Marketing Strategies of LOreal Australia - Research Paper Example

?Running Head: MARKETING Marketing [The of the will appear here] [The of the will appear here] [The of the ] [Course] Executive Summary L’Oreal is one of the most global recognized cosmetics companies that operates in more than 100 countries. Even with such a strong market presence, marketing issues have been found in the overall marketing strategy of L’Oreal Australia. This includes a strong online presence and a clear marketing strategy for the different product range of L’Oreal. Using consumer behavior theories such as media strategy, target market and buying attitudes and preferences, a marketing plan has been proposed for L’Oreal. This plan deals with developing an online presence for Generation Y to create different marketing plans for the different brands within L’Oreal. Table of Contents Page No. 1. Introduction …….. 3 2. Issue Problem …….. 4 3. Analysis and Application …….. 8 a. Australian Culture …….. 9 b. Gender Role in Australia …….. 9 c. Social Classes in Australia …….. 10 d. Core Australian Values …….. 11 e. Target Market …….. 11 4. Application …….. 13 5. Recommendations …….. 14 6. References …….. 16 Introduction L’Oreal is one of the largest Cosmetics and Beauty Products Company and offers a big range of hair and beauty products with 23 global brands. With headquarters located in the world fashion capital of Paris, L’Oreal enjoys a strong global presence in more than a hundred countries (L’Oreal, 2011). L’Oreal has made a division within its product according to their target market that is consumer products, luxury products, professional products and active cosmetics. These product ranges cater to different kinds of consumers depending on their specific needs. Issue/Problem After analyzing the marketing campaigns of L’Oreal, a few issues have been identified that could be improved so as it increase brand loyalty within the Australian market for L’Oreal. At this time, L’Oreal is a multinational product that has to compete with other cosmetic and beauty products that includes both international products and national products. With a cosmetics company, brand loyalty can be quite advantageous as consumers prefer to buy products from the same company that they are satisfied. They do not wish to invest in new brands where they are not aware of the quality of the product. The reason is because all kinds of people are conscious about their skin and the impact of cosmetics on their skin. For this reason, brand loyalty is imperative for cosmetics and beauty products companies and this can be developed by effectively using consumer behavior theories to bring consumers to buy a particular product (Ergin, Ozdemir and Pariliti, 2005). But for this we need to analyze the marketing problems that are apparent in L’Oreal’s marketing campaign. When brand enter into new markets, they often face certain barriers when communicating with the new consumers. The core values of these consumers are often different from that of the previous consumers and sometimes even clash with each other. For this reason, local marketers are hired for the promotion of the brand keeping in view the new consumers (Boone and Kurtz, 2011). In the case of L’Oreal, marketers in all countries follow the international pattern of marketing. The products are advertised in almost the same manner in every country. This alienates the brand as an international brand. The consumers are more confident in investing in brands that appear friendly and act as their friend. L’Oreal has alienated itself through its marketing. The following example shows L’Oreal advertising in two different countries, namely Australia and Japan. Though one can differentiate through the language but consumers want to see faces they can identify with. L’Oreal advertising Japan L’Oreal advertising Australia Though L’Oreal is an internationally active brand, its presence in Australia leaves a lot to be demanded. As Generation Y is increasing its dependence on internet and social networking, many brands are becoming socially active on the World Wide Web. Internationally, L’Oreal also has an active presence on the internet but in the case of Australia, their presence on the internet negates their strong global presence. The Australian L’Oreal shares a link with the main L’Oreal, the website being www.loreal.com.au. The website follows the same design pattern of other L’Oreal country websites and this is a good marketing strategy to synergize the website so as to create a unified feel. However, with social networking on the increase, L’Oreal should also maintain presence in social networking websites such as Facebook. Though L’Oreal maintains a Facebook page (L’Oreal Australia, 2011) but it leaves a lot to be demanded. Social networking sites main to increase the dialogue between the brand and its consumers on an informal level but the marketing team at L’Oreal has failed to capitalize on this aspect of marketing. Another issue worth discussing is the broad product range of L’Oreal that needs to competition between the same products. Consider the advertisements of L’Oreal promoting their different mascara collections: In this case, L’Oreal is competing with its own brands and confusing the average consumers. When consumers go out to buy mascara, they cannot differentiate between the different products but rather buy on the basis on brand identity. Sub-brands often kill their own brands if the nature and personality of the sub-brand is similar to another brand (Ellwood, 2002) and L’Oreal suffers from the same fate. L’Oreal consumers get confused on what actually are they supposed to buy. To create a differentiation, L’Oreal has categorized