Global Brand Management Strategies - Case Study Example

Running Head: Case Study, Marketing Q1. Global Brand Management strategies According to the Euro monitor International,L’Oreal is making frequent and huge strides in the business world. It has become an indomitable giant in the industry. For example, in the year 2012, it recorded an exceeding growth of 10% nominal terms and a 5% organic terms; the company has been growing tremendously because of the strategies it has adopted in the market. Some of its major competitors like Procter & Gamble have continuously chased L’Oreal to no avail. This France based giant has enjoyed major and huge bonuses from its well articulated market strategies and qualitative leadership (Kazmi 2007). L’Oreal has managed to penetrate the market deeper because of the strength of its brand. Mostly, it is its association with top models and proper marketing that has aided the company to fly high. Amid strong competitive environment, L’Oreal has fully engrossed in one line of product production to achieve quality. Unlike its competitors who have diversified, L’Oreal has only opted to stay fixed to one line of production. Branding is a major asset of a company and through it; a company can either achieve market or financial advantage (Jayachandran 2004). A brand can be defined as a name which influences buyers. Throughout its entire period in the market L’Oreal has managed to grab the attention of customers. At the display of its products customers are easily evoked to make a purchase. L’Oreal has adopted a method of saliency, differentiation and intensity to market its products globally. Being an attention driven economy brand campaign is a requirement, bringing to the fore the major attributes of the product aids the sale of that product; these are the mechanisms which L’Oreal has incorporated in its strategy (Cant 2006). L’Oreal’s brand has been a certitude and risk reducer in the market. Each moment a customer comes across these products they feel contended about the quality and use of them. L’Oreal’s product images portray a quality and functional product which is essentially attractive in the eyes of the customers. It is these appealing techniques which have spurred the growth of this company. A clear observation at the taglines of the company is a sign that its planning mechanisms are up to date; ‘because you are worth it’. These Cathy taglines are what pull customers continually to remain loyal in the company’s products. It gives a sense of caring and concern to customers in the market (Little & Marandi 2003) The logo chosen by the company is a simple and easily interpreted figure. It captures the name of the company which means it is not easily forgotten. From a distance someone can notice the name L’Oreal displayed on the logo. It’s a clear form of advertisement of the company which imparts positively on its brand system. In addition to these aspects is the messaging criteria, a company which observes contact with the customers is often deemed to succeed no matter what. Basically it is the customers who determine the direction of growth of any company. Management in L’Oreal has always observed special occasions like Easter, Christmas and Ramadan sending messages of encouragement and participation (Haberer 2010). When it comes to identification of future markets, L’Oreal is a step ahead of its competitors. With the use of its powerful brands the company has extended to enchanted territories. La Roche-Posay and Vichy which are the major brands of the company in France have done tremendous coverage in the country. For example between 2008 and 2012 these two brands recorded a growth rate of 17% and 31% in that order. At times in the current competitive market efficacy can be major stepping stone which aims to spearhead growth through dermatology by the use of aligned products which enjoy more credibility than other products. L’Oreal has also over time considered a move to extend over its market to the US by the purchase of Clarisonic. By buying this device the company is fostering to strengthen its brand further. It is also evident that this device grew at a rate of 50% in volumes over the years till 2012. In addition, L’Oreal acquired the US based Urban Decay which has filled a major gap in its portfolio for a different color combination of cosmetics which specifically targets the youth and the aspiring consumers in the market (Bowman & Gatignon 2010). Garnier brand in China is another branding example adopted by L’Oreal, a keen observation of the company will depict how strategic it has developed over time. Its major weapon is the branding mechanism it adopts to outdo its competitors. Besides branding there lie other factors which add up to facilitate its branding techniques. Promotion is one key aspect in marketing mix which has seen the growth of this brand. For the past 40 years the company has been operational in the market it has tried hard to build on its image. Generally it’s the company’s image which will attract customers and at the same time maintain old customers. For a brand to succeed in the market, management has to understand the needs of the users and their specific wants. For example, trendy individuals will tend to invest more on quality and appealing brands as compared to just other common users (Codita 2011). Q2. Brand Acquisition Brand acquisition can either be friendly or hostile depending on the circumstances which surround the process. In a friendly acquisition, managers of the target firm will welcome the approach or seek it out. But in others which can be termed as hostile, the acquiring firm offers a higher price than the target company’s