L'Oreal Final

8/9/2019 L'Oreal Final

1/7

Case: LOreal Netherland B.V.Efforts to Market the Garnier

Brand in The Netherlands

Dr. Jablonski

MKTG 600

Presentation Date: September 16, 2008

Joel Gunnarson | Jeff Hoppe | Brian Kroger | Jessica Stanley


2/7

LOreal Netherland B.V.

Gunnarson | Hoppe | Kroger| Stanley

2

Problem Definition

Under the Garnier family brand name LOreal has successfully launched both the Synergie skin care and Belle

Couleur permanent hair coloring lines in France. While the Garnier brand name is familiar to the French, Dutch

consumers have little to no awareness of the brand. LOreals main problem in this case is deciding whether they should

try to launch a product line in a market with little brand awareness. Although this is their main problem, other

difficulties are likely to arise, such as overcoming brand loyalty and defining a positioning statement that appeals to the

female Dutch consumer.

In the Netherlands, Garnier has introduced only one product, a sunscreen that few Dutch women know about,

and corporate headquarters wants the Netherlands to introduce more product lines over the next few years. Introducing

a new product line successfully into the Dutch market is vital for Garnier because it can determine the success of the

brand as it expands into new markets. One of the goals of introducing a new product line, to a market with little brand

awareness, is to create a positive association and/or experience with the Garnier family name. To create a positive

brand image and high brand awareness new products must have a strong concept, high market potential and great

positioning with consumers.

Cosmetic consumers tend to be brand loyal in fear that they will have experience negative results when

attempting to use a new or different brand. This is another obstacle Garnier must overcome in addition to launching a

product line to a market with little brand awareness. Dutch consumers will continue to purchase products that they

know, use and trust, because they have had positive outcomes after product usage. It is known that attachment to a

certain product only becomes stronger with age, so its imperative that a new product l ine reach the young consumer

who will only grow increasingly loyal as they grow older. Cosmetic consumers research products to become familiar

with the items that they want to buy, therefore, both product packaging and advertising of the new product lines needs

to be informative, to ensure the cosmetic consumer understand that the Garnier brand will fulfill their wants and needs.

When discussing possible solutions, it is necessary to come to a recommendation that will create the most

brand awareness and result in a positive association for the brand. The more familiar a consumer is with the brand, the

more they will be willing and able to relate to a concept presented by that brand. Hopefully this will lead to reduced

perceived consumer risk, trial of the product, and finally increasing brand and family loyalty.

Solution Possibilities

Option #1: Launch Belle Couleur Only

The first potential solution for LOreal would be to launch only the Garnier hair coloring line, Belle Couleur.


3/7



3

Launching Belle Couleur aligns with LOreals mission statement of helping men and women around the world aspire

to be beautiful and to express their individual personalities through cosmetics. In the Netherlands, there are 5 million

women in the market of which 46% used hair coloring. Of this 46%, 73% used permanent hair coloring, this totals to a

market size of about 1.7 million users. With a proposed selling price of 12.95 guilders and an average use of 4 times

per year the total revenue market potential is 87 million guilders in year one and growth of almost 46% over the next 5

years. Belle Couleur has a strong positioning statement, natural colors, covers all gray which resonates with Dutch

consumers as over 60% of research participants stated that they used hair color to cover gray. No competitors currently

have a clear positioning statement; therefore Belle Couleur has a great opportunity to clearly position their brand.

LOreals current hair coloring offering, Recital, is the hair care market leader. Recitals market share is

declining as the general market is trending towards warmer shades, and competitors appear to be offering warm, red

tones. Based on market research, Dutch consumers responded positively to the concepts and the prices of the product

line, but after usage participants stating that they probably/certainly will not buy Belle Couleur increased from 13% to

32%, as consumers said that the colorant didnt cover gray and was too dark. Since LOreal only offers permanent hair

coloring products that target consumer looking to cover gray, this presents a major issue for Belle Couleur and shows

that their product results and positioning strategy are not matching up well. Another red flag with the market is that

Dutch hair-coloring users are clearly trending towards using semi-permanent hair coloring products, as over the past 4

years permanent users have dropped from 88% to 73%.

