In this study we chose to concentrate on the cosmetics market. Why? It is a market that reaches to us all, with a more enunciated attraction for some people. In fact, the cosmetics market covers a wide range of products related to health and beauty like hair care, skin care, fragrance, makeup, etc.
We found that the cosmetics market has been in constant growth for 10 years, between 4% and 7% growth per annum in the developed countries. For emerging countries like China, India and Latin America, we learnt that they also began to consume more cosmetic products, the proof to this was their entrance in the category of "developed countries" .
In this market, many groups are present. Among them, several groups have a share market of 70% with brands like L'Oreal, Beiersdorf, Henkel, Johnson and Johnson, Clarins, etc. We decided to focus on two particular groups to study and compare their respective strategies: L'Oreal, the world leader, and Henkel, the European leader.
These two groups show some interesting facts when they are compared: L'Oreal totally concentrates on a wide range of cosmetics (with 98% of its turnover with this activity) with a strategy called "specialization", and Henkel, meanwhile, has 22% of its total turnover with cosmetics and with three other activities (Glues and adhesives, detergents and maintenance products and technologies). Henkel therefore opted for a strategy of diversification and not a "pure" player in the cosmetics sector.
We have concluded, after various studies on the market, that the cosmetics sector has great potential because of the changing demographics and habits:
-Ageing population, that causes a strong need among older people,
- Growing interest among men who are concerned about their looks: the role in the development of the range of cosmetics for men
-Growing consumer interests in natural products and environmental protection
-Emerging countries of Latin America and Asia: Development of specific range of products for skin and introducing new markets (enhanced internationalization)
-Innovation is vital to fulfill the continuous needs of people.
L'Oreal has conquered international and emerging markets. It has also launched a range of products for men around the world. Henkel, which is less internationalized, is virtually not existent outside Europe. It also offers innovative products but not in the field of cosmetics. Investments in research and development are divided, and the results too. Its efforts are focused less on the market.
This is why Henkel is known as the European leader and L'Oreal, the world leader. To answer the question posed at the beginning of the study:
What are the strategies pursued by each of the two groups in this industry? What are the results and prospects that lie ahead for both groups?
L'Oreal is much more reactive than the Henkel Group in the field of cosmetics, which is easily explained by the distribution of sales and investments in research and development of each group. L'Oreal has one main business, Henkel's interest in cosmetics cannot be the same.
In the long term, we can say that Henkel has a risk of losing its influence on the cosmetics market. Infact, L'Oreal has captured and will continue to capture the market opportunities, and has the strength to withstand and cope with the threats. L'Oreal will be existent in the market because it can adapt its products to all targets. For Henkel, given the low share of turnover with respect to cosmetics, the growth should be balanced and it should focus on its profits.
Tags: Cosmetics market, China, India, Latin America, L'Oreal, Beiersdorf, Henkel, Johnson and Johnson, Clarins, strategy of diversification, natural products and environmental protection
[...] Strategic analysis of L'Oreal and Henkel In this section we will focus on strategic aspects of the two groups. After observing the cosmetics market, we must now analyze the situation of the two companies in connection with this contract. We will therefore, as a first step, focus on the strengths and weaknesses of L'Oreal, and those of the Henkel Group. And then, with the help of the opportunities and threats emanating from the market we have identified in part one, we can map the SWOT of each group. [...]
[...] customers who are Computerization of manufacturing process that reduces manufacturing costs and Environment The cosmetics industry is subjected to European regulations in packaging import or sell packaged products and contribute financially to the Through this analysis of threats and opportunities in the cosmetics sector, we can observe that it is a market that has tremendous opportunities and the market needs to face its weaknesses to remain sustainable The key success factors Constant innovation, which involves heavy investment in research and development Significant investments in terms of communication Communication through which the target product should be identified easily Customer loyalty by developing specific products (niche strategy with increasingly targeted products) and relationship marketing. [...]
[...] Moreover, its efforts fit the requirements of the market and capture new markets helping with the discovery of new needs for the consumer from any region Global strategy group Henkel For the Henkel Group, four key issues can be relieved from its strategy: - Innovation strategy: The group spends about (284 million euros) for research and development. Thus, the search for new needs, new approaches and research in design and marketing are the priorities of the group. Research efforts are also partly aimed at sustainable development, which is the main line of communication of the group million euros are distributed among the four activities of the group, which gives us, in proportion to the contribution, a total turnover of 62.5 million euros - Communication strategy: The group does not communicate in a massive way as L'Oreal. [...]
[...] L'Oreal is much more reactive than the Henkel Group in the field of cosmetics, which is easily explained by the distribution of sales and investments in research and development of each group. L'Oreal has one main business, Henkel's interest in cosmetics cannot be the same. In the long term, we can say that Henkel has a risk of losing its influence on the cosmetics market. Infact, L'Oreal has captured and will continue to capture the market opportunities, and has the strength to withstand and cope with the threats. [...]
[...] Henkel handles 3 other major activities, but at the same time, performance in the field of cosmetics is not as crucial for L'Oreal Comparison of financial results Evolution of sales in cosmetics Henkel and L'Oreal The sales for the Henkel group in 2004 was 2.477 billion euros and $ 2.629 billion in 2005. This gives us an evolution of between 2004 and 2005. The sales of L'Oreal cosmetics was 13.65 billion euros in 2004 and 14.5 billion euros in 2005, representing an increase of between 2004 and 2005. [...]
APA Style reference
For your bibliographyOnline reading
with our online readerContent validated
by our reading committee
