It is about the analysis of the Loreal Thailand Case Study and the way forward plan.

1. L'OREAL
THAILAND
Badariah Baharuddin PBS1331387
Roziana Mohammad PBS1331432
Mohd Ainul Shah Bachok PBS1331421
Norfasha Mohammad PBS1331340
Nor Ain Jafar PBS1331420
Jennie Oh PBS1321264
1

2. AGENDA
2
Introduction
• Country Profile & Company
background
• L'Oreal Thailand : Case study
background
• Consumer profile
Situational
Analysis
• Business Segmentation & Competitors
Analysis
• L'Oreal Thailand SWOT Analysis
Problem
Analysis
• Key Issues
• Action Plan and Implementation
• Result
Conclusion
• Evolvement of L'Oreal Thailand
: 2001 and beyond
• Now & Beyond

3. The Kingdom of ThailandThe Kingdom of Thailand
Floating Market
3

4. Quick Facts: Thailand
Source : The World Factbook (Central Intelligence Agency), doingbusiness.org
67.0 mil
8.642
mil
Bangkok
18th ease of doing business
119th real GDP growth 6.5%
120th GDP percapita USD5390
37th economic competitiveness
1 of two SEA not taken over by
Western power
4

5. Hair ColoringMake UpHair Care PerfumeSkin Care
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6. L’Oreal Thailand Ltd
Company background - L'Oreal Thailand
1950s’
early 1990s’
1992
1998
1999
Distribution through
local agents
• JV with local conglomerate
• Manufactured some Lancôme
product
• Lancôme products distributed
through counter (department stores)
with other luxury L'Oreal brands.
Siampar
• Directly manage import and
distribution (mass consumer &
professional hair salon products)
• Other product line – hair color,
makeup, skin care products
• Merging of Siampar and
Thailor
Thailor
 Different locations
 Different internal
cultural
 Different process
 Different policies
• Discontinuation of Lancôme local
production by JV partner share
buy out (Siampar)
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7. Case Background – L'Oreal Thailand
Under
capitalized
"Thai
Exception"
management
Cash
Management
Problem
Zero Brand
Image
Pressured
market share,
sales &
profitability
Excessive Fixed
Asset
Investment
Reckless
Borrowing
Undiscipline
Financial
Institution
Asian Crisis
1997
7

8. 8
COMPETITOR ANALYSIS

9. Skin care
12%
Make-up
29%
Coloration
33%
Fragrance
26%
The Thai Beauty Market (Year 2000)
L’Oreal
7%
BT 26.6
billion
Target
Group  20 – 44 years old
 Central Thailand & Greater Bangkok
 Average monthly – Bt 7,000
 Expenditure (personal care & health) Bt 650
9

10. 30%
22%21%
14%
9%
4%
Skincare Make-up
Haircare Hair Colourants
Fragrances Others
Business Segment vs. Competitors
36%
27%
19%
18%
Personal Care
Foods
Refreshment
Home Care
25%
10%
9%32%
24%
Beauty
Grooming
Healthcare
Fabric Care & Home Care
Baby Feminine and Family Care
10

11.  Operating before World War II
 Involved in beauty and non-beauty sections
 Thai is the key innovation center
 Factory as export hub supplying to Asian market
 Products variety and diversification
 Leading market position
 Products appeal to wide range of population
 Go Green Campaign
COMPETITOR ANALYSIS - UNILEVER
11

12.  Involved in beauty and non-beauty sections
 Has relocated hair care R&D Center from Japan to Thailand with
USD 150m
 Procter & Gamble has strong brands.
 Take advantage on high-growth markets in hair care and skin
care
 Opportunity in health and beauty product for men
COMPETITOR ANALYSIS – P&G
12

13. Strong growth prospects for
China skin care – Estee
Lauder
SWOT ANALYSIS - THREAT
13

14. Regulation of cosmetics were highly regulated and inflexible
SWOT ANALYSIS - THREAT
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15. Substitute products offer cheaper price
SWOT ANALYSIS - THREAT
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16. SWOT ANALYSIS - WEAKNESS
16
Lack of media support
– ranked no. 35 in overall media spending in 1999.
– ranked no. 4 in media spending in beauty industry.

