How Has Multi-Brand Strategy Affected LOreal's Market in China - Thesis Example

The paper “How Has Multi-Brand Strategy Affected LOreal's Market in China?“ is a  delightful variant on the thesis on marketing. The demand for cosmetic products all around the world has highlighted the need and importance of developing strategies that are aimed towards providing products at competitive prices. This has highlighted the need and importance of understanding the strategy which different business uses. The research thereby looks to explore L’Oreal’s marketing strategy in China and focuses on the different aspects associated with multi-brand branding and other strategies so that proper formulation of strategies can be developed and the future path which the player looks to adopt can be determined.

China possesses the most population in the world, which spread unevenly on the land of China. Although around one-third of Chinese people live in the cities, the buying power from these cities is so strong that it cannot be ignored and make the Chinese market one of the major markets. It is really necessary for business seekers to be aware of where the cities are and what is happening there. Chinese cosmetics market is one of the fast-growing markets in China, according to the performances and the activities happened in the past 10 years.

1.2. Background of the Topic

1.2.1. Huge Chinese Cosmetics Market
Chinese people’s demand and life concept have changed dramatically with the development of the economy, this witnessed the point of growth of cosmetic and skincare products worldwide. It is calculated that in the past 10 years, the average annual sales increase of Chinese cosmetics industry is around 25%. Many internationally renowned multinational companies like P&G, Unilever, and L’Oreal have already entered the Chinese market. Meanwhile, some local cosmetic companies like Jahwa and Longliqi have also started a fierce competition with the multinational companies. However, foreign brands have taken up more than 70% of the Chinese market.

1.2.2. L’Oreal Entering the Chinese Market
L’Oreal has always observed the Chinese market as a promising market. It entered China since the 1980s and set up its first factory in 1996. Nowadays, L’Oreal has already extended its business to more than 500 cities in China, with 14 famous brands under L’Oreal (eg. L’Oreal Paris, Maybelline, Garnier, Lancome, etc). The company even succeeded in acquiring two Chinese local brands—Little Nurse and Yue-sai, which indicates its accelerating pace of expanding in China.

1.2.3. Multi-brand strategy increases a company’s competitive advantage
With the expansion of business scale and increase in variety series, the multi-brand strategy has become a more and more important means in the market competition. The multi-brand strategy means the marketing of two or more similar and competing products by the same firm under different and unrelated brands, while these brands eat into each others' sales. It has some advantages such as: