28-04-2014, 12:27 PM
L’Oréal Marketing Strategies in India
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INTRODUCTION
Before the facial cosmetics, L’Oreal was known as a hair-color formula developed by French chemist Eugene Schueller in 1907. It was then known as”Aureole”. Schueller formulated and manufactured his own productswhich were sold to Parisian hairdressers. It was only in 1909 that Schueller registered his company as “Societe Francaise de Teintures Inoffensives pour Cheveus,”the future L’Oreal. Scheuller began exporting his products, which was then limited to hair-coloring products. There were 3 chemists employed in 1920. In 1950, the research teams increased to 100 and reached 1,000 by 1984. Today, research teams are numbered to 2,000 and are still expected to increase in the near future. Through agents and consignments, Scheuller further distributed his products in the United States of America, South America, Russia and the Far East. The L’Oreal Group is present worldwide through its subsidiaries and agents. L’Oreal started to expand its products from hair-color to other cleansing and beauty products. The L’Oreal Group today markets over 500 brands and more than 2,000 products in the various sectors of the beauty business. Such includes hair colors, permanents, styling aids, body and skincare, cleansers and fragrances. Indeed, the L’Oreal Group has reached the peak that all cosmetic brands sought after.
When it First Entered the Market
Gender Segmentation: L’Oreal first segmented the population into the different sexes as they thought their products’ “combination of low price and natural ingredients would fit India’s market, where women use plants and herbs as part of their beauty culture”. Their product specifically catered to the women of India, though later our group discusses how it should carve a niche market for itself in the Men’s sector as well.
Income Segmentation: L’Oreal segmented the market into 2 main segments: the poorer masses and the rest. It marketed its product as low in cost to attract the poorer masses, and her efforts in reducing ingredients to cut price reveals her aim to minimize costs as much as possible. At this point of time, it was not yet targeting the affluent middle class or upper class and thus did not make any distinct segmentation of the richer classes, preferring to regard them as a whole entity.
The “L’Oreal Makeover”
After a poor start, L’Oreal approached the market with a different concept. Presence of home brands posed problems as they had already captured a large proportion of the masses’ market share. They offered cheaper products to buyers at a price which L’Oreal was unable to match, and their long presence had established a strong sense of loyalty in the buyers, making it difficult to pry them away. With the understanding that it needed to capture a different market, it proceeded with a different from of segmentation in order to better identify its target segments
Income Segmentation:
This time L’Oreal separated a new segment from the original 2 segments: the quickly rising middle class which was gaining in affluence. This was very specific compared to the original two broad segments it identified as they saw that this was the fastest growing income class that represented a highly untapped market potential due to their radically different mindsets from the masses.
Psychographic Segmentation:
L’Oreal segmented India into different groups based on their thinking and behavior from the older, more conservative Indians who held conservative values of thriftiness more strongly and stubbornly, and the younger more impressionable generation who had developed a very different and westernized view on spending and culture. Influx of brands like Tommy Hilfiger, Benetton and even MTV in 1991 greatly emphasized Western values of luxury, beauty, and self-awareness leading to the rise of a new segment of people who did not view thriftiness with equal importance as their predecessors but were rather more willing to splurge on luxury goods which were previously considered too expensive and wasteful.
Age Segmentation:
By segmenting the market into the younger middle class from the more conservative, often older Indians, it had also inevitably segmented the market based on age, and showed an increased interest in capturing the market share of the younger Indians.