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Transcript of L'oreal Italia
Manuela Vilas Boas June 2015. The Italian Beauty Market
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Slide 9Micro Analysis
My value to improve the Italian beauty market
Manuela Vilas Boas June 2015. Contents
LOral has a presence in Italy since 1908, and today Italy occupies a very important and prominent position as the 5th country in the world by revenue.
L'Oral Italy is present in all distribution channels, from salons to pharmacies and supermarkets, with a range of leading brands in many market segments.
The company is organized into four divisions to cover all markets of cosmetics:
Consumer Products Division offers the best affordable cosmetics innovations. Ex: LOral Paris, Garnier, Maybelline, Frank Provost and Essie. LOral Luxe brings together a unique portfolio of prestigious international brands. Ex: Lancme, Giorgio Armani, YSL, Khiels, and Clarisonic.Active Cosmetics Division created and marketed products for selective distribuition through pharmacies. Ex: Vichy, La Roche-Posay, Innov, and Skinceuticals.Professional Products Division dominates products for salons and professional hairdressers. Ex: L'Oral Professionnel, Krastase, Redken, Pureology, and Matrix.
The products from the plant in Settimo Torinese are distributed in 39 countries and 4 continents.Manuela Vilas Boas June 2015. Micro Analysis
Macro AnalysisManuela Vilas Boas June 2015. In 2030, the median age in Italy will be 49.2 years making it the first oldest country in Europe and the second oldest country in the world.
A substantial proportion of the Italian population are still very interested in high-quality products and premium brands, while the majority of Italians are increasingly looking for better value for money, as the mid-range takes the hit of the countrys recent economic uncertainty.
They also have changed their shopping behaviour, and this has taken effect on different channels. The Italian market has a very complex distribution, because it has many different channels, such as its regional and national chains, and also independent retailers. And the speech with each one of these channels is completely different, and they ask for different products too.
The Italian organisation says that the evidence points to a readiness to change channel and to spend less, going about choosing hedonistic buys with more freedom and fewer scruples.
Manuela Vilas Boas June 2015. The only way to increase margins has been to offer innovative products which provide higher levels of functionality, including multipurpose products.
For today's constantly connected consumers, shopping never sleeps. Whether we need to make an everyday purchase or research a big-ticket item, we reflexively turn to our devices. These I-want-to-buy moments are important moments for consumers, and they're critical for brands. 93% of people who use a mobile device for research go on to make a purchase.
The growing interest in natural/organic brands at affordable price points in developed markets could provide L'Oral a good opportunity to further expand.
Looking to avoid animal testing, as part of public concern over the sales of pets to research facilities, LOreal earlier this last monthannounced that it's partnering with bioprinting startup Organovo to figure out how to 3D print living, breathing derma that can be used to test products for toxicity and efficacy.
STRENGHTS WEAKNESSESOPPORTUNITIES THREATS Market leadershipHigh quality of productsStrong brandingInnovationA well-segmented portfolioLeading print and digital media advertiser
Inflexible brand imageLess dynamic in natural/organic
Natural/organic brandsEmerging marketsTravel retail sales growthE-commercePremium brandsAnimal cruelty free products
Economic crisis in EuropeGrowing competitionClose substitutes
Manuela Vilas Boas June 2015. SWOT Analysis
Improving the Italian beauty marketManuela Vilas Boas June 2015. Knowledge of different cultures and rituals worldwide enables the laboratories to anticipate and invent the products of the future. It is clear that people on different continents have their own specific needs, habits, dreams and desires so one product, or even one formula, does not fit all The average Italian consumer of beauty is changing. They are getting older, much more concerned and hesitant about how they spend their money on beauty products, they buy through many different channels, also check their phones before making a final decision, and recognize the natural or organic brands, appreciating companies that do not test their products on animals. Theres a worldwide public concern about animal testing, and Italy isn't out of this trend. They want an effective product, which is also aware of the environmental impacts.
Analyzing this scenario, I would suggest LOral to expand or create brands in Italy with more lines of Environment friendly and natural/organic products that include anti-aging components, with smaller packages or cheaper versions of the same product, as the Italian population is getting older and more concerned about how they spend their money.
The Body Shop, for example, is a very innovative brand that I believe has a great potential of growth. If LOral invested more in R&D within The Body Shop for new anti-aging product lines with natural ingredients (miracle creams and secret formulas for older Italian women and men), Im sure it would be a huge success.
Smaller and prettier packages for cheaper versions of the same product are also a solution, because the Italians want to spend less, but they enjoy to buy products with more freedom and fewer scruples. If they see a cheaper version of the product they love, they will buy it. Also if they see a product that fits their needs, with natural ingredients and animal cruelty free logo, its a strong incentive for the purchase.
Furthermore, sponsorship of Italian beauty bloggers and opinion leaders, who influence the attitudes or behavior of their followers, for how-to videos and blog posts publications about these new LOral products, is very important for decision making before the purchase. 93% of people who use a mobile device for research go on to make a purchase.Manuela Vilas Boas June 2015.
Henderson, Rebecca M., and Ryan Johnson. "L'Oral: Global Brand, Local Knowledge." Harvard Business School Case 311-118, June 2011. (Revised May 2012.)
Manuela Vilas Boas June 2015.