CHAPTER 6 IDENTIFYING MARKET SEGMENTS AND TARGET CUSTOMERS 145

marketing
SPOTLIGHT Alamy
L'Oréal Vagnone/
L'Oréal was founded in Paris over 100 years ago by a
chemist, Eugene Schueller, who sold his patented hairyoung
dyes LLORÉAL Emma
Stock
Photo
to local hairdressers and PARIS
salons. By the 1930s, Schueller Source
had invented beauty products such as suntan oil and the
first mass-marketed shampoo. Today, the company has
evolved into the world's largest beauty and cosmetics com
pany, with distribution in 150 countries, more than
84,000
employees, 34 global brands, and over ¬26 billion in sales. stores, travel retail stores, as well as own-brand bou
Well known for its 1973 advertising
tagline-"Because l'm tiques and dedicated websites.
Worth It"-L'Oréal is the leader in beauty products around
" Professional Products is responsible for 14 percent of
the world. The company spends approximately ¬4 billion in
advertising each year, making it the third largest advertiser sales and offers professional-quality products to hair
in the Worid. dressers and skin care professionals. Brands include
Much of the company's early international expansion is L'Oréal Professionnel, Kérastase, Redken, Matrix,
credited to Sir Lindsay Owen-Jones, whose strategic vision Pureology, Shu Uemura Art of Hair, Mizani, Decléor,
and precse brand management transformed L'Oréal from a Carita, Biolage, and Seed Phytonutrients. These
brands are distributed to hair care and skin care salons
small French business into an international cosmetics phe
worldwide.
nomenon. During his almost 20 years as CEO and chairman,
Owen-Jones divested the firm of weak brands, invested " Active Cosmetics, which accounts for 7 percent of
heavily in product innovation, acquired ethnically diverse sales,is the world leader in dermocosmetics. Its
brands., and expanded into markets no one had dreamed of, brands include Vichy, La Roche-Posay, Skinceuticals,
including China, South America, and the former Soviet Union. Roger &Gallet, Sanoflore, and CeraVe. These highly
His quest was to achieve diversity, "meet the needs of men complementary brands are developed and endorsed by
and women around the globe, and make beauty products health professionals-dermatologists, pediatricians, cos
available to as many people as possible." metic doctors-to meet a range of skin-care needs from
L'Oréal has a richly endowed portfolio of international normal to blemish-prone. The Active Cosmetics brands
brands that responds to the diverse needs of consumers the are sold in health care outlets worldwide, incluing phar
world over. Its brands are grouped into four divisions based macies, drugstores, and medi-spas.
on the profile of its target customers: L'Oréal believes that precise target marketing-hitting
Consumer Products produces 52 percent of sales and the right audience with the right product and message at the
offers a wide range of competitively priced, mass right place-is crucial to its global success. Owen-Jones
marketed hair-care, makeup, and skin-care products. explained, "Each brand is positioned on a very precise
its brands include L'Oréal Paris, Magic, Garnier, May [market) segment, which overlaps as little as possible with
the others."
belline New York, African Beauty Brands, Essie, Nyx
Professional Makeup, and Niely. These brands are The company has built its portfolio primarily by pur
chasing local beauty companies all over the world, revamp
distributed in mass-retailing channels, including hyper
ing them with strategic direction, and expanding the brand
markets, supermarkets, drugstores, and traditional
stores
into new areas through its powerful marketing arm. For
example, L'Oréal instantly became a player (with a 20 per
" L'Oréal Luxe makes up 27 percent of sales and offers cent market share) in the growing ethnic hair-care industry
upscale skin-care, makeup, and perfume brands that when it purchased U.S. companies Soft Sheen Products
include Lancôme, Giorgio Armani, Yves Saint Laurent in 1998 and Carson Products in 2000 and merged them.
Beauté, Biotherm, Kiehl's, Ralph Laurern, Shu Uermura, L'Oréal believed the competition had overlooked this
Cacharel, Helena Rubinstein, Clarisonic, Diesel, category because it was previously fragmented and mis
Viktor&Rolf, Yuesai, Maison Margiela, Urban Decay, understood. Backed with a deep portfolio of brands and
Guy Laroche, Paloma Picasso, Atelier Cologne, House products, SoftSheen-Carson is now the market leader in the
99, It Cosnetics, and Proenza Schouler. L'Oréal Luxe ethnic hair-care industry.
products are available at department stores, cOsmetics
(continued )
 146 PART 3
DEVELOPING A VIABLE MARKET STRATEGY

short
L'Oréal also invests significant money and time in its eyelashes, which are usually
tocurl Asian wormen's Wondercurl mascara
20 research centers grouped into six months,
regional hubs in the and straight. Within three
United States, Japan, China, India, Brazil, and South number-one-selling mascara, and
Africa. had become Japan's
The company spends close to ¬900 million on stores to buy it. L'Oréal
R&D, more girls excitedly lined up in front of developed nail polish,
than one percentage point above the industry continued to research the market and
average, new generation of
researching and innovatingproducts that meet the local blush, and other cosmetics aimed at this
needs of each region. Understanding the unique beauty rou Asian girls, 37
tines and needs of different cultures, climates,
traditions, and
physiologies is critical to L'Oréal's global success. Hair and Questions
skin differ greatly from one part of the world to different
another, so
L'Oréal listens to and observes consumers across the globe 1. Review L'Oréal's brand portfolio. What are the
customer segments targeted by these brands?
to gather a deep understanding of their beauty
needs. 2. What are the keys to successful local product launches
L'Oréal scientists study consumers in laboratory
bathrooms and in their own homes, sometimes achiev (e.g., Maybelline's VWondercul in Japan)?
ing scientific beauty milestones. In Japan, for example, 3. What's next for L'Oréal? Who are its biggest competi
tors? If you were its CEO, how would you sustain the
L'Oréal developed specially formulated Wondercurl mascara
company's leadership position?