17. Poor brand awareness in consumer division
SWOT ANALYSIS - WEAKNESS
17

18. Too depending on foreigner and no senior
local people in management
SWOT ANALYSIS - WEAKNESS
18

19. Reckless borrowing and undisciplined financial institutions
SWOT ANALYSIS - WEAKNESS

20. Led brands in make-up
and hair care industry
SWOT ANALYSIS - STRENGTH
20

21. Excellent image among top professional salon owners
(L’Oreal Professional and Kerastase)
SWOT ANALYSIS - STRENGTH
21

22. Strong R&D + Best technology
SWOT ANALYSIS - STRENGTH
22

23. 5 strong brands in Luxury Division
Lancôme, Biotherm, Helena Rubinstein, Giorgio Armani
and Ralph Lauren 16% share
SWOT ANALYSIS - STRENGTH
23

24. Gain
SWOT ANALYSIS - STRENGTH
24

25. Hiring High Profile International, Local Ambassador And
Experts (Make Up, Hair Care And Skincare) as product ambassador
SWOT ANALYSIS - STRENGTH
25

26. Focus only in beauty section
SWOT ANALYSIS - STRENGTH
26

27. Online social networks and internet marketing techniques
SWOT ANALYSIS - OPPORTUNITY
27

28. Enter new market such as fragrance
industry where less competitor
SWOT ANALYSIS - OPPORTUNITY
28

29. Tap into more prospective distribution channels
SWOT ANALYSIS - OPPORTUNITY
29

30. Metrosexual Trend
SWOT ANALYSIS - OPPORTUNITY

31. 31
KEY ISSUES AND HOW DID LOREAL
THAILAND TRANSFORM?

32. • Poor Product Positioning
• Product Overlapping
• Lack of product localization
• Not focus on whitening
products for skin care
Loreal Thailand Key Issues in 1999
Product
Marketing
Financial
People
Operations
Management
Brand and
Communication
• Negative cash flow
• Flat sales – declining sales
• Poor financial performance
• No budget to increase
marketing spending
• Traditional promotions
• Using international celebrities to
be ambassador
• Not understanding the local
market
• Poor engagement with retailers
• Low brand awareness – Ranked
8th
• Zero visibility in print media
• No budget to advertise on TV
• Poor image and reputation
• Rank 4th in media spending
(beauty industry)
• Limited media support
• No convincing ambassadors
• Poor inventory control
• Account receivable increased to 203
days -6.7 months
• Problem of overstocking
• Clash cultures – Siampar and Thailor
• Managed by expatriates
• Perceived as a Company that has no
vision, no results and no rewards
• Under utilized of local talent
• Low morale among staff
• High labor turnover – 2nd highest
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33. Loreal products are being segmented by price and
distribution channel
33
LOREAL PARIS
• Loreal Feria Brands
• Loreal Plenitude
• Loreal Make up
• Maybeline
• Garnier
LOREAL PROFESSIONAL
Hair colour
Hair Colour Treatment
Other Products :-
Excellence and Natea
LOREAL LUXURY
• Bioterm
• Kerastene
• Helena Rubinstein
• Lancome
• PCI- Perfumes
Loreal Paris – 1,200 outlets
Maybeline& Garnier -5000 stores
Leading brand – Skincare-
Plenitude
65% 15% 20%
2000 Top professional salons
Market leader for Hair
Products – rapid innovation
and true technical superiority
Helena – 6 major dept stores
Lancome – 34 outlets
Target market :
Teenagers and Women
Target market :
Hair Salon
Target market :
Men and Women
High end market

34. 34
Turn around L’oreal Thailand by transforming the
following …
PEOPLE
FINANCIAL AND OPERATIONS
MARKETING

