LÐŽ¦Oreal Nederland B.V.

LÐŽ¦Oreal Nederland B.V.

Pertinent Facts

LÐŽ¦Oreal is the largest cosmetics company in the world. In 1992 the LÐŽ¦Oreal Group was the largest cosmetics manufacturer in the world. They are Headquartered in Paris, it have subsidiaries in over 100 countries. In 1992, its sales were $6.8 billion (a 12% over 1991) and net profits were $417 million (a 14% increase). France contributed 24% of total worldwide sales. Europe (both western and eastern countries, excluding France) provided 42%, and the U.S.A and Canada together accounted for 20%; the rest of the world accounted for the remaining 14%. LÐŽ¦OrealÐŽ¦s European subsidiaries were in one of two groups: (1) major countries (England, France, Germany, and Italy) or (2) minor countries (the Netherlands and nine others).

The company believed that innovation was its critical success factor. It thus invested heavily in research and development and recovered its investment through global introductions of its new products. All research was centered in France. As finished products were developed, they were offered to subsidiaries around the world. In established markets such as the Netherlands, any new product line introduction had to be financed by the current operations in that country.

LÐŽ¦Oreal doesnÐŽ¦t sell all of its product lines in every market in which it sells, and the market in the Netherlands is no exception. In the Netherlands, unlike in France, LÐŽ¦Oreal and Garneir are both sold under the same sales force. In this particular case, LÐŽ¦Oreal needs to decide which Garneir product lines such as Synergie skin care line and the Belle Couleur permanent hair colorants line to introduce in the Dutch market.

Issues

• Although, LÐŽ¦Oreal is the largest cosmetics company in the world but

LÐŽ¦Oreal doesnÐŽ¦t sell all of its product lines in every market and also in the Netherlands

• Upper management of the NetherlandsÐŽ¦ LÐŽ¦Oreal subsidiary have to make decisions on which product lines will succeed in their market and which ones will fail .

• LÐŽ¦Oreal needs to decide if it would like to introduce Garnier product lines such as the Synergie skin care line and the Belle Couleur permanent hair colorants line into the Netherlands market.

• The basic problem is what product lines should be introduced into the Dutch market under the Garnier name without negatively effecting the current product lines already available under the LÐŽ¦Oreal brand.

S.W.O.T Analysis

Strengths

Will known brand and plenty market share

LÐŽ¦Oreal is the largest cosmetics manufacture in the world. It has subsidiaries in over 100 countries and international subsidiaries could make its own decision

RD capacity

LÐŽ¦Oreal they believe innovation is its critical success factor for the company, they try introduce one or two new products in every year.

Market research

They are willing to do the market research before they sell products in that market

Willing to listen to customers

After they complete their research, they are willing to listen to customers and modify their product in order to fit the market.

Weaknesses

Consumer behavior and loyalty

Dutch customers have high brand loyalty and they trust the brand name that they use to and what they like.

Different market have different tastes

Customer in different regions have different tasty like the preference, of hair color is different in the French and Dutch market is different because of this reason .

Not famous in Dutch market

LÐŽ¦Oreal has a small market share in the Dutch market and there is a small market in the Netherlands.

Opportunities

Demographics growth

The Dutch population was aging and fastest growing, women are more interested in skin products like anti-aging anti-wrinkling products.

Fashion and stylish

The young generation tends to think that it would be fashionable and stylish to have a different hair color than their original one

Male customers

Cosmetic and toiletries companies always set female customers as their target market, but nowadays more and more guys care about their outfits so L ЎҐOreal might see this potential marketing.

Threats

Competition

Not only from other manufacturers producing similar products but retailer might create their own private-labels.

Saturated

The cosmetic market is become saturated so LÐŽ¦Oreal has needs to increase their innovation

for new products.

Alternatives

1. Do nothing at all and to hope for the best.

2. Introduce only a Synergie of facial skin care products line into the Dutch market.

3. Continue the rollout at its current place but only have a Belle Couleur of permanent hair coloring products lines.

4. Continue the rollout facial skin care products and permanent hair coloring products.

Evaluation of the Alternatives

Alternative 1ÐŽGDo nothing at all and hope for the best.

PROS

Ñ"Ь This alternative does not offer any positive ways to solve this problem and also doesnÐŽ¦t make them get more market share.

CONS

Ñ"Ь If the company doesnÐŽ¦t introduce either of its products, it wonÐŽ¦t be able to take advantage of growing.

Ñ"Ь It