L'oreal Nederland B.V. Situation Analysis Case Study

Pages: 13 (3770 words)  ·  Bibliography Sources: 0  ·  Level: Doctoral  ·  Topic: Business  ·  Buy This Paper

SAMPLE EXCERPT:

[. . .] Women in the Netherlands were gaining self-confidence, independence and disposable income, and more of them were using it to buy cosmetics for use on a daily basis.

The skin care market was the second largest sector of the Dutch cosmetics and toiletries market.

The fastest growing category of skin care products was anti-aging and anti-wrinkle creams.

The fastest growing population segment was the 25 and older group, which was more concerned with youth preservation.

Threats

Dutch per capita spending on personal care products was only 60 per cent of the amount spent in France or Germany.

There were numerous competitors in the market, including existing L'Oreal products.

Holland ranked fourth in per capita income in the EU, but sixth in per capita spending on cosmetics and toiletries.

Dutch women were highly cost conscious when shopping for cosmetics.

Consumers tended to be loyal to their current brands -- worrying about possible allergic reactions to a new product.

Any innovative product could be quickly copied by retailers or other manufacturers.

New products required substantial advertising expenditures. Smaller brands were taking market share, resulting in a 60 per cent increase in advertising expenditures for all brands of hair colorants.

Hair coloring had recently become a fashion statement, partially accounting for the increase in popularity of semi-permanent colorants.

The high end of the cosmetics market was dominated by Shiseido and Estee Lauder.

Primary Impact Factors

Any new product introduced to the Dutch market must have a strong product concept and high market potential. The products must offer unique, desired and demonstrable advantages to Dutch customers.

Problem Statement

Should L'Oreal Netherlands introduce the Synergie skin care line of products and the Belle Couleur hair colorants or just one? In any case, how should the marketing program be structured? How should management minimize the impact of one or both of the new products on the existing L'Oreal product lines?

Identification of Alternative Solutions

Introduce the Synergie line of skin care products

Synergie was a new line of natural-ingredient facial skin care products including moisturizing cream, anti-aging day cream, anti-wrinkle cream, cleansing milk, mask, and cleansing gel. This range of products would benefit from the recent trends in the Dutch market favoring anti-aging, scientific development and natural ingredients. It also fit the population dynamic that the Dutch people were getting older.

Introduce the Belle Couleur line of permanent hair coloring products

Belle Couleur was the market leader in France where it had been sold successfully for 20 years, with the advertising line "natural colors, covers all grey." In France, the line had 22 shades, mostly natural with a few strong red or very bright.

Introduce Synergie and Belle Couleur in one campaign

By introducing both products together, the advertising of the Garnier name would get leveraged as the consumers would see and hear the Garnier name twice, giving the impression of a major supplier.

Decision Criteria

The following decision criteria were chosen to evaluate the marketing strategy alternatives listed above. A weight has been assigned to each criterion depicting the analytical importance to L'Oreal Netherlands. The scale is from 1 to 10, with 10 being the most important.

Product in line with market trends (weight = 10)

The Dutch managers were being pressed by L'Oreal Paris to introduce more Garnier products. The first introduction must be successful. Go with the flow.

Evidence of consumer acceptance (weight = 8)

Retailers will be critical to a successful product launch. Consumer acceptance, closely followed by manufacturer advertising, is highest priority for retailers.

Advertising campaign effective (weight = 7)

L'Oreal Netherlands could leverage ad spending on the Garnier name by promoting two product lines in the same campaign.

Product is mature in the market (weight = 5)

Promoting a product that has been proven successful in the French market could help allay fears about allergic reactions.

Analysis

The following analysis was performed using the decision criteria listed above and assigning a score to each of the alternatives. Points were assigned on a 1 to 5 scale with 1 being the lowest (least beneficial) and 5 the highest (most beneficial) marks.

Option 1: Introduce the Synergie line of skin care products

Product in line with market trends (weight = 10) Score = 5-

Synergie was a new product line, with all natural ingredients, which was focused on 25 and older women, the fastest growing market segment in Holland.

Evidence of consumer acceptance (weight = 8) Score = 5-

Market research showed that Synergie was well received by the consumer panel. On a scale of 1 to 7, panelists gave Synergie marks of 4 and 5 on the question of buying intent. 24-39% said that they would "certainly buy" the product.

Advertising campaign effective (weight = 7) Score = 2-

Introducing a new product with no market history would likely be relatively expensive. Dutch women were highly loyal to their existing brand.

Product is mature in the market (weight = 5) Score = 1-

Synergie was not only new to Holland, but it had only recently been introduced in France; therefore, facing the natural inertia in consumer buying decisions. Comprehensive Score = 109 out of 150 possible points = 73%

Option 2: Introduce the Belle Couleur line of permanent hair coloring products

Product in line with market trends (weight = 10) Score = 1-

Permanent hair colorants were on the decline, in favor of semi-permanent. The proportion of women using semi-permanent had increased from12% to 27%.

