L'oreal Case Study

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Yue Sai sold to Coty, that focused on distribution and not branding over time → gradually losing relevance.

LOREAL ACQUIRED YUE SAI IN 2004. This would fit perfectly with “beauty for all” mission from Loreal. Loreal also bought mininurse, a Chinese brand targeted to the mass market. → FUTURE LOOKED BRIGHT FOR YUE SAI UNDER L’OREAL MANAGEMENT

POSITIVE SIDE: L’Oréal acquired brand with wide distribution, strong sales, historical strength in makeup, good skincare products and packaging, and factory and r&d facility.NEGATIVE SIDE: brand associated with older consumers, sales fading, lost marketing and r&d innovative edge, and unclear how it fitted into L’Oréal portfolio.

Yue Sai assigned to Consumer product division (cpd) -> same mktg strategy as worldwide. (scientific improv, celebrity driven glamour, wide accessibility)

Lower price than L’Oréal Paris, new products annually, and the brand continued with the huge distribution. Communication focused on technology, featured beautiful Chinese actresses and models, inspired by loreal Paris ads.

→ This strategy failed, less sales and awareness while loreal Paris was booming. To give a new set → FROM CPD DIVIISON TO LPD (LUXURY PRODUCT DIVISION). Promotion: Yue Sai featuring Taiwanese movie star to re-stablish brands luxury image

L’Oréal Shanghai Research and Innovation Centre focused on creating products specifically designed for Chinese skin.

REPOSITION YUE SAI as the first brand to stand for Chinese women’s beauty. → insight that modern Chinese women were radically changing, were proud and self-confident, and had clear vision of future and their new role in society.

To communicate this, they invested in television and print advertising campaign featuring Chinese supermodel. STRONG MESSAGES, CONFIDENCE. ----→ PRICE HIGHER THAN L’OREAL PARIS. (new positioning); new distribution channels.

INCREASING NUMBER OF FOREIGN PREMIUM BRANDS ENTERING THE CHINESE MARKET DECREASE THE VISIBILITY OF YUE SAI.

TURNING AROUND YUE SAI

-UNCERTAIN BUSINESS MODEL, AN AGEING CONSUMER BASE, UNCLEAR POSITIONING.

-Chinese firms catching up with multinationals.

- Make explicit association with Loreal?

- Expand internationally?

- Extend brand to other product categories?

- Target other consumer segments

MARKETING MIX DECISIONS

ADVERTISING AND PROMOTION: continue with tv and press campaign? Costs increasing, more brands relying on celebs. Replace du Juan for celebrity? 80% on skincare and 20% makeup. Change? Focus on new media platf?

PRICING AND DISTRIBUTIONS: how to price in comparison with loreal? Some lines expensive? How to deal with the new distribution channels such as ecommerce portals? Engage in franchising to create own standalone stores?