The L'Oreal group, which was established in 1907, is a world leader in the cosmetics market. Representative of a century of expertise, the group is present in all continents with subsidiaries in 58 countries and product sales in 130 countries. It also included 19 global brands and 15,800 million Euros in consolidated sales in 2006. Its success is based on the stability of its management, since only four CEOs have been at the helm of control since the establishment of the group. L'Oreal also relies on the quality of its products and therefore prefers to create its products itself. Indeed, it manages 94% of the manufacture of its cosmetics and therefore invests heavily in Research & Development (3.4% of the turnover is dedicated to R&D) and employs over 2,800 researchers around the world.
The L'Oreal strategy is that the company's products are accessible to people around the world through a distribution network which corresponds to every lifestyle. Consumer products of high technology are offered at affordable prices and sold in supermarkets. Professional products include brands and products at the forefront of innovation, meeting the requirements of professional hairdressing. Luxury goods are made from premium brands that offer products and services in high-end department stores, retail outlets and selected airports. Finally, the dermo-cosmetic products are sold in pharmacies, according to the advice of pharmacists and dermatologists. Its turnover is steadily increasing; the company registered a 6.5% growth in 2005.
The cosmetics market has been a concentrated market since the leading twenty groups alone account for almost three-quarters of the global market shares, while 250 groups are present in this market.
If we look at this market in more detail and observe more closely two of its sectors, we note that: the makeup is a market segment where L'Oreal and its two main competitors together account for more than 60% market share (79.6%). And, if we look at the segment of Skin Care (Moisturizers), it shows that the market is fragmented because the three main market competitors represent only 51.2% of the market. The cosmetics industry is a sector in constant growth and attracts many new entrants.
[...] Therefore we may conclude that L'Oreal is the market leader in cosmetics. BCG Matrix The luxury sector is dilemma for the company L'Oreal. It is a very important sector for the group since it has a high added value for its high sales price. It is represented by 10 brands and is distributed in department stores, perfumeries and travel Retails. They contribute to the image of the sign. Next to this dilemma by sector, are also found active cosmetic products that are booming and are sold in pharmacies. [...]
[...] Cash cows, in turn, are the general public and salon professionals. These are distributed in the wider channels or only in hair salons. Together they account for 68% of the total turnover of the group. IV. Cultural components and the performance factors of the group One of the key concepts of the success of this company is its corporate culture. This culture consists of an evaluation of each staff member and relies on the commitment and enthusiasm of the men and women in the group. [...]
[...] L'Oreal has never diversified and this has made it a clear leader in the cosmetics industry (its direct competitor, Unilever's U.S. sales of 1.5 times lower than that of L'Oreal). The group has been subscribing to a double-digit growth for many years. The company's strategy is centered on two activities: the cosmetics branch and the dermatology branch. L'Oréal is present in several segments to reach the maximum number of buyers. We also note that its strategy is global, and it continues to invoke the international level: "Investing in all countries to diversify risk" (quote from Owen Jones). [...]
[...] Luxury goods are made from premium brands that offer products and services in high-end department stores, outlets and selective airports. Finally, the dermo-cosmetic products are sold in pharmacies and drugstores, and supported by advice from the pharmacist or dermatologist. Its turnover is constantly increasing, with a growth of in 2005. In this study we will see what is its business strategy is. I. Strategic segmentation of group activities Notion of job at L'Oréal A profession is a blend of specific technologies and experience. We have studied that each company defines the profession in its own way. [...]
[...] Apart from perfumeries and department stores there are also new brands that cater to young, high income, looking for customized products, which have embarked on the sector. - The perfume sector is a very competitive one because of its reputation for being very lucrative, and therefore it attracts new players. - The cost or exiting is also very high. Indeed if the L'Oréal group will change direction, this change of activity will not be easy because the significant investment which the group has done in its factories but also in research and development. Indeed, L'Oreal has filed 529 patents in 2005. [...]
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