French consumes were washing their hair more frequently than in the past, they still languished far behind their counterparts in other countries such as Germany where consumers washed their hair twice as often -- and therefore consumed twice as much shampoo.

The concentration of new product offerings in different countries was also cited by Franch and Quintana as being salient in formulating different strategies for each country market. In addition, and perhaps most importantly of all, were the cross-cultural differences in preferences for various types of shampoos among the targeted markets, and how these preferences have changed in each country in recent years in ways that demand a responsive country-specific marketing strategy.

What recommendations do you have for L'Oreal's marketing strategy in Europe in general and specific country markets discussed in the case? Why?

Based on the company's experiences in the European market described in the case study, two main recommendations can be made:

1. At this point in the company's history, the acquisition of some of its European competitors might be in L'Oreal's best interests.