1.0 Introduction

Business marketing refers to the process of marketing products or services within a market to attract more consumers to a particular organization. The process of marketing services and goods differs in terms of organizational size and type depending on the types of consumers, buying situations, and different types of decision-making processes. However, these differences tend to make the purchasing decision and process more complex and involved. The marketing sales forces tend to generate as well as maintain relationships with consumers to understand their requirements and ensure high business revenue from the market. This report, therefore, is going to describe the marketing strategy and analyze the macro environment to understand the marketing process of Loreal.

1.1 Company Overview

Loreal SA is one of the largest personal care brands of France headquartered in Clichy. The company provides a wide range of products that includes haircare, skincare, makeup products, and perfumes. It operates in more than 1520 countries around the world with a revenue of 29.87 billion euro. It also has different subsidiaries such as Lancome, NYX cosmetics, Maybelline, Garnier, Matrix essentials, and some more. Loreal currently markets more than 500 brands. Currently, the company is facing tough competition in the international operating market. It, therefore, is trying to implement different innovative ideas by applying Green Science to acquire more target markets and increase the sales ratio simultaneously (loreal-finance.com, 2020).

Figure 1: L’Oréal Logo

(Source: loreal-finance.com, 2020)

2.0 Macro-environmental changes and their Response

In the marketing field, macro-environment means some significant external forces and factors that cannot be controlled by the organization. It, however, influences the development of the organization. While evaluating the macro-environment of L’oreal, it is important to lay focus on demographic, cultural economics, and technological elements (Mansuy et al., 2019). It will help to understand the way Loreal is working towards maintaining its international business marketing. The analysis can be done on the basis of two main factors, such as digital trends and consumer trends.

2.1 Branding

Loreal has been leading the cosmetic and beauty industry for a long time. Due to its wide range of products and range, even the common people find it as one of the most affordable cosmetic brands for their regular use. Loreal mainly focuses on universalization by maintaining all demographics and cultural differentiation in their products. The main USP of this band is that Loreal tries to localize their product scarring to the culture, the environment of its operating country. Through this, they want to share a vision or message that the company is adopting its own culture. Another reason behind the local product formulation is to make the product affordable and absorbent for the consumers (Boisen et al., 2018). In this way, the company tries to give its consumers the best brand experience at an affordable rate. By making a digital transformation, Loreal is trying to invest more in research and development that is helping the company to create its own customer persona. It helps them to understand the consumer requirements through different digital media platforms and communicate with them accordingly. By accepting branding as one of the most significant factors of marketing, l’Oreal expressed that through digital as well as traditional branding, they are trying to reach maximum consumers to understand their requirements as well as complaints regarding their products. In this way, Loreal is trying to convert their one-time consumer to a long-term consumer that will help the brand to make their presence in every possible market.

2.2 International Expansion

L’oreal operates in more than 150 countries around the world successfully; hence it is obvious that it performs an extensively exclusive international marketing strategy to hold this position for a longer time. International market expansion strategy refers to the process of formal and multi-level planning to enter into an overseas market to establish a growing global presence as well as become profitable. The companies need to implement expansion strategies to make the business more sustainable and structured (Li et al., 2020). However, the planning helps the company to identify the risks and encourage proper use of time, resources, and capital for global expansion.

The organization always tries to analyze the cultural, economic, and political elements to understand the cultural and economic patterns of giving them the products to which they are actually worth. It also analyses the competitive market before entering into a new market to develop a successful competitive culture for international market expansion. It, therefore, builds an ample number of products or brands that are entrenched into the restricted cultural countries to be accepted by a larger percentage of consumers. It also focuses on the supply and demand ratio to maintain a constant product demand even in the international sector rather than keeping the products identified in the world.

2.3 Segmentation

Customer segmentation plays a key role in developing the business in the international sector. This can be described as the process through which the company divides the customers based on their common characteristics such as demographics and behaviors. This helps the company to evaluate the customer’s nature more effectively and efficiently. Loreal segregates its market on the basis of its demographic area of market expansion. It has segmented its market into four regions, such as the Asian market, European Market, North American market, and African, Pacific, and Orient region. L’oreal is one of the most famous and accepted due to its low price. Hence, people of China, Japan, Thailand, and other countries are more prone to using this brand (Bortoluzzi et al., 2018). This helps the company to develop its branding and marketing strategy to acquire more target markets. In Asia, Loreal uses the brand diversification strategy by involving the local variations to become the local company in this region. In the European market, it focuses on the local culture that helps the company to segment the region based on their culture. In regions like Africa and the Pacific region, this company segments the customer based on their economic capacity and also based on their requirements to develop appropriate strategies to achieve maximum benefit of internationalization.