Evidence of consumer acceptance (weight = 8) Score = 1-

On the question of purchasing intent, the consumer panel gave Belle Couleur marks of 3 out of 7. After using the product, 31% of the panelists said they would not buy, compared to 13% before their experience with the product.

Advertising campaign effective (weight = 7) Score = 3-

Belle Couleur would have a modest advantage over Synergie with an advertising pitch of "French women have been happily using this product for 20 years."

Product is mature in the market (weight = 5) Score = 4-

Twenty years of history could help allay fears of product danger.

Comprehensive Score = 59 out of 150 possible points = 39%

Option 3: Introduce Synergie and Belle Couleur in one campaign

Product in line with market trends (weight = 10) Score = 2-

Score indicative of a mix of trendy and mature products.

Evidence of consumer acceptance (weight = 8) Score = 2-

Negative reaction to Belle Couleur outweighed Synergie's positives.

Advertising campaign effective (weight = 7) Score = 5-

L'Oreal Netherlands could leverage ad spending on the Garnier name by promoting two product lines in the same campaign, partially overcoming the loyalty factor in the market.

Product is mature in the market (weight = 5) Score = 4-

Garnier campaign could benefit from Belle Couleur history.

Comprehensive Score = 91 out of 150 possible points = 61%

Recommendation and Implementation

Based on the score of 73% for Option 1, compared to 39% and 61% for the other two options, introducing the entire Synergie product line in Holland is the best decision. The null option (doing nothing) would not be advisable for two reasons: Firstly, Synergie presented as being an attractive business opportunity, and secondly, L'Oreal headquarters was pushing for a broader distribution of Garnier products in the Netherlands and the Dutch management team would be hard pressed to defend a non-responsive position.

Madame van der Zande should direct Mike Rourke to prepare a promotional program emphasizing the Garnier by L'Oreal name and the natural ingredients along with the technical advantages of the Synergie product: "An alliance of science and nature to prolong the youth of your skin." The marketing focus should be on the 25 and older woman, which was the fastest growing market segment in Holland.

For the Synergie marketing program, Rourke could take a page from Shiseido's playbook when the Japanese company introduced its products into the European markets. (Drawn from "How Shiseido Succeeded in Europe." Yutaka Goto, Director General Shiseido Communications Center for Europe. January 12, 2005 www.japansociety.org.uk.) Shiseido expanded into Italy first before moving into France, the heart of European cosmetics. Since they were confident of the quality of their products, Shiseido aggressively dispatched beauty consultants to the high-class boutique perfumeries in Rome and Milan, and had them diligently convince customers, one-by-one, to try their products. They adopted the attitude that the quality of a cosmetic can only be experienced by actually using it on one's skin. With these efforts, they were able to acquire a number of loyal followers in Italy after people tried their products.

After the early experience in Italy, Shiseido decided to adopt a prestige brand as its overseas strategy, and targeted the upper class as they moved into France. Instead of aiming for recognition by the general public, Shiseido directed its efforts in pursuing the prestigious customer. The opening party held at the Shiseido retail boutique in the arcades of the Jardins du Palais Royal,… [END OF PREVIEW]

Four Different Ordering Options:

?
Which Option Should I Choose?

1.  [This option is temporarily unavailable.]

or

2.  [This option is temporarily unavailable.]

or

3.  Access all 175,000+ papers:  $41.97/mo

(Already a member?  Click to download the paper!)

or

4.  Let us write a NEW paper for you!

Ask Us to Write a New Paper
Most popular!

L'oreal Case Study


Marketing Plan Situation Analysis the Dining Restaurant Term Paper


Corporate Analysis - L'oreal Group Contents Research Proposal


International Corporation Discussion L'oreal Is the World Essay


Promotion Plan Situation Analysis Promotional Strategy Communication Research Proposal


View 1,000+ other related papers  >>

Cite This Case Study:

APA Format

L'oreal Nederland B.V. Situation Analysis.  (2011, March 12).  Retrieved February 20, 2019, from https://www.essaytown.com/subjects/paper/l-oreal-nederland-b-situation-analysis/4713472

MLA Format

"L'oreal Nederland B.V. Situation Analysis."  12 March 2011.  Web.  20 February 2019. <https://www.essaytown.com/subjects/paper/l-oreal-nederland-b-situation-analysis/4713472>.

Chicago Format

"L'oreal Nederland B.V. Situation Analysis."  Essaytown.com.  March 12, 2011.  Accessed February 20, 2019.
https://www.essaytown.com/subjects/paper/l-oreal-nederland-b-situation-analysis/4713472.