Loreal

1. Overview of the Company
The L’Oreal Group is a French cosmetics and beauty company, headquartered in Clichy, Hauts-
de-Seine. It is the world's largest cosmetics company, and has a registered office in Paris. It has
developed activities in the field of cosmetics, concentrating on hair color, skin care, sun
protection, make-up, perfumes and hair care. With a portfolio of international brands that is
unique in the world, L’Oréal wants to provide the best in cosmetics to women and men around
the world. Its leadership is founded on the ability of its teams to create innovative products that
combine quality, effectiveness and safety in every branch of cosmetics such as hair care,
coloring, skin care, make-up, perfume. Close to its markets, the group innovates to respond to the
aspirations of consumers, whatever their lifestyle and their beauty habits.Its closest global
competitor in the premium make-up segment is Revlon.
L’Oréal currently markets over 500 brands and many thousands of individual products in all
sectors of the beauty business: hair color, permanents, hair styling, body and skin care, cleansers,
makeup and fragrances. Loreal is selling 4 kind of products such as consumer products
(GarnierFructice, Loreal Paris and Maybelline), professional products(Loreal Professional,
Kerastase, Matrix, Keraskin), luxury products (Giorgio Armani, Diesel, Lancome, Ralph Laurel,
Kiehl’s) and cosmetic items (La Roche-Posay, Vichy).
The world leader in beauty, L’Oreal is today present in 130 countries. On every continent, the
group creates and develops cosmetic products adapted to the infinite diversity of its consumers.
Analyzing the Mission
The mission of L’Oreal Is based on following points:
Beauty is a language.
L’Oreal has set itself the mission of offering all women and men worldwide the best of cosmetics
innovation in terms of quality, efficacy and safety. It pursues this goal by meeting the infinite
diversity of beauty needs and desires all over the world
.
Beauty is universal.
Since its creation by a researcher, the group has been pushing back the frontiers of knowledge.
Its unique Research arm enables it to continually explore new territories and invent the products
of the future, while drawing inspiration from beauty rituals the world over.
Beauty is a science.

2. Providing access to products that enhance well-being, mobilizing its innovative strength to
preserve the beauty of the planet and supporting local communities. These are exacting
challenges, which are a source of inspiration and creativity for L’Oréal.
Beauty is a commitment.
By drawing on the diversity of its teams, and the richness and the complementarity of its brand
portfolio, L’Oreal has made the universalization of beauty its project for the years to come.
L’Oreal, offering beauty for all.
It is offering beauty for all the consumers with the great value.
History of the Organization
It got its start from the hair color business but soon it developed activities in the
field of cosmetics, concentrating on skin care, sun protection, make up, perfumes and
hair care.In 1909, EugèneSchueller, a young Frenchchemist of Germandescent, developed a hair
dye formula called Auréale. . On 31 July 1919, Schueller registered his company, the
SociétéFrançaise de TeinturesInoffensives pour Cheveux (Safe Hair Dye Company of France).
The guiding principles of the company, which eventually became L’Oréal, were research and
innovation in the field of beauty.
On 17 March 2006, L'Oréal purchased cosmetics company “The Body Shop” for £562 million.
L'Oréal'sadvertising slogan is "Because I'm worth it". In the mid-2000s, this was replaced by
"Because you're worth it". In late 2009, the slogan was changed again to "Because we're worth
it" following motivation analysis and work into consumer psychology of Dr. Maxim Titorenko.
Market Orientation
The signature of the L’Oreal Group brand, operates at the prestige end ofthe mass health and
beauty market with a range of skincare, cosmetics and home hair color for women of all ages.
This sector of the market is highly competitive. Brand loyalty is a challenge to maintain. In an
effort todifferentiate itself from competitors, strengthen brand values and consumer loyalty, It
sought a communications program which established a direct communications channel that
enabled targeting subgroups of consumers gained consumer insights through regular and cost-
effective research Developed relationships with consumers that engender brand loyalty
consideration on each and every purchase occasion. An obvious solution was to produce a
custom magazine. Recognizing the marketplacewas already crowded. L’Oreal Paris decided
against this medium. L’Oreal researched Internet penetration, finding that women use the

