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Marketing Essay – Marketing Communications Strategy

Integrated Marketing Communication Strategy – L’OREAL

Executive summary

The following report provides an analysis of the integrated marketing communication mix of the global cosmetics giant L’oreal. The report is organized in three parts. The first part provides an overview of the company and brief insight into the health and beauty market. The second part of the report covers the analysis of the marketing and communication activities of the company, supported by relevant literature in the area. The report ends with elaboration of the recommendations proposed for the company’s marketing activities.

Introduction

L’Oreal is a worldwide leader in the health and beauty industry with more than a century of expertise and know-how in the area of cosmetics. The company is dedicated on inventing beauty and meeting the expectations of men and women throughout the world, with a universal vocation of offering everyone the best of cosmetics and making beauty universal “in a sustainable and responsible way” (L’Oreal 2012, L’Oreal 2011 AR:3). Initially created by a researcher, L’Oreal has been pioneering research in the area of cosmetics, “pushing the frontiers of knowledge” and conceiving the products of the future, inspired from diverse beauty rituals in different parts of the world (L’Oreal 2011 AR:3). One of the company’s key strengths is the organisation of its divisions that provides the opportunity of meeting every customer’s expectations by local adaptation of production and distribution and delivery of accessible innovation (L’Oreal 2011 AR:5).

L’Oreal covers several product groups under its umbrella, each comprised of some of the most famous brands in the world: Consumer products – the largest product category dedicated to the mass market and comprising more than half of the Group’s share, Professional products, Luxury products, Active cosmetics, The Body Shop and the recently added specialised dermatology company Galderma (L’Oreal 2011:5,66; L’Oreal 2012). L’Oreal’s portfolio comprises products from almost all business segments in the industry, including Skincare, Haircare, Make-up, Hair colourants, Perfumes and Other (L’Oreal AR 2011:18).

The company is a genuine international player with almost 27 global brands present in more than 130 countries worldwide, offering the highest quality beauty products by nearly 69,000 employees and company agents (L’Oreal AR 2011:1). The Western Europe and the new markets of Asia Pacific hold the largest and almost equal shares of the market (more than 38 per cent each) (L’Oreal AR 2011:18). The report covers the company’s activities in the markets of the UK and India, as representatives of the largest geographical segments. L’Oreal UK exists since 1932 and has grown into the sixth largest subsidiary of the French company with more than 3,000 employees in the UK and Ireland (L’Oreal UK 2012). L’Oreal India is part of L’Oreal’s Asian market for more than 20 years and is one of the company’s fastest growing subsidiaries with more than 1,000 employees (L’Oreal India 2012). The report aims at providing a critical analysis of the Integrated Marketing Communications (IMC) approach, followed by identification of recommendations and a development of an Integrated Marketing Communications plan for 2012.

Integrated Marketing Communications (IMC)

Term and Concept

The Integrated Marketing Communications (IMC) model is behind the brand building of every contemporary company.  The concept in its original form was first introduced in marketing theory by John Fitzerland, in 1988.   Today, IMC is defined as “a concept of marketing communications planning that recognises the added value in a program that integrates a variety of strategic disciplines, for instance general advertising, direct response, sales promotion, and public relations–and combines these disciplines to provide clarity, consistency, and maximum communications impact.” (American Association of Advertising Agencies (AAAA 2005).  IMC’s model is based on the use of a combination of media drivers, which deliver the message to the final consumers (Belch et.al. 2007).  As a result, IMC is not made only by the tools of the promotional mix, it affects all the other elements of the wider marketing mix, product (branding, packaging, labelling), price (premium price, discount price and etc) and place (type of channel  and experience at the place of sale visited ) (Belch et.al. 2007).   Each element of the IMC mix integrates with the other communication tools so that a unified message is consistently reinforced.

Integrated Marketing Communications at L’Oreal India and UK

The global cosmetics market is a solid market, led by supply and driven by innovation, with steady growth through the years and proved flexibility in times of difficult economic conditions. As of 2011, the worldwide cosmetics market is estimated to a value of nearly €153 billion and a growth of 4.4 per cent (L’Oreal AR 2011:16). The market is segmented both geographically and by product categories. Geographically, to six regions, among which the Asia-Pacific accounts for the largest share of the global market (31 per cent) followed by Western Europe, N. America, Latin America, Eastern Europe and Africa-Middle East, respectively. By product type, the market covers several categories, including Skincare (the largest category comprising 31 per cent), Haircare, Make-up, Perfumes, Toiletries and deodorants and Oral cosmetics (L’Oreal AR 2011:16). The market is comprised of large international players, among which L’Oreal is the market leader with 26 per cent market share, followed by its main competitors Procter & Gamble, Unilever, Estee Lauder and Shiseido (L’Oreal AR 2011:16).  The competition in the industry is intensive and strong while the competitive strategy of the players is product differentiation, based on brand building.  In the beauty and health industry, the product and the brand are of greatest value. Therefore IMC is extremely important if not the most important factor behind the strong position and market share of L’Oreal at the global markets, India and the UK inclusive.

