International Advertising Loreal Pranay Oswal

L’Oreal: BIOTHERM CASE STUDY ANALYSIS

Submitted to:- Dr. Joy Mukhopadhyay Adjunct Faculty International Advertising BMA- ECU

Submitted by: Pranay Oswal ECU Id:- 10193528 BMA Id:-BLR0911034002

International Advertising L’Oreal: BIOTHERM Dr. Joy Mukhopadhyay

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Edith Cowan University Bangalore Management Academy

Table of Contents INTRODUCTION ....................................................................................................................................... 3

SNAPSHOT OF THE CASE ...................................................................................................................... 5

VISION AND BRANDING STRATEGY FOR BIOTHERM ................................................................................. 8

NEED APPEAL ........................................................................................................................................ 12

POSITIONING OF BIOTHERM AND CLINIQUE .......................................................................................... 14

RELATIONSHIP BETWEEN THE CULTURAL CHARACTERISTICS OF THE COUNTRIES ................................... 16

POSITIONING OF BIOTHERM HOMME ................................................................................................... 18

MARKETING COMMUNICATION IMPLICATIONS OF THE GERMAN BIOTHERM HOMME .......................... 20

Conclusion ............................................................................................................................................. 22

Recommendations: ............................................................................................................................... 24

Bibliography .......................................................................................................................................... 26


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INTRODUCTION The L’Oreal Group is the world’s largest and the most popular cosmetics and beauty products

company. It was founded by Mr. Eugene Schueller in the year 1909 with its registered office in

Paris and head quarters in the Paris suburb of Clichy, Hauts-de-Siene, France. It has consistently

been a trend setter and a revolutionary business group in the field of cosmetics. Focusing mainly

on hair colour, skin care, make-up, perfumes, serums, sun protection creams, face wash,

shampoos, conditioners, lipsticks, L’Oreal is aggressively spreading its arms in dermatology and

pharmaceutical fields by being the leading nano- technology patents holders in the United States

of America.

An organization with a century of expertise in the diversified fields of cosmetics, its consolidated

sales until the year end of 2009 was reported to be € 17.5 billion. It is present in 130 countries as

on September 2010, with a headcount of 64,600 employees, and 674 patents filed in 2009.

L’Oreal also claims that the brands annual sales are superious to 50 million Euros. L’Oreal has

recently been selected for inclusion in the Dow Jones Sustainability Stock index that lists the

companies with the best performance in terms of its social and environmental responsibility in

Europe and in the Euro zone. It is listed under the ticker symbol “OR” with its share price of €

82.62 as on 1st October, 3.26 p.m. IST. The L’Oreal share was introduced to the Paris Stock

Market on October 8th, 1963. As on Dec. 31, 2009, the Market capitalization of L’Oreal was

€46.72 billion with the total number of shares in the market over 5, 98,972,410.

Mrs. Liliane Bettencourt a French heiress, daughter and the only child of the founder Mr. Eugene

Schueller is a socialite, businesswoman and philanthropist and one of the principal shareholders

of L’Oreal with a fortune estimated at US$20 billion, and also one of the wealthiest people in the

world. She holds the maximum share that accounts to 31% stake, along with the Nestle’s holding

29.8% stake and the remaining other individual shareholders (5.4%), French institutional

investors (9.4%), international holders (21.3%), treasury stock holders (2.4%) and the employees

holding 0.7% of the Employee Stock Options Plan.

(sustainabledevelopment.loreal, 2010)


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SNAPSHOT OF THE CASE The succeeding case discussed on L’Oreal mainly emphasizes on the promotion strategies that it

has practiced mainly in Europe and other parts of the world taking into thorough consideration

the diverse culture and different countries Low Context and High Context elements and also

giving adequate amount of understanding on Geert Hofstede’s Cultural dimensions, viz; – Power

Distance, Individualism V/s Collectivism, Masculinity V/s Femininity, Uncertainty Avoidance

and Long Term Avoidance along with the vital importance of Abraham Maslow’s Theory on

Hierarchy of Needs with pertinent reference to doing business locally and on a global scale.

In the case presented below, L’Oreal claims to put all of their expertise and research resources to

work for the well being of men and women in all their diversity, around the world keeping into

mind the power of culture and value predominantly. Consequently, in this case the company’s

center of focus revolves around the following three main beliefs:

1) Unfailing attention to consumers, understanding and anticipating their individual needs

and aspirations.

2) Respect for personal diversity; the company striving hard to match the personal diversity

with the diversity of their products and brands with reference to age, type of skin, over

time, values and culture.

