Marketing of LOreal - Research Paper Example

? Marketing Report Executive Summary As the cosmetic industry enters the second decade of the 21st century, the industry confronted significant growth opportunities in developing countries. The revenue generated from this industry is estimated to be around $197billion (Taylor, Archibong, et.al, 2011, p.4). The present study deals with the issue of the cosmetic industry with respect to consumer behaviour. The company chosen for this project is L’Oreal, one of the renowned brands in cosmetic industry. The issue that was encountered was of consumer purchase decision, the process that they go through before purchasing a product. If the products are not presented accordingly to their needs there might be a shift towards other brands and products. Another important issue concerning the cosmetic industry is of misleading advertisements, L’Oreal two of its advertisement were banned as they were against the code of conduct and leads to purchase decision criteria of consumers. The solutions to these issues were through identifying the needs of the consumers and producing products, generating awareness through promotional tools and alternatively changing the marketing mix according to the needs and wants of the consumers. By conducting a research the consumer’s behaviour could be monitored their liking towards a brand, the reason for their preference and what different features they want in their brand. This would help the marketer to know about the taste and preference of the consumers and can work accordingly. One of the drawbacks that lead L’Oreal lose its market share was the misleading advertisement, thus to avoid such loses L’Oreal could endorse someone who actually is blessed with good skin and hair. Thus there would not raise a need to use artificial extensions and lastly in order to stay ahead the company needs to keep on innovating new products. Henceforth, L’Oreal can launch new product that would take care of the hands and feet of the consumer. Contents Contents 3 Introduction 4 Issue and problem 4 Analysis and Application 8 Psychological factors 8 Consumer Decision Making 10 Marketing mix 12 Recommendation 13 Reference 15 Introduction For more than centuries, L’Oreal has invented beauty and has met with the aspirations of millions of women and men. L’Oreal aims in offering the best quality of cosmetic along with safety and efficacy to everyone who wants to access to beauty (L’Oreal, 2011). L’Oreal is the largest cosmetic company, it had transformed from being a French company into a global renowned business in sectors like skin, cosmetics and hair care. The company was founded in the year 1953 as Cosmair, Inc. In spite of its origin from France, the company is French only when the need arises else it’s satisfied being Asian, African or anything that accounts to sales (Noel, 2008, p.48). The company is committed in carrying out the mission who is to make beauty universal in a way that would be sustainable and responsible. It is ranked among the top 100 ethical and sustainable companies globally (L’Oreal, 2011). The company has about 23 global brands in around 130 companies with 66, 600 employees. The brands annual sales turn up to be more than 50 million Euros. Some of the consumer products of L’Oreal are L’Oreal Paris, Garnier, Maybelline New York, soft sheen Carson to name a few. The brand has its presence felt globally and has been well accepted by the people. Issue and problem Consumer behaviour reflects the decision made by the consumer with the consumption, disposition and acquisition of goods, services and ideas (Hoyer, Macinnis & Dasgupta, 2008, p.4). In today’s context consumer behaviour has become extremely important for marketing decisions in deciding upon the marketing mix elements, segmentation or in exploring new ideas with the change in the environment. The luxury and leisure market such as for shampoos and creams have boomed in recent times. With a change in psychographic and lifestyle of the people, there has been a shift in the habits of the consumers. More and more amount of consumers is willing to spend on luxury and leisure and L’Oreal being a luxury brand, there has been a frequent increase in the demand. Thus the brand has been catering to the world as such. The elements of marketing mix need to be changed to fit the behaviours of the consumers. The marketing mix involves the product, price place and promotion. The company should keep on inventing new commercial advertise which would relate and keep the consumers informed about the brand. In case of absence of such measure the company might lose its customers. L’Oreal has been experimenting with its marketing mix to suit the need and preference of the consumers across the world. Recently it has customised its marketing mix for consumers residing in Middle East. Another important concept in consumer behaviour is the purchase decision is influenced by the psychological process of a consumer. It involves various psychological factors such as motivation, perception, attitude and