Marketing Mix In this part, the set of actions used by L’Oréal and Estee Lauder to promote their brands or products in the market is discussed. The current report focuses on the 4Ps, explaining how both companies position themselves in terms of Product, Price, Place and Promotion. For a better understanding of both companies’ marketing mix, Lancôme is again compared to Clinique.
Product in the Marketing mix L’Oréal has a wide portfolio of brands which covers a range of products, such as cosmetics, skin care, hair colour, make-up, sun protection, hair care and perfumes. All the products are grouped into the following four operational divisions:• Active cosmetics division, which includes brands such: Vichy, Inneov and Sonaflore, offering medicinal products, usually skincare.• L’Oréal Luxe division, which includes brands such: Lancôme, Diesel, Ralph Lauren and YSL, offering prestigious skincare, makeup and fragrances.• Professional products division, which includes brands such: Technique, Matrix Essentials, Mizani and Kerastase, offering premium hair products.• Consumer product division, which includes brands such: L’Oréal Paris Ombrelle, Maybelline, offering skin care, cosmetics, hair colour and hair care for men and women at affordable prices in all mass market channels.
(Bhasin, Marketing mix of Loreal – Loreal marketing mix, 2016)Graphic n: L’Oréal Operational Division Graphic n : L’Oréal Business SegmentAs Graphic n illustrates, in 2016 The Consumer Products division covered the largest part of the total operational sales (49,1%), followed by L’Oréal Luxe (30,8%), Professional Products (13,6%) and Active Cosmetics (7,5%). Moreover, Graphic n, emphasizes that the skin care business segment has registered the biggest percentage of sales, being followed by make-up. (L’Oreal Group, 2017)Estée Lauder majorly deals in luxury products. The company doesn’t segment the brands into different divisions as L’Oréal does, however, the products are divided among the following 5 product lines.• Skincare, which includes products like cleanser, face oil, toner, mask, BB crème, moisturiser, anti-blemish, anti-wrinkle, repair serum, etc.• Fragrances, which include Sensuous, Pleasures and Beautiful for women, Intuition and Lauder for men• Makeup, which includes powder, blush, concealer for face, mascara, eyeliner, eyeshadow, lipstick, lip pencil, nail lacquer, etc.• Haircare, which includes hair dye, hair oils, hair brushes, etc.
(Bhasin, Marketing Mix of Estee Lauder – Estee Lauder Marketing Mix, 2017)• Re-Nutriv, which includes eye cream, face oil, skin care mask, concealer and foundation for make-up.Graphic n: Estee Lauder Business SegmentAs Graphic n illustrates, in 2016, the largest sales of Estee Lauder were registered in the Skin Care Segment (41,54%), followed by Makeup (39,93%), Fragrance (13,14%), Hair Care (4,92%) and other (0,46%).Price in the Marketing MixThe pricing strategy in the marketing mix of L’Oréal is based on premium pricing, competition, and product demand. Because many of the L’Oréal products belong to the high qualitative product group, the company maintains a premium pricing policy for those products, which are also available at salons worldwide. When customers visit a beauty salon, they are willing to pay for these products as they are low priced.However, the products of Consumer division brands discussed previously target the middle class, therefore their price is lower in comparison with the luxury line. Now that you know that the price of L’Oréal products varies depending on the product division, you might wonder what exactly determines the difference in price.
In order to justify the pricing difference, the current report compares 2 brands owned by the L’Oréal Group: Lancôme – a brand from the luxury division and L’Oréal Paris – a brand from the Consumer products division. Bellow the reasons for the difference in price are discussed: Reason 1: Higher quality=more expensiveLancôme products contain more expensive ingredients that usually are considered revolutionary and new on the market. Most of Lancôme products are “multitasking”, for example, the Dual Finish Versatile, is a combination of powder and makeup.Moreover, the technologies used to make the products differ on a large scale. For example, if we compare L’Oréal Paris Collagen Moisture Filler with Lancôme’s Hydra Zen Neocalm, the technology used by Lancôme gives immediate moisturizing and smoothness effect. However, the effect of the L’Oréal cream comes after using the product for a longer period.Reason 2: More elaborate packaging = more expensiveA tremendous part of the cost price of any cosmetic product is the packaging. Lancôme uses dispensing mechanisms with higher-priced elements, such as gold or silver foil paper and different metallic elements.
Reason 3: More marketing = more expensiveLancôme puts more effort into advertisements and services. For example, customers can go to department stores and ask the sale assistants for help or try the products at the counter. Meanwhile, Lancôme uses more international and efficient ways to advertise their products. For example, Michelle Phan is known as a famous video make-up artist on YouTube with more than two million subscribers and a total of more than six hundred million views.
Lancôme hires her as its first and only video make-up artist, and since then, Michelle was sponsored by Lancôme and started using more and more Lancôme products.(Cornell Univeristy, 2012)In terms of price, the products made by the Estee Lauder company, cannot be separated into different divisions, because the prices are similar among all the brands. Estee Lauder positions itself to be a brand that cherishes the women’s uniqueness and celebrates women beauty. Thus, its products are priced higher than most of its competitors. Estee Lauder is bought by the classes and not the masses.
The affluent customers, who are less sensitive to prices buy the products of this brand. At Estee Lauder, some products are priced higher than the rest, but the price differences among the brands are quite small in comparison with L’Oréal. If you take two sub-companies from Estee Lauder: MAC and Bobbi Brown, is easy to notice the insignificant price variance. For example what makes a difference is the range of products. For example, Bobbi Brown lipsticks come in 39 shades, however, MAC offers more than 70 shades.However, in order to compete with its rival companies and to retain customer loyalty the company sometimes brings down the high prices. Therefore, it offers several incentives, which are presented in the following chapter.
(Mba School, 2016)Promotion in the Marketing Mix L’Oréal uses an array of promotional avenues to attract consumers. The offers are everywhere from newspapers, online, Facebook, YouTube, Twitter, in stores and more recently via text. As discussed previously the company uses famous celebrities in order to promote their products, famous names include Beyoncé, Audrey Hepburn, Sophia Loren and Jennifer Lopez. Moreover, L’Oréal has tapped into the ‘here today gone today’ mentality of ‘Generation Y’ leading to the kind of brand promotions that modern consumers crave.
Liking’ L’Oréal on Facebook is a trendy way to keep L’Oréal in your mind 24/7. When you “like” L’Oréal on Facebook you are kept up to date on the latest deals, discount offers and beauty news.Mobile marketing is a new promotional trend and clever way to deliver current branded news instantly, right to the palm of your hands. In 2010, L’Oréal teamed up with a company called O2 more. O2 More send SMS and MMS location-based marketing messages to over one million of their customers. O2 More is a service that allows customers to ‘opt in’ and record their personal information and interests to receive offers based on their location with the information they have provided. To market the new items, free products as samples are provided.
Furthermore, beauty salons help the company to promote their products. Customers are given the chance not only to make use of the products in the beauty salon, but also to purchase the product from there, and to use the same product at home.Additionally, L’Oréal intends to be seen as a business that cares about the human values, that’s why the company organizes events such as: “L’Oréal Brainstorm” and “L’Oréal-UNESCO Awards for Women in Science”. (UKessays, 2015)Estee Lauder has undertaken several policies to promote its products and increase brand awareness. The biggest and oldest reasons for the success of Estee Lauder is the free samples and gift coupons. Moreover, the fact that new customers receive 15% off on first purchase through brand’s online stores, increases the customer’s loyalty and demand for the brand.What differentiates Estee Lauder from its competitors, is the intention to make customers aware of the provenience and the way the product is made. Thus, detailed information regarding net contents, usage directions, ingredients, country of origin and name of the manufacturer are provided on the label and usage instructions.