L’Oreal’s rich and diverse product portfolio is comprised of a vast array of products covering all product categories and including some of the most famous brands in the world (L’Oreal 2012, L’Oreal 2011). The secret behind this cosmetic giant’s success is very much related to the adaptations of the product portfolio in terms of distribution and promotional channels used. The adaptation is mostly achieved through alignment of the brand image to the market’s cultural traits and communicating the company’s understanding of different cultures through the product design (Kotler et.al. 2009:469). The “think local act local” approach is heavily implemented by L’Oreal in product design and promotion for attracting consumers across different cultures and borders. Innovation and research is in the heart of the company, so that the products reflect “the best of cosmetics innovation in terms of quality, efficacy and safety” (L’Oreal AR 2011:3,7). L’Oreal’s diverse and high quality products reflect diversity in every way, concerning diversity of beauty rituals around the world as sources of innovation and also concerning diverse populations, genders, skin types and ethnic specificities taken in account in the product design (AR 2011:29, Raju and Xardel 2009:305). L’Oreal’s products are developed in regard to four types of populations: Hispanic, European, Asian and African, supporting the idea of the universal access to beauty (AR 2011:29). Products are categorized in different product groups and related to certain benefits from the product use. They are perceived as high quality products, aimed at the rising middle class of men and women that values quality products produced by quality ingredients. The company develops ethnic beauty products as well, as are the high profile products aimed at different ethnics in the UK launched in 2005 (Brassington and Pettitt 2006:423).

As in every industry, in the health and beauty industry price is commonly related to the costs coverage, target market profile and competition’s pricing strategy, among other relevant factors. L’Oreal is a premier cosmetics giant producing high quality products and investing heavily in research and innovation. Most of the company’s products are luxury products produced with high quality ingredients, considered a justification of the high prices. The consumer products are a product category dedicated to the mass market that offers more affordable prices. However, there are variations in pricing structure and strategies in different geographic segments. For example, in India, as a country with strong traditional beauty rituals, the company is facing fierce competition from much cheaper local beauty brands. Yet, L’Oreal is staying close to its aggressive pricing strategy aimed at the growing middle class of Indian women characterised by transformed consumer spending and rapidly growing beauty needs and desires, as a result of the cultural shift, increased income and advanced urbanisation in the country (Lamb 2011:529; L’Oreal AR 2011:17). The company offers products at three diverse pricing points of luxury, premium and affordable, that are offered in most of the markets, including the Indian market where L’Oreal  is among the rear cosmetic companies with such diverse pricing strategy (Lamb 2011:529; Rediff 2005).

Concerning place, L’Oreal’s rich product portfolio is in line with the official brand guidelines combined with specific local adaptations of the product offerings. The vast array of globally recognized brands is adapted to a wide range of distribution channels that include mass market retailers as are Carrefour, Auchan and Kaufhof, perfumeries, department stores, professional hair dressers and hair salons, duty free shops, pharmacies and specialist health outlets (Raju et.al. :306). L’Oreal uses intensive distribution with coverage of multiple distribution channels, combined with selective distribution for some of the luxury brands. The company has extended its distribution into new channels as are the Internet and Travel Retail, in order to increase reach and visibility (L’Oreal Finance 2010). Direct distribution is facilitated through local manufacturing plants and main distributions centers, as the one in Chakan, Pune in India or the main UK distribution centre in South Wales (L’Oreal UK 2012, L’Oreal India 2012). The category of professional hair care products is handled through direct distribution to salons through the company’s developed network of sales representatives.

