Executive Summary
L’Oréal is a multinational company that manufactures cosmetic products and owns several well-known cosmetics brands such as Lancôme and Maybelline, among others. Currently, it is the number one cosmetic group globally, with over 36 brands and subsidiaries in 115 counties. This company prides its ability to innovate, which began with the establishment of this brand 110 years ago. L’Oréal’s history began in 1909 when the founder of this brand created the first sample of hair dye. Therefore, L’Oréal is an innovative multinational brand that operates in the beauty and cosmetics industry. This report will explore the marketing ethics relating to L’Oréal and provide advice on how this company can improve its advertisement strategy. The first section of this report will provide a brief outline of L’Oreal’s history, followed by an assessment of the global environment and an analysis of the brand’s marketing activities. This report will help L’Oréal’s Board of Directors evaluate the brand’s current position and foresee the challenges that it might face in the future.
Introduction
L’Oréal is a multinational corporation based in France that works in the field of cosmetics and personal hygiene products (L’Oreal, n.d.). The cosmetics industry, in particular, is scrutinized for its marketing due to the unrealistic standards of beauty, use of editing when advertising the products, and the creation of unattainable beauty images that urge consumers to buy products they may not need (Burr, 2017). This criticism has led to severe changes within the consumers’ purchasing patterns. Hence, although L’Oréal is a successful brand, its approaches to the global marketing strategy have to be adjusted to address the emerging threats. This report considers L’Oréal’s strategy in the global cosmetics market and examines its approach to ethics and social responsibility.
Background
L’Oréal’s aim is to “is to offer to all women and men on the planet the best of beauty in terms of quality, efficacy, safety, and responsibility” (L’Oreal, n.d., para. 1). Its objective is to manufacture beauty and cosmetics products that help people feel more confident. L’Oréal benefits from attributes such as global marketing strategies and economies of scale. In 2019 its market share in Europe was 20% and provided the brand with over 29 billion in revenue (Statista, 2021),
L’Oréal owns several cosmetics brands that also allow it to benefit from collective innovations and product development, including Garnier, Maybelline, Lancôme, NYX, among the 36 companies it owns (L’oreal, n.d.). Hence, the main strength of this business is its scale that allows it to reduce costs and operate effectively by utilizing the R&D from all of its brands. This also implies that L’Oréal can offer a wide selection of beauty products to its consumers, unlike smaller brands that may have two or three items in several categories of makeup and personal care. This brand prides itself on the innovation and ability to introduce novice products to consumers. L’Oréal was established in 1909 when the brand’s creator developed the first sample of hair dye, and this organization continues to invest in innovation as one of its core value propositions (L’oreal, n.d.).
Global Environment and Key Threats and Opportunities: Market Audit
This section will present a detailed market audit of the global cosmetics and beauty industry. On the macro-level, the beauty and cosmetics industry is undergoing changes as consumers become more conscious of the products they use and the unfair advertisement practices that depict unrealistic images (Burr, 2017). As discussed in the textbook, marketing has been under criticism for advertising products that people cannot afford or that they do not need in actuality (Eagle and Dahl, 2015). Although the nature of criticism has changed, the same arguments are used to condemn the cosmetics industry.
The mission to urge brands to use cruelty-free practices has become one of the central trends in recent years. Consumers pay more attention to whether their cosmetic products were tested on animals or not, which requires brands to invest in other practices to adhere to the legal standards of cosmetics safety testing (Nieto-Márquez González, 2020). Hence, the global culture of beauty products consumption has changed, and consumers demand products that are manufactured with minimal harm. Moreover, “there has been a shift in the beauty consumer, and they demand transparency and more responsibility from brands” (Nieto-Márquez González, 2020, p. 4). Corporate Social Responsibility and the brand’s impact on the environment, as well as attention to the work practice and raw materials, has become pivotal for many industries, including personal care and beauty.
From the economic perspective, the industry of beauty has transformed as well after the coronavirus since consumers purchased less personal care and cosmetics items. McKinsey’s report shows that the global pandemic has had an effect on the beauty industry as well, which will lead to changes in the way consumers perceive beauty products (Gerstell et al., 2020). In the report, it is stated that this industry was able to survive all the major crises that occurred before, but COVID-19 is affecting consumer behaviors and patterns in an unprecedented manner. According to the report, “first-quarter sales have been weak, and there have been widespread store closures” (Gerstell et al., 2020, p. 1). Notably, some brands successfully altered their production lines to manufacture hand sanitizers and other first aid products. However, these changes will not be able to account for the massive decrease in demand.