3) Effectiveness of products being built upon in-depth research and a dedication to invest in

innovation, product safety and the highest standards of reliability and product quality.

Although the availability of L’Oreal products is there in super markets, hair salons, chemist

shops, boutiques and other dedicated company outlets it also ensures to reach its users through

online and mail order distribution. Their availability of L’Oreal brands broadly depends upon the

category they fall into. They are mainly segregated into the following 4 categories:

1) Consumer Products

2) Professional Products

3) Luxury Products

4) Active Cosmetics(Dermo Cosmetics)


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In the following case “BIOTHERM” that falls into the category of Luxury brands is elaborately

discussed to study, understand and analyze against its competitors, its market share, its

positioning into the minds of the customer, its brand image especially in France, Spain and

Germany. It also helps in doing a comprehensive SWOT analysis of the brand – BIOTHERM in

these three countries especially on the grounds of Brand Image, Brand Positioning on these

Focused groups. Although the tabulation of the data that has been shared in the case below stand

quite obsolete i.e. way back to 2002 and hence the arguments and the views presented might

differ than the ones projected in the case drastically.

This case mainly deals with the promotion strategy used by L’Oreal in marketing its product

BIOTHERM in diverse culture and different countries. BIOTHERM is one of the luxury

products of L’Oreal. The study conducted highlights some of the area where L’Oreal lacks in

understanding the perception of the people of different country and their view about the product.

Because different culture sees the same product in different ways and also the same product

satisfy their different needs.


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VISION AND BRANDING STRATEGY FOR BIOTHERM L’Oreal pays great attention to the layout of relying on sales and distribution channels to

implement the brand portfolio strategy in order to integrate heterogeneous systems of the brand.

This helps them gain a high degree of intensification effect. This is also accomplished though

placing these high end luxury cosmetics brands along with its extended brands – Lancome,

Helena Rubinstein, Kiehl’s, She Uemura, Giorgio Armani, Ralph Lauren, Cacharel and Viktor

& Rolf, by carefully placing them in selected high-end departmental stores and through online

channel only. This has so far become successful for BIOTHERM and its sister brands like

Garnier and Maybelline are also following the same channels of supermarkets a high end

departmental store sales. They are not limited only to pharmacies like Vichy and La Roche-

Posay.

BIOTHERM follows a multi-brand strategy because each brand is independent of each other and

is also corresponding to services market segments. It is difficult to see the brand from the surface

of the main and auxiliary relations. On the other hand, businesses want to foster their own brands

to grow and do inputs may be more human, material and also through financial resources. The

result is the limited resources of some companies have "equal distribution," and finally each

brand, due to lack of adequate resources to support doesn’t really grow up the ladder. However,

the business-to-one brand for each of equal treatment does not mean that the success of brand

management stand alone. According to the 80/20 principle, 80% of corporate profits pump in

from 20% of the brand contribution. Therefore, multi-brand management is the strategy that is

taken in to focus on the brand – BIOTHERM with due respect to all its category management

strategies, focusing on management of the market attractiveness and market size of the brand.

BIOTHERM spend it major marketing budget on “Direct Mailing”. Usually, as per the industry

reports, cosmetic company spend their marketing budget at the ratio of 4:1, but BIOTHERM’s

Direct Mailing Vs marketing ratio is 1:1. They surveyed department store loyal card holder’s age

group between 20-29 and achieved certain spending target for 3 consistent months. BIOTHERM

gave their brochure to those department's store loyal card holders. These target members

received at least 3 brochures every year from BIOTHERM which ultimately attracted them to

request sample product. Usually, cosmetic product's sample sets are 5ml but BIOTHERM being


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generous, gives full sets of its product completely in kind. As BIOTHERM gives a lot of its

sample sets. It immediately builds up its customer database and right after one week a person

receives a sample set he gets a follow up call for feedback. This quickly creates a buzz amongst

young people. Survey has shown that majority of BIOTHERM's new customers are

recommended by friend, and this is the first time they buy skin care product. Thus, they have

successfully attracts first timers and they also bring in new customer to the department stores.

After this incident, department stores start allowing them to set up counter in their premises.

Later, BIOTHERM launched body care product and men's care product. Unexpected the market

trend has changed and slimming become a fashion. Sales of slimming products have ever since

been escalated. Even today, slimming product comprises 1% of its turnover. In Hong Kong,

BIOTHERM breakeven just in its first year. It became a top department store's brand in second

year. In Korea, where people are loyal to their home brands it ranks 7 in the category of loyal

brands today.