personality. The selection of brand involves the features offered by the product, price and emotional appeal by the brand. If the brand does not meet these factors they may switch to other products and brands causing customer disloyalty for the brand. But consumer behaviour helps in linking the four aspects so that proper marketing strategies are formulated (Ramesh, 2008, p.2). The different factors that are associated with consumer behaviour are shown in Figure 1: Figure 1: Consumer Behaviour (Source: Ramesh, 2008, p.2). Consumer behaviour acts as problem solving in topics related to marketing issues. The marketers view the consumers as conscious problem solver, to satisfy their wants and needs. The consumers take thoughtful and reasoned actions to find solutions which would satisfy their needs and demands. Consumer buy solutions to their problems they do not buy products. For example, when a woman buys perfume, she has purchased hope along with the bottle of perfume. The first step is the problem recognition, which arises from unsolved problem of consumers, their needs and wants. The changes arises from a new product available in the market, change in taste and preference with coming up of more fashionable brands and also from external stimuli such as the aroma from the bakery or pizzeria. The marketing tools act as a problem solving tool during the problem recognition stage (Lantos, 2010, p.108). Advertisements are a primary tool for the marketers to develop consumer value in their brands. The brands deliver choice, confidence, innovation, and consumer value; this in turn reflects the brand assets and leads to the success of the brand. Advertisement is a tool of competition which puts the consumers in charge. Advertisement creates awareness, it communicates the brands attributes and benefits in both rational and emotional way, it ensures top of mind awareness which generates repeat purchase of the brand (ISBA, 2004, p.2). L’Oreal the world’s largest cosmetic company also promoted its product by way of advertising. One of its famous slogan states ‘because we are worth it’. This slogan motivates the psychology of consumers and they can relate themselves with the brand. L’Oreal deals in variety of cosmetic products ranging from skin care to hair care for both the genders. Advertisement influences the behaviour and the purchase pattern of the consumers. In one of the advertisements of L’Oreal for its sub brand, L’Oreal Paris depicts the purchase decision as the advertisement sends a message that using the Elseve nutri gloss, which contains protein and parley would make the hair glow and soft and shinny. The spokesperson for this advertisement was Freida Pinto. Being an actress she could very well relate with the targeted audience. L’Oreal takes on famous personality and actresses of all age groups because famous personalities enable individuals to relate with their lives, that they can look as beautiful and good as the actresses and ensures higher sales for the product. The brand has gained positive as well as negative appreciation from the consumers. Some of its advertisement has been banned and drawn criticism for the brand. The ‘L’Oreal Elvive Full Restore 5’ shampoo and conditioner has reported drawn criticism from UK. The reason being the woman in the commercial has been wearing expensive hair extension which had cost up to 1000 pounds, thus it is not possible to obtain the same look by applying the shampoo (The illusionists, 2011). Analysis and Application The core concepts in which the behaviour of the consumers revolve around includes the psychological factors, consumer decision making, group concept, marketing mix and culture. All these factors together influence the consumer. The psychological factors include motivation, experience, perception and beliefs and attitudes. Psychological factors Motivation is usually an internal feeling which influences a person to buy certain products to satisfy his or her needs. It is defined as psychological needs that determine the person behaviour and the level of effort put in by the consumer (Majumdar, 2010, p.25). In case of L’Oreal, the company has already created a mindset among the consumers of being a premium brand of skincare and hair products. With the erg to look good, the consumers are trying the products and the company according to their requirements keeps on inventing new products that would suit the taste and preference. L’Oreal has launched many products that satisfies the needs of the consumers such as shampoos , conditioners, creams like anti ageing, anti wrinkles, men deodorant to name a few. For example, consumers tend to purchase products which are not required as of that particular point, but they purchase it because they have a thinking that the product would make them feel good and better. For instance, a teenage girl purchasing hair colour of L’Oreal which might not be used by her at that point of time but it makes her feel good. Perception is related to concepts like feel touch and smell. A consumer develops perception based on the