Kim Jiwon Jessie 11340696045 Wong Siew Fong 11340126053 Contents Market overview Chinese beauty market consumer behavior Company overview amp Main business LOréals business model in china ID: 815136
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Slide1
Market study of L’Oréal
Kim
Jiwon
(Jessie) 11340696045
Wong
Siew
Fong 11340126053
Slide2Contents
Market overview
Chinese beauty market consumer behavior
Company overview & Main business
L'Oréal’s
business model in china
L'Oréal
in China
Situation & competitors in China (local &
intl
’)
Challenges & problems
Recommendation
Slide3Market overview
Global beauty market
Slide4Global beauty market
Compound annual
growth
rate
3.4
%
Personal Care Industry Reaching
$630billion by 2017
Premium Cosmetics
outperformed Mass
Cosmetics
(growth of 4.7%)
Demand from Asia Pacific region generated
$21billion incremental retail
value
Slide5Chinese beauty
market
Slide6China’s Beauty Market
Retail sales increased by 17% year-on-year
Foreign cosmetics enterprises captured about
80
% market share in key cities
Cosmetics sales growth relatively slower in tier 1 cities
Slide7China’s Beauty Market
Shifting away from the traditional distribution
channels
Health and beauty retailers and Online retailers
replacing Grocery retailers and departmental stores
Slide8China’s Beauty Market:
Socioeconomic factors
Lack of makeup culture: only 10%-15% of the market is Makeup products
Increasing recognition to Local brands
TCM and Herbal Culture
Slide9Company overview
Slide10L'Oréal
Started in French
in 1909
World’s largest cosmetics company
, with worldwide sales of €22.5 billion in 2012
In 130 countries
on five continents
Unrivalled portfolio of 27 brands
2 main divisions
The Luxury Product Division (LPD)
The Consumer Product Division (CPD)
Slide11L'Oréal
China
Started in 1997 in
Hongkong
with
L’Oréal
Paris
Second largest
beauty and skincare player in China:
No.1 in the luxury
segment
Established a Research and Innovation Centre in Shanghai, and manufacturing centres in Suzhou and in
Yichang
Slide12Product categories
L'Oréal
Luxe
Active
Cosmetic
Division
Professional
Products
Consumer
Product
Division
Lancôme
Giorgio
Armani
Beauty
Biotherm
Kiehl’s
Shu
Uemura
Helena
Rubinstein
Yves Saint Laurent
Yue
Sai
Yves
Saint Laurent
Beauté
Ralph
Lauren
Cacharel
Clarisonic
Diesel
Viktor&Rolf
Maison
Martin
Margiela
Urban
Decay
Vichy
La Roche-
Posay
SkinCeuticals
Innéov
Roger&Gallet
Sanoflore
L’Oréal
Paris
Garnier
Maybelline NY
Mini Nurse
Softsheen.Carson
Createurs
de beaute.com
Essie
L’Oréal
Professional
Kérastase
Matrix
Redken
Pureology
Shu
Uemura
Art of Hair
Mizani
Essie
Slide13Product categories
Make Up
Skin Care For Men
SkinCare
Hair
Slide14China grew from the 7
th
largest market in 2008 to the
3
rd
largest market
Slide15Slide16Business model
in
China
Slide17Key Partners
advertisement agencies Suppliersdistributors
Value
PropositionsPrestige
Western
branding
Asian
branding
Customer
relationship
Advertisement
Consumer
Caring
Center
in Shanghai
Customer segments
Gender
Income
Distribution
Channels
Departmental
stores
Beauty product chains
E shopping platforms
Key
Activities
Production
Marketing
R&D
Key
Resources
R&D
P
roduction plants
Employees
M
arketing
Cost Structure
marketing, research costs, commission and rentals (departmental stores), production
Revenue Streams
fixed pricing
e commerce
Slide18Gender
Male
L'Oréal Men Expert
Garnier
Men
Income
Masstige
Vichy
La Roche-
Posay
SkinCeuticals
L’Oréal
Paris
Garnier
Maybelline New York
Mini
Nurse
Prestige
Lancôme
Giorgio Armani Beauty
Biotherm
Kiehl’s
Shu
Uemura
Helena Rubinstein
Yue
Sai
Channels
Female
Beauty product chains
E shopping platforms
Departmental Stores
Cosmetic Stores
Slide19western
Asian
Chinese
Young
Mature
Origins
Age
Value
proposition
Slide20Key Partners
advertisement agencies Suppliersdistributors
Value
PropositionsPrestige
Western
branding
Asian
branding
Customer
relationship
Advertisement
Consumer
Caring
Center
in Shanghai
Customer segments
Gender
Income
Distribution
