L'Oréal of ParisBringing “Class to Mass” with Plénitude

- B A K E - syndicate

Maria Alfa Raniadita

Edhita ParadeviTrisya Kansya

SaleaLa Ode M Arief

Akbar

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Case BackgroundPlenitude line introduced in 1982.Very success in the France skin care marketStrong introduction in US MarketUS sales grow pretty well through 1991After 9 years introduction in US still not make

money

Problem Identification

Rethink all

Aspect

Many types of products

Premium Pricing

Strategy

“Star” System

“Too French” for US

Brand Utilizatio

n

How to improve further upon Plenitude’s

current operations in the U.S ?

How to introduce a new product (Revitalift-Eye)

into the existing product line

L'OréalFounded by Eugene Schueller in 1907.Initially develop and market a new

hair coloring.2,000 products with 500 brand

names,150 countries.Worldwide presenceConsolidated sales: 53.4 billion French

Franc in 1995 from over 2,000 products

L'OréalBeauty, personal and high tech

productsCosmetics represent 81% of revenues$300 million on research & 300 new

patent worldwide in 1996Acquires Maybelline to broadened

participation in the mass market.Combining Hair care and Cosmetics

Division

Plénitude At 1982 launched in France Positioned as : high end, superior performance, but

accessible (class to mass strategy) Strategy :

◦ Firstly introduce moisturizer until it had helped established the “technologically advance” image and then introduce cleanser

◦ Supported by massive advertising (star philosophy) Result : Achieving sales of one million units in 1983 and

continue its success in 1987 Formula for success :

◦ Have technologically Superior Products◦ Concentrate Resources and Support on newest “star product”

to pull the entire line◦ Follow the golden rules of advertising : feature star product,

provide technologically superior evidence

The U. S Launch & Early Result• First test marketed in Atalanta and Dallas at

1988• Strategy “class to mass”• Positioning “ Reduces the Signs of aging”• Covering 3 products :• Basic moisturizers• Treatment moisturizers• Cleansers

• Before Plenitude entered, L'Oreal had good reputation for its cosmetic and hair product, so the name was critical to sell the products.

• Used the same formula "star" philosophy in advertising as in France

Market Size and Brand

Market Size and Brand

• Increasing Trend in Total Retail Market for Moisturizers and Cleansers.

• Stagnancy in Plenitude sales for both category.

Market Size and Brand

US Market Analysis

25%17%

17%22% 18%

UnconcernedIngredient ApatheticPrice Conscious Socializers

• Assumed that advertising spending in all brand used for moisturizers and cleansers

• Plenitude has poor advertising performance than Olay and Ponds

• Plenitude brand not strong recognized in US• Market study divide consumers into 5

segments:

Acceptor/Rejecter Studies• Brand name cited• Brand name meant• Department store quality

Motivation for Trial

• Young rejecters found it too heavy and greasy• Didn’t absorb into skin

Respond to Product

Formulas• Having large number of products but have plus

and minus• Individual products could be more helpful in

through the line

Perception as Full Product

Line

• Packaging seemed feminine and expensive look• Confusing and have lot to read

Respond to Packaging

• Perceived targeted to older women• Not for 20s, and maybe not even 30s

Perceived Target

Consumer

Acceptor/Rejecter Studies• Olay dry skin, light and soaked,

ads on magazines• Pond’s staple of life

Motivation for Trial

• Olay light and reasonable priced• Pond’s reliable, accessible, and

reasonable priced

Product Satisfaction

Sources

• Olay traditional & generational brand

• Pond’s older, down to earthBrand Imagery

• Overwhelming & confusing• Need more time to read it

Perception of the Plenitude

Line and Packaging

Shelf Shopping Study• + : Fun, meet the different need of

consumers,• - : So many selection, it’s very

confusing

Shopping Experience

• Olay: Pink cream, old fashioned, nice packaging

• Ponds: Really heavy & greasy, for older women

• L’Oreal: Really expensive

Competitors Brand Image

• + : Very informational, very helpful• - : Look complicated, very confusing

Product Line

Presentation

Developing the Plénitude Plan• Introduced in 1995 • Quickly represented 20% of Plénitude sales with

heavy support • Attract 40% new users to the Plénitude

franchise & younger customers problem: consumer’s perceptions of the brand (a treatment product for people who have problem)

