L’Oreal in India

3 March 2017

Table of Content Table of Content3 Executive Summary4 Company Introduction5 Indian Cosmetic Market5 L’Oreal in India6 Product7 Factors influencing Consumer Decisions8 Culture9 Personal Factors9 Changing Demographics9 Demand for Luxury Cosmetic Brands:9 Cosmetics for Men:10 Perceptions10 Colour Selection:10 Fair Skin Syndrome :10 Beliefs and Attitudes11 Harmful chemicals in cosmetics:11 Ayurvedic/Herbal Products are good for the skin :11 Social Factors12 Boom in Salon Care :12 Bollywood Influence on Cosmetic Industry :13 Packaging :13

Trends:13 Hair Care and styling:14 Conclusion15 References16 Executive Summary Cosmetic industry is one of the most profitable businesses globally. Over the past 15 years the cosmetic market has grown on average by 4. 5% a year. Resulting from the natural increase in the population and the raising levels of income in a large number of countries there is a huge potential for further growth in the cosmetic markets globally. However, the sales growth in mature markets in the western world is slowing and the focus is now shifting to the east.

L’Oreal in India Essay Example

In the past 10 years due to improvements in the overall Human Development Index and per capita income most emerging markets particularly the BRIMC (Brazil, Russia, India, Mexico, China) there is more awareness of personal hygiene and more consciousness about personal grooming. Cosmetic producers and distributors globally have identified this potential and are expanding their businesses in to these new markets. With the increase in per capita income, urbanization , awareness about personal grooming and changing lifestyles India’s cosmetic market has huge development potential.

With the demand for cosmetics increasing Indian markets are opening up to more and more multinational cosmetic companies. Since the liberalization many international brands like Avon, Burberrys, Calvin Klein, Cartier, Christian Dior, Estee Lauder, Elizabeth Arden, Lancome, Chambor, Coty, L’Oreal, Oriflame, Revlon, L’Oreal, Yardley, Wella, Schwarzkopf, Escada, Nina Ricci, Rochas, Yves St. Laurent and Japanese cosmetics company, Shiseido have entered the Indian market. (State of Israel Ministry of Industry Trade & Labour) L’Oreal founded in France is at present the world’s largest cosmetic producer by revenue.

L’Oreal’s global network is very well established in emerging markets and is at present contributing to 33% of the sales. L’Oreal entered the India in 1990 and at present is one of the key foreign players in the Indian cosmetic Market. It is a challenge for any company to be successful in international markets as the factors affecting consumers buying decisions vary from one market to the other. The purpose of this assignment is to conduct a survey to explore the factors influencing Indian consumers purchasing decision of cosmetics and how L’Oreal has addressed these factors.

Company Introduction The L’Oreal group was created in 1909 by a French chemist Eugene Schueller. By 1950 the company had acquired 100 products was present in Holland, Austria and Italy. Soon they expanded their business to US, South America, Russia and Far East. At present the L’Oreal group is the worlds largest cosmetic and beauty company represented in 130 different countries and owns a wide brand portfolio of 500 different brands providing diverse products ranging from hair colour, permanents, styling aids, body and skin care, cleansers and fragrances.

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L’Oreal also well known for its research and development work in the dermatological industry. 3% of its sales revenue is spent on research on cosmetology and dermatological research. It is also active in dermatological and pharmaceutical field and at present is the largest nanotechnology patent holder in the US. The distribution channels are diverse from hair salons to super markets and hypermarkets, health and beauty outlets and direct mail. Indian Cosmetic Market The total size of the Indian retail beauty and cosmetic market stands at U. S. 950 million, showing growth between 15-20 percent per year. This is twice as fast as the growth rate of United States and European Markets. The overall beauty and wellness market that includes beauty services stands at about $2,680 million. (Bhattacharya, 2007). Premium brands that are globally recognized are gaining acceptance amongst the Indian consumers as their exposure to these products have increased rapidly during the past few years. The latest trends demonstrates that middle and high class Indian people spend a large portion of their money in cosmetic product or service.

According to the latest Euromonitor report the Indian color cosmetic market stands at $4113. 4 million and skin care at $346. 9 million (Bhattacharya, 2007). Even with such high growth rates the per capita consumption of cosmetics in India is $0. 68 which is very low when compared to other Asian countries $ 40 in Hong Kong, $ 10 in Malaysia and Taiwan, 12 dollars in Japan and 1. 5 dollars of China. (The Times of India, 2008). However, the improvements in the per capita disposable income in India has resulted in cosmetic products to be considered as necessity products rather than Luxury products in the past.