its products on the basis of four different categories namely, consumer products, luxury products, professional products and active cosmetics. But there seems to be no broad distinction between the marketing of the different products. All brands are marketed in the same manner without any distinction between the target markets that the different sub brands serve. The next issue is the marketing of the brand for the target market. L’Oreal has developed an international image where they have become the aspiring choice of all kinds of people that include teenagers, young mothers and even the Gay population. However, L’Oreal does not employ the different marketing mediums for its different products. Most of the products are advertised on TV and also on the internet through their website. Apart from the different categories, L’Oreal products are not targeted to any specific target market. And even if the different categories, L’Oreal does not employ different marketing tactics to capture its consumers and make use of their behaviors. Analysis & Application In order to develop marketing strategy for L’Oreal based on consumer behavior, we need to analyze the consumer behavior within Australia. This consumer behavior would then be used to develop a strategy for a global cosmetic company which is L’Oreal. Consumer behavior, while being quite similar in every country, also differs on the basis of culture. Different cultures have different core values and social beliefs which effect their purchasing decisions. The Australian culture is quite similar to that of other Western cultures but Australia has its unique culture that is quite different from any other culture. Also the Australian population is diverse mixture of different ethnic groups that consists mostly of Asians. Australian Culture The Australian culture is composed of diverse ethnic groups. ‘Since 1945 more than six million people from across the world have come to Australia to live. Today, more than 20 per cent of Australians are foreign born and more than 40 per cent are of mixed cultural origin’. (Australia, 2011). This makes Australia diverse cultures that borrow elements from both the Western and the Eastern world since its people come from Asia, Europe and even the Middle Eastern countries. However, western influence is greater in Australia as compared to Eastern influence. English is the official language of Australia and is widely spoken in Australia, even when Italian and Arabic as also popular languages in the country. Since we are studying the culture with respect to developing and understanding consumers, the shopping culture of Australia should also be studied. The Australians are fast developing a strong shopping culture. Hedonism is increasing among the average Australians as they are growing materialistic. While this is a negative factor, L’Oreal can make use of this fact for the promotion of its products. Also credit card usage within the consumers is also on the increase. Credit card usage differs in pattern among the affluent and the working class. The affluent class pays their dues at the month’s end while the working class usually pays on installments (Clancy, 2004). Gender Role in Australia Since Australia is influenced greatly by the western culture, the women in Australia have an almost equal status as that of men. Since we are dealing with a cosmetics company, we would mainly focus on the female gender. Women in Australia can broadly be divided into four main segments which include housewives, working women, women planning on getting a job including young teenagers and finally women using job as a pass time. Women in Australia are not price conscious since they are earning income on their own and do not have to depend on men for their basic needs and luxuries. Also Australian women are addicted to magazines and thus the most effective way of tapping this market is through magazine advertisements. Another gender that we generally ignore is the bisexual gender. Gays in Australia are accepted as part of the society. Though the size of their target market is generally unknown, they belong to the affluent status and thus have income to spend on cosmetics. This gender is mainly concentrated in the media of Australia. Social Classes in Australia Social classes in every country are formed on the basis of different occupation, education and income levels. While the rich class boasts a high income level along with good education, the literary class boasts of a high education level combined with a substantial income. Consumer behavior in every country also differs due to the presence of different social classes. While Australia is considered primarily as a society with equal social status, different social classes are still present in the society. The demarcation between the social classes is less pronounced in Australia because there seems to be almost equal distribution of the wealth which allows for the mixing of the affluent and the working class. The affluent class in Australia consists of a small group of people. These people are business oriented and therefore do not have spare time to watch television. However, they read the newspaper regularly so as to get information on the world happening that would impact their businesses. The affluent class of Australia mostly shops at high end stores that include internationally recognized brands. The middle class is another social class within Australia. Just as the middle class is shrinking in most western worlds, it is also decreasing in Australia as this group of people either joins the affluent class or the working class. The working class of Australia is thus the largest group of people. These people are