L’oreal in France and America Case Study

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Thus the breakdown of retail sales for all major players is as follows (in $ million)

Total retail Sales

Treatment

Daily

Cleansers

Olay

158.73

15.94

116.86

25.9

Ponds

107.85

42.66

28.44

36.9

Plenitude

77.09

48.11

17.80

11.1

Noxema

70.8

-

-

70.8

Yellow is the segment leader. What is interesting to see is

- Presence of Ponds as number 2 in all segments!

- Ponds is the highest priced and yet has a good toe-hold in all segments

- Perhaps due to the fact that L’Oreal is the highest priced cleansers. Ponds cleansers price is lower (much lower!). So, do customers form price perception based on cleansers (more used than moisturizers? In other words, do people perceive L’Oreal to be high priced because its cleanser is highly priced?

Final thought—L’Oreal is the leader in Treatment, even there it is closely followed by Ponds. Olay is the leader in Daily, Ponds is a very poor second. Treatment is a smaller market (about 105 million) while Daily is a larger market (about 170 million). So, it is natural for L’oreal to aspire to be in Daily (Class to Mass). The Question, therefore is, do they have the internal competency?

Question 3: L’Oreal has a “Star” product policy. What is this policy? Why is this Policy? What is the consequence of this policy with respect to marketing expenditure?

What is the policy: Very Clear from the case

Why is this policy: Due to technology platform

Consequence of the strategy with respect to marketing expenditure. See Table on page 7. The Sales are given, so you can find the market share. The ad expenses are given you can find the share of expense. And therefore, you can find the ad efficiency. You should find that Ponds is very efficient and Plenitude inefficient. Surprisingly (or is it?), Olay is also inefficient. Why?

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