The cosmetics industry is dominated by key players who have a strong control on the market. Hindustan Unilever Limited (HUL), Procter & Gamble, L’Oreal, Garnier, Revlon, Maybelline, the group of Godrej, Dabur and Lakme are elements par excellence of this industry. Many multinationals are also introducing product ranges of its international portfolio for the Indian market to capture greater market share. L’Oreal in India L’Oreal 1st entered the booming Indian hair colour market in 1990, in partnership with MU group with the Ultra Doux range of hair care & lip care products.

L’Oreal set up its wholly-owned Indian subsidiary operation in 1994 with the launch of its GARNIER range of products from the low-end brand of their international portfolio bringing the “country-of-origin” formula to new markets. Translating from the “Consumer Product” segment to their “Professional Products” range, L’Oreal set up the Professional Product division in 1997 and set two development centres in New Delhi and Mumbai to train the salon owners and professional hairdressers.

L’Oreal operates in India through four main divisions: consumer products, professional products, active cosmetics and luxury products. The biggest contributor to its revenue in India is the consumer products division led by its strongest brand in terms of sales — Garnier. L’Oreal products in India are marketed in a variety of distribution channels namely : mass market, pharmacies and salons. With the expansion of its market share L’Oreal introduced its skin care and make up offerings to India. The rise was also reflected in the change of the subsidiary in India from Indelor to “L’Oreal India Private Limited”.

In 2002, looking at widening the portfolio along with deepening the product lines VICHY was launched of VICHY marking the introduction of “Active Cosmetics Department” which is a very niche, premium product from L’Oreal. Over the three years of its presence its coverage is just 80 chemists all over India. L’Oreal operates three divisions in India, including the Consumer Products Division – L’Oreal Paris,, Maybelline New York and Garnier – the Professional Products Division, which manages the salon business, and the Active Cosmetics Division with the Vichy brand of dermo-cosmetics.

The main threat that L’Oreal face s in India comes from not just its direct competitors like Revlon, P, Nivea etc. but also from the traditional wisdom prevailing. So L’Oreal is fighting to bring in a whole new lifestyle here that requires a change in the way the Indian women think of grooming and also about the expenditure on it. L’Oreal today is present in over 300 Indian cities accessing 7 international portfolio brands. Registering a amazing double digit growth L’Oreal looks set to capture the Indian market in the coming years.

Product L’Oreal cosmetics are well known amongst women of all ages and have a reputation for providing budget friendly but high quality cosmetic products. L’Oreal group markets 500 brands and more than 2000 products in all the sectors of beauty business. There are cosmetic products of European origin, American origin and Asian Origin. Refer Appendix 1 L’Oreal have a complete selection of cosmetic products including hair colour, skin care, Sun Protection, Make-up, Perfumes and Toiletries. The Product Categories Refer Appendix 2

Consumer products : High technology products offered at competitive prices through mass-market retailing channels ranging from haircare, skincare, make-up and perfume products that meet the aspirations of all of its customers. Professional products: Products created for salon professionals, ranging from colorants, hair care, texturing and styling formulas. Luxury products: Top of the range products made available via selective retail outlets (department stores, perfumeries, travel retail outlets, and the brands own boutiques) providing personalized advice at the point of sale.

Active cosmetics : Dermo-cosmetic skin care products that are sold in pharmacies and specialist retailers. These products offer consumers proven safety and effectiveness supported by advice from pharmacists and dermatologists. Factors influencing Consumer Decisions When making a purchase decision there are many factors affecting the consumer’s decision. Most often why consumer by what they buy is deeply rooted in their subconscious as, ninety “ninety-five percent of the thought, emotion, and learning [that drive our purchases] occur in the unconscious mind- that is without our awareness” (Armstrong et al. 2005) These factors must be taken into consideration in order to reach target consumers effectively (see figure 2. 1) (Kotler et al. 2005). When organizing marketing campaigns organizations look at how their products are positioned against these various factors affecting the purchase decision of the preferred market segment. Marketing products such as L’Oreal cosmetics in a non native foreign market such as India, there are many factors influencing the consumer decision making that are different. Culture One major factor significantly influencing the consumer behavior of an individual is culture.