Furthermore, Estée Lauder promotes its brand and products through several tools like photo displays at strategic points, editorial coverage and direct mail. Sales and marketing executives are in a close relationship with customers. They are encouraged and expected to spend time with potential and existing customers in order to offer the best possible help. Thus, in shopping centres, there are usually consultants that offer free guidance regarding the Estee Lauder’s brands. The last, but not the least, like L’Oréal, Estee Lauder also uses celebrities and supermodels to promote its products. Popular faces include Shaun Casey, Elizabeth Hurley, and Willow Bay.Place in the Marketing MixL’Oréal has vast distribution networks to enable a strong market presence.
They have acquired many different companies worldwide to increase their brand presence. Over the years, L’Oréal has grown and now operates in 130 countries. As Graphic n illustrates, most of the sales are made in Western Europe (32,1%), followed by North America (28,5).
Graphic n: L’Oréal Sales by Geographic ZonesHowever, selling products according to countries is a difficult task, for that reason, L’Oréal has four worldwide research and development centres, which prove again how dedicated the company is to fulfil customer satisfaction. The research centres are located in Japan, France, USA and China. The products are found in outlets like perfumeries, hair salons, supermarkets, pharmacies, beauty outlets and even though the direct mail. Moreover, the brand has its own website and has tie-ups with other shopping websites. In that way, customers can purchase the products from any part of the world.
Estee Lauder is currently selling its products in one hundred and thirty-five countries. In 2016 most of the sales (43,09%) were made in The Americas, followed by Europe, Middle East & Africa (38,91%).In order to position itself as a luxury brand, unlike L’Oréal, the distribution system is limited, that’s why the company sells its products through department stores, shopping malls and chain of retail outlets. Yet, depending upon profitability, the distribution system is selectively expanded for some products.
The company has technical laboratories around the world, including USA, Korea, Canada and China. (ESTEE LAUDER COMPANIES, 2017)Graphic n: Estee Lauder Sales by Geographic ZonesDistribution ChannelsWhen it comes to distribution channels, both Lancôme and Clinique use selective distribution strategies. However, there are still some differences. For instance, Lancôme distributes its products in large department stores, Lancôme-owned boutiques and outlets which are all in the niche area of the world. You will never find a Lancôme product in a drugstore or a grocery store because it contradicts with Lancôme’s image of a luxurious brand. (Jill Rose, 2015)Clinique also places their beauty counters in prestigious department stores, but they do that because they provide high-end quality products at slightly lower prices than other high-end brands, whilst still providing an informative and personal approach to their product line. This creates a positive brand image and a sense of real care in customer’s mind. Moreover, unlike Lancôme, Clinique can be found in some drugstores, because it is a medical line, offering products which work against the blemished skin, pimples or other skin problems.
Furthermore, Clinique focuses more on online sales, it even was one of the first cosmetic brands which provided the online store for its customers. (Hanlon, 2017)Promotion StrategyLancôme uses a pull/push promotion strategy. magazine ads, TV commercials, promotions, and direct mail are only some means that help Lancôme to gain consumer awareness. Furthermore, the company successfully makes use of in-store beauty advisers, which share their wide knowledge with the consumers, help them to choose the right products, thus substantially contributing to the increase in sales.In-store displays throughout department stores help to promote the wide variety product line, great consultation quality, and innovative technologies.
(Jill Rose, 2015)Moreover, Lancôme likes to stand out from the mass when it comes to promoting their products. For example, it introduced: Lancôme bus, which aimed to promote new products to the Chinese population in second cities and third cities. Also, the company uses beauty forums that gather consumer brand, professional makeup and allows them to receive beauty tips, to share and to keep them informed about the brand and products. (Dean, 2013)The way Clinique targets their customers is unique. Clinique approaches their target audience by focusing on the individual needs of each consumer in terms of skin types and age. Clinique prides themselves on their staff. Clinique Beauty Advisers are well-known for their superior knowledge and unparalleled customer service. Their uniform – chic white lab coats that evoke the companies ties to the medical and dermatological communities – exhibits those standards perfectly.
Also, they offer samples and gift coupons in store, which turned out to be very successful for the company, because lots of consumers return to the store in order to purchase the larger version of the product. Moreover, new customers receive 15% off on first purchase through brand’s online stores, which increases the customer’s loyalty and demand for the brand. (Hanlon, 2017)