L’Oréal’s goal of attracting 1 billion new customers by 2025 is characterized by expansion into developing markets and retention of its customer bases in developed markets. The company plans to achieve this goal through employing a strategy of new brand acquisitions, continued R&D spending, and brand expansions into new markets.
Strategic Brand Acquisitions
Strategic brand acquisition is L’Oréal’s main strategy for successful market entry and continued dominance in developed markets. L’Oréal’s success in market entry can be attributed to a strategy of building and acquiring brands rooted in local culture that appeal to different segments of the global market. Rather than attempting to homogenize brands and make them appealing to many cultures, …show more content…
Before 2013, L’Oréal commanded a market leadership position in China with L’Oreal Paris and Maybelline New York being the number one brands in their respective segments. Chinese companies such as Shanghai Jahwa United, however, showed a better understanding of Chinese consumer tastes with the strategic use of Chinese traditional medicine and herbal practices in developing its products (Trefis “L’Oreal”). In order to remain competitive in the Chinese Market, L’Oréal acquired Chinese beauty and cosmetics company Magic Holdings International in 2013. Magic Holdings is the leader in the Chinese facial care market and will allow L’Oreal to better address Chinese consumer …show more content…
L’Oréal’s competitive advantage in the industry stems from its ability to exclusively focus R&D spending on beauty products and its well-segmented portfolio of brands. L’Oréal spent 760.6 million euros (827.9 million dollars) on R&D in 2014. Unilever and P&G, L’Oréal’s top two competitors, only allocate a portion of their total R&D budgets of over 1 billion dollars (Unilever) and 2.02 billion dollars (P&G) to personal care, which accounts for 36% and 24% of their net sales respectively. L’Oréal also spends the most on R&D as a percentage of net sales compared to its top beauty care competitors (Estée Lauder, Revlon, and
Strategic Brand Acquisitions
Strategic brand acquisition is L’Oréal’s main strategy for successful market entry and continued dominance in developed markets. L’Oréal’s success in market entry can be attributed to a strategy of building and acquiring brands rooted in local culture that appeal to different segments of the global market. Rather than attempting to homogenize brands and make them appealing to many cultures, …show more content…
Before 2013, L’Oréal commanded a market leadership position in China with L’Oreal Paris and Maybelline New York being the number one brands in their respective segments. Chinese companies such as Shanghai Jahwa United, however, showed a better understanding of Chinese consumer tastes with the strategic use of Chinese traditional medicine and herbal practices in developing its products (Trefis “L’Oreal”). In order to remain competitive in the Chinese Market, L’Oréal acquired Chinese beauty and cosmetics company Magic Holdings International in 2013. Magic Holdings is the leader in the Chinese facial care market and will allow L’Oreal to better address Chinese consumer …show more content…
L’Oréal’s competitive advantage in the industry stems from its ability to exclusively focus R&D spending on beauty products and its well-segmented portfolio of brands. L’Oréal spent 760.6 million euros (827.9 million dollars) on R&D in 2014. Unilever and P&G, L’Oréal’s top two competitors, only allocate a portion of their total R&D budgets of over 1 billion dollars (Unilever) and 2.02 billion dollars (P&G) to personal care, which accounts for 36% and 24% of their net sales respectively. L’Oréal also spends the most on R&D as a percentage of net sales compared to its top beauty care competitors (Estée Lauder, Revlon, and