In strict terms , culture is defined as a learned , persuasive , and shared set of orientations within a specific cluster of individuals in a given society (Perner , 2007). European markets being the home market for L’Oreal there is a vast difference between Indian market in terms of history, cultures and level of development. Based on Maslow’s hierarchy of needs cosmetics meet the esteem needs of people as cosmetic assist them in improving their image to gain acceptance, or to gain social status or social recognition.

Esteems needs being high up in the hierarchy of needs, the Indian culture has a huge impact on psychology and consumer purchase decision making process at all levels. Personal Factors Changing Demographics : Unlike many countries where the aging population exceeds the young population creating high dependency ratio, India has a young and rapidly growing population. It is expected that this new generation will result in an overall increase of 70% of Indian GDP.

Since increasing number of women in the age group 22 to 45 becoming independent and joining the work force instead being a stay at home moms there is more demand for cosmetic products . These women have the disposable income and the decision making power to buy what they want (Bhattacharya, 2007). This has resulted in high demand for cosmetics in India. With the increasing literacy rate, Indian consumers are becoming more conscious about personal grooming and the demand for high-quality cosmetic products has increased rapidly.

Hence, there is a huge demand for world-renowned brands of cosmetic products in India. Demand for Luxury Cosmetic Brands: With the rapidly increasing number of millionaires in India, the market for luxury brands is growing annually at a compound average growth rate (CAGR) 35% especially since the emerging young urban population of India, combined with high disposable income are increasingly looking for lifestyle-oriented and luxury products with an internationally recognized brand. Based on Nielsen Global Luxury Brand study (March 2008) India has the 3rd highest brand conscious population in the world.

L’Oreal being an internationally recognized cosmetic brand has introduced luxury product lines such as Lancome, Bodyshop and active cosmetics such as Vichy to India. Cosmetics for Men: Cosmetics and toiletries are not just the domain of women any longer. Men are the emerging market of cosmetic and skin care. (SPC Asia, 2006) Indian men are increasingly taking to the use of more and more body sprays, perfumes and other cosmetics and toiletries. With rising demand from men, the Indian cosmetic market is getting enlarged and many players are coming out with cosmetic products especially skin care products for men.

The market size of men’s personal care segment is estimated at approximately US$ 165million, with Gillette having the largest market share. Other major players in this segment include Godrej, J. L. Morison and HLL. L’Oreal has introduced their “Menexpert” and “Garnier” cosmetic range for this new consumer segment in India. Refer Appendix 3 Perceptions Colour Selection: The culture has an impact on people’s perception of shapes, colours and space. How people interpret different colours can be based on their job, age, gender, status or even religious beliefs.

For an example red is considered to be a colour of celebration for Indians where black is considered to be colour of mourning. In cosmetic fields, the choice of Aishwariya Rai to represent L’Oreal Paris is also a symbol of Indian beauty. When producing colour cosmetics these perceptions are taken in to account as it drives the consumer demand. L’Oreal has large range of colour pallets to suite specific Indian consumer preferences. For an example introduction of gold and colors, jade, Indian pink, turquoise, orange and browns for Indian cosmetic markets. .

Fair Skin Syndrome : Almost all cultures around the world have a preference towards fair skin tone. The desire for pale skin amongst Indians are emerging from the history where based on the complex social hierarchy or the cast system. In addition to this history of colonization by lighter-skinned invaders from the west for 200 years, the concept of fairness being superior is embedded deep within the Indian psyche. According to Mr. Venkatramani who oversees the skin care category at Unilever’s Indian unit, the definition of beauty in the Western world is linked to anti-aging,” where “In Asia, it’s all about being two shades lighter”.

Skin lightening creams are by far the most popular categories in India skin-care market and valued at $318M. L’Oreal has identified this huge market potential and has entered this specific market 1st with “Garnier” and next with their super highend line “Vichy”. However, L’Oreal products so far have a small market share. The major players in this segment are Lakme, Ponds, Fair & Lovely with a 50 percent market share, followed by players such as Nivea, Godrej and Revlon. Beliefs and Attitudes

Harmful chemicals in cosmetics: Customer possesses specific belief and attitude towards various products mostly driven by cultural norms. These beliefs and attitudes make up brand image and affect consumer buying behaviour. Even though cosmetic products are regulated and tested prior to be made available in the markets, there are still concerns amongst consumers regarding the presence of harmful chemicals in these products. Since consumer protection regulations with regards to cosmetic product are not present in India, Indian consumers are much more reluctant to accept safety of cosmetic products.

