L'Oreal's Global Branding Strategy
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Case Details:
Case Code : MKTA020
Case Length : 14 Pages
Period : -
Pub Date : 2005
Teaching Note :Not Available
Organization : -
Industry : -
Countries : -
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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Background Note
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L'Oreal, the world's largest cosmetics company was established in 1907 by a French chemist Eugene Schueller (Schueller). Schueller had developed a formula to make synthetic dyes safe for human hair.
He sold his patented hair dyes to local hairdressers and beauty salons in Paris. The company's name was adapted from Schueller's first brand, L'Aureole, which meant 'halo', in French.
By 1920, Schueller started exporting to other European countries like Holland, Austria and Italy. Schueller's successor, Francois Dalle (Dalle) took the company public in 1963.
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Sensing a threat from France's left-wing politicians who were advocating state control of the nation's top companies, Dalle decided to internationalize L'Oreal's ownership structure. In 1973, Dalle persuaded Liliane Bettencourt, Schueller's daughter and L'Oreal's main shareholder, to dilute her majority stake. Under a complex deal, Swiss food-products giant Nestle took a 49% stake in a holding company--with Bettencourt owning the remaining 51%.
The holding company in turn acquired a little over 50% of L'Oreal's stock. In 1972, L' Oreal launched the legendary campaign "Because I am worth it," to promote the 'Preference' line of hair color. The emotional pitch "Because I am worth it," made the consumer feel good about paying higher prices for L'Oreal products.
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Over the next few years, the company's business expanded considerably. It started distributing its products through agents and consignments to the US, South America, Russia and the Far East. The next phase of L'Oreal's growth started under Lindsey Owen-Jones who had joined L'Oreal in 1969, fresh out of Oxford and the Insead business school in Fontainebleau (France).
He rose to head the company's Italian operations (1978-1981), where he caught the eye of his superiors with exceptional performance. He was then asked to head the strategic US operations. Managing the company's US operations was not an easy task... |
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