experience that people had with the brand and also of any knowledge that the consumers may have gained from others. L’Oreal deals in consumer product and the people usually go with their perception before purchasing the products. The touch and feel concepts arises before purchasing. All the advertisements of L’Oreal are depicted by way of touch and feel concepts. The company endorses celebrities who connects with the people and ensures to have a skin or hair like them. The knowledge or any information regarding the product is highly influenced by the company. By providing current information and distributing free samples the company can manipulate the image of the product. This is often practised when the company wants to introduce anything new or completely change the image for that particular product. For example L’Oreal advertises that they cost a bit more because they are worth it (Lantos, 2010, p.420). Thus, this influence the consumers to certain extend. A consumer can have a positive or a negative feeling for a product. This may due to their personal experience or with interaction with other people using the product. The markets can therefore use this as an advantage by customizing the product according to the requirements of the consumers. L’Oreal has positioned itself as a premium product which takes care of skin and hair and conveys a message to its consumers that they are worth it. The consumer believes that L’Oreal would help them in getting the kind of skin and hair they urge for and in addition to it a felling of happiness (Majumdar, 2010, p.27). Consumer Decision Making While deciding upon the products there are often individuals who plays important role in the purchase decision. Sometimes an individual can play more than a role in decision making. The roles are of Initiator, Influencer, decider, buyer and the user. After deciding upon the role of the consumer, the next step is the decision making process which is considered to be the most important factor (Saxena, 2005, p.163). The decision making process is shown in the following figure: Figure 1: Consumer decision making process (Source: Jobber, 2009, p.61). The first step is the need recognition stage, which gives number of implications to the marketers. The marketers must be aware of the needs demanded by the consumers and also the problem faced by them. For instance spot a new trend that the consumers are following. The managers must be aware that need arises due to stimulation; proper advertising campaigns may act as a tool for need arousal. L’Oreal has fairly succeeded as they were able to spot the tread of colouring the hair, thus they introduced hair colour, glossy colour and excellence cream. These two products got a positive feedback. But the problem was that the consumers needed something which could further protect their hair colour. Thus L’Oreal came up with L’Oreal colour protect shampoo and conditioner (L’Oreal, 2011). Therefore the company was able to recognise the needs of the consumer and even better solve it. The next step is information search, where a consumer is inclined to search more information about the product. This helps them in learning more about the competing brand and the total set available in the market. After a detailed search, consumers evaluate the alternative available in the market. They compare and contrast and finally make a choice. In this process the consumer is satisfying the needs; they are looking for benefits or solutions to their problems. Purchase decisions made by the consumer are based on the brand name, quantity, dealer, timing and mode of payment. But everyday purchase decision does not involve all the sub sections. Consumer purchasing consumer goods goes for the brand name along with performance. L’Oreal has a huge brand name and because of new innovations, the brand has achieved global success. The post purchase stage is very important, the marketer must keep on monitoring the satisfaction level of the consumer and then communicates certain evaluation and beliefs which would reinforce the customer’s choice and make them feel positive about the brand. L’Oreal has been able to define the consumer decision making process by portraying what the consumer’s wants through their promotional tool, and that is advertisements. The brand is endorsed by many well renowned actress and models like Beyonce, Frieda Pinto, Aishwariya Rai, Jenifer Aniston to name a few. The reason for choosing them was these actresses being well known could easily relate with the customers and would help in their decision making process. L’Oreal has launched a new anti wrinkle cream eye cream, Revita Lift which has targeted the people within the age of 28 and above. The consumer demands for a product which would make them look good and young were well captured by L’Oreal. Though it was not the first company to launch such a cream, but they assured that the cream has been validated by scientific research (L’Oreal-a. 2011). The advertisement starts by a spokesperson saying that there is no single step to tackle