3. Internet as much as menand the most common application by women was e-mail.The results
were compelling and the decision was to use the e-mail to communicate toits customers. Rather
than build an expensive website, the company took a more.
Strategic Approach towards Market Orientation
Strategic approach and created an online loyalty program.
– The L’Oreal Beauty Club. The site was designed to be refreshing, capture the essence of the
brand and bevisually appealing to the target market. The newsletter enables L’Oreal to showcase
its products, conduct market research, trial products and share its expertise with a loyal consumer
base. Information about members is stored a database which integrates registration data,
consumer survey responses, competition interaction and offer redemption. This enables the
business to customize the newsletter content based on interests,geographic region, product usage,
survey responses, demographics and otherimportant factors.
– L’Oreal Beauty Club Editorial exclusivity and control Support for product lines Pre-
emptive competitive launches access to a rich source of consumer insights Development of
meaningful relationships with consumers
Current State of L’Oreal’s Resources
Share Capital
L’Oreal is incorporated in France as a “SociétéAnonyme” with registered capital of
121,180,377.40 euros.’
Share price (138.35 €)
Finance
2013 was another year of robust growth for L’Oreal, with sales of 22.98 billion euros, an
increase of +5.0%
+2.3% based on reported figures
+6.0% at constant exchange rates
 Operating profit: 3.875 billion euros, representing 16.9% of sales
 Net profit after non-controlling interests: +3.2%
 Net earnings per share*: +4.4% at 5.13 euros
 Dividend**: +8.7% at 2.50 euros

4. Human Capital
Because women and men are at the heart of L’Oréal, the group has a long-term policy of
developing its human capital, a crucial vector for universalization and for building the L’Oréal of
tomorrow.
It is a strategic intangible asset, and a truly long-term competitive advantage, alongside the
brands, governance and Research. Today more than ever it is based on detecting the potential of
individuals, and the art of guiding their development inside the organization, while passing on to
them the essentials of the “L’Oreal culture”: the founding values, a unique model of innovation
and dialogue between marketing and Research, and an entrepreneurial spirit honed by
a continuous training process.
In 2013 MORE Than 44, 900 employees were trained and currently having 77,500 employees
throughout the world.
Research and development
L’Oreal has always invested continuously in Fundamental Research by developing cutting-edge
knowledge about hair and skin. Our challenge is to transform science into innovative products,
while respecting regulatory aspects and all our ethical commitments.
L’Oreal’s ambition is to understand the needs of consumers all over the world, and to be the first
to respond to them. That is why L’Oreal have developed a unique innovation model that goes
from Advanced Research to development. It is based on a creative interaction between marketing
and science that makes us stand out from our competitors.
L’Oreal’s twenty-three Research and Innovation centers are located all over the world. These
worldwide centers and regional hubs network with each other to ensure the closest possible
connections with their innovation ecosystem of consumers, universities and suppliers. This paves
the way for privileged partnerships to drive major scientific advances.
It has a budget of 857 Million Euros on research which is 3.7 % of sales including 624 patents
with more than 4000 researchers working on research and development of L’Oreal.
Research & Development of L’Oreal by time
Proven anti-ageing efficacy
(2000 – 2006) First proofs of efficacy
Its performance at 3% on skin elasticity and tone is demonstrated both in vitro and in vivo.
(2009 – 2012)New proofs of efficacy

5. Advanced Research continues to enrich the cluster of proofs of the anti-ageing performance of
Pro-xylane™. Its mechanism of action on GAGs is demonstrated, and an in vivo clinical trial
concludes that there is a visible reduction in lines and pores, along with evenness of complexion.
(2011) an increasingly accessible molecule
The challenge is to ensure that this very expensive molecule can be accessible to a mass-market
brand. By optimising the synthesis of Pro-xylane™, the laboratories manage to reduce its cost by
three quarters.
(2012) in a clinical trial
The laboratories compare over two months the efficacy of a rejuvenation laser session with a
skincare product containing Pro-xylane™ at 3%, associated with two other active ingredients.
Revitalift Laser x3, launched by l’oréalparIS, claims a triple action on lines, skin quality and
facial contours.
(2013) Revitalift Laser x3
It is a worldwide success and enables the L’Oreal brand to post strong market share increases.
Meanwhile, the Pro-xylane™ saga continues. New properties are brought to light,
and researchers strive to enhance availability in the skin by adjusting formulation and
associations.
Marketing
L’Oreal is a market leader selling the products in different segments which are divided as
follows
29.7% ● Skincare
21.7% ● Make-up
20.7% ● Haircare
13.8% ● Hair colorants
9.5% ● Fragrances
4.6% ● Other
It is using different kind of strategies in different regions and in case of entering in new markets
its using penetration strategy and it has been observed with the huge acceptance and growth of
products in the new markets.
+8.4% growthoftheconsumerproducts in thenewmarkets
Discussion on the Resources being used by Loreal