Brand differentiation is vital for succeeding in the health and beauty industry, which is why product and brand promotion are heavily emphasized by market players. In general, L’Oreal follows the traditional promotional approach in the industry that includes “prestigious locations, glamorous models and exaggerated messages” mainly through extravagant magazines and aggressive television advertising (Fill 2005:200). L’Oreal includes adaptation of its promotion according to the product category and geographical market. For example, the company uses local spokesperson (celebrities from the music and film industry) for promotion of the brand or dedicated promotions for professional stylists with messages enhanced with extensive technical information (Fill 2005:200). The commonly used promotional approach in the industry is significantly enhanced with additional tools, as are the digital media and online communications, and especially the emerging social media networking and advertising heavily used in all countries where the company operates (L’Oreal AR 2011). The message should ensure the theme of “universality of beauty” through all channels (L’Oreal 2012, Hackley 2005).

The process element of the marketing mix refers to the way that the product and service are provided and experienced by the customer, and is related to the procedures for managing customers before, during and after the process of product consumption. L’Oreal recognises the significance of the entire expe

rience for the customer and pays great attention particularly to the service and individual advice, as a high added value to common purchase of products (Raju and Xardel 2009:310-311). The company understands the act of purchasing as a very personal and custom-made experience, that helps in differentiating the brand in the competitive mass market and adds to the luxury trait of the brand. Attention to service is especially paid during promotions and at point of sales with the assistance and expertise of skilled beauty consultants, as well as through the rich and developed network of sales representatives (L’Oreal 2012; Raju and Xardel 2009:310-311).

Concerning physical evidence, L’Oreal has inspirited the sense of quality, luxury and prestige in every facility that holds the company’s name. Stores and other facilities are additionally arranged and adapted to local style and preferences, reflecting the company’s dedication and respect towards diversity and the continuous efforts for universalising beauty.

L’Oreal recognises the importance of people as a vital asset for facilitation of the entire process, from the actual creation of the high-quality products to the delivery of the desired customer experience. Therefore, the company invests heavily in the recruitment and further development of its employees in manufacturing, administration, marketing, sales, research, distribution, human relations and other. The commitment to diversity is valued in regard to people as well, and the company forms teams of a broad variety of employees that are offered a stimulating working environment and thrilling personal and career opportunities (L’Oreal 2012, L’Oreal 2011 AR).

Direct marketing is a valuable tool in an industry overflowed with marketing campaigns, as the health and beauty industry. L’Oreal acknowledged the fact that indirect marketing activities are not sufficient for recruiting and sustaining customers in the long run, rather more direct and customised marketing activities for getting familiar with customer habits, creating relationships with existing and potential customers, attracting and keeping their attention in-store with surprises and special service and build an emotional bond with customers as vital ambassadors of the brand (Raju and Xardel 2009:312-313). Mailings and flyers, especially e-mailings, leaflets and coupons are customised for each country of operation, and the internet is also heavily used as a crucial direct marketing tool. A well-structured and developed customer relationship management (CRM) is a necessity for an efficient direct marketing, for continuous record, tracking, coordination and analysis of activities and permanent database management (Raju and Xardel 2009:312-313). Direct marketing requires considerable investments in advance, which L’Oreal does not hesitate to make, and the benefits are usually felt and measured after a middle to long period of time.

Advertising is among the traditional tools heavily used in the health and beauty industry for generating brand associations and experiences, through broadcast media, i.e. television and radio, print, i.e. newspapers and magazines, and also at point of purchase when faced with product purchase decision (Fill 2005:195). The advertising through broadcast media, especially television advertising is heavily used by L’Oreal for the promotion of some leading brands, especially the consumer products category dedicated to the mass market which require expensive mass media advertising, through messages that promise life enrichment and accent the unique features of the product. Magazines are also an inevitable advertising channel, commonly high-quality, extravagant, life-style and fashion magazines. Super models and celebrities are inevitable figures in the advertising messages, and L’Oreal has some exclusive partnerships with famous celebrities from different genres and generations for achieving powerful associations with the brand for a long period of time (Kotler and Armstrong 2009:95, L’Oreal 2012).

Public Relations are a very important tool in the health and beauty industry where the brand is heavily related to the concept of beauty and the universality of beauty the L’Oreal strives to achieve. A very popular technique, heavily used by L’Oreal in all geographic segments is the use of celebrity spokespeople, both local and international, for improving the overall effectiveness of the message. Local celebrities are particularly used in public relations in Eastern countries for adapting to the diverse culture and strengthening the value and effectiveness of the message, as in India for example, where international as well Indian superstars as the famous actor Priyanka Chopra are used for promotion of some of L’Oreal’s product lines (Business Standard 2011). UK on the other hand, is more part of the international, wide-known figures used for promotion through PR.

