Sales Plan

Executive Summary Mission Statement SWOT Analysis Key Performance Indicators Target Customers – Segmentation Industry Analysis Financial Analysis and Competitors Brand Marketing and Sales Strategy

For more than a century, they have devoted their energy and their competencies solely to one business: beauty. They have chosen to offer their expertise in the service of women and men worldwide, meeting the infinite diversity of their beauty desires. They are committed to fulfilling this mission ethically and responsibly.

L'Oréal is the second leading beauty and personal care manufacturer in the world, L'Oréal is the second leading beauty and personal care manufacturer in the world, and also the most favorite brand in Vietnam for its good quality and reasonable price in Vietnam.

L'Oréal’s exclusive focus has enabled it to make more targeted investment in R&D and advertising, growing to be a formidable force in the industry. In color cosmetics, L'Oréal is the leading provider at over 19%. It has also made strong strides in skin care through a number of launches based on cutting edge technology

Beauty is a language Beauty is universal Beauty is a science Beauty is a commitment

L’Oréal, offering beauty for all

STRENGTH Strong brand:

L’Oréal has a strong brand portfolio. It includes Body Shop, Garnier, Maybelline,…all are recognized globally -> has built a portfolio of strong brands through heavy advertising expenditure over the years. Diversified presence:

The company currently has operations in over 130 countries across five continents R&D capability:

focused on cosmetology and dermatology. The company registered 569 patents related to cosmetics and dermatology in 2006.

WEAKNES Slow revenue growth

L’Oréal's long term revenue growth has been low. Slow revenue growth relative to the industry average and the revenues of competitors such as Estee Lauder indicates a decline in competitiveness and lack of revenue driving products. Weak performance in parts of VietnamThe company is also losing market share in the parts of Vietnam to Unilever in hair care and skincare market. A weak performance in such a geographically strategic market undermines investor confidence, as well as adversely affects revenue growth.

OPPORTUNITY Demographic trends in the US:

Growing beauty consciousness especially among the aging baby boomers is an important trend for all cosmetics companies. Acquisition and alliances:

The natural personal care products market is rapidly growing. Demand for natural personal care products is rising as consumers shift to products which are safer and more eco-friendly. Cosmetics market in emerging

nations:The importance of emerging markets such as China, India and Vietnam is on the rise for cosmetics companies due to increasing popularity of beauty contests and increasing disposable incomes.

THREATGrowing popularity of cosmetic surgery:Beauty consumers are increasingly taking refuge in new technologies such as advanced dermatology, cosmetic surgery, hair and organ transplant and other treatments to enhance their beauty. Not only are the results from these treatments instant, but they are also long lasting. This could reduce dependence on traditional beauty aids which could lead to a fall in demand for the skin and hair care products of L’Oréal. Counterfeiting:

Low quality counterfeits also reduce consumer confidence in the products of a company. More importantly, the company's key differentiator, exclusivity, is damaged by counterfeiting operations

The Asian cosmetics market is the most dynamic market for L’Oréal, representing about one-third of the global cosmetics market. Excluding Japan, the Asian market (including Vietnam) has been growing at over 10% per year and has contributed to more than 45% of the market growth. The skincare category is particularly dynamic and is an essential driver for worldwide market growth.

L’Oréal is especially focusing on the Asian markets of China, India and Vietnam to fuel its growth over the next two decades. Currently serving around 30 million nantional buyers, L’Oréal plans to drive up its customers fivefold to 150 million over the next decade.

Geographic and Psychographic SegmentationKnowing no geographic bounds or social class limitations, L’Oréal'smain marketing tool is the innate drive to be attractive in men and women alike. By using young female models and celebrities of many different ethnicities L’Oréal accomplishes an important task. Women of all ages and races will see how beautiful women look using L’Oréalproducts. This triggers a personal interest and inferring that L’Oréalproducts make you beautiful. Demographic Segmentation

Demographically, the largest consumer segment for the entire beauty industry is white women aged in their early teens and older. Women of different ethnicities can purchase cosmetics from L’Oréal'sSoft Sheen product line, men, young and old, can hide their gray or change their look with L’Oréal's Color Spa for Men hair coloring, and all parents can make bathing fun with a brightly colored bottle of L’Oréal Shampoo for Kids.

Benefits-Sought SegmentationL’Oréal Paris offers 6 different lines of lip color each with 48 different shades. To compare the product lines consider the shine, texture, and richness of color. This phenomenon is the product of benefits-sought segmentation. Situation Segmentation.

L’Oréal USA has 10 companies for manufacturing and 11 companies for distributing. Considering that the majority of revenue comes from retail stores, the proximity and abundance of distributing firms might persuade a retailer to choose L’Oréal.

Suppliers Bargaining Power of suppliers – LOWL’Oréal owns most of its suppliers through its different brands (forward integration). Very few brands compete with L’Oréal and thus its suppliers are dependent on them. The cost of suppliers relative to the cost of its products is actually quite low. Substitute Products

Potential development of substitute products - MEDIUM to LOWBecause L’Oréal is a much-diversified company in cosmetic products ranging from makeup, crèmes to hair products, it is difficult to find a substitute product that L’Oréalis not already selling. Competitors

Rivalry among competing firms - HIGH to MEDIUM The number of competitors in this industry is quite high. Moreover, most of L’Oréal’scompetitors are specialized in a certain type of cosmetic, giving them an expert image advantage over L’Oréal. Buyers

Bargaining power of consumers/buyers - MEDIUM to LOWConsumers have increasing power over companies because of the increased accessibility of company information. However, L’Oréal is considered a high-end and high-tech leader in its industry that directs demand rather than follows it.

