Maybelline's Global Strategy: Organization and Competitive Analysis

Introduction

Maybelline is an American company owned by L'Oréal that produces and sells makeup products globally. The company is headquartered in New York City, with its manufacturing facility located in Little Rock, Arkansas. L'Oréal purchased Maybelline in 1996, giving L'Oréal access to a broader mass-market audience in cosmetics. Maybelline New York is the number one cosmetic brand globally, selling in 90 countries and stocked in most major mass-market retailers worldwide. Maybelline's annual sales exceed $1 billion, and the company employs over 50,000 people (Maybelline Sales, Inc., 2012).

Competitive Comparison

Revlon is also an American skincare, cosmetics, and personal care company headquartered in New York City. Revlon Corporation has revenues in excess of $1.3 billion and approximately 7,000 employees worldwide. Revlon has continued to acquire brands — including Max Factor, sometimes selling them to larger firms — while maintaining a pattern of mergers and acquisitions. Revlon is active in many philanthropic organizations and, for a time, replaced fashion models with motion picture stars in its advertising (Revlon Corporate Home, 2012).

Estée Lauder is also headquartered in New York City, with annual sales of just over $7 billion and more than 30,000 employees. Estée Lauder is more upscale than Maybelline, a position L'Oréal can counter with its own premium brand names. Estée Lauder sells its products in higher-end department stores worldwide and through a chain of stand-alone retail outlets. In addition to makeup, Estée Lauder offers fragrances for men and women, dedicated men's products, and all-skin-type lines at its Clinique counters. It was also one of the first U.S.-based companies to enter the Soviet Union, doing so in 1981. The company remains family owned, with the family controlling approximately 70% of voting shares (Estée Lauder Companies 2011 Annual Report, 2012).

Maybelline is the low-price leader among Maybelline, Revlon, and Estée Lauder, and its products are designed to appeal to entry-level or price-conscious consumers. It is now difficult to completely separate Maybelline from L'Oréal, as many global cross-over sales affect the brand's identity, and a number of retailers carry one part of the L'Oréal line while remaining uncommitted to others. As shown in Figure 1, Maybelline has the lowest brand value in the comparison (38%), yet it clearly outperforms Revlon within its segment. Estée Lauder's stronger performance also reflects the greater breadth of its product line, which includes a wider range of personal care and ancillary products.

Figure 1 — Brand and Enterprise Value (as percentage): This graph compares brand values and enterprise values, showing absolute brand value and the proportion of total business value attributable to the brand — an indicator of how effectively a brand is working for the organization.

Figure 2 — Brand/Enterprise Value vs. Brand Rating: This chart illustrates the relationship between brand rating and how hard each brand is working for its respective business unit. (Source: Brand Finance Comparison Tool, 2012)

Organizational Overview and Functions

Maybelline is a wholly owned subsidiary of L'Oréal, the largest cosmetics company in the world. Its executives report to the L'Oréal Group, which uses Maybelline as a gateway product to place offerings into major mass-market channels at accessible price points, with the goal of cultivating consumers' habit of using an L'Oréal-branded product.

From an organizational standpoint, L'Oréal manages broad marketing and distribution decisions for all its subsidiaries while relying on Maybelline to interface directly with its production facilities and to maintain adequate distribution channels. When L'Oréal acquired Maybelline, the brand already held a strong North American presence and had begun expanding globally. The strength of Maybelline's organizational functions lies in its dominance of the mass-retail market, particularly through Walmart, Kmart, and Target. Its sales and marketing functions allow Maybelline to connect its core product lines to more sophisticated lifestyle brands. As a business unit within L'Oréal, Maybelline's organizational functions address consumers across all ages, ethnicities, and demographics. This is achieved through an advertising approach that features multicultural models and spokespersons, sponsors events that celebrate diversity, and creates entry points into Asian and European markets. Even following consolidation with L'Oréal, Maybelline continues to hold approximately one-third of the North American affordably priced cosmetics market and around 20% of growing global markets.

Conclusion

Maybelline is designed to serve as both an introductory product and a price-value leader for L'Oréal. An average Maybelline product is available at lower price points than comparable Revlon or L'Oréal offerings, but is priced above budget brands such as Elle 17. Maybelline sits between budget and premium tiers and tends to project a premium image at a price point lower than many imported brands (Pinto, 2012). Maybelline is not targeted to the same demographics as Revlon, Estée Lauder, or even L'Oréal's core line. Its organizational structure — from manufacturing through branding and marketing — is focused on entering new product categories in a global marketplace and on reaching the 15–35 age group, or until consumers can afford higher-priced lines (at which point the intention is to transition them to L'Oréal). Women in this age group can find Maybelline products in low-price, big-box stores (Maybelline Sales, Inc., 2012).

Structurally, Maybelline must meet sales goals based on the contribution margin it delivers to L'Oréal. The company recognized that market growth and global expectations for its niche would require a more refined strategy. A particular marketing challenge involves building customer loyalty, since younger consumers tend to use multiple brands for their beauty needs. Examining margin, production, and global demand, Maybelline identified the need to leverage its top worldwide ranking in mascara to grow share in categories where it holds smaller positions, such as foundation. Many consumers are also unaware of the technical considerations involved in selecting products for different skin types. To address this challenge, and as an example of using organizational form and structure strategically, Maybelline developed a direct marketing campaign built around emotional, rational, and relationship-driven relevance. The campaign — consisting of a series of three 20-page booklets — allowed for full customization and demonstrated how organizational structure can be harnessed to strengthen the brand and increase market share (B2Me Marketing, 2012).

As part of the company's evolving structure, Maybelline is also positioned for future growth through a digital presence centered on innovation, inspiration, and instruction. The relaunched Maybelline website goes beyond e-commerce: it uses tutorials to teach global consumers tools and techniques for enhancing their appearance through color, individual shade selection, and application shapes. In keeping with the organization's structural goals, the site functions as a destination and online community where consumers engage, share tips, learn, and develop greater fashion awareness (Maybelline.com Receives a HUGE Makeover, 2012).

Modern business evolves faster than ever before. Globalization has reshaped the organizational environment, forcing businesses to undergo continuous and rapid change driven by rising stakeholder expectations, new technological advances, and competition that is not only global but viral (Bendell, 2005). This has produced a dramatically different business environment in which companies must continually revise their internal and external processes to survive and grow. Nowhere is this more evident than in the highly competitive, increasingly global cosmetics industry. Nevertheless, it is precisely Maybelline's structural integrity that has allowed it to retain market share, develop new markets, and fill a valuable niche within L'Oréal's broader corporate portfolio.

Works Cited

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Estee Lauder Companies 2011 Annual Report. (2012, January). Retrieved from elcompanies.com: http://investors.elcompanies.com/phoenix.zhtml?c=109458&p=irol-reportsannual

Maybelline Sales, Inc. (2012, March). Retrieved from Cortera:

Maybelline.com Receives a HUGE Makeover. (2012, May). Retrieved from Hugenic.com:

Revlon Corporate Home. (2012, March). Retrieved from Revlon.com:

Bendell, T. (2005). Structuring business process improvement methodologies. Total Quality Management, 16(8–9), 969–978.

Pinto, V. (2012, April 9). Maybelline seeks to crack the beauty code. Retrieved from Business Standard: