2. … Increase Garnier’s brand presence in the Netherlands L’Oréal’s Objective Garnier currently offers one product in the Dutch market... How can Garnier successfully grow market presence without negatively impacting L’Oréal’s current market share? 2
3. Increase brand awareness for the Garnier family brands Minimize cannibalization from the introduction of Garnier products Meet the needs of the Dutch market 3 L’Oréal’sDecision Criteria
4. Short-run strategy (0-12 months) Launch GarnierSynergie skin care products Increase L’Oréal Recital’s distribution Long-term strategy (12-36 months) Develop improved products for L’Oréal and Garnier Wait and see with Synergie anti-aging skin care line … Develop products to better suit market’s needs Recommendation 4
6. Netherlands … High per capita income and growing number of working women make this an attractive market Fastest growing population: Age 25 or older segment Increasing number of Dutch women working 29% labor force participation for women (and growing) 4th in per capita income but 6th in per capita spending on cosmetics and toiletries Price conscious 6
7. Dutch Hair Colour Market … Accurate results: a major value driver for Dutch women Volume growing at an annual rate of 15% 46% of Dutch Women used hair colorant (up from 27%) Brand loyal Preference for lighter shades Permanent colorant (73%) Semi-permanent colorants Grew from 12% to 27% Fashion driven Demand for warmer shades 7
8. Dutch Skin Care Market … Demand for products with natural ingredients 2nd-largest sector of Dutch cosmetics Volume growth: 12% Sales growth: 16% 2.5 million Dutch women aged 15 to 65 use skin care products Consumers are brand loyal: Performance matters Loyalty increases with age Products heavily advertised and sold on the basis of brand image Market share determined by share of voice Increased interest in natural products 8
10. Current International Position … Strong showing for both L’Oréal and Garnier L’OREAL GARNIER Largest cosmetics manufacturer worldwide Subsidiaries in over 100 countries $6.8 billion in sales (+12%) $417 million in profits (+14%) Sales breakdown: France: 24% Rest of Europe: 42% Independent operation Belle Couleur Permanent hair color Successful in France for over two decades Market leader Synergie Skin care products Successfully launched in France 10
11. Current Position in Netherlands … Low brand awareness for Garnier 11 Garnier Operates under same division as L’Oréal Currently manages one brand in the sun screen category Minimal brand presence L’Oréal Brand is well perceived by Dutch consumers Plénitude: A mid-market, high quality skin care product Recital: A high-end, high quality hair colouring product Recital is losing market share due to aggressive distribution strategy, private-label brands and salon services
13. L’Oréal Recital … Declining market share due to increasingly competitive market Strengths Current market leader with one-third of the market Weaknesses No clear positioning statement Market share decreasing over the past two years No semi-permanent formulation To protect current market share, L’Oréalshould develop a semi-permanent formula for Recital to meet market demands 13
14. L’Oréal Plénitude … Avoid cannibalization by new product in an increasingly competitive market Strengths Reputation for high quality Anti-aging line appeals to older demographic Weaknesses Unclear differentiation Threat of cannibalization from Synergie To differentiate Plénitudefrom Synergie, L’Oréalshould emphasize its anti-aging benefits to women 35 years and older 14
15. Garnier Belle Couleur … Must be reformulated to meet the needs of the target market Strengths Only product with a strong positioning statement Positioning statement resonates with Dutch women Weaknesses Current colours are too dark for Dutch women Positioning statement is not consistent with results Buying intentions decreased after use Belle Couleur is unable to meet market needs; Garnier should delay its launch until product improvements are made 15
16. GarnierSynergie … Offers a unique value proposition to the target market Strengths Buying intentions increased after use Different positioning from Plénitude Weaknesses Dutch market is very competitive Need to maintain share of voice to maintain market share Garnier should launch Synergie skincarewithout anti-aging line and emphasize natural ingredients that are scientifically proven 16
20. Synergie will be positioned as high-performance, high-value skin care products for women aged 20-35 Reliable Natural Smart Choice Synergie is a worry-free, natural skincare line for young women who care about healthy skin. High Value High Performance Understated 20
21. Synergie and Plénitude will be positioned as high value for women 20 to 35 years old Performance Upper End Middle/ Value High Ellen Betrix Synergie Yves Rocher Plénitude Dr. vd Hoog Oil of Olaz Price High Low Nivea Visage Ponds Dead End Lower End Low 21
22. Synergie and Plénitude will be differentiated on the basis of ingredients and demographics Science- Mature Science Science-Youth Plénitude Ellen Betrix Oil of Olaz Ponds Anti- Aging General Purpose Synergie Nivea Visage Dr. vd Hoog Yves Rocher Natural- Mature Natural-Youth Nature 22
23. Garnier will target the value-conscious segment with Synergie Target consumer profile: Aged 20-35 Recently graduated university and started working Has tried multiple skin care brands with mixed results (not brand loyal) Looking for brand to use with consistent results Value and performance conscious but not brand focused Thinks natural ingredients are better for skin Unfamiliar with technical product descriptions and terms 23