As a subsidiary of LOreal, Garniers Belle Couleur would be manufactured in France, the headquarters of

LOreal; therefore they have the option to either take the product to market unmodified or dont take it to market at all.

If Belle Couleur is going to work in the Netherlands, the organization will have to immediately work on a distribution

plan, as the Dutch like to buy specific products at specific locations, therefore a detailed marketing and advertisement

strategy must be put into place. Management also needs to keep in mind that LOreal already offers Recital under its

own brand name and avoid cannibalization. (For current distribution channels and proposed distribution and the percent

of sales expected from each outlet given only Belle Couleur is launched, see Appendix 1 and 2.) (See Appendix 5 to

see Financials showing what would happen if Belle Couleur were added to the LOreal mix in The Netherlands)

Option #2: Launch Synergie Only

The launch of Synergie is supported by the fact that the Dutch market is growing more than 12% annually.

When looking at demographic trends (the aging population, increasing disposable income for women, value focused

consumers) along with a growing market, the launch of Synergie appears to have a lot of potential. Financially the


4/7



4

projected total revenue potential for the skin care market in year one is 58.6 million guilders and the 5 year growth rate

of the category is estimated at 110%. In addition, the Dutch consumer has shown increased interest in products with

natural ingredients, which is part of Synergies positioning statement The alliance of science and nature to prolong the

youth of your skin. If Synergie can break into the market, consumers are very loyal and they link their self concept

with the brand image.

Within the skin care market competition seems to be very stiff at the middle price range especially from

LOreals own offering, Plentitude. The Synergie product line is going to have to f ind a way to d ifferentiate itself to

create consumer value. Synergie will also have to find a way to familiarize the Dutch consumer with the technical

product descriptions and terms that make Synergie unique.

Lastly, one of the most significant problems with the introduction of the Synergie line comes back to the

product. According to market research, after knowing the price those who used the product for a week were less likely

to purchase the product than those who just used it once. This seems to show that the product is not as good as others in

its price range. At the same time private labels entry is a viable threat as they can copy competition fairly quickly. (For

current proposed distribution and the percent of sales expected from each outlet given only Synergie is launched, see

Appendix 3.) (See Appendix 4 to see Financials showing what would happen if Synergie were added to the LOreal mix

in The Netherlands)

Option #3: Launch Both Synergie and Belle Couleur

One obvious benefit to launching both lines would be the saturation of the Garnier brand name into the Dutch

market. By launching both product lines, Dutch consumers would become even more familiar with the Garnier brand

name and potentially be more willing to try the product. If Garnier can get over the initial challenge of breaking

consumer loyalty to their current products, by showing that they are offering a unique product that works well and

appeals to their needs, then they should see success from launching both lines. LOreal has a policy of having

subsidiaries financing their own product introductions and marketing plans. By launching both, LOreal would have a

bigger budget to work with, thus increasing their ability to reach the Dutch consumers.

There is clearly a lot of risk associated with launching both lines. As stated earlier, based on the current

positioning statements and market research for each line-up, the data simply does not support strong consumer

acceptance. Something would have to be done to improve the consumer perception of the brands, such as a stronger

positioning statement, a focused marketing plan, or a better product in general. Also, since the subsidiary is responsible

for the introduction of the product, there is a possibility that the LOreal sales force becomes overwhelmed by having to


5/7



5

sell in both products at once, while maintain the current LOreal offerings. LOreal would also have to lobby for a lot

of shelf space in both drugstores and supermarkets. They cannot rely on the retailers just handing them the shelf space,

especially since they do not have an established brand name in the Netherlands.