L’Oreal has identified theses consumer concerns and has taken steps to gain consumer confidence for their products by promoting the concept of “caring through makeup” by highlighting the products’ natural ingredients when advertising. Ayurvedic/Herbal Products are good for the skin :Ayurveda is known to originate in India around 1500 BC influenced by Hindu religion and is embedded in to the Indian culture. Products that initially originated as Ayuvedic medicine expanded to herbal products and herbal cosmetics. The Indian “herbal” care market is currently valued at $630 million. Bhattacharya,2007) Made from natural local herbs extracts or plants like Turmeric, honey, tulsi, pudina, saffron, herbal/ ayurvedic products are very close to Indian consumers. Indian women influenced by Ayurwedic treatments use herbs and natural ingredients as part of their beauty care. Taking the opportunity of growing concerns of harmful chemical in cosmetics consumer preferences Indian Herbal/ ayurvedic cosmetic producers like Himalaya, Lotus and Jovel are drawing customers to their all natural cosmetic products.

Even the existing players too have expanded their range to include herbal variants for an example Hindustan Lever recently introduced the herbal version of Fair & Lovely fairness creme. L’Oreal has more than 70% certified organic ingredients in their products. L’Oreal brand Body Shop recently introduced its Ayuvedic product range “Nutriganics “to attract this consumer segment. Social Factors Boom in Salon Care :For a customer who needs more than a trim, a visit to a hairdresser in India has traditionally been something of a hair-raising experience. O’Connor, 2010) However, beauty salons in India are no longer only about the usual hair cut-and-dry routine. With the out-look towards personal grooming and beauty is changing in the Indian society. Beauty is no longer for the rich and famous. With the boom in the salon and spa industry there is large demand for salon and spa care products in India. L’Oreal salon care products lead in this industry because they were the trend setters where they opened up the L’Oreal Hair & Beauty Academy to train salon professionals in 2006.

Over the past decade they have trained close to 30,000 professionals. Today, L’Oreal markets its range of specialized hair care products exclusively through salons and beauty parlours. L’Oreal currently is the only company in the market that has a hair colour range tailored exclusively for parlours. Bollywood Influence on Cosmetic Industry :Indian film industry “Bollywood” has a tremendous influence on the growth of the cosmetic industry in India. Actors and actresses are considered as style icons of youth of India.

L’Oreal has identified the impact of Bollywood and movie star glamour on building consumer confidence as well as improving sales of their cosmetics range. L’Oreal has selected young and trendy Sonam Kapoor and Miss World pageant winner and established Bollywood actress Ayishwarya Rai and Bollywood heartthrob John Abraham to endorse their new product lines. Refer Appendix 4 Packaging : Packaging is an integral part of the product and identity. It also preserves efficacy and performance in different local conditions of storage, distribution and use.

Given the price-sensitivity of the Indian consumers, they do not normally prefer to spend a large sum of money at one time. Hence, many cosmetic and toiletries companies launched their products in smaller pack sizes to make them more affordable and attractive to the average consumers. By selling products in tubes instead of bottles, for example, or by using smaller-format bottles or sachets, L’Oreal is able to offer consumers in all markets innovation at the right price Trends: Trends are long lasting because they emerge from collective needs of consumers that is part of their culture.

With the popularity of satellite Television and a wide variety of television channels as well as Internet, more and more Indian consumers are constantly exposed to wide variety of global cosmetic brands creating more brand awareness which often translates to sales. They are linked to consumers’ behaviour and psychological patterns that refect their unique culture. With the increased exposure to global fashion trends, lifestyle trends and glory in international beauty pageants, has given a boost to the Indian cosmetic industry.

The Young Indian population are more interested in keeping up with global fashion trends such as whitening boom, eco friendly trend, natural trend, peter pan trend as well as neo-femininity trends. Refer Appendix 5. Cosmetic producers such as L’Oreal has been innovative in predicting these trends and making right products available at the right time. Hair Care and styling: As has always been the case in every country since history began, hair still possesses powerful symbolic and reminiscent properties. Dark Eyes, long black hair are two things that are considered as attraction in the Indian culture.