price hence stakeholders are asked to buy or tender for shares at that price (Wenderoth 2009). By purchase of existing brands L’Oreal is able to avoid unnecessary costs. Such costs of initial advertisements are drastically reduced because the existing brand was well known in the market. Typically it is a measure to reduce the initial installation costs which may accrue to a fresh starting brand in a new market. This tactic has helped L’Oreal to acquire resources very fast as compared to if it could have contemplated on initializing its own platform. In addition L’Oreal is able to cut back the risks associated with it starting in a new market. Often times new markets can be a challenge to pursue with established competitors in that very market. Through this mechanism L’Oreal is able to gain synergic benefits in the market. At the same time competition decreases. The purchase of existing brands which may be the only source of competition is a brilliant move to be adopted by management. By purchase of different brands for example the US based Urban Decay has helped this company to trudge new markets without intense competition. L’Oreal is able to make effectively in the US because of the least impact of competition in the country. More importantly purchase of a brand increases market share. Watching L’Oreal grow over years is because of its operative capabilities. The company has possessed numerous small companies which add up to its huge empire (Okonkwo 2007). L’Oreal has been able to reduce the risk of competitive reaction. The purchase of brands in many countries has enabled the country to enter those markets easily without the numerous barriers which exists. Also brand acquisition brings with it financial gains which is characterized by a number of wide collection centers. It means that the company will be able to achieve stability if it spreads its wings further. Growth simply means expansion of the company’s assets Acquisition will definitely spur stakeholder’s expectations and facilitate mergers. It is a positive approach to initiate brand acquisition has it has profound advantages. However on the contrary there lie a number of disadvantages on acquisition as compared to initializing a personal business. Integration of the business with the acquired organization may be a problem. It may in tern be faced with opposition from either the employees or the stakeholders (Vaid 2003). There may be higher costs incurred in the acquisition process this is best demonstrated in the forced acquisition. This high cost acquisition may not bring forth the intended profit to the organization; it becomes a challenge to maintain such business. There may also be financial consequences as the returns will not be the same as the expected output (Spiller & Bergner, 2011). However, with L’Oreal over time gone into an acquisition spree, it has recorded significant improvements in growth. For example, the acquisition of’ The Body Shop’ was a major consolidation strategy which established a significant impact in the company’s growth. It is also evident that The Body Shop acquisition was a strategy to geographical expansion. A framework which opened up the underdeveloped regions to L’Oreal’s products and services; it was all about market positioning a strategy which has always worked in favor of L’Oreal. Q3. (A). Positioning Strategy Success of L’Oreal is mostly attributed to its full investments in research and development; it has laid a lot of emphasis in exploitation of new trends. This company spends approximately 3-4% of its profit on research and development. It is tremendous steps which have seen this company come up with new brands on a regular basis. For example, hair decolorize, shampoo without soap, hair color and Episkin among numerous other products. Galderma laboratories which have been founded in collaboration with Nestle Company are the source of all this new brands which are trending in the market. Market positioning is essentially determined by the nature of the products produced (Wreden 2007). L’Oreal has incorporated services of hair salons as distribution channels of its products. With the huge number of salons in the world means that there will be numerous distribution centers hence market access strategy. In these salons there are both technical and professional products which are sold to customers. A salon technique of distribution is basically an important attribute which allows professionals who concentrate on a particular product have access to it. Salon growth has immensely helped L’Oreal to adequately position itself in the market. Growth of salons is dependent on the frequency of customer visits; this can be achieved by acquisition of new customers and ensuring that the current customers visit more frequently. L’Oreal has established categories of products which are the major mechanisms through which it can easily penetrate the market. Consumer products; this division is dedicated to offering high technical products to the consumers at competitive prices via mass marketing or retailing shops. In this division we have products like; hair care, skincare, make ups and perfumes which are capable to meet the standards of the consumers. Some of the division 5 brands are Garnier, Maybelline New York, soft sheen, Carson and Le Club des Créateurs de Beauté (Roscam 2010). Professional products; this section of the brands is made up of professional saloons specifications and it encompasses; LOréal Professional, Kérastase, Redken 5th Avenue NYC and Matrix. Finally there is a division of luxury products which offers consumers top range products. It is basically based on selective approach where the