The cosmetic market is a market that affects us all closely, with a more pronounced attraction for some people. In fact, the cosmetic cover a wide range of products: hair care, skin care, fragrance, makeup etc. In short, everything related to health and beauty.
The cosmetics market has been steadily growing for 10 years, between 4% and 7% growth per year in the developed countries. For emerging countries like China, India and Latin America, we learned that they also began to consume more and more cosmetic products, proof of their entry into the class of "developed countries”.
In this market, many groups are present. Among them, several groups world-class share 70% of the market: L'Oréal, Beiersdorf, Henkel, Johnson and Johnson, Clarins etc.
This document focuses on two particular groups to study and compare their respective strategies: L'Oreal, the world leader, and Henkel, the European leader.
The term "cosmetic" means any product intended to come into contact with parts of the human body, with a view to cleaning, perfuming them, changing their appearance, to protect them, keep them in good condition or correcting body odors. This was the definition of Public Health Code, Article L.5131. This definition covers many products of everyday life, which meet many needs of consumers: health, prevention, appearance and wellbeing.
Since 1990, the cosmetics market is changing and representing twice the global GNP, even in developed countries. This is due to the constant discovery of new demands from consumers, the continuous quality improvement in research and development, the lengthening of life expectancy and the extension of cosmetics for men.
This market is growing between 4% and 7% annually for 10 years. This growth is fueled by aggressive bidding strategies: the manufacturers maintain a steady pace of innovation, promotion and facilitation of trade marks. The number of consumers increases from year to year. Many companies share the market as well.
We will study the strategy of two groups actively present on the sector, namely L'Oreal, the world leader in the cosmetics sector, and Henkel, the European leader. What are the strategies pursued by each of the two groups on this industry? What were the results and prospects that lie ahead for both groups?
First, we detail the position of L'Oreal and Henkel's cosmetics market to achieve a strategic analysis of the two groups and, finally, we will focus our discussion on the determination of strategic directions and future prospects.
In order to position each of the two groups on the cosmetic market, we will conduct various analyses. First, we will look at their respective histories (because the present situation of a group obviously depends on its direction and past choices), then their trades and the respective strategic business areas. After that, we can then perform the analysis of Porter, allowing us to highlight the opportunities and threats from the market and the key success factors. With these, we can then map the strategic groups, which will give us an overview of different strategies and groups in the market.
As we can see, both groups were born 33 years apart. It took 10 years for the Henkel Group to start its internationalization, and only 3 years for the L'Oreal Group. L'Oreal has been much more efficient from the start to go international as quickly. We also note that L'Oreal has developed a new activity every 3 or 4 years (luxury cosmetics, cosmetic active) while the Henkel Group has developed a new activity every 7 years or more. The most successful group development activities are without doubt L'Oreal.
Tags: L'Oreal Group; Henkel Group; cosmetics market; comparison between L'Oreal and Henkel
[...] Station Threat 5 and Strength 5 Consumers today are less sensitive to brands because they like the change; we must succeed in mobilizing the brand loyalty. For this L'Oreal is developing more and more products for highly targeted customer loyalty (products for men, products for seniors . ) Henkel: Couple Strength 1 and threat Innovation is a key element of the cosmetics market, but this requires significant investments. Henkel was able to overcome these investment needs, and devotes of its turnover to research and development. [...]
[...] Cosmetics are therefore increasingly focused on health. These technologies are designed to give the product credibility and scientific backing The competitive forces of Porter (Please note that this diagram cannot be converted to English) Following the development of this scheme with the 6 forces of Porter which influence the market, we now turn the information into a hexagon drawing of the cosmetic market using the notes we have attributed to the impact of each actor. This tool allows us to highlight the factors that have a strong power and influence, and which should not be neglected in the study of the area. [...]
[...] Station Threat 3 and 2 Weakness Consumers are very sensitive to brands but are no longer faithful. For loyalty, we must offer products which are highly targeted, and that "lock" people for whom these products are suitable in some way. Henkel does not really have targeted products (unlike L'Oreal, which has a range for men, a range for young . ) and is not really a specialist in Cosmetics (sales in cosmetics are a small share of its total turnover, which is the one with the smallest increase). [...]
[...] Thus we will, initially focus on the strengths and weaknesses of L'Oreal, and those of the Henkel Group. Then, with the help of the opportunities and threats emanating from the market we have identified in the first part, we can map the SWOT of each group. Both maps will allow us to compare the performance of the two groups, and draw conclusions about their situation Strengths and weaknesses of L'Oreal As we said before, we will initially highlight the strengths and weaknesses of L'Oreal in relation to the key success factors of the cosmetics market. [...]
[...] We therefore focus on the overall Consumer Products and Cosmetics. (See Appendix We will now define the SBU's that are common for both groups. An SBU is defined through three dimensions: the target, the technology used, and the type of need satisfied Determination of the target of L'Oreal and Henkel For both companies, the Consumer Business Unit offers a wide range of products involving a diverse audience. It has a wide target and covers all spheres of society, including women, men, teens, seniors, with specific ranges for each customer Determination of the need satisfied by the products of L'Oreal and Henkel The strategic activity of Consumer Cosmetics answers two major needs: the need for welfare (people feel increasingly the need to pay attention to them; to feel and "look good" in the eyes of other people. [...]
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