The paper "What Have Been L’ Oré al’ s Key Success Factors in China to Date" is a perfect example of a management assignment. L’ Oreal is a global leader in the cosmetic industry with headquarters in Paris, France. The company has over the years been successful in selling, developing and distributing products in the fields such as in hair color, cosmetics, sun protection, skincare, haircare, perfume and make-up. Additionally, L’ Oreal is also active in the pharmaceuticals and dermatological fields. The group is a family business founded back in 1909 but by then it was referred to as Socié té Franç aise des Teintures Inoffensives pour Cheveux (L’ Oré al, 2016).
The company has its operations in 130 countries and has a total of 66, 600 employees in a total of 66 countries and it also have some notable and large brands, for example, the Garnier and Maybelline New York, Lancô me, Kiehls and Yves Saint Laurent Beauté . L’ Oreal sells its products to professional stylists and business and also to non-professional consumers. L’ Oreal distributes their products through a wide range of chemists to the departmental stores in addition to the use of their own boutiques.
As of the year 2010, the sales of L’ Oreal sales increased by approximately 11.6% (L’ Oré al, 2016). Despite having a global presence, the majority of company sales are from Western Europe and also from North America. Their international distribution and presence are also increasing as the years goes by as the new wealth in areas such as in Asia enables the consumers to have high spending power and this includes their consumption of cosmetics products and thus the need of an effective distribution network. Question 1: What have been L’ Oré al’ s key success factors in China to date? The success of companies in certain markets is mainly attributed to certain factors but these factors tend to be unique and different from one company to another (INSEAD, 2014).
A key success factor of L’ Oré al’ s in China to date is based on the Research and development activities initiated by the company. L’ Oré al has developed the L’ Oré al Research & Innovation Centre in Shanghai and their decision of establishing the R & D centre have a great impact of the distribution decisions of the company since location seems to be an essential factor and mostly when developing hair care products and developing cosmetics that are designed more than ever for the Chinese market. Additionally, through the research centre which was opened in 2006 in Shanghai, L’ Oré al was able to analyze and know in details the manner in which men and women wash their faces and also how they apply cosmetics as well as the diameter of their hair follicles.
This plays an essential role in that they will come up with products that are well suited for their target audience (INSEAD, 2014).
Another major success factor in the Chinese beauty and cosmetic market is the company diversity in terms of branding, products as well as in their sales distribution methods. Distribution of products play an essential role in ensuring the success of products and this is based on the notion that the consumers have ease of access to the products. When products are not distributed in the most effective manner, consumers are likely to turn to other substitute brands that are easily available. L’ Oré al was aware of this and thus the adoption of a good distribution system for their products in all countries that they have their presence in.
To further their distribution the L’ Oré al Group acquired Mininurse which is also a Chinese skincare brand in the year 2004. The main aim of purchasing Mininurse was based on the idea that it would be able to reach the group of consumers that the other brands in the company failed to reach. This aligned with the long term strategy of the firm. Another success factor in China was the company focus on the rapidly growing men’ s skincare market in China and thus did this by ensuring that they targeted their distribution towards these new and emerging consumers.
When compared to the women’ s market, the distribution strategy applied when marketing to men seems to be totally different and more so in regard to the western market (L’ Oré al, 2016). The company success at the present can be attributed to the fact that some of the products manufactured by the company such as Lancô me, Yves Saint Laurent, Garnier and L’ Oré al tend to have a high level of recognition among the consumers.
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