Entry of New CompetitorsPotential entry of new competitors – LOWL’Oréal offers products that are different and benefit from economies of scale for its production. In the cosmetic industry, brand identity and product differentiation is very high. High capital is required because of the heavy R&D needed to create cosmetic products. Internal Environment

Tangible Resources: The tangible resources of L’Oréal would be first and foremost its financial position and capital. Intangible Resources: For a cosmetics company like L’Oréal, a majority of its resources are intangible. Some of the company’s major intangible assets are its technological patents. Resource and Capabilities

Some of L’Oréal’s main capabilities are its ability to cater products to different ethnic backgrounds, as well as its advanced R&D in these skin types. For this reason, they are able to venture into untapped markets. L’Oréal’sconstant innovation and cutting edge technology puts them at the top of the market. They have recently conducted the first ever stem cell research for makeup purposes.

L’Oréal is the leading company for the cosmetics and skin care industry, with Estee Lauder behind, and then Proctor and Gamble, and then Avon.

Proctor & Gamble is as big in size as L’Oréal; however, in terms of cosmetics and skin care, L’Oréal triumphs over them. Avon loses in terms of advertising and market 29 shares, and Estee Lauder comes in second due to its product selection as well as product quality.

Liquidity Ratios L’Oréal is not as liquid then the competitors. L’Oréal is not able to pay off their short-term debts and liabilities as well as their competitors. Leverage Ratios

L’Oréal is less levered compared to its competitors. They have low Debt to Assets ratio meaning that they have low liabilities and more assets, which is a good sign. Their low Debt to Equity ratio is also lower than competitors meaning they are less of a risky company than competitors.

Activity Ratios Inventory turnoverIn line with competitors: They can try to improve to match Estee Lauder but they are in healthy shape. Fixed asset turnoverVery healthy number and in line with competitors: They have a low number, meaning their fixed assets are used very efficiently. A/R turnoverBetter than competitors, which mean the company is able to collect money from its customers faster than its competitors. This is good for liquidity. Profitability Ratios

Gross Margin RatioL’Oréal has a relatively high gross margin ratios compared to its competitors, which is a good sign. They are left with more money for the company. Return on Equity: L’Oréal’s ROE is low compared to its competitors. They are less able to generate return for its shareholders. Their net income ratio is in line with competitors. Revlon recently came out of bankruptcy, therefore they have a very high net income but it is a skewed ratio

L’Oréal operates strict brand segmentation across its portfolio to retain its exclusive brand identity. For each of its brands L’Oréal maintains distinct retailing channels to keep its brand image intact. Its premium ranges Lancôme and Yves Saint Laurent are marketed through department stores. Its mid- and lower-tier mass brands L’Oréal Paris and Garniershare the same retailing space in Western markets but the distinctions are made on the basis of price and product offerings.

The economic downturn necessitated L’Oréal to use its brand portfolio carefully to exploit any growth potential.

For premium and mid-tier brands, it launched more targeted products whereas for mass brands such as Garnier the focus has been on multifunctionality.

Lancôme L'Oréal Paris Maybelline Hair care Natural/organic

category Clarisonic

Lancôme for global market growth in premium cosmetics

Yves Saint Lauren, Shu Uemura and Ralph Lauren are mostly present in Western Europe, Latin America with the majority of its sales emerging from premium fragrances. Lancôme has performed well in Asia Pacific, notably in China and Vietnam, driven by the brand’s strong reputation across the world. L'Oréal uses Lancôme to help drive global growth Lancôme will be L’Oréal’s leading premium cosmetics brand operating across skin care, color cosmetics and fragrances although skin care and color cosmetics form the majority of its global sales. .

L'Oréal Paris focusing on hair care and skin care In recent years, the brand’s focus is gradually gearing away from color cosmetics to focus more on hair care and skin care. In 2011, L'Oréal Paris experienced the highest absolute growth in hair care in comparison to all its other categories. L'Oréal Paris operates across a number of categories, but its key categories are hair care, skin care and color cosmetics.

Maybelline cannibalizes L'Oréal Paris’ color cosmetics shareMaybelline’s more affordable price points also made it popular with consumers in both developed and emerging markets. In recent years, the parent company, L'Oréal, has been using Maybelline to drive growth in color. Apart from the fact that Maybelline is an affordable brand, which is a key factor motivating consumer purchase at times of economic austerity, Maybelline developed as a color cosmetics brand while L'Oréal Paris was originally a hair care brand. Consequently, consumers associate Maybelline with color cosmetics and L'OréalParis with hair care. Focusing on the brands’ core portfolios allowed the brands to retain their identities more closely.

Develop hair care paceHair care in Vietnam is becoming a key reason for the drop in L'Oréal beauty and personal care market share globally. Hair care is one of its key categories, but the pace has dropped as L'Oréal focused on other categories such as skin care. It faces competitive challenges from Henkel, Unilever and Procter & Gamble in developed markets and has the option of tapping into retail channels through salon hair brands.

Growth potential in natural/organic category

L'Oréal lost market share to Beiersdorf which gained share through Nivea Pure and Natural. L'Oréal has done well to expand The Body Shop in emerging markets but has yet to tap into Vietnamese market natural/organic category. L'Oréal should take advantage of growth opportunities in the natural/organic category in developed markets.

Introduce Clarisonic in VietnamL'Oréal has been driving sales growth of Clarisonic primarily in the US and recently launched it in France.Consider launching it in Vietnam given Vietnamese consumers increasing affordability and preoccupation with skin care. The brand is available on a number of websites although there are doubts about its authenticity. Nevertheless, Clarisonic has received rave reviews, indicating a good market opportunity.