The Marketing Planning of L'Oreal Organisation - Essay Example

 The marketing planning of L’Oreal organisation Marketing & consumer behavior module Abstract This paper examined marketing planning process within L’Oreal Group organization. In this document numerous strategic methods for planning are applied in relation to marketing planning which is defined to state its necessity in organization for better understanding company positioning in the market. Internal and external company environment are also examined to review the conformity of its goals with what is tangibly and intangibly processed to be evaluated in conjunction with its organizational level. 1. Introduction L’Oreal Group is a leading company that markets a wide range of cosmetic products. The corporate products are sub divided well in order to help the company to become an important player in beauty industry across the globe. Notwithstanding the intensity of competition that exists, it is beneficial to analyze the company’s internal and external profile to gain an understanding of its strategic planning process. 2. Discussion 2.1Marketing as an exchange process The term marketing as an exchange process refers to a concentrated term in relation to the marketing concept. It is originally defined as a transaction by which two or more parties offer a benefit or value to others with a view of satisfying their prospective needs. Companies receive a benefit of selling goods through a market which incorporates a wide range of products and services while end-users obtain commodities they desire from the market. Therefore, both parties including the firms and end users/customers gain in this exchange process (Fill and Jamieson, 2011). This can occur in transactional form which means that a consumer buys a particular brand because of self-interest or in form of relational exchange if long term orientation has taken place (Bagoozi, 1978; Houston and Geimer,1978). In case of L’Oreal, it can be seen that the company utilises this concept when conducting its business. The exchange between L’Oreal and its customers result in transactions where the customers buy the products offered and the company gets money. The main goal of L’Oreal is to facilitate and increase its sales transactions through convincing the existing customers and potential customers to purchase its products. As such, it uses the marketing exchange process to assess the trade-offs it needs in order to satisfy its wants and needs, as well as its customer’s wants. L’Oreal’s objective is to create safe and effective quality beauty products for its customers. It is a company that values establishing a strong consumer relationship. Its philosophy and lifestyle is to ensure that its customers are satisfied with its products. Similarly, it is operating in the market with the aim of making profits from its sales. To attain this, it has a cut off profit margin which must be attained or exceeded for it to engage in the marketing exchange with its customers. Again, in an exchange process, L’Oreal aims at obtaining profits. The company utilizes the exchange process to achieve its satisfactory level of reward by minimizing costs and maximizing rewards in its transactions with customers. The company utilizes promotional tools in the exchange process to make its services and products more appealing to customers by offering payment on credit terms, rebates, sales promotions, and other premiums. Through the marketing exchange process, L’Oreal is able to understand its consumers’ internal influences, and how they perceive its brands’ messaging. This way, it is able to respond by ensuring its content is aligned with consumer’s motives. 2.2Marketing plan steps In order to draft a marketing plan, the SOSTAC frame work should be considered below: 1. Conducting marketing audit is a critical review of current business plan which is worthwhile to begin with, since gathering information on products, its consumers and market size and competitors can highlight the desired situation for a company (Malcolm, 1996). By conducting a market audit, a marketer can comprehensively, systematically, independently, and periodically examine the internal marketing goals, external marketing environment, operations, objectives and efficiency. L’Oreal can utilise this strategy in order to scan the market so as to be better positioned to gain a competitive advantage over other players in the same industry. A marketing audit reviews the marketing plan itself, and the internal and external influences on a plan. It allows the marketer to utilize tools such as SWOT analysis, and PEST and Five Forces Analysis and these can also be used to evaluate L’Oreal’s performance. SWOT analysis can be used to reveal L’Oreal’s internal and external environment including its long and short term goals, strengths and weaknesses, its market share, its focus in terms of vision and mission statements. The SWOT analysis for L’Oreal’s reveals competitors (market share, strengths and weaknesses, and market share), and consumers (key demographics: age, social class and age, and value drivers). By conducting the Five Forces Analysis, the marketer can analyze five forces that affect the organization. 2. Setting an objective. The objective set must be SMART; determine a specific goal to be clear, known what is achieved, timing scale accounted to ensure it is realistic and able to be achieved (Subashini, 1996). Defining a company’s objective requires a marketer to have a deliberate thought that can produce lofty goals and objectives (Margaret, 1996). It is important for the marketer to consider what is to be achieved and ensure it is Measurable and Specific. “L’Oreal seeks to achieve 60% market share in the 6th month of business.” This is objective is definitely measurable. However, is it Attainable? It may be attainable, but the resources that the company has will determine the size of the market share that can be attained. Here the marketer has to think about the market maturity and the total available market. And finally, if the objective is Timely? Can it be achieved within the time provided in the plan? A S.M.R.T and huge objective can inspire L’Oreal to greatness. 