wrinkles, sagging and puffiness of the eyes, but L’Oreal has come up with a new cream which fights the signs of ageing and that is L’Oreal’s 2 step Revilalift double eye lift. The white cream needs to be applied beneath the eye and the red gel above the eye to give the eyes a smooth look and would lift the eye within an hour. This influences the customer to use the product and makes them believe that the product is worth buying as it would definitely deliver results. Marketing mix Marketing mix refers to a unique blend of product, price, place and promotion designed to satisfy the target group. The four components must be blended tighter to get the optimal result (Lamb, Hair & McDaniel, 2011, p.47). L’Oreal has successfully catered to the demands of the consumer by changing its marketing mix. It has tailored it product to meet the needs of the African Americans and has launched its True Match line of cosmetics which is designed to meet all the skin tones. The company understands the diversity of pigmentation not only for ethic group but also within themselves (Kotler, 1972, p.147). Recommendation L’Oreal being a global brand, its presence has been felt around the globe. The company has tasted success and is ranked among the top cosmetic brands all over the world. The company has been able to tackle the needs of the consumers by way of motivating them to buy the products. This has been portrayed by the spokesperson in the advertisements. The consumer tends to believe the advertisement and go on buying the product. But some of its advertisements are also misleading. The advertisement of L’Oreal Elvive Full Restore 5’ shampoo and conditioner which has been banned as it was found out that the model was wearing a artificial hair extension. This advertisement was banned as it misleads its customers. Therefore the company should not portray any of its products which might mislead its potential customers. The consumers buy the product because they have generated a trust and feeling for the brand. If L’Oreal has to maintain the loyalty of its consumers it needs to act accordingly. There are many upcoming models that are blessed with real good hair, L’Oreal can therefore make them endorse the brands and stay away from the critics. When it comes to the decision process of the consumers, L’Oreal needs to position itself differently from its competitors. There is a huge rivalry among competitors such as Olay, Neiva etc. Also the company should try to minimize the chance of cannibalization between its core products Garnier and L’Oreal. While making the choice the consumer can easily switch over its competitors product. Thus L’Oreal can keep on inventing new products which would suit the consumer’s preferences and demand. L’Oreal can introduce new product range which would take care of the hands, would make the figures and nails shinny and soft. With every addition in the portfolio the demand for the brand increases (Stark, 2011, p.111). Apart from the misleading advertisements and competition from other brands, L’Oreal has fairly succeeded in convincing the consumers for choosing its product; it has been ranked number 1 in the beauty top 100 ranking by WWD Beauty Inc (L’Oreal-b, 2011). Reference Hoyer, W.D. Macinnis, D.J. & Dasgupta, P. (2008). Consumer behaviour, 2008 edition. Dreamtech Press. ISBA. (2004). Advertising and consumer behaviour. Retrieved on November 4, 2011 from www.isba.org.uk/isba/filegrab/Advertising-and-consumer behaviour.pdf?ref%3D33+advertisements+that+depict+a+particular+consumer+behaviour&hl. Jobber, D. (2009). Foundations of Marketing 2E. Tata McGraw-Hill Education. Kotler, P. (1972). Marketing-management. Pearson Education India. L’Oreal. (2011). Hair colour. Retrieved on November 5, 2011 from http://www.lorealparis.co.in/_en/_in/home/index.aspx. L’Oreal-a. (2011). Brands. Retrieved on November 5, 2011 from http://www.loreal.com/_en/_ww/index.aspx?direct1=00003&direct2=00003/00001. L’Oreal-b. (2011). News and events. Retrieved on November 5, 2011 from http://www.loreal-finance.com/eng/news/wwd-beauty-inc-top-100-loreal-ranked-number-1-775.htm. Lamb, C.W. Hair, J.F. & McDaniel, C. (2011). Essentials of Marketing. Cengage Learning. Lantos, G.P. (2010). Consumer Behaviour in Action: Real-Life Applications for Marketing Managers. M.E. Sharpe. Majumdar, R. (2010). Consumer Behaviour: Insights from Indian Market. PHI Learning Pvt. Ltd. Noel, H. (2006). Consumer behaviour. AVA Publishing. Ramesh. K. (2008). Conceptual Issues in Consumer Behaviour the Indian Context. Pearson Education India. Saxena, R. (2005). Marketing Management. Tata McGraw-Hill Education. Stark. J. (2011). Product Lifecycle Management: 21st Century Paradigm for Product Realisation. Springer. Taylor, M.L. Archibong, C.A. et.al. (2011). The Twenty-First's Second Decade-Whither the Beauty Industry. Retrieved on November 5, 2011 from http://midwestacademy.org/proceedings/2011/CASE-Taylor-1.pdf. The Illusionists. (2011). yet another misleading ad by L’Oreal. Retrieved on November 4, 2011 from http://theillusionists.org/?p=592. Read More