Flanking the brand is also known as a combatant brand, whose main role is to create more

similarities with the competing brands in order to maintain the ideal position of the main brand.

It should not be too cheap, or they could damage the image of the entire brand portfolio; also

should not be too attractive, or they will be considered to be the main consumer brand of cheap

alternatives to the main brand of the market away.

High-end brands and low-end brands are "trading makers" that these brands may not make much

money for the enterprise, but help sales of other brands. Low-end brands priced relatively low

profit margins small, but able to attract customers to products, point of sale so that they could use

the opportunity to persuade the purchase of higher-priced brands. A higher premium brand

positioning, it may make the majority of consumers are far too low, they can improve the image

and prestige of the brand portfolio.

Hence, the vision and branding strategy of BIOTHERM is global where it follows the product

branding strategy since the products are transnational products. Most of their advertisements are

globally advertised as the range of product and its positioning is almost similar in almost the

countries. However the skin color of the models, the language and the cultural aspects of some of

the advertisements are reasonably distinguished as this can send a wrong message and sometimes


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also go against the sentiments of the mass and the existing customers. This also makes it cost

effective as it is backed up by large economies of scale. One important thing that shouldn’t be

left unspecified is the official website of BIOTHERM. They have designed a portico that is quick

enough to open unlike the parent company – L’Oreal’s home page. There are limited sessions of

graphics and hence the user doesn’t need to hold his/her patience for a longer period to have

access to it. They are mainly directed towards the 3 different regions for its users in Europe, Asia

and North America from where they can shop online. It is again dedicated for both the sexes.

BIOTHERM and BIOTHERM HOMME websites portray a picture of a young beautiful and a

sensational female model and a handsome looking sporty male model respectively, displaying

freshness, seductiveness, happiness, courage pride and a positive attitude with white color

remaining at the backdrop.

(investing.businessweek, 2010)


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Worldwide models of L’Oreal


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NEED APPEAL L’Oreal products have a wide range of products that are positioned for all levels except the base

level or first level i.e. the Physiological needs level in Abraham Maslow’s theory of needs

hierarchy. Holistically speaking, L’Oreal products are classified mainly in two categories. They

are consumer products and professional products that are positioned at various levels of

Maslow’s theory. The level of needs differ from one country to another country significantly on

the income levels. In European countries, the income levels are much more than the level of

incomes in Asian countries therefore the global products are positioned at different levels in the

pyramid of Maslow’s theory in different countries. In the USA L’Oreal consumer products are

servicing for the needs of people in the Safety level i.e. the second echelon in Maslow’s theory

ladder, as the people use this product for providing safety for skin, face etc, and L’Oreal

professional is fulfilling the needs of people in Social level i.e. the third stage in Maslow’s theory

ladder. But in countries like India and China the needs will be totally different. There L’Oreal

consumer products are satisfying the needs of people in Social level in the ladder of Maslow’s

theory and L’Oreal Professional is positioned for fulfilling the needs of people in Esteem level

i.e. the fourth altitude in Maslow’s theory ladder. It shows the shift in the needs for product in

different countries.

BIOTHERM is positioned as a luxury product and hence it satisfies the needs of the people in

the Esteem level in Maslow’s theory. This product is positioned as it signifies the physical and

mental abilities of a person such as youth, freshness, assertiveness with positive attitude and

simplicity. BIOTHERM HOMME products, which are for men are focusing the needs of the

people in Esteem level in Maslow’s theory of needs. BIOTHERM HOMME is the market leader

for men care.

(Geert-hofstede, 2010)


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POSITIONING OF BIOTHERM AND CLINIQUE From the plotted positioning map in the case, it was found that the main competitor of BIOTHERM is

CLINIQUE. BIOTHERM is positioned in the first quadrant of the positioning map i.e., the serious – new

luxury area where its competitor Clinique is positioned in between the first and fourth quadrant. Even

though Clinique is positioned as the closest competitor, it is not a competitor in terms of the market share

except in Spain where its market share is slightly more than BIOTHERM. In the UK websites of both

products it was found that the product width is almost common which include sun care, body care, make

up etc. Both the brands target the same set of customer groups which includes both male and female

customers. The brand statement of BIOTHERM speaks about problems that men and women are facing

and hence use of this product is to overcome the problems of BIOTHERM where Clinique in its website

is speaks about its quality and also its shows the promotional offers they are offering.