2.4 Consumer behavior

Understanding consumer behavior is important to expand the business both in the domestic and international markets. Consumer behavior can be determined through the process that influences the decision-making process of a consumer to purchase any product. There are different things that influence a consumer to or not to purchase any product from any particular brand or company. Analysis of consumer behavior gives the organization the foundation that it needs to achieve while expanding business in both domestic and international sectors (Camilleri 2018). It seems, especially in the Asian region, consumers are highly satisfied with the product price and quality. In 2020 the sales rate of Loreal increased by almost 35% in the Asian region. However, in contemporary times consumers are more prone to ensure whether the brand is maintaining its CSR policies subsequently and ethically at the same time.

For having a clear understanding regarding consumer behavior, L’oreal has created numerous Social media reference groups that give them potential ideas regarding the choice and experience of customers. As the company tries to mitigate the issues soon thus, it can enhance the range of loyal customers in its operating area. However, psychological factors also influence consumer behavior towards an organization. Generally, human perception uses five sensors while selecting a product, which includes vision, smell, touch, taste, and hearing (Moravcikova et al., 2017). Thus Loreal always tries to produce its products within an attractive packaging with an attractive smell to attract more customers to use their products. Moreover, the company also uses different celebrities to promote their products in their operating markets with attractive taglines. Since 2011 Loreal has been introducing more environment-friendly and animal cruelty-free products, which drives consumer behavior to a new level. 

2.5 Competitive Advantage

Every business organization analyses its competitive advantage within a market to identify the factors that allow it to produce products or services in a better or cheaper way than its competitors. These factors guide the company to become a more productive entity for generating more sales and profit margins in comparison to other market competitors. The factors include cost structure, product quality, branding strategy, intellectual property distribution network, and pre and post-buying customer service. Loreal also tries to evaluate its competitive advantage through four factors such as cost leadership, differentiation, cost focus, and differentiation focus. Boeing, an 109 years old company, uses different innovative and advanced technologies to produce in bulk that helps the company to limit its product price (Dhiman et al., 2018). Despite substitute products in the market, Loreal always tries to increase its product quality and variation that attracts the consumers to try the new products at least once.

Figure 2: Factors of Competitive Advantage

(Source: Self-created)

Also, it develops products based on its customer segmentation through which people from every sector of society can afford a different range of products from their variants. Finally, it offers unique product features and attributes to its target markets to achieve their attention for a longer time. Especially in the post-covid era, Loreal is mainly focusing on the “Go Digital” strategy to influence its buyers through digital platforms and through different beauty vloggers. It is helping them to understand their position in the competitive market and implement strategies accordingly. 

2.6 Customer Communication

In this contemporary market, communication with consumers has become most important to meet consumer demands and win a competitive advantage within a market. Traditionally, the communication between the consumers and organizations generally happens through one-to-one conversations between the client and vendor. However, in these changing circumstances, customers, as well as organizations, try to communicate with each other through different channels. The organizations are also trying to use different surveys and software to understand the consumer view and communicate directly with them (Raewf et al., 2021). The heart of L’oreal’s communication strategy is corporate communication. However, with the changing business environment, the company is also trying to incorporate different social media platforms and other tools to communicate with its consumers. The company even uses emails and other platforms to communicate directly with its consumers and provide maximum support to them regarding products and services.

3.0 Future Challenges

The continuous market expansion of other cosmetics brands is reducing the strength of these cosmetic brands in the international market (Distanont and Khongmalai, 2020). Furthermore, the biggest challenge of Loreal is that the consumers have become more concerned regarding their policies of sustainability and CSR policies on which they are failing to meet the consumer demand.

3.1 Future Growth Opportunities

As the company is slowly involving the consumers in decision making policy that will help the company to bring out new products according to the customer requirements. Also, if the company utilizes the growing demands for organic cosmetic products, it will help the company to extend its customer base in new operating markets (Singh et al., 2019). The studies show that the market potential of cosmetic and personal care products is constantly evolving. Hence if the organization invests more in R&D regarding organic or vegan products, it can get maximum benefit for the organizational development.

4.0 Conclusion

This report has tried to provide a brief discussion regarding the marketing strategy implemented by L’oreal. It seems to be one of the oldest as well as most popular cosmetic brands in the world. It imposes sufficient importance on developing marketing strategies to expand and quite new markets. However, due to its strategic business marketing policy, the company is successfully operating in more than 150 countries. Still, with the growing competition in             In this market, the company is facing several challenges.

If the company can do more in-depth market research regarding the customer requirements, it will be helpful for the company to bring the products according to their needs. Also, it needs to develop some organic and vegan products at a limited price as the vegan market is slowly increasing in many European and Asian markets. Eventually, the company needs to become more digitally active for maintaining direct communication with the consumers, which will help the company to understand the exact market condition.

However, marketing strategy plays a very important role in developing an organization. Undoubtedly L’oreal is performing its strategic expansion in a tactful way. If the company follows the given recommendation, it will ensure more success in the upcoming days.