3. Strategy. After deciding on the objective, the next thing is to think about how L’Oreal will fulfill its objectives. A strategy is a vital because it communicates the gains made from the products by the targeted audience (Subashini, 1996). The company ought to implement the best strategy and this should be a process rather than treated as an event. It is important to take time to evaluate possible strategic directions because the strategy chosen will eventually affect the tactics available and the necessary budge to execute a strategy. The budget depends on both the money available and the objective. For L’Oreal, its competitiveness can be attributed to the strategy it utilizes in its operations. 4. Tactics is a strategic approach to promoting goods to increase sales and results in satisfying consumers and utilizing business resources efficiently by communication tools (Subashini, 1996). The marketer should collaborate with marketing expertise in order to determine what yields the best Return on Investment and invest in investments that yield positive, and measurable results. L’Oreal utilises different tactics in order to appeal to the interests of the customers. 5. Action by gathering resources and utilizing it to accomplish a set of objectives is also very important. This can be done by breaking down strategies and identifications to reach the goal (Subashini, 1996).This is the stage in which the laid down plans are accomplished. Although this stage is among the last on the list of issues to consider in a marketing plan, it is not the least. It is critical to have the right tools, processes and people to accomplish the planned activities to achieve the objective and to support the strategy. L’Oreal uses a proactive approach when conducting its business to ensure that all operations go according to plan. 6. Control which is also known as evaluation stage mainly determines whether the goal has been achieved or not by obtaining feedback through utilizing both formal and informal techniques that can also be used for drawing marketing plans in next coming years. 2.4 Internal and external marketing audit presentation * The external environment can be extracted through PESTEL analysis implementation: PESTEL Analysis of L’OREAL Economic 1. Since 2004, L’Oreal’s profits have almost doubled and its revenue increased by half. In 2013 alone, it had a profit of 17.6%. 2. L’Oreal’s key consumer-products categories are highly sensitive to both global economies of scope and global scale. 3. L’Oreal as a largest cosmetics firm was affected by the 2008 global financial crisis that affected the USA (the largest consumer of L’Oreal’s cosmetic products. The 2008 global financial crisis led to a reduction in its customer’s purchasing power. As a result the L’Oreal products pricing declined. Political 1. L’Oreal is the world’s largest cosmetic company. Since its inception, it has expanded from local to international. 2. The Company recently experienced some legal issues regarding some of their products; the products were regarded as unsafe to use according to European Union policy. The products were said to contain high chemical content with effect on the body and therefore, should be banned. 3. Politically, the challenge to L’Oreal is that it operates in many countries with different leadership styles. It has had to conform to these government leadership styles. 4. L’Oreal has an obligation to produce products that are safe and that have no harmful substances Technology 1. L’Oreal has accumulated scientific knowledge in hair and skin over a century. This has opened the way and made it achieve great innovation 2. Formulation procedures, active ingredients, and evaluation technologies. 3. The advancement of technology is applied within this organization. The progression of innovative approach in formulating products such as Medical imagery, robotics and 3 D are examples of biotechnology implemented to enable researchers to experiment in professional manner. In addition to this, L’Oreal use a technical tool called skin chip sensor to measure the level of skin hydration (organization website). Social 1. The Foundation for Social for Change recognized L’Oreal as the “Leader of Change”. 2. L’Oreal was recognized for its approach to responsible, sustainable and inclusive growth. 3. L’Oreal has been recognized for the creation of positive social impact while at the same time reducing environmental footprint. 4. L’Oreal operational process in developed countries where there is much attitude to educate consumers highly and the investment rate to assure the quality and effectiveness of skincare products is high Legal 1. L’Oreal has legal teams that shed expert light and make important contribution in the making of legal decisions 2. L’Oreal’s mission is aimed at making their business operations legally secure Environment 1. L’Oreal’s environmental concern is the use of environment friendly natural ingredients 2. L’Oreal established and programmed indicators for reporting and measuring group performance in the environment. It has established internal audits. *The internal analysis can be illustrated the 5 MS, SWOT analysis. This can be as flows: 1. The five Ms Factors This is referred to resources put together in order to produce a product or service and these are: Money L’Oreal has developed its presence in Japan market for over 50 years by selecting a brand; luxury market products such Lancôme and Beauty hair style and mass market goods including L’Oreal Paris. That was not a case, when its market opened in German, it recorded a decline in business. This allowed L’Oreal group to invest in different countries including China, India and Middle East. Their percentage of sale grew gradually 27.1% in 2006 and 38.3% in 2011(L’Oreal financial statement) Machine L’Oreal is the leading cosmetics company and it is primarily based on innovation and technology. For example, launching the INOA coloring