(CLINIQUE)


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RELATIONSHIP BETWEEN THE CULTURAL CHARACTERISTICS OF THE

COUNTRIES

BIOTHERM’s focused group results and discussions after conducting the survey in these three

countries - France, Spain and Germany shows that the brand image is varying according to their

features and perceptions. But there are also some similarities observed in it. The similarities

found are that the people in these countries find this brand as natural, pure and fresh i.e. in terms

of the image value. The target segment is almost identical in Germany and Spain. The

advertisements of BIOTHERM in these countries show that they are lacking in some qualities

like sensuality, consistency etc. The differences found here are that they have weakness in their

product offering but the qualities they lack are different. E.g. People of Germany find this

product lacking in benefits whereas French customers find the brand too pharmaceutical.

There are some relationships found between the cultural aspects with that of the attitudes and

perception of those people. Almost all the European countries are low context countries since the

relationship amongst the people is less effective and so the people here in these countries are

individualist i.e., they don’t depend on others and can take own decisions without much

influence and they give importance to self esteem. In almost all Asian countries and mainly in

China and India it is found that it has high context culture where they give importance to Guanxi

(esp. in China) and relationships and the power of autonomy is accumulated to a single person in

a family where a person takes a decision according to the benefits and the needs of the family

members. The way of transmitting the message through the communication is also dependent on

culture. Based on the above mentioned factors, it shows that culture influences the way of

advertisement is made.

(biotherm-usa, 2010)


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POSITIONING OF BIOTHERM HOMME Positioning of BIOTHERM HOMME is almost same in countries like United Kingdom, United

States of America and Singapore. It is positioned as it is a better and more useful product for

men than any other products in that league. The websites of above mentioned countries

communicates the same message regarding the benefits of the product and the product width in

these countries remaining same. This brand is exclusively for men and this product is used as

anti shaving, anti aging, anti wrinkle products. The models used in the advertisements are young,

handsome, energetic and masculine in nature and it is common in all the countries.

(BIOTHERM)


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MARKETING COMMUNICATION IMPLICATIONS OF THE GERMAN

BIOTHERM HOMME The marketing communications by BIOTHERM HOMME in Germany is implicated differently

i.e., it was not implied the way it was to be communicated and this has been established in

Germany through a study, that is factual. Initially, when the marketing communication was

launched in Germany it was positioned as a skincare product which is an aftershave lotion. The

target market of this product is generally men who want the immediate result and it must be

effective. But the conclusion of this communication i.e., decoded message was different, as the

German people thought that the word “coach” which is used in their advertising statement

signified to be of more business sense and they also found that this product lack in pleasure,

character, sensuality and emotionality. Even the non-selective packing strategy for this product

also ended in negative result. There are also some positive results in terms of advertising effects

such as the advertisements are identifiable, attractive, contains aesthetics and it resembles the

masculine spirit. The advertisements are simple and understandable and also give information

regarding the products and its benefits. It also concluded that this product needs brand building

by conducting fashion shows and other public relation events, in order to convey the brand image

properly and effectively.

Yes, the communication strategy for BIOTHERM HOMME in Germany must be changed i.e.

they can use Pattern Standardization Advertising which is one form of global advertising, where

the execution of the advertising is localized but the positioning and brand identity choosing is

controlled by Top Management. The other things that are to be modified or changed are that they

can exclude the words like coach which are not suitable for them and the advertisements must be

localized that they can use the brand statement which contains the words that suits the German

society and their likings. The brand statement should contain the message which tells about their

latest technologies they used for the production, the benefits of this product; so on and so forth

(campaignasia, 2010)


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Conclusion

L’ORÉAL is the world market leader in cosmetics and related products.

They are exceptionally innovative and invest a lot of money in research and development.

Products deserve to be positioned in the high-priced segment because of their high quality.

They offer well coordinated products for almost all the target groups.

To keep their strength alive they have to observe their Competitors

They are trend setters.

They have an experience curve.

As per the Ansoff Matrix they should focus on Market Penetration by aggressively entering

into potential markets like India where the presence of BIOTHERM is relatively very low.

They are an environment friendly company.

The contributions in the various fields through Corporate Social responsibility have been

appreciable and this has also helped them gain several awards under various categories.


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Recommendations:

Sincere observation of the market.

Though Competition analysis.

Beware of latent competition.

Using competitive intelligence to achieve strategically.

Gain Sustainable Competitive Advantages

Early market entry

Be prepared for the growing competition

Diversify their expertise also into the untapped field of clinical research through medical

foundations.

Ensure that the products that have been utilized are recycled responsibly.

Dropping the level of wastage from the current 2% and narrow it down even further.


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International Advertising Loreal Pranay Oswal

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