6. By reviewing the brief details given it is clear that Loreal is making growth with the passage of
time and it is utilizing the resources at the maximum level due to which its making progress and
more attractive towards the customers. All the products which are offered by Loreal are accepted
the consumers it’s just because of using the proper research and implementation of marketing
strategies.
L’Oreal’s Core Strategies
Broadening Customer Base
The recent economic crisis has brought this strategy into focus. To counter the deficit,
broadening the consumer base will allow the company to concentrate on accessible innovation.
L’Oreal is also expanding geographically. The company is moving into the Latin American and
Eastern European markets for deodorants and fragrances, which have been an outstanding
success.
Changing Business Operations and Functions
L’Oreal has been focusing on streamlining, focusing, simplifying and making their business
more efficient. These changes have resulted in continued industrial re- engineering of the
business in every aspect, including closure of inefficient production facilities, centralization of
purchasing processes, better utilization of equipment and major advances in productivity.
Increasing Expense in Research & Development and Promotion & Advertising
In 2009, the company started to actively increase R&D. This contributes invaluably to the
innovation efficacy, quality and safety of the products, which in return gives the company a
competitive advantage. L’Oreal supports its sales growth by increasing expenses in promotions
and advertising. “We intend to maintain a high level of investment in P&A, at the same time as
undertaking an in depth analysis of our operations in this area to ensure that every euro generate
maximum addional growth, ”Jean-Paul Agon, the CEO of the company, stated in their 2010
financialpresentation.
CORE COMPETENCIES
L’Oréal has several core competencies including product diversification that create value, giving
it a competitive advantage to its competitors. L’Oréal offers a diverse range of products

7. including makeup, perfume, hair and skin products that caters to various ethnic groups.
RECOMMENDATIONS
One of the recommendations we have come up with is market development. Expanding to other
countries such as Thailand, Saudi Arabia, etc. would help increase in an untapped market share
abroad and international brand awareness. It can also attract potential investors and shareholders
from the new markets. However, the downside entering the new market would be costly in terms
of market research; market and government regulations, distribution and the risk of failure to
meet demands.
Organizations Goals:-
 L’Oreal’s goal is to drive sales growth through category expansion.
 It has been aiming to grow in perfumes, body spray and body care.
 It entered a number of new markets such as Ukraine with perfumes.
 It is expanding in body care with Roger &Gallet.
 Its most successful category expansion has come from adding skin care device Clarisonic
in the US.
Organizations Objectives:-
 L’Oreal’s key objective is to increase its consumer base from one billion to two billion by
2020/2025.
 The company has been targeting emerging markets and is well on track.
 It has done well in China where it is increasing penetration through both premium and
mass brands.
 In India, it targeted men’s skin care and is increasingly expanding Garnier.
 It recently announced the completion of a manufacturing site in Indonesia and acquired a
Colombian color cosmetics brand.
 Targeting two billion consumers is a considerable change of scale and ambition for the
group, but also a realistic objective.

8.  To provide best quality product to the consumers.
 To be friendly and helpful towards customer and staff also.
 Treat everyone equal so that’s why their products available in every range.
Objectives are consistent or inconsistent:-
The objectives of L’Oreal’s are consistent. How can we say they are consistent, we can see the
mission statement of the organization, the today’s external environment and customer
environment.
The mission statement is to help men and women around the world realize that aspiration, and
express their individual personalities to the full.This is what gives meaning and value to our
business, and to the working lives of our employees. The objective of L’Oreal’s is also the same
to satisfy the need of the customers by providing them best quality. So according to mission
statement the objectives are consistence, they help the men and women equally and behave with
them friendly.
Today’s external environment is going in full of fashion. L’Oreal gives the gift of beauty to
every age of person, people can fulfill their dreams by using products with full quality provide
by the L’Oreal. Now it becomes a first choice product to the customers who want to feel
beautiful. Cosmetic got a high demand in the society and as a result there have been so many
cosmetic firms all over the world. The main purpose of this analysis is to understand how the
PESTEL analysis affects the cosmetics industry. The external environment can be change
according to the situation, but the objective of the L’Oreal is to satisfy the people, fulfil their
needs, provide them best quality product. So, objectives are consistent and remain same
according to external environment.
Customers of L’Oreal Company or any company of cosmetics always want best quality of the
product and need the products which fulfill their requirements. Customer environment of the
cosmetics products always remain the same. So the objectives according to the customer
environment are consistent.