Sales promotion covers activities that use discounts or incentives in order to increase the sales of the product and dealer effectiveness (Kurtz et.al., 2009:565). L’Oreal follows and enhances the traditional sales promotion tools used in the industry, as are GWP (gift with purchase), discounts, rebates, bonus items and bi-packs – different products in joint packaging offered as a single product at reduced price, as are Garnier’s shampoo and regenerator packs, or L’Oreal crème and mascara bi-packs). Sample kits especially of make-up and perfume products are offered in-store by beauty consultants, as well as additions and gifts to magazines. Starter kits – miniature product sets with trial and travel sizes are very interesting mediums used commonly in product combinations or as gift sets for product purchase, that are both beneficial for attracting new customers which test products with smaller sizes to eventually make a big and expensive investment in the final product, and also for addressing young clients with limited cosmetic budgets (Raju and Xardel 2009:310). The sales promotion offers are offered through all channels, in-store, in newspapers and magazines, and online on L’Oreal’s webpage and on social networks.

Personal selling also plays an important part of L’Oreal’s promotional mix. L’Oreal pays great attention to service and individual advice, and has invested heavily in engagement of skilled sales representatives and a wide network of beauty consultants that offer the company’s rich product and brand portfolio adding a personalised trait to the selling process.

As a company with research and innovation at its heart and as a result of the digital revolution of online media, social networks and online sales, L’Oreal heavily utilises online media and interactive product and campaign communication in its marketing and communication approach. The internt is especially a medium of choice in the new emerging markets of the East where the customer base is mostly young, middle class, digital native and looking for efficient cosmetics (L’Oreal AR 2011:74).The new media proved applicable, affordable and efficient stimulating awareness and trial for all product categories, from mass consumer products to professional and luxury products. The recommendation and persuasion power of social media is heavily exploited by L’Oreal, through the active presence of loyal customers, star bloggers and brand ambassadors on the social networks as are Facebook and Twitter, as well as video and viral marketing of commercials and events on online video channels as YouTube (L’Oreal AR 2011:74).

Mobile marketing is heavily emphasised especially in markets as the Indian market, where the number of mobile phones outweighs the number of TVs and computers. Concerning mobile marketing, L’Oreal joined forces with O2 More for sending location based SMS and MMS. Advertising messages to more than millions of customers (The Register 2010). In summary, the comparison between the IMC strategy of L’Oreal UK and L’Oreal India is presented in Table 1.

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Marketing and Communication objectives for the UK market (2012-2013)

L’Oreal’s marketing objectives for the UK market represent a blend of financial and non-financial targets reflecting the business strategy of the company.

  1. Maintain the position of the number one brand in the cosmetic and beauty industry;
  2. Reach one billion consumers in 2012;
  3. Continue with the annual sales growth of 25%;

The communication objectives supporting the realisation of the marketing objectives are:

  1. Continuous brand recognition in line with its initial positioning at the market; and
  2. Promotion of L’Oreal’s new product and product lines for women in the UK market in line with the brand’s guidelines.

The Target Audiences

The message should ensure the theme of “Universal beauty” at all contact points at the UK market (Hackley, 2005). The main target market is comprised of all women of all ages – Beauty affordable – a choice of all. There is no identification of a specific target market among the women in terms of demographics (age in particular), as the IMC of L’Oreal is highly integrated, with very small variation in the communication approach regarding the different products.

For accomplishing its marketing objectives L’Oreal needs resources for continuous investment in its brand; it needs employees, investors or creditors, suppliers, distributors (Belch et.al. 2009, Dahl et.al. 2011).   Therefore, the secondary audiences which need to be targeted with the IMC are:

  • Employees, as the company needs to ensure that the values of the brand are part of the culture of the company;
  • Partners, distributors and suppliers for ensuring clear communication of brand values and partnership with reliable companies which will not jeopardise brand’s positioning;
  • Potential Investors/Creditors for ensuring the required financial resources;

Strategy and Tactics

The communication objectives call for a clear strategy and tactics in their realisation accompanied with adequate allocation of resources in terms of people and finances.

For L’Oreal, the primary and secondary target audiences need to be approached with the message through the right mix of communication elements ensuring that the brand results in pre-defined features which define the brand personality and create a competitive advantage and positioning.  The mix is provided in Table 2 while the implementation plan is in Table 3.

The communication mix is developed in line with the definition of the Integrated Marketing Communications mix (IMC). Table 2 provides an identification of the right messages for each control point and how the same support the overall message of the brand – Beauty is affordable to all classes.

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