The heterogeneity of the industry has been changing for years now, and according to Kestenbaum (2017), traditional makeup brands reported a 6% decrease in sales in 2017, while independent bands have increased their market share by 42%. This is a serious threat to companies such as L’Oréal that cannot adapt to the changes within the industry quickly because of the large scale of operations that a transnational company has. However, since consumers are paying more attention to independent brands, there is also no possibility to address this through marketing since L’Oréal has been on the market for over 110 years. Hence, the competition in this industry is no longer between global corporations but rather between small indie brands and major corporations. However, when looking at the attention towards indie brands from the perspective of an opportunity, L’Oréal can use the changing nature of consumer demands to partner with younger companies and leverage L’Oréal’s drive for innovation to create new products.
The nature of marketing cosmetic products has changed as well since social media influences have become pivotal for cosmetics brands, which previously relied on advertisements in magazines and other offline sources. Now, recommendations from “beauty gurus” play a key role in determining the success of a product or a brand. Some brands have leveraged this by creating makeup collections with influences and feeling products with influencer’s names on them, apart from using the services of these individuals in the advertisement.
Apart from the threats that were discussed above, there are some notable opportunities for L’Oréal as well. Burr (2017) argues that in recent years the beauty industry has become a symbol of expressing oneself for women and has contributed to the emerging political and social activism of women. Hence from a cultural perspective, the notion of beauty and cosmetics is being transformed from viewing it as an oppressive instrument towards seeing beauty products as a way of self-expression. Burr (2017, p. 158) states that “women could use their bodies as tools of self-expression amid changing definitions of femininity in modernity.” Finally, in terms of the political and legal environments, there have not been any major changes for the brands that would alter the way the beauty industry is regulated.
L’Oréal’s Current Marketing Activity
Although L’Oréal owns several well-known cosmetics brands, this report will focus only on the marketing strategy that L’Oréal itself uses. Typically, L’Oréal shoots ad campaigns which are videos showcasing a celebrity using one of the brand’s products (Adbrands, n.d.). The message of the video may differ based on a specific campaign and product, but the general outline is using celebrity endorsement to promote the beauty items that L’Oréal offers. L’Oréal primarily uses the traditional methods of advertisement, such as television ads and billboards. The most recent example of a typical L’Oréal campaign is the “Paradise” video featuring Elle Fanning and Camilla Cabello (Adbrands, n.d.). The company uses the still images and videos from the campaign to create billboards, posters, and social media posts. This approach is in line with the IMC strategy because L’Oréal ensures that its message is consistent across different communication channels.
Under the IMC Theory, a company develops a different communication strategy for each of its consumer segments. The messaged is consistent, and the brand communicates it through different channels to persuade the consumer to purchase a product. L’Oréal has been successfully applying the IMC Theory in its marketing activities because the brand develops one message that will showcase the value of the product and disperses it across different marketing channels, as was discussed with the “Paradise” campaign.
Another example of Loreal’s use of IMC is the “Because You’re Worth It” campaign, which featured an empowering message targeted towards women (Adbrands, n.d.). The implication of this campaign was that the company’s products are a means of expression for women, which corresponds to the theory by Burr (2017), who argues that beauty products are means of expression. The “Because You’re Worth It” campaign also featured celebrity endorsers who showed L’Oréal products and repeated the campaigns’ message (Adbrands, n.d.).
Although L’Oréal has been successful in promoting its products via traditional advertisement methods, it is necessary to address the social media campaigns and the brand’s approach towards managing digital communications. According to Tamisier (2020, para. 1), “brands can now understand consumers and reach them in new ways, but at the same time, they’re challenged with managing a growing number of customer interactions.” The multinational company partnered with a digital advertisement agency Sprinklr and develop the Listen-to-Engage model, where the focus of advertising efforts is on ensuring that the brand can understand the expectations and preferences of its customers (Tamisier, 2020). Under the Listen-to-Engage, L’Oreal’s marketing team monitors different social platforms and websites to analyze the brand’s reputation and reaction to new campaigns. Next, they post consistent messages across the different platforms at L’Oréal to communicate the brand’s message consistently across different channels.
Apart from this, L’Oréal’s digital media strategy also includes influencer marketing. According to Tamisier (2020, para. 20), this brand uses “influencers to deploy a brand ambassador program.” Influencers show the products and discuss their value with their followers, and because of the unique bond between these individuals and people who are subscribed to their social media accounts, they add value to L’Oréal’s message. Finally, as part of the management of the public relationship, L’Oréal uses social media to provide customer care to its buyers. The company’s agents use social media accounts to respond to questions and discuss issues with the consumers.
The current marketing approach can be improved to allow L’Oréal to capitalize on the industry threats. Some recommendations, based on the findings of this report, include the need to learn from indie makeup brands, which primarily use social media advertising and online marketing to promote their products. Additionally, there is a pressing need to review the sustainability strategy that L’Oréal has put forward and create targets that will communicate to consumers that L’Oréal is a socially and environmentally conscious brand. In line with consumer demands, the company is working towards the development of fully organic products. However, the COVID-19 changes in consumers’ perceptions of cosmetics, the decreased purchasing of these products, and the increasing market share of new makeup brands show that L’Oréal has to use IMC to communicate to the buyers that it meets the demands of the contemporary beauty industry in the fields of sustainability and environmental friendliness.
Ethical Issues
Cosmetic brands are under scrutiny for advertising unrealistic beauty standards or using photoshop when showcasing their products, which means that the end result that consumers have differs from what they see in the ads. L’Oréal has been criticized for these issues as well and considering the consumers increasing awareness of the beauty products’ false advertisement and increasing attention towards the brands’ ethics policies. Hence, L’Oréal faces the issue of promoting its products fairly by showing the real effects that they offer to consumers. In 2019 this company faced a lawsuit in China for false advertisement due to “promised that anyone using the product for eight days would experience a “miracle” of skin renewal” (Gu, 2019, para. 1). The Chinese authorities warned L’Oréal about the consequences of false claims and fined the brand. Apart from this, the promotion tactic caused a massive discussion on a popular Chinese social network Weibo. Moreover, Gu (2019) argues that many posts on social media praised the authorities for enforcing the local advertisement laws and fining brands for their claims regarding the effectiveness of their products that are not supported by research or other evidence.
Although this is the most prominent false advertisement case that L’Oréal has been involved in so far, it is vital to ensure that the brand avoids marketing its beauty products with claims that promise miracle results. From an ethical viewpoint, L’Oréal should focus on discussing the potential effect and how ingredients in its products can help resolve certain skin problems, which would provide consumers with factual information.
Conclusion
Overall, this report focuses on the marking strategy of L’Oréal and the ethics that this brand applies for its operations and advertisement. Marketing ethics, in general, have undergone a transformation linked to the changes in the definition of marketing since more attention nowadays is directed towards the social responsibility and environmental impacts of the brands. The cosmetic industry has seen drastic changes, especially the traditional brands, since the consumers prefer the newly emerged companies. Moreover, the coronavirus has changed the way people view care and beauty products and altered their purchasing patterns. Based on the results of this report, L’Oréal has successfully capitalized on the market opportunities through its global marketing strategy. L’Oréal does not use local marketing strategies mainly since this brand is present in major developing and developed nations, and the use of local strategies would be financially and strategically unjustified.
This company develops its advertisements in line with the IMC theory since it creates a campaign for its products that feature a prominent campaign message and a celebrity endorsing L’Oréal’s products. The company typically films an advertising video and showcases it across its different platforms. The recent digital marketing strategy allows L’Oréal to integrate all the communication with the consumers into its marketing strategy because the company’s teams monitor the customer’s responses and
However, from the viewpoint of marketing ethics, L’Oréal still has some improvements to make, such as focusing on the fair advertisement and avoiding false claims in its marketing messages. Considering the recent controversy about its ad in China, the company should focus on promotion without promises of a miracle transformation that are not true.
Reference List
Adbrands (n.d.). L’Oreal. [Online]. Adbarands. Web.
Burr, C. (2017) ‘The power of beauty: commercial beauty culture, the body, and women’s political activism’, Journal of Women’s History, 29(2), pp. 158-164.
Eagle, L. and Dahl, S. (2015) Marketing ethics & society. London: SAGE.
Gerstell, E. et al. (2020) How COVID-19 is changing the world of beauty. Web.
Gu, S. (2019) L’Oreal on the defensive over false advertising case in China. Web.
Kestenbaum, R (2017) How the beauty industry is adapting to change. Web.
L’Oreal (n.d.) About L’Oreal. [Online]. L’Oreal. Web.
Nieto-Márquez González, L. (2020) Sustainability in the beauty industry and its effect on consumers’ purchase intention. Master thesis. International Business & Management. University of Groningen.
Statista (2021). L’Oreal’s market share worldwide in 2019, by region. [Online]. Statista. Web.
Tamisier, A. (2020) L’Oréal’s new social marketing model: listen to engage. Web.
