L’Oreal of Paris: Bringing Class to Market with Plenitude Essay

L’Oreal has always used its Class to Market approach and used its high-end technologically superior products to advertise its brand. It uses the ‘Class to Market’ products to finance its research into newer technologically advanced products. The US Market is a very competitive market where all the companies put millions of dollars into advertising and other promotional events. The US market also has a lot of potential as the people are fashionable and have the money to pay for the products that cosmetic companies make. The US market presents its own challenges; people from across the world live in the US, for a cosmetic company this means that there are many skin tones, skin types etc. importantly, it also means that there are different attitudes and perceptions about cosmetics, consumers income levels, consumers budget towards cosmetics. And this differs from state to state in the US. Community A maybe using a lot of cosmetics vs. Community B where people feel that cosmetics are too fashionable and hence abhor using them; but these opposing opinions like I mentioned also go along with subtle changes in perception amongst communities. Unlike Europe where it is easy to categorize people based on the country, in the US it is extremely difficult. There are companies that are doing it quite successfully but as the CEO mentioned, L’Oreal needs to figure out a couple of things before they can crack the US market. Their market share is stagnant and they are now fighting back; however, what they need in the US is to identify which product go to what area – the expensive products probably sell better on the east coast than the west? The moisturizers probably sell better in the colder parts of the country in a certain season compared to the cleansers which again probably sell better on the east coast as people generally (myth or reality? Only research can tell us) have more money and care more about their looks. Social pressure is also another factor that will affect the way people use and spend money on cosmetics. L’Oreal must also analyze what products to sell and which ones not to. It has hundreds of products and its very difficult to sell all of them successfully in each country. However, going with just 5 or 10 products isn’t going to win the battle either. They should sell high-end products with big profit margins but they must know that there are other companies competing for the same dollars, so the product they sell must either be better or must be properly differentiated. Selling products in beauty parlors is a good idea in the US, however, they must first find out which parts of the US has more beauty parlors, where do customers get what type of treatments, and where do customers ask for specialized products vs. letting the beauty parlor decide for them. The level or research that goes into introducing products for the US has to be much deeper than the research they have done in Europe. They are basically baking on Europe to provide two-thirds of their revenues and profits. The company is focusing their resources on Europe, which is not a bad thing; however, with competition getting successful int eh US it shows that there is a lot that L’Oreal is losing. L’Oreal is also losing on the lucrative South-East Asia India and China market, there are 3 Billion people in that part of the world and less than 20% of their sales come from this region. With the money flowing into China and India, people will eventually have more spending power which means they will spend more money on items of beauty and other personal care products.