• Options: Launch a new product as a Revitalift extension “Star product” philosophy high support

Bring out the product & not make it ours “star”

Brand Development

Brand Aware EverTried

Conversation Ratio

Currently User

Retention

Ratio

Oil of Olay

96% 77% 80 34% 44

Pond’s 93% 52% 56 16% 31

Avon 91% 68% 75 23% 34

Revlon 90% 35% 39 10% 29

Plenitude

78% 23% 29 7% 30

Nivea 76% 26% 34 6% 23

Taken from Exhibit 11

Poor Plenitude Sales

Performance

Low Consumers Ever TriedLow Conversation RatioLow Current UsedLow Retention Ratio

Competitor AnalysisAspects L’Oreal

(Plenitude) Oil of Olay Pond’s

Motivation for Trial

Premium and Expensive

Generated by information / advertisement

Seen as a staple of life

Product Satisfaction

Sources

Good quality product

Light and reasonably priced

Reliable, accessible and reasonably priced

Brand Imagery

Hard to understand

Traditional, generational brand

Older and down-to-earth

France vs. USUnknown US consumer behaviorIn France, successive product launch, but, in

US product launch simultaneously. It May confused consumer.

Benefit Positioning in France of Aging perception succeed while in US not succeed.

France consumer have more high concern regarding beauty perception than US consumer

US consumer more pragmatism than France consumer regarding beauty knowledge

France vs. US

FRENCH

• Sophisticated in using a skin care (technology advanced product)

• High-end market (not price sensitive)

• Premium quality

UNITED STATES

• Didn’t much know about skin care need to educated them at the point-of-purchase

• Price sensitive• Need effective

product

Revitalift Introduced in September 1995Product innovation incorporating pro-retinol A & ETreatment product for people who have problemSupported by $5 Million in TV advertisingQuickly represent 20% plenitude salesTarget Younger Consumer Bring new buyer

Revitalift Key SuccessKeep superiority in Research & Development Increase U.S. consumers knowledge on skin

care products Creating demand in a younger consumer

market Improving the global L’Oreal Brand Increase sales and market share

SWOT Analysis

STRENGHTS• Known with good quality• Great Research &

Development department

• Have a good experience in handling cosmetic product

WEAKNESSES• Unknown about

consumer behavior in US• The product cover

unattractive• L’Oreal need to upgrade

awareness of US consumer

OPPORTUNITIES• Big market in US• Young consumer felt

local product is old fashioned

• Us maker has many channel for L’Oreal product

THREATS• Expensive product

Image• Consumer’s loyalty to

competitor product• Local product known

about US consumer behavior

SWOT

RecommendationIncrease consumer knowledge by

advertising and at the point of purchase Packaging modifications simple

information, change the Plenitude name

Launch Revitalift Eye with star productUse premium price to maintain product

prestigiousStep by step Product Line Extensions.Target a younger executive woman to

create consumers base

thanks for your attention

Exhibit 7. Market Size & Brand Shares on $ Basis (‘91-’95)

Moisturizer - All Mass Outlets1991 1992 1993 1994 1995

Dollar vol. (Retail $) $309MM $338MM $375MM $440MM $471MMPlénitude 11,7 13,6 14,1 13,8 14,0Olay 38,3 36,1 32,3 29,7 28,2Almay 5,4 6,0 5,6 4,4 4,6Nivea 4,8 5,5 6,0 6,2 6,2Pond's 5,0 4,6 9,1 13,9 15,1Alpha-Hydrox - 1,0 3,8 5,7 5,4Neutrogena 7,0 6,5 5,7 4,8 5,2Cleansers - All Mass Outlets

1991 1992 1993 1994 1995Dollar vol. (Retail $) $252MM $288MM $308MM $308MM $328MMPlénitude 3,2 3,2 3,1 3,1 3,4Olay 11,0 9,9 7,6 6,4 7,9Almay 4,8 4,8 4,9 4,4 4,1Noxzema 22,9 24,4 23,8 22,9 21,6Pond's 11,7 12,6 11,6 12,2 11,2Neutrogena 4,9 4,9 6,0 6,3 6,2Sea Breeze - - - 9,4 8,9Clean and Clear - - - 4,9 6,7