more concerned with getting more value out of their money and thus look for immediate gratification. They have less money to spend on high end products and thus shop at mass market stores such as Kmart and Aldi. Core Australian Values Every society has certain core values that define the culture of the country. These core values are generally present in almost all the people. Even though Australia is a western country, its core values differ from American core values. Australians give the greatest amount of importance to security. Security for them means living a safe life by eliminating risks such as loss of jobs, poor health, accidents etc. Australians are also very ambitious and thus achievement and power is symbol status for them. Their ambition mainly stems from their need to gain a credible status in the society. With western influence growing the country, materialism is also on the increase in Australia. The Australians are fast becoming used to the mass consumption culture and for them achievement equals to increased possessions. However, since Eastern values are still present in Australia, they are also traditional people who conform to the rules of the society. Australians are generally peace loving people who believe in giving to the society as a whole (Jupp, Niewenhuysen and Dawson, 2007). Target Market Target Market refers to the demarcation of the consumers who are most likely to buy the product as opposed to people who would buy the products after long intervals. Since L’Oreal has a big product base, they can capture all kinds of consumers by focusing on different brands for different generations. In order to understand the consumer behavior of these generations, we need to study them in detail first. Generation Y is the most lucrative target market at this time. Generation Y are the people born between 1975 and 1995. The Generation Y consists of roughly 4.2 million people in Australia. This group of people has attained education in life and has started entering the workforce in large numbers. They have grown with internet as a part of the household and thus have great affinity with internet and technology in general. They are media savvy and spend a large amount of time on the internet (Schffiman and Kanuk, 2010). Social networking websites are the most favorite pass time for these people with popular social networking sites being Facebook, Twitter, MySpace, LinkedIn etc. Consumer behavior of Generation Y is greatly influenced by their friends or peers. They are grown up with holier than thou advertising and thus have grown cynical towards most advertising promotions in general. They do not believe all that they see and thus depend on their friends to guide them to make good buying decisions. Also Generation Y, before buying any product, would go online and search for product reviews of the particular item. They would most likely buy the product based on these product reviews (Belk, 2010). Generation X is another target market that would work for L’Oreal. Generation X comprises of roughly 4 million people in Australia that were born between the 1960s and the 1970s. These people were born after the Baby Boomers were reviving from the ill effect of the Great Depression and therefore they do not have the same value of money as Baby Boomers. Generation X is not materialistic and therefore spends more than they save. Brand loyalty among Generation X is higher as compared to Generation Y. The best marketing medium for this generation is television with magazines and newspapers following close behind. For them internet is still a foreign technology and most do not maintain an active online presence (Hoyer and Macinnis, 2009). Application Using the above information, one can apply the consumer behavior tactics to develop a better marketing strategy for L’Oreal. With the wide product range of L’Oreal, different kinds of consumers need to be targeted. The target market could differ on the basis of income level or either through the different generations. Since Australia is basically a classless society, targeting on the basis of generational differences would work betters. Media Strategy for every product is based on television and print, internet or events. Alternatively a brand could use all three. For L’Oreal, different markets can be used to capture different target market. We are aware the Generation X relies more on television and print magazines while Generation Y is more attracted to internet (Young, 2010). Events can compliment both the above marketing strategies. Once the medium has been selected, the next step should be the selection of message source. For message source, a variety of options are available which include worth-of-mouth; formal source, informal source and encoded messages. Formal source could be Celebrity endorsement through testimonials, spokesman and direct endorsement. However we have to understand the professional users are not influenced by celebrity endorsements and cannot be fooled into buying the wrong product. Celebrity endorsement is however a power reference group that could bring about the required changed. An informal power reference group is buzz agents. Buzz agents are used to generate interest within the consumers and these agents belong to the same group as the consumer. They could be friends, co-workers or any person who also acts in the capacity of an opinion leadership for the group. A buzz agent should be such that people would be inspired by that person (Fogli, 2007). At this point, consumer attitudes need to be changed about L’Oreal. The idea is to direct the consumer towards the right direction. According to the Elaboration Likelihood Model, we can bring change either