At present 85% of Indian women have long hair. Most young girls are encouraged to wear their hair from young age. When maintaining long to medium long hair, hair fall and breakage are main issues faced by Indian women. In the past hair care meant oil massage and shampoo, now more and more users have started adding conditioners to their hair care list. They do like to use hair serums as a way to tame frizz and improve shine. L’Oreal has introduced “Total Repair 5” shampoo and conditioner to meet these specific consumer demands.

Traditionally Indians have been non experimental with hair styling. Due to increase in awareness, with more available global fashion trends, Indian consumers are more open to styling their hair by, perming, colouring, straightening ,re-bonding or even using hair spray, gels and hair cremes. L’Oreal professional dominate these growing markets. L’Oreal has even introduced its Kerastase Institute’s premium hair care service to create more awareness and feed the fashion and beauty aspirations of India consumers. Conclusion

India is one of the emerging in the cosmetic industry. Being a country rich in culture there are many elements affecting the consumer purchase decisions. Potential growth in Indian cosmetic market is unlimited. There are lot of customers who have the resources to buy what they want. If company within the marketing industry properly and effectively advertises their products or services, there would be a great demand for them. Therefore, it is important to know how to properly market the specific product within the Indian culture.

In conclusion as a global cosmetic brand L’Oreal has been up to date very successful in moving away from its self reference criteria and embracing the Indian culture to gain consumer acceptance. However, the market conditions are fast changing. Hence, continuous efforts needs to be taken to ensure proactive solutions are offered to Indian consumers to capture the growing market share. References Bhattacharya, P. (2006) India’s Cosmetic Market Ready for Big Leap,. Global Cosmetic Industry. Issue 1, Retrieved on :Wednesday, 22 December 2010 from : http://www. cimagazine. com/marketstrends/regions/bric/30806969. html India’s cosmetics market set to grow, (Jan 6, 2008), The Times of India Retrieved on Wednesday, 22 December 2010 from; http://timesofindia. indiatimes. com/business/india-business/Indias-cosmetics-market-set-to-grow/articleshow/2678458. cms#ixzz18xh6erla Kotler, P. , et al. ( 2005), Principles of Marketing Sankhe, S. , at all (2010), India’s urban awakening: Building Inclusive Cities, sustaining economic growth, Mckinsey & Company Retrieved on Wednesday, 25 December 2010 from : ttp://www. mckinsey. com/mgi/reports/freepass_pdfs/india_urbanization/MGI_india_urbanization_fullreport. pdf State of Israel Ministry of Industry Trade & Labour, Indian Cosmetics Market – 2004, Retrieved On: Wednesday, 25 December 2010 from : http://www. tamas. gov. il/NR/exeres/2F7DC4F0-48C2-45BE-AFB3-86E5E9CF993C. htm O’Connor, A. (2007), Sharp-eyed L’Oreal gets head start in India, The Sunday Times, Retrieved on Wednesday, 22 December 2010 from; http://business. timesonline. co. uk/tol/business/industry_sectors/consumer_goods/article2980264. ce Appendix 1 L’Oreal Cosmetics Range [pic] Appendix 2 Product Range Appendix 3 Appendix 4: [pic] Appendix 5: Trends ———————– Whitening Trend: New Interpretations Pinking White: Beautiful skin is pinkish white,look natural just like a baby’s skin.. radiant like having aura. Healthy & Flawless: Beautiful skin is not pale white butradiant and flawless skin. Overall the skin must be healthy Natural White: Beautiful skin is white and bright with fine texture. no need to be white like European people. Must look natural Peter Pan Trend

Fear of old age: Fear of old age, wrinkles and aging. Preventative care to slow the aging. Happiness in Life: Remaining attractive to stable happy family life. Fit In/Feel Confident : Feeling less confident with age. Need to look young to catch up with peers of same age. Neo Femininity Trends Femininity Fever : Show feminine side and bring out the sex appeal of women but still have the elements of confidence and modernity Changing perspective of gender role: Support the traditional gender role-cute fragile and lovable rather than being equal to male counterpart

Back to Basic Trends Natural Look Emphasize on creating bright and radiant skin. Nude look, flawless finish, groomed and sophisticated. Looking younger, less make-up. Eco-Beauty Trend Using eco friendly products. Go green trend and environment friendly packaging Green cosmetics Natural Trend High perceived benefits like longer lasting beauty. Synthetic products contains chemicals that can harm your health. Ayuwedic products are naturally clean and good for health.

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