Assignment on Distribution Network Of L`oreal

Submitted to : Mr. Neeraj Gupta

Submitted by: Vineet Kumar Nishant Sharma Prashant Kumar Singh

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No. 1 Introduction 2 3 4 4 5 10

Particulars

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LOreal In India Divisions in India LOreal India at glance Brands Of The Company

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Segmentation
Elements of Marketing Strategy Major Competitors Distribution Channel Presence in rural area Suggestions

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LOreal in India:
The company began doing business in India in the early nineties through a distributor and later established LOreal India, a wholly owned subsidiary of the LOreal Group. LOreal the second ranked international cosmetics company in India - claims that revenues in the country increased five-fold over the past five years. The new factory in Pune is the latest step in the group's rapid development in the subcontinent. The high-tech plant is to manufacture hair care, hair colour and skin care products to meet rapid increases in demand. The Pune site is one of the first within the company to implement LOreals newest GHP or Good Hygiene Practices. "These new requirements have a profound impact on the way buildings are designed, the way production units are organized and on the installation layout. GHP zones are protected by airlocks to allow for a controlled atmosphere, and processing vessels are isolated in dedicated areas physically separated from the rest of the facility," said a spokesperson for LOreal. LOreal operates three divisions in India, including, The Consumer Products Division - L'Oral 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.

When L'Oreal's Professional Products Division entered India in 1997, there wasn't a sniff of structure in the hairdressing industry. Organised education was absent, training considered redundant and hairdressers content with dubious domestic brands and prohibitively expensive foreign ones. L'Oreal had the vision to realise all that would change and invested heavily in hairdressing education and training. Today, the hair care industry is pegged at Rs 200 crore (Rs 2 billion), growing in double digits, and L'Oreal Professional Products -- Professionnel and Kerastase -are market leaders. L'Oreal Professional Products prides itself on a product they believe is technologically unmatched. "3.5 per cent of our sales are pumped back into research & development. "They skim the top 100 cities in India and have the largest salon base in the country, of which 20 per cent is exclusive to them, contributing to 40 per cent of their revenue." SA "Their biggest cost is the education of their trade. They have over 40 trainers; it's an entire machine that needs constant oiling."

But competitors are eating into the same strategy. Both Schwarzkopf, at the number two position in the industry, and Wella have launched technical training centers. Schwarzkopf even launched a by-invitation-only hairdressers club and flew 150 members to Goa for an inaugural meeting.
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LOreal India at glance:

LOreal, world leader in cosmetics, has a modern and efficient growth model that is always looking to the future. 100 years of expertise in cosmetics 5 key areas of expertise: hair care, hair color, skincare, make-up & fragrances 23 global brands Products distributed in 130 countries 17,5 billion consolidated sales in 2008 581 million in R&D investments 628 patents filed in 2008 67,662 employees worldwide 4.6 billion Units manufactured in 2008.

Brands of the Company:

1. Consumer products
High technology products at competitive prices distributed through mass-market retailing channels. LOreal Paris Maybelline Garnier

2. Professional products
Portfolio of brands that meet the requirements of hair salons and provide customers with a wide range of innovative products. LOreal professional Kerastase Matrix

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3. Luxury products
Prestigious brands which offer customers products and premium service in stores, specialty stores and travel retail outlets. Lancome Ralph lauren Biotherm Giorgo Armani Diesel department

4. Active cosmetics
Dermo-cosmetic products sold in pharmacies and specialist retailers and supported by advice from pharmacists and dermatologists. Vichy La roche posay

L'Oral uses brand segmentation to drive growth Premium

L'Oral operates strict brand segmentation across its portfolio to retain its exclusive brand identity. For each of its brands L'Oral maintains distinct retailing channels to keep its brand image intact. Its premium ranges Lancme and Yves Saint Laurent are marketed through department stores. Its mid- and lower-tier mass brands L'Oral Paris and Garnier share the same retailing space in Western markets but the distinctions are made on the basis of price and product offerings.

Mid-tier
Cutting edge formulations are found more under L'Oral Paris than Garnier. L'Oral also sells its premium range formulations under L'Oral Paris when demand in the premium range slows down. L'Oral uses Garnier to penetrate lowincome consumers in emerging markets whereas L'Oral Paris is reserved for urban consumers.

Mass

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The economic downturn necessitated L'Oral to use its brand portfolio carefully to exploit any growth potential. For example, hair care launches were made under L'Oral Paris as it was originally a hair care brand, while for colour cosmetics the mass brand Maybelline was used to drive growth. L'Oral used Lancme to appeal to a wider global consumer base, whereas Yves Saint Laurent was used to appeal to Western European consumers. For premium and mid-tier brands, it launched more targeted products whereas for mass brands such as Garnier the focus has been on multi-functionality.

Elements of Marketing Strategy

Market penetration
L'Oreal gained over of 15.8% market share all over the world. Instead of rely on creating new product and brand, L'Oreal aim to take profit from the growing middle class and the merging market. The latest researches are focusing on emerging market for example Asia, Eastern Europe and Latin America. Furthermore, L'Oreal penetrated two profitable markets, the men older population that is increasingly showing more intention to products such as skin care for men and anti aging.