Channels
Departmental
stores
Beauty product chains
E shopping platforms
Key
Activities
Production
Marketing
R&D
Key
Resources
R&D
P
roduction plants
Employees
M
arketing
Cost Structure
marketing, research costs, commission and rentals (departmental stores), production
Revenue Streams
fixed pricing
e commerce
Slide21L'Oréal in China
Slide22International experience + Adapting to the local market
Competitive Advantages
“Because you’re worth it”
“
你值得拥有
”
Local Acquisitions
Strong R&D capability
12.4 percent year-on-year growth in 2012
12.05 billion
yuan
($1.94 billion) in China
12th consecutive year the company gained double-digit annual growth
Slide23Chinese taste for Luxury
L’Oreal
Luxe
Huge
potential from the next generation
Slide24Yue
Sai
-
L'Oréal’s
Local Brand
Bought in 2004, targeting mass-market
Struggle for successful marketing
the brand for modern Chinese women
the brand for modern Chinese women.
traditional Chinese medicine ingredient
Slide25Competition in China :
Situation & Competitors
(Local & Intl’)
Slide26Local competitor
– Shanghai
Jahwa
(
上海家化
)
Established in 1898
leading and largest Chinese company of beauty and
personal care products
doubled its revenue in the past 5
Liushen
,
Herborist
,
Maxam
and GF
blending traditional Chinese herbal medicine with modern
biotechnology.
several international partnership like Coty Adidas
and Sephora
Slide27Jahwa
L'OréalTarget group
Product positioning
Strength
Masstige
/ low end segments
Luxe
market
Local brand vs. International brand
Masstige
/ mass market vs. Prestige market
Younger market vs. Mature market
Owns the most extensive distribution network in
china
Use of herbal ingredients and traditional Chinese Medicine
Consistent strategy development as local
brands
Specialized in
luxe
brands
Prestigious: trustworthy image
Internationally diverse portfolio
Slide28International competitor
– P&G
Established in 1837
,
the world’s largest consumer products company
First multinational to enter China’s
beauty and
skincare market in 1988
6% of the firm's worldwide sales in China
250 brands in six main categories
Beauty products ; Olay, SK-II, Pantene,
Head&Shoulders
,
Safegaurd
, Gillette
Slide29P&G
L'OréalEmphasis Target group
Brand image
strength
Beauty and Hair care products Beauty and cosmetics
Usually mass and rural
Luxe
market
consumers
Amiable international brand Luxury European brand
Flexible marketing strategy (esp. in rural areas)
Prestigious: trustworthy image
Diverse portfolio
(whole
product categories)
Specialized in
luxe
brands
Prestigious: trustworthy image
Diverse portfolio
(cosmetics
and skincare products)
Slide30Market Share
Slide31Challenges & Problems
Limited consumer market for makeup
products
Competition with local brands and natural products
Conflicts of Animal testing
Slide32Slide33Threats
of alienating consumers in markets where public sentiment demands humane treatment of
animals
Companies would need to reformulate their wares for the two markets
Slide34Competition with local brands (natural products)
Maintain
luxe
image
Strengthen local brands like
Yue
sai
Connecting the long heritage with safety and luxury image
Suggestion : What are the next steps for L'Oréal?
Slide35China requiring Animal testing
Suggestion : What are the next steps for L'Oréal?
- Invested
€900 million
in international research on alternatives, such as reconstructed tissues and tissue models.
-
5.7 billion L’Oréal products
are sold per year which are free from animal testing
-
Less than 1 percent
of its total safety testing on cosmetics ingredients involve animals
* Produces
130 000 reconstructed skin models per year
in France
* The facility in
Pudong
(China) produces close to 30 000 skin models
Finding alternative methods to testing
Keep talking to local authorities to ease the regulations
Slide36Limited consumer market for makeup
product in China
Word of Mouth marketing
Samples for makeup products(color)
Make-up Campaigns & Workshop
Suggestion : What are the next steps for L'Oréal?
Slide37Thank you