Product Development of LOreal - Assignment Example

Why is new product development so important for a company like L'Oreal' L'Oreal is influential member of the cosmetic industry. The brand has global recognition and is spread over all the seven continents. The brand is popular among the masses irrespective of their economic, cultural, social and ethnic affiliation. The foremost objective of the L'Oreal is economic success through market capitalization. The entire team of the company is committed towards attaining significant market share and secure financial interest for the company. The company has specific values attached to its policy, which are endorsed by both, the management and employees. L'Oreal has been successful in the establishment of healthy professional environment, where the employees have the feeling of ownership, responsibility and accountability; all employees are observed investing significant efforts for the attainment of professional goals; the professional objective of the company has been realised as personal ambition by the employees. L'Oreal is involved in consumer driven products especially the cosmetic products which is considered to be neat business. Irrespective of the nature of the business, the company is committed towards its moral and ethical responsibilities. The objective of the company is to represent itself as "global citizen". The company has pursued reforms and plans to achieve sustainable development; the company was recognised as top 100 sustainable companies in an international survey by Innovest and Corporate Knights. The company has received several acclamations; it has been listed among the leading ethical companies and is committed towards sustainable investment indices. The company has evaluated its business opportunities, and has mitigated the economic risks and challenges of governance. L'Oreal took major initiative by committing itself towards corporate social responsibility; the company is the signatory of French Union of Advertisers' Charter (Sustainable Development Report, 2007). The company has launched L'Oreal Corporate Foundation; this foundation has taken significant initiatives for the promotion of education and healthcare. The foundation was launched with an initial budget of '40 million for a period of five years. The company has been signatory of Bali Communiqu'; and has therefore undertaken measures towards carbon-dioxide emission reduction and water conservation (Sustainable Development Report, 2007). The precise introduction in actual interprets the product development strategy of the company. Cosmetic industry is regarded as challenging market with several local and foreign brands; therefore the brand is always in tough position to achieve market shares in countries where people with conservative approach survive. L'Oreal has realised that through international label it will never achieve market shares, rather for securing shares in distinct cultural society the company has to initially personify traditional approach. The initiatives undertaken by the company in social, educational and healthcare sector is an attempt to seek acceptance among the distinct. The packaging of the cosmetic product is another crucial area to ensure and achieve product development. The packaging of the cosmetic products as per customer-specific requirements has influenced the product development strategy of the company. The core of the product development scheme is to achieve the customer satisfaction, and in special cases it has been to direct the customer towards certain revelations for the improvement of living standards. The company has taken initiatives to ensure that manufacturing of the products includes environmental friendly items, and the recyclable items have been given ample focus. The major drift towards the environmental aspects by the company has been with intent to secure acceptance among masses. The new and refine version of product development has brought laurels and success for the company. What are the potential risks of launching up to 200 products a year into global markets' The company has introduced several distinct brands with challenge to achieve substantial market share. The market shares can be secured once the company has been able to bring novelty in its product. The count of products is irrelevant if all such products are distinct and novel; above all it is the company which has to make the customer realise about the necessity of the brand. The advertisement campaign pursued by the company will positively influence the sales and market share of the company; irrespective of the number of items. From the manufacturing and governance aspect, indeed the product of 200distinct items is serious challenge for the company, however the risks pertaining to the launch and distribution of as many as 200products can be averted through recruitment of capable human resource. L'Oreal has to confirm that it is able to confirm "good commercial potential" for each product prior to launch (Brassington, 2006). The criteria for the good commercial product are based upon the application and usage of the product by the customer; thus once the company is able to confirm the potential of the product then count of product is insignificant. The marketing of these products can ensure success of the brands, but it is difficult to confirm the extent of success. The marketing campaign causes millions of dollar against a return which is difficult to predict. From critical perspective, the success of the brand can be only confirmed upon "value creation for which customer is prepared to pay" (Brassington, 2006). Once the customer realises and accepts the value of the item, then the success of the product is definite. The challenge for L'Oreal is to confirm it has been able to create value of each product out of total 200products among the masses. The potential risk for the market in the midst of the economic recession is the empty pockets of the customers. The launch of so many different products in the market will certainly receive lukewarm response from the customers due to their limited purchasing capacity. L'Oreal shall essentially adopt cautious approach prior to the launch of the product in the market. It is essential for the company to launch prototype of the product among limited customers as trail run, and based upon final results the full-scale launch of these products shall be planned. The risks for the company further includes that the failure of single brand item will overall affect the credibility of the entire company; a failure or non-acceptance of single item will naturally repel the masses from other products, and once the confidence of the customer is shattered it is nearly impossible to develop trust. The company has to therefore carefully revise its product and its acceptance in the market prior to major launch. References 1. L'Oreal 2007 Sustainable Development Report. Corporate Communications and External Affairs Division of L'Or'al Group. June 2007. 2. Brassington, F. and Pettitt, S. Principles of Marketing. Prentice Hall. 2006. Read More