trendy groups of people are able to satisfy their needs and wants. Some of the products in this class include; Giorgio Armani, Ralph Lauren, Cacharel, Paloma Picasso and Guy Laroche. These products are however housed by selective stores in the market. By diversification of its products L’Oreal Company is able to strategically position itself in the market amid intense competition (Bowman & Gatignon, 2010). Jones has also come up with a method to improve the social responsibility of the company. UNESCO and L’Oreal company signed an understanding on how they will work together to prevent the spread of HIV AIDS in the society. Another important scenario where L’Oreal has traversed is the commitment of serving the disadvantaged in the society. It brought up the campaign Look Good Feel Better. This was a program which was designed to help the needy in the society. It was an initiative which was driven towards helping cancer victims by conveying skin care products and make ups (Codita 2011). After the mass destruction in India, L’Oreal was at the forefront to offer relief to those who were affected. In 1998 L’Oreal championed the formation of L’ORÉAL-UNESCO FOR WOMEN IN SCIENCE award. It can be illustrated that social responsibility is one aspect which has ensured market positioning of L’Oreal. Without recognition from the society a company will never be able to attract sales. It all starts from the background before realization of profits. L’Oreal brands in Czech Republic are the highly priced products as compared to competitors like Wella which has a significantly lower price on its products. For example, Kérastase is an exclusive brand which is positioned for the highest demand in the market. Redken is the second most expensive products which is in the Czech market and lastly is the L’Oreal’s professional brand (Haberer 2010). By the division of its products into categories the company is able to adequately manage its competitors and at the same time control wars between itself. If the company was not able to lay a clear boundary among its products then there could raise a situation where each product is fighting for superiority. However, with Jones’s agility and understanding of market concept he developed a framework which segregates the products into different consumer preferences. Q3. (B). Multi-Branding Strategy Brand competition is a major strategy adopted by L’Oreal in its market strategy. Multi-brand strategy offers economies of scale to companies it is a way by which a company will take advantage of the different markets in geographical disparities. For example, investing in US may not be the same as in France. Thus, L’Oreal had to apply this mechanism of multi-brand in order to target specific markets cross the world (Little & Marandi 2003) L’Oreal has acquired a huge operating space because of multi-branding techniques. It has been able to access higher markets which it could not have stepped if it was operating under one brand name. Its global impact is accelerated by the fact that people within the trading localities associate the products to their own culture because of the brand name. Unlike Proctor & Gamble which has diversified its production techniques L’Oreal has only rebranded its products to suit a given market segment (Kazmi 2007). By promoting its products under different brand names the company is able to fill price gaps and quality inequalities. It is the best approach which is capable of ensuring that the products sale or no gap exists in the market. The market essentially becomes saturated with products from the same company and competitor penetration becomes hard. It pushes away prospective competitors as this saturation of same product becomes a hard nut to crack or the introduction of a new brand in such circumstance is hard to achieve. In any market there exist brand switchers who will want to adopt or at least use each brand ones in a while. By adopting multi-brand strategy L’Oreal was able to take into considerations the demands of such people in the society. Also multi-brand facilitates management of the company. With this adoption there is a high degree of internal competition thus management will have to operative effectively towards organizational goals (Vaid 2003). On most instances multi brand strategy depends on the success of the first brand to be produced. If the first brand was never successful then multi-brand will never be a good choice. However, if the initial brand was successful then a second brand can be developed without causing much expense. This is the strategic approach adopted by L’Oreal in branding techniques. The greatest hindrance to effective multi-branding is the poor management system in an organization. L’Oreal has succeeded in its endeavors on multi-branding because it has taken responsibility and strengthened its management capabilities (Wreden 2007). Conclusion L’Oreal is a global giant which has demonstrated management techniques which should be borrowed by other companies. The company’s success lies in its strategies which are adopted by management. A good management plan will open up the gates to cash inflow and brand recognition across the market. Management of any company ought to take a clear decision making approach to ensure that all critical aspects are addressed. Marketing is the second core aspect of an organization. No company will stay in the market if it fails to make sales; marketing mix variables should be applied tactically. References Bowman, D., & Gatignon, H. 2010. Market response and marketing mix models: trends and research opportunities. Boston, now. Cant, M. 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