through the central route or the peripheral route. The central route includes direct marketing campaigns while the peripheral route uses subtle techniques such as subliminal advertising (Hansen and Christensen, 2007). Recommendations Based on the above analysis of consumer behavior and the issues with L’Oreal advertising, a marketing strategy will be proposed that would use consumer behavior theories as support mechanism. The first change should be a clear distinction between the different L’Oreal products. The four different categories would be used to cater to different target market with women being the primary target market for all these categories (O’Guinn, Allen, and Semenik, 2008). Luxury products would be meant for the Generation X who has the income to buy high-end products and have a high brand loyalty. For these products, marketing would be done through television advertisements and print magazines since this medium works best for this generation. The message source for this generation would be a local celebrity. Local celebrity is chosen since Australians while aspiring for that personality are also able to relate with her on a cultural level. The Ego defensive function would be explored here since these consumers are mature and they wish to satisfy their ego needs (Kardes, Cronley and Cline, 2010). For the professional line, the most appropriate strategy would be licensing. Licensing refers to borrowing the name and personality of a celebrity for a particular brand. This is particular common in fashion brands such as licensing Shania Twain for a perfume. In the same way, L’Oreal could bring makeup artists to endorse brands. This would work for professionals when they realize a particular brand is the favorite for their role model. However, celebrity licensing is a sensitive issue and it is imperative that the right celebrity is chosen for the product (Hollenson and Banerjee, 2009). For the third brand which is consumer products, L’Oreal would benefit by targeting the young generation Y. For Generation Y, they need to cultivate a media strategy on two levels. The first is using the internet and most particularly social networking sites. L’Oreal needs to improve its image on L’Oreal Australia by increasing discussion, events, promotional material. For this they need more people to like and visit the page. This could be very well done through buzz agents carefully selected from universities, colleges and even workplaces. The buzz agents will form a group that is admired by most of their peer and thus use the value expression function to change attitude about the product. The message language here would be kept informal since Generation Y is cynical towards traditional advertising and word-of-mouth works best for them (Solomon and Rabolt, 2004). The last product range is the active cosmetics range. For this range, L’Oreal should explore the growing consumer awareness towards natural and herbal products. Since the active cosmetic range focuses on the healthy beauty, herbal products can be created that tap on the consumers gaining awareness. This product range would create a sustainable product range for L’Oreal that is environmentally conscious. Active cosmetics can become the channel for information for consumers on creating awareness towards the use of cosmetics such as sunscreens to prevent cancer. L’Oreal does not need to bring major changes in their marketing strategy. They just need to adapt their products towards a specific target market and ensure that their products do not compete with each other. Also with the increasing internet dependence, a strong online presence is a must for a company as strong as L’Oreal. References Australia, (2011) Australia’s Culture, Tourism Australia, Retrieved from http://www.australia.com/about/culture.aspx Belk, R. W. (2010) Research in Consumer Behavior, Volume 12, UK: Emerald Group Publishing Boone, L. E. and Kurtz, D. L. (2011) Contemporary Marketing, Ohio: Cengage Learning Clancy, L. (2004) Culture and customs of Australia, New York: Greenwood Publishing Group Ellwood, I. (2002) The essential brand book:  over 100 techniques to increase brand value, London: Kogan Page Publishers, 2002 Ergin, E. A., Ozdemir, H. and Parilti, N. (2005) Brand Loyalty In The Cosmetics Industry: A Field Study On Turkish Women?s Brand Loyalty Among Cosmetics Products, Journal of Business & Economics Research, Volume 3, Number 5 Fogli, L. (2007) Customer Service Delivery:  Research and Best Practices, New Jersey: John Wiley and Sons Hansen, F. and Christensen, S. R. (2007) Emotions, advertising and consumer choice, Norway: Copenhagen Business School Press Hollenson, S. and Banerjee, M. (2009) Global Marketing, New Delhi: Pearson Education India Hoyer, W. D. and Macinnis, D. J. (2009) Consumer Behavior, Ohio: Cengage Learning Jupp, J., Nieuwenhuysen, J. P, Dawson, E. (2007) Social cohesion in Australia, London: Cambridge University Press Kardes, F., Cronley, M and Cline, T. (2010) Consumer Behavior, Ohio: Cengage Learning L’Oreal, (2011) Company Overview, Retrieved from http://www.loreal.com/_en/_ww/html/our- company/facts-figures/researchinnovation.aspx? L’Oreal Australia (2011) L’Oreal Australia. Retrieved from https://www.facebook.com/group.php?gid=9218675375&v=info O’Guinn, T., Allen, C., and Semenik, R. J. (2008) Advertising and Integrated Brand Promotion, Ohio: Cengage Learning Schiffman, L. G. and Kanuk, L. L. (2007) Consumer Behavior, New Delhi: Pearson Education India Solomon, M. R., Rabolt, N. J. (2004) Consumer Behavior : In Fashion, New Delhi: Pearson Education India Young, A. (2010) Brand Media Strategy: Integrated Communications Planning in the Digital Era, UK: Palgrave Macmillan Read More