Everyday Average Retail

Moisturizers-DailyActive Daily Moisturizer-Regular 4,00 4,72 7,11 2,39Active Daily Moisturizer-Oil Free 4,00 4,72 7,17 2,45Active Daily Moisturizer- SPF 15 4,00 4,72 7,21 2,49Hydra - Renewal Jar 1,70 6,83 10,17 3,34Hydra - Renewal Tube 1,60 6,09 9,13 3,04

Moisturizers - TreatmentAdvanced Wrinkle Defence Crème - Jar 1,70 8,87 12,15 3,28Advanced Wrinkle Defence Crème - Tube 1,20 7,07 10,30 3,23Advanced Overnight 1,40 8,87 12,26 3,39Eye Defense 0,50 8,87 12,07 3,2Excell Cream 1,40 8,42 11,36 2,94 Excell Lotion 4,00 8,42 11,51 3,09Serum 1,00 10,43 15,19 4,76Revitalift - Face 1,70 8,87 12,31 3,44

CleansersDeep Cleansing Gel 5,00 5,50 6,97 1,47Hydrating Clenasing Cream 6,00 5,50 7,07 1,57Hydrating Floral Toner 8,50 5,50 6,94 1,44Clarifying Foaming Gel 4,00 6,25 8,06 1,81Clarifying Mask 2,80 6,25 8,09 1,84Clarifying Toner 8,50 6,25 8,26 2,01

Size (oz) Trade Price ?

Exhibit 8A. Plénitude Product Line Pricing of Chain Drug Stores

Everyday Average Retail

Procter & Gamble - OlayFoaming Face Wash 6,78 2,12 3,17 1,05Facial Cleansing Lotion 6,78 3,09 4,56 1,47Refreshing Toner 7,20 2,69 3,98 1,29Age Defying Daily Renewal 6,78 N/A 4,76 -

Pond'sCold Cream 3,50 2,78Self Foaming Cleanser 4,00 5,03 7,44 2,412 in 1 Cleanser - Tube 4,00 2,79 4,22 1,432 in 1 Cleanser - Pump 7,00 3,88 5,60 1,72

NeutrogenaFacial Cleanser 8,00 5,91 8,33 2,42Deep Clean 6,00 4,10 6,07 1,97Deep Pore 2,00 5,50 8,06 2,56

NoxzemaMedicated Skin Care 10,00 2,68 3,71 1,03

Size (oz) Trade Price ?

Exhibit 8B. Competitive Cleansers Pricing of Retail Drug Stores

Everyday Average Retail

Procter & Gamble - OlayOriginal Beauty Fluid 4,00 5,86 6,59 0,73Oil Free Beauty Fluid 4,00 5,86 6,65 0,79Sensitive Skin Beauty Fluid 4,00 5,86 6,66 0,80U/V Protectant Beauty Fluid 3,50 5,86 6,74 0,88Original Beauty Fluid (Larger Size) 6,00 7,53 8,76 1,23U/V Protectant Beauty Fluid (Larger Size) 5,25 7,53 9,60 2,07

Pond'sDry Skin Cream 11,00 5,50 8,19 2,69

NiveaShine Control Mattifying Fluid 3,00 4,84 7,15 2,31Facial Nourishing Lotion 3,00 4,58 6,87 2,29

NeutrogenaCombination Skin 4,00 7,50 10,43 2,93

Size (oz) Trade Price ?

Exhibit 8C. Competitive Daily Moisturizer Pricing of Chain Drug Stores

Exhibit 8D. Competitive Treatment Moisturizers Pricing

Everyday Average Retail

Procter & Gamble - OlayNight of Olay 2,00 4,49 6,45 1,96Replenishing Cream 2,00 4,58 8,73 4,15Age Defying Protective Renewal Cream 2,00 N/A 7,31 -Age Defying Protective Renewal Lotion 4,00 N/A 7,36 -

Pond'sAge Defying Lotion 3,00 7,80 10,99 3,19Age Defying Lotion 2,00 7,80 11,23 3,43Prevent and Correct Lotion 4,25 10,80 14,94 4,14Prevent and Correct Cream 2,50 10,80 15,20 4,40

NiveaAnti-Wrinkle Cream 1,70 4,84 9,22 4,38 Optimale 1,70 4,58 10,52 5,94

NeutrogenaHealhty Skin Oil Free Bottle 2,50 7,50 10,55 3,05

Size (oz) Trade Price ?