24. The positioning is aligned with capabilities, consumer needs and the competitive landscape Dutch Consumer Needs Growing consumer segment that is value conscious and cares about natural ingredients Competitive Landscape No direct competitor in high-value segment Synergie Positioning Synergie is a worry-free, natural skincare line for young women who care about healthy skin. Company Capabilities “Alliance of science and nature” – natural products that don’t sacrifice performance 24
26. 26 Synergie Pricing Strategy … Mid-range pricing will appeal to value-conscious target market Performance Middle/ Value High Synergie Plenitude Dr. vd Hoog Price Oil of Olaz Low Synergie should be priced below Plénitude to target younger demographic Low
27. 0-2 months 4-12 months 2-4 months Prepare Customize literature Train new hires Create a beauty buzz Educate target market Sell bundling option to retailers Launch time! Free product trials Advertisements 27 Implementation Timeline … Launching Synergie will require a high level of coordination. 1 3 2
28. Increase sales force Training period of two months Define sales incentives Distribution strategy: Leverage current distribution network Grocery stores and chain drug stores in densely populated urban areas Incentivize retailers with L’Oréal-Garnier bundling option 28 1 Prepare for Synergie launch
29. 29 2 Create a beauty buzz Secure optimal shelf space Place near Plénitude Find the face of Synergie Dutch celebrity spokeswoman Educate about benefits of natural ingredients PR efforts with women`s magazines and local TV stations ?
30. Free product samples Mass mailing to select neighbourhoods Local charity events Product demonstrations Shopping malls located near distribution outlets Outdoor advertising Public transit, bus shelters, shopping malls 30 3 Launch time!
32. 32 Risk Mitigation … Differentiate Synergie’s position to maximize market share Cannibalization of Plénitude sales Position Plénitude and Synergie for different target markets Even with some cannibalization, overall L’Oréal-Garnier market share will still increase Highly competitive skin care market First-mover advantage in high-quality, high-value natural segment – gain share before others can enter Emphasis on natural positioning for Synergie – increase reluctance to switch due to possible allergic reaction
33. 33 Risk Mitigation … Reformulate hair colour to better meet needs of market Declining market share for Recital Develop a clear positioning statement and build on position as current market leader Introduce semi-permanent formulation to meet market demands Lost opportunity for mid-range hair colour Still no competitors in the mid-range hair colour market Reformulate Belle Couleur to increase chance of successful launch in future
35. Expected Results … Increase in L’Oréal-Garnier market share and profits Skin Care Hair Colour Dutch skin care market: 2.5 million consumers 56 million guilders 10% market share for L’Oréal-Garnier = 5.6 million guilders Plénitude 5% Synergie 5% 35 Permanenthair colour market: 1.7 million consumers 88 million guilders 30% market share for Recital = 26 million guilders 32 million guilders in revenue 2 million in profits
36. 36 Metrics for Success … Indirect metrics drive top- and bottom-line results
38. Recommendation … Launch Synergie skin care products immediately Synergie (Skin care products) Belle Couleur (Hair colour) Synergie (Cleansing products) Belle (Hair color) Target: Professional women Age 20-35 Price: Mid-range 9.95-16.95 Position: Natural ingredients Affordable quality Promotion: Free product samples Product demonstration Distribution: Leverage L’Oréal’s existing network Expected Results: 10% increase in overall market share for L’Oréal and Garnier combined Darker shades not suitable for Dutch market Negative feedback from test market Trend towards semi-permanent hair colorant Launch Cleansing products Do not launch hair color Synergie (Anti-aging products) Synergie (Skin care products) L’Oréal’sPlénitude promoted as anti-aging product 40% of Dutch population under 25 Only 3% of Dutch women use anti-aging products Do not launch Anti-Aging products 38
Wihtout negatively impacting the loreal market share
CHANGE PICTURE TO BE OF THE NETHERLANDSMore facts:15 million Dutch to 350 Million EU residents5 million Dutch women between ages 15 and 65
CHANGE PICTURE TO BLONDE WOMAN46% in 1989; 27% in 1986French preferred darker shades.
Reformat emphasize recital declining market shareMarket shares are declining... How will we address this? (sameera will talk about that
Successful launch is critical to long-term success and perception of Garnier name
Looking for a brand that is different than her mother’s.
Show price ranges of other products
Assumptions:Skin CareDutch market size 2.5 million consumers (women aged 15-65 who use skin care products)Average 1.5 purchases/consumer/year (text, p. 647: 1 or 2 purchases/year)Average price 15 guilders (price ranges from Exhibit 4)Hair Colour-Market size 1.7 million consumers (5 million x 46% colour their hair x 73% use permanent colour – from text)-Average 4 purchases/year-Average price 12.95 (Exhibit 6)Profit margin = 6.2% (based on overall L’oreal 417 MM in profits on 6.8 B in revenue)