Recommendation Do Not Launch Either New Product Line

The decision that the Netherlands LOreal subsidiary faces is very difficult, especially in a smaller market with

multiple competitors and an aging population that tends to be very brand loyal. We recommend that LOreal launch

neither Synergie nor Belle Couleur until they can come up with a concept and product that d ifferentiates itself from

competitors and provides clear evidence of consumer acceptance. Obviously this is not going to be an easy decision for

management to accept, but based on what we know about the Dutch market and the importance of introducing the

Garnier name with a successful product line launch, we believe that the target market and product positioning needs to

be more clearly understood. Also cosmetic life cycles are very short; therefore if we offer a new product in the Dutch

market we need it to be breakthrough innovation. Finally, in an established market such as the Netherlands, a new

product line would have to be financed by the current operations within that company and LOreal already markets both

skin care and hair coloring product lines in the Netherlands. So not only would Garnier be competing against LOreal

in a smaller market, but the Dutch LOreal sales force would have to sell both product lines.

Dutch consumers have very little awareness of Garnier and they have not formed a brand image; this makes it

very difficult to break into a market where consumers tend to be brand loyal. Although Dutch women have more

disposable income, the fastest growing segment is women 25+ who shop for value and only purchase skin care products

1 to 2 times per year, making it very difficult to establish a new brand in the skin care market. The Dutch research

department conducted research on the Synergie products and the results were fairly similar to competing brands

including LOreals current offering, Plentitude. An especially fast growing category consists of anti-aging creams and

yet the research results declined after participants used the Synergie anti-aging cream. Dutch women are increasingly

interested in products with natural ingredients, but they arent familiar with technical product descriptions, which is part

of the current position statement that Synergie provides (The alliance of science and nature to prolong the youth of

your skin).

The trend over the past 4 years has been towards the semi-permanent colorant, yet nearly 73% of Dutch

women us permanent hair coloring. There is a lot of potential in this market, but there are strong competitors. As

mentioned, LOreal has an offering in this category and smaller brands have entered the market over the past few years

as well. Currently none of the competitors have a clear positioning statement describing customer benefits; therefore


6/7



6

Belle Couleur appears to have a competitive advantage with its current positioning as natural colors, covers all gray.

But there are two major problems with the Belle Couleur line. First, the market research conducted revealed that after

use participants who probably would not or certainly would not buy the product increased from 13% to 32%, with

many women saying that their hair was too dark and the color didnt cover the gray. Secondly, Dutch consumers

tended to use naturally light colors, but the French manufactured Belle Couleur is formulated to give a classical dark

blond look and it is LOreals policy to not modify the product for a new market.

In terms of distribution, LOreal has a positive image with Dutch retailers and they need to make sure that any

new products they offer provide high quality and innovative, while showing consumer acceptance. We do not think that

either of the potential lines offers what distributors expect from LOreal. Therefore if they decide to launch the new

line-ups there may be some risk of losing current LOreal distribution as the Garnier lines will be shipped with LOreal

in order to gain distribution quickly.

LOreal headquarters wants to introduce more Garnier products in other areas including the Netherlands over

the next few years. There is potential to move into both skin care and hair coloring markets as the annual volume

growth rate is 12% and 15% respectively, but more work needs to be done to understand the target market and to come

up with a concept and value that resonates with the Dutch consumer. In order to move into the skin care market,

Garnier needs to position the Synergie line as a natural moisturizer that is sold at a reasonable price, and then they

have to retest this concept and using a lower price to determine if there is a potential target market for a new brand line

up. They also need to be prepared to spend a lot of money upfront on advertising in order to gain market share. To

move into the hair care market Belle Couleur needs to modify its product to cover gray hair, they have a strong

positioning statement that resonates with consumers who want color to cover gray hair. Either they need to re-formulate

the product to cover the Dutch consumers gray hair or they need to change the positioning statement and emphasize the

lower price offered by Belle Couleur. It is critical that the Garnier product line launch is successful so that they can

build a positive brand image, create consumer value and ensure future success of its products in the Netherlands.


7/7



7

Appendix

L'Oreal Final

Documents

Transcript of L'Oreal Final