35. PEOPLE – CULTURE REVOLUTION
• Change of culture – banned employees from using the
names Siampar and Thailor – formed new entity Loreal
Thailand Ltd
• Restructuring of HR Department – 2 units set up :
1) Focus on HR and systems,
2) Focus on training and retention
• Relocate to a brand new office, prestigious building (but
cheaper)
• Offer interdivisional transfer – widen opportunities
• Talent Spotting – Key Personnel : Government Relation
Manager, Head of IT, Warehouse Manager (Local)
• Talent mobilization –Groom potential local talents to
become the next generation leaders
• Use persuasive and creativity method to motivate the
talent to stay with L’oreal
• Revisit reward system – Hard work and dedication will be
rewarded i.e. Bonus
35

36. FINANCIAL
• Subsidy grant from Loreal HQ in Paris – Bt 50
million – money to exclusively spend on
COMMUNICATIONS only
• Restore cash flow and profitability
• Loreal luxury products – Stock coverage at
counters reduced from 5.2 months in Dec 1999 to
2.5 months a year later
 Improve account receivables from 203 days
to 130 days
 Improve cash flow
• Focus investments on 2 major outlets, and getting
designers from Paris and London to develop the
best beauty counters
 6 months after – Sales up more than 50%
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37. 37
MARKETING – UNDERSTANDING THE MARKET -RETAILERS
• Listen and engage with the retailers – tailor made strategies
 Drug stores – consumer would find rational and highly emotional
benefits from beauty products
 Carrefour vs Tesco – Carrefour – revamp beauty space, whilst Tesco
concerns on Category Management
• Help retailers to create a better understanding the emotional values of
beauty products
• Be more professional in dealing with retailers
• Clearer ideas for product positioning
• Understand market better when launch products
• Support the right communications strategy

38. 38
MARKETING – UNDERSTANDING THE THAI CONSUMER
• Skincare products are the most preferred and
popular. Most Asean consumers are looking for skin
whitening products.
• Thai Skin is unique – Not Caucasian, Indian, Oriental
Hispanic or Black
• Consumers like to see the products further
segmented for different age groups and skin types
• Motivation and needs – Brighten skin, fulfilling
emotional needs and uplifting self esteem –
Brighter skins means high status
• Thais often associate the made-in Japan image
with high-quality or premium products, which
encourages Thai consumer’s willingness to pay a
premium price
• Factors to purchase cosmetics – Quality and Price
• Preferred means of cosmetic info – Magazines
(79%), TV (64%) and friends (58%)

39. 39
MARKETING – PRODUCT POSITIONING
• Reposition of Loreal Paris, Maybelline and
Garnier, by redefining pricing strategy
• Increase SKUs of hair colour products from
15 to 20 compared to 7 of Sunsilk’s (Main
competitor)
 Increase shelf space from 50 to 90% at
Watson
 Matching the hair color demanded by
consumers
• Consider Whitening Skin Product as one of
the killer skin care product

40. 40
MARKETING - COMMUNICATION
CONVINCING LOCAL AMBASSADOR
Before - The boring and lacking in self
confidence ambassadors
After - The WELL KNOWN LOCAL STAR – enjoys
widespread respect and credibility achievement
at international level – represents as Thai icon
Laila Boonyasak
(White Perfect Laser
Ann Thongprasom
(Revitalift / L’Oreal
Excellence)
Araya Alberta Hargate
(Total Repair / Revitalift
white / UV perfect /
Areeya Sirisopa
(Fall Repair)
PRINT MEDIA AND POINT OF SALE
Print media – Use to explain technical innovation
Point of sale and Merchandising – Use for product innovation i.e product testing
Communication message - Thai women are highly sophisticated and understand
beauty!