Product development
Research and development are the major factor of L'Oreal success. Continuously, the company is attentive to the market trend and the consumers need in order to meet their expectation and provide their satisfaction. Each year, there are more than 5000 formulas created, tested and 500 product launched each year. For example, Feria range was specifically innovated for Japanese people and Soft Sheen Carson for African. As a result, L'Oreal achieves their target by offering them the newest product with innovative feature which are marketable and generate an important turnover in diverse segments of the international market.

Market development
L'Oreal continues to diversify its portfolio integrating new brands and product. Thus, permit the company to gain new area of development and new lines of growth. In the other hand, L'Oreal try to adapt their product to the potential market for instance R & D center was established in Shanghai to improve the competitiveness of their products and make it more
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appropriate for Chinese customers. Even if their product are existing in over 130 country, the group is trying to create more demand and increase market share of its brand in news countries.

Diversification
As we can noticed, although their multiple and various product and brand, L'Oreal keep working and cosmetics and personal care product. We cannot find L'Oreal in other domain or activities like clothing, food or any domain not related to cosmetics.

Customer Satisfaction (Product; Price)

L'Oreal priority is to meet customer expectation by providing the right product, with highest quality and innovative features. Through intensive research, the company aim to provide plenty of new products and to improve the current product. As result customers is offered a wide variety of brand and product from whom he can choose according to their need and budget. L'Oreal study different market, with different culture, habits and needs and try to satisfy them using the information collected to create the suitable product for each task, age and budget. L'Oreal consumers can stay updated and follow the newest trend just by buying the newest product. Simply the company adapts their product to the latest trends and even more; set the trend in the market. L'Oreal portfolio is for all types of consumers. As well as we can find luxurious brand, there is also mass market product. However, for L'Oreal each brand and product necessity a deep research to provide the best quality. The diversity of the portfolio allow the company to adapt different pricing politic because each brand can cover and finance other in case of decrease in sell. For luxurious product

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MAJOR COMPETITORS

www.loreal.co.in http://www.fashinvest.com/loreal-india-expands-beauty-market-acquisition-cherylscosmeceuticals/

DISTRIBUTION CHANNEL
Factory

Distribution Centres (Depots)

Distributors

Mass retailing channels Salons, hypermarkets, supermarkets, drugstores and traditional stores

Final Customers

L`oreal has 42 factories worldwide. In India, it is located in Pune. One or more distributors are present in mostly cities depending upon the population or size of the city.

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Salons: Loreal has acquired a company named Cheryl's Cosmeceuticals which has 10,000 stores in India. It has its own stored also named Loreal professionnel, Matrix and Kerastase. Its products are also sold through hypermarkets, supermarkets, drugstores and traditional stores. They don`t have their own transportation facilities so they use public and private transportation for reaching the distributors from manufacturing units.

References: Darshan Lal and sons (Distributor) Address: Sector 8, Panchkula PH. No.:-0172-2567790 Chadha Marketing (Distributor) Ludhiana-141001 PH. No.:-0161-2730980

Efficiency of Distribution Network

Salons vs Retailers
Loreal is present in the market through both salons and retailers. For salons, Margin ranges between 10 to 15% while for retailers margin lies between 6-8 % which is there for sharing between both distributors and retailers. Distributors keep 20-25% of the margin given by company and rest is transferred to retailers. Salons give loreal a better business as compared with retail stores because in stores, people have no other choice except the use of Loreal products while outside, they may prefer using some cheap products like Godrej`s and HUL`s http://in.linkedin.com/pub/sandip-dwivedi/54/203/838

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PRESENCE IN RURAL AREA

Loreal is present in the Rural Market but it is not very much active or popular there. Reason behind that is the hard competition from P&G, HUL Godrej and Johnsons and Johnsons etc. Loreal is considered as a costly brand so that rural population do not prefer or afford to by loreal.

SUGGESTIONS
1. They should introduce new products according to the need of rural population which should be simple and easy to use. 2. They should make a new segment for lower middle class families. 3. They should consider manufacturing of soaps, oils etc which are having a larger share in rural market. 4. They should start their promotional campaigns in rural areas in order to educate and make them aware about their products 5. They should make their products available in the sachets also as it is more popular in villages. 6. Garnier is having a better position in India as compared with other Loreal products so it should promote it more. 7. They can consider reducing the size in order to decrease price. e.g Godrej has introduced its Cinthol, Fair Glow and other Godrej products in 50 gram packs that are priced at Rs. 4-5, particularly for the markets of Uttar Pradesh, Madhya Pradesh and Bihar.

http://archive.indianexpress.com/news/loreal-sets-rs-7000-cr-sales-target-in-india-by2020/1057597/ http://ibnlive.in.com/news/india-is-the-future-loreal-india-md/270199-55.html http://www.loreal.co.in/_hi/_in/index.aspx?direct1=00006&direct2=00006/00002 http://timesofindia.indiatimes.com/life-style/beauty/Indias-cosmetics-industry-may-treble-by2020/articleshow/27844855.cms?referral=PM

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