Managing L’oréal’s Product Life Cycle: More Than Just Makeup

Founded in 1909, L’Oréal has devoted itself to one business over the century: beauty.
Headquartered in Clichy near Paris, the company has become the largest cosmetics company
worldwide, operating in 140 countries with 32 international brands. Its mother brand, L’Oréal
Paris, is the no. 1 beauty brand in the world. In the increasingly dynamic environment of the
cosmetic industry, L’Oréal must ensure a continuous and sophisticated management of the life
cycle of its products and services to bring new value and appeal to its customers. By tradition, the
makeup market has long been driven by classic mass marketing brands such as Maybelline New
York and Max Factor. In addition, competition is intensified by brands selling directly to
customers, such as Avon, and low-cost brands such as Essence and Kiko. While competition is
fierce and challenging, the makeup market is growing fast. To a large extent this growth is driven
by so-called makeup artist brands, which are product lines initially used by professionals or named
after famous makeup artists such as MAC, Benefit, and Bobby Brown. There are also many
makeup brands that wear the names of perfume or luxury ready-to-wear brands, such as Shiseido,
Chanel, or Yves Saint Laurent. L’Oréal’s makeup brand L’Oréal Paris has a long tradition of 30
years in the market, and it currently ranks no. 2 in the global market after Maybelline New York.
The makeup market encountered a strong growth of 50 percent in the 10 years between 2003 and
2012. Even though L’Oréal’s makeup brand performed better than the market with a significant
market share increase, it was outperformed by the makeup artist brands. With respect to the product
life cycle, the L’Oréal makeup brand was close to the maturity phase, as the competition was fierce,
profits were slowing down, and the brand’s customers were aging. An initial analysis of the market
and its competitors indicated that the two fastest growing types of brands—makeup artist brands
and low-cost brands—had something in common: a very large variety of colors that appealed to
customers. Although L’Oréal’s makeup brand was still performing, the company realized that this
might not be sustainable enough in the future to compete with its rivals.
By tradition, the brand was particularly strong when it comes to foundation and mascara products
but has been increasingly challenged by the fashionable segment of color variety and selection.
Yann Joffredo, Global Vice-President Cosmetics L’Oréal Paris, emphasized that the traditional
market had shifted, and that today’s women shop “looks” rather than products. As a result,
conventional channels are no longer the only key in this new era of internet sales, cross-channel
purchasers, and connected beauty. Instead of pursuing an exit strategy and dropping out of the
makeup market like Nivea did in 2011, L’Oréal wanted to continue building its makeup brand and
avoid the decline stage. To achieve this target, the company investigated various market research
reports and conducted a battery of tests. One study carried out in Europe showed that L’Oréal Paris
was seen as a trustworthy brand whose products were highly effective and innovative, enhancing
beauty in an elegant manner while bringing self-esteem to women. However, the study also
discovered that the brand was not seen as the most dynamic and trendy in the industry, particularly
when it comes to the younger generation, who claim that L’Oréal did not offer the right shades.
All findings were analyzed in-depth to determine the right strategy with respect to competition and
the marketing environment while still hewing close to the company’s culture and values. L’Oréal
decided to choose a different positioning from the low-cost brands. Without the cost structure that
L’Oréal has, with a team of over 3,800 researchers, the latter would always win the battle of
inexpensiveness. Consequently, the idea was to learn from the makeup artist brands’ success by
repositioning the brand and developing an innovative color statement that appealed to young
consumers. L’Oréal Paris established a new strategy platform, moving from a generalist brand to
a multi-specialist one. In 2014, the name of the brand was changed to L’Oréal Makeup Designer
Paris. The value proposition is that the products are developed and endorsed by the greatest
makeup artists and spokespeople. The brand is positioned on three pillars: L’Art du Regard (The
Art of Looks), L’Architecture du Teint (The Architecture of Complexion), and L’Obsession de la
Couleur (Color Obsession).
n order to evolve from proposing products to offering an experience, the brand needed to create an
interactive relationship with its audience at all customer touchpoints, offline and particularly
online. Therefore, the new positioning and strategy was primarily driven by the creation of the
revolutionary Makeup Genius App, an easy-to-use smartphone IOS application that gives
customers the ability to “shop” their look instantly. Thanks to head and expression tracking
features as well as face texture 3D analysis, this application enabled users to be the designers of
their own looks through a real-time interactive mirror. In addition, L’Oréal Paris developed a fully
integrated digital approach to bring valuable services to consumers, inspiring conversations and
building relationships through social media platforms. The campaign kicked off on three
continents, starting in France, the United States, and China in May 2014 and then rolled out to 20
countries. Cyril Chapuy, L’Oréal Paris International General Manager, stated that the strategy
successfully positioned the company at the vanguard of creativity and fashion. As a result, L’Oréal
has grown its followers tenfold at the global level in the past 2 years. Its Makeup Genius has
become the first beauty, app in the world and has been downloaded over 10 million times since
May 2014. Since then, the company has started to see a strong acceleration of its sales. In all,
L’Oréal has successfully repositioned and relaunched its makeup brand by managing the product
life cycle in a sophisticated way. By entering a new era of digital beauty through its Makeup Genius
App, L’Oréal successfully lives up to its ambition of creating tomorrow’s beauty services.

Question:
1. Identify the problem (s) / issue (s) faced by the company.
2. Give a review of the case and list down the product promotion Success Strategies by help
of which the brand get out of the hot water.