range with oil delivery system revealed that it is technologically used for hair product business. Men The organization research team could meet consumer aspiration over the world. The company has integrated research into sustainable development process. So, the ingredient used is research that is carried to respect consumers and environment. Materials In 2010, L’Oreal group created a program called wall to wall. This is for specifying production unit and packaging with suppliers in special area which is highly surrounded by advancement to assure high resources production. Minutes The financial communication department set some adjustments to keep the financial community informed by the e-newsletter. . Marketing mix for L’Oreal 2. SWOT analysis Strengths -L’Oreal’s powerful strength is innovation. . -Furthermore, well segmenting products is an absolute indication of strategic method used to increase the level of sales. Weaknesses -the range of L’Oreal hair care products are less competitive compared to P&G Company. (These are less competitive products as the market share for this range dropped in 2011 according to L’Oreal financial web). Opportunities -investing in developing countries such India and china is the major opportunity for L’Oreal -By expending their presence, the company can expand their market too. Furthermore, the acquisition of Body shop is another opportunity for L’Oreal. - By growing the number of consumers who are interested in using eco-friendly and safe products, their market growth can be much higher (datamonitor.com). -Venturing outside regular products can expand the market even more and it is an opportunity. Threats -high level of competition in the cosmetics market is a threat -price discrimination by other companies poses a threat to L’Oreal -global economy forces 2.5 Marketing planning evaluation and importance within corporate Managers use the planning process to identify and select the appropriate course of action and goals for the organization. Marketing planning is defined as “A business document written for purposes of describing current market position of business and its marketing strategy for the period covered by marketing plan”. At L’Oreal, planning occurs at three levels: Corporate-level planning, business level planning and functional-level planning. The corporate level planning involves the top management: the CEO, top managers, their support staff, and the chairman (Dick, 1996). L’Oreal’s corporate-level plan consists of decisions made by top management pertaining to the organization’s goals, mission, structure and the overall strategy. Corporate-level strategy indicates the national markets and industries L’Oreal intends to compete with. Corporate-level managers play a role of approving functional-and business-level plans in ensuring they are consistent with plans made at the corporate level. At the business-level planning, The L’Oreal’s managers create long-term goals that allow each division to achieve corporate goals. Business-level strategy indicates the methods that a business or division intends to utilize in order to compete against L’Oreal’s competitors in the industry. Functional-Level plan of L’Oreal states the goals to be pursued by functional managers to help the division to meet its business-level goals. The main context of a marketing plan is often provided by the corporate objectives (Dick, 1996). Behind the corporate objectives, there is the “corporate mission”. This corporate mission in turn offers the context for the corporate objectives. In sales-oriented companies such as L’Oreal, the marketing planning function is very important. It is used to design incentive pay plans to fairly reward and motivate frontline staff and to align corporate mission with the marketing activities. Corporate mission defines the organization, what it does and the business it gets involved in. L’Oreal’s corporate mission is to offer all men and women worldwide the best cosmetic innovations in terms of safety, efficacy and quality. This means that L’Oreal’s aim is to offer products with higher quality for those who care of their beauty while one of its main objectives is to support women scientist’s rights in poor resources countries to conduct research within industry. As such, marketing planning plays an important role in L’Oreal. It helps to identify sources of competitive advantages; depth understanding of targeted market, driving valuable costs and resources and forecasting the result generated by activates. It enabled them to achieve a satisfactory level of productivity at strategic level. It helps to ensure their sustainability by capability to respond to change. It provides a clear outlook of L’Oreal positioning in years coming. In practice, the process of marketing planning underlines the objective addressed at business level. It gives an insight on dealing with a change in technology and keeps standing against competitors. 3. Conclusion To conclude, L’Oreal Company should pay attention to the level of threats and weaknesses which they are facing. The company should strive to convert the threats into opportunities and to change the weaknesses into strengths. It is further recommended that: The company should continue focusing on quality not quantity; a few active products with high quality are better than more sophisticated products that are in less attractive. The company should address political issues facing it to operate viably. Bibliography Dick, M. (1996). “Doing Your Own Marketing Audit,” Marketing Computers, 16(April) (4), 26-28. Malcolm, M. (1996). “Strategic Marketing Planning: Theory, Practice and Research Agenda,” Journal of Marketing Management, 12, 5 – 27. Margaret, S E. (1996). “Conducting a Marketing Audit: A Service Organization Illustration,” Journal of Professional Services Industry, 14(2), 39-54. Subashini, P. (1996). “Marketing Planning, Market Orientation and Performance: An Empirical Study of Practices in Australian Organisations,” doctoral dissertation, Melbourne Business School, University of Melbourne. Read More