41. ARAYA ALBERTA HARGATE
41
 Choompoo as a nickname
 Famous Thai Superstar
 Born in 1981
 A Thai-British born
 Model, Actress, TV Host
and Singer
 A graduate in Bachelor in
Arts
 Won many awards i.e
 FHM Sexiest Actress in
Thailand Awards 2007 –
2010, W Style Awards,
Siam Dara Stars Awards,
and The Best Actress
Awards

42. FACES OF LOREAL
42

43. 43
AS A RESULT, FINANCIALLY BOOSTED UP
1.
1.Customer credit cover days improved for all product lines
especially the Luxury Product Division!
2. NEGATIVE Cash Flow has turn into POSITIVE!
3. Sales improved tremendously by 80% up!

44. 44
• Change in organizational capability and morale
• No. of talents of recruited increased
• Job distribution was more structured
• The brand - the asset in attracting new talent
• Lower labor turnover rate averaged around 4%
• Local “real stars” developed to run the division
• Engage with retailers closely – focusing extra
value that Loreal tailor made strategies would
bring them – win-win situation
• Strong and aggressive marketing & sales team
contributed to the faster turnaround – move fast
in the market with good innovations
• Launched of the 4th Division - Active Cosmetics
(for sensitive skins or affected by dermatological
conditions)
Local talent being recognized…
Better engagement with retailers and strong sales and marketing team led to Loreal’s success in winning the
heart of Thais. Launching of Active Cosmetics has strengthen Loreal’s market position.
CULTURAL CHANGED AND MOTIVATED EMPLOYEES CONTRIBUTED
TO THE LOREAL THAILAND OUTSTANDING PERFORMANCE

45. 45
ALL IN ALL, LOREAL THAILAND HAS SUCCESSFULLY
TRANSFORMED…
Understand the Market
Get the right products
Communicate Effectively with
Consumers
Get the right resources to implement
WINNING STRATEGY

46. 46
CONCLUSION

47. 47

48. 48

49. 49
HONESTY RESPECT COURAGE TRANSPARENCY

50. COMMITMENTS
& TARGETS FOR
2020
PRODUCING
Reduce their
footprint by 60%
- CO2 = -60%
- H2O = -60%
LIVING
Make social profile of 100%
of the products. This is to
allow consumers to take
right choice while buying
DEVELOPING
COMMUNITIES
Enables 100K people
from underprivileged
communities to
access work
SUPPLIERS
Evaluate & select on
social and
environmental
performance
EMPLOYEES
Access to health care,
social protection &
training
INNOVATING
100% of the products:
Natural materials with
social and environmental
benefit
50

51. 51
MISSION
(OFFERS
BEAUTY TO
EVERYONE)
BEAUTY IS ITS
- Create products that
meet needs & desires
Deliver innovative & quality
cosmetics
BEAUTY IS UNIVERSAL
- Different researches
explore new ideas
- Innovative products
inspired beauty
BEAUTY IS SCIENCE
- Brainstorming to
innovate & inspire
creativity
- Suit the local community
BEAUTY IS THE
COVENANT
- Diversify
universalization the
brand perfectly

52. 52
AIM
To reach 1B
new
consumers
around the
world
Beauty 4 everyone
Beauty 4
Individual
Opportunity to
reach beauty
Accelerate
regional
specialization
Local Observers
on innovation

53. 53
28
International
brand
World No. 1 in
cosmetics
business
Sold 22.98B
Euros in 2013
Be in 130
countries
77,500
employees
624 patents in
2013

54. 54
• Support by L'Oreal, France Foundation with MoE, government agencies and private
organizations
• Provide training with great facilities, learn professional skills
• For ages of 15 - 40 years, have insecure income
• Creating beautiful and social equality
• After project, participants stand on their own with skills
SPECIAL PROJECT

55. 55
“A diversified workforce in every
function and on all levels strengthens
our creativity and our understanding of
consumers and it enables us to
develop and market products that are
relevant”
JEAN-PAUL AGON, CHAIRMAN AND CEO OF
L’ORÉAL

56. 56