L’Oréal used many different strategies to expand and enter into China. The text helped us to understand these strategies. In order to have a better understanding of the case, we are going to explain all these strategies. This development will be divided into parts that relate important steps or points of their strategy. Firstof all the entry strategy in China will be developed and then its expansion strategy (marketing plan, research and development, acquisition of new brands…). L’Oréal had huge challenges by entering into this market. They had to face a high fragmented market with many local competitors. They also needed to access to deep market knowledge and gain a wide distribution network. Product adaptation wasanother challenge that L’Oréal faced.
To begin, L’Oréal had invested a huge amount of money to enter into China, it was a major change for their brand. They had to face a very different market with customers that have different needs and beauty ideal. L’Oréal had to understand this new culture and adapt their products and marketing plan. Leah Genuario, Ex Editor, beauty editor magazine, saidin 2006, “L’Oréal’s current strategy in China reflects their corporate commitment to respecting cultural differences in beauty ideals and using a diversified portfolio to adapt to customers needs”. L’Oréal had to establish a strategy before to enter; this took a long time and many investments. They needed to establish their brands in phases into the Chinese market. They were focused on gainingpopularity into this market and brand loyalty. They also wanted to establish a franchise network before a mass expansion.
First, we will analyse the entry into China. At the beginning of all operations, in 1997, L’Oréal decided to introduce only two brands (Maybeline and l’Oréal Paris) and to only launch makeup, skin care, hair colour and to do abstraction of shampoo (launch it later). They wantedto be recognised and well known among the local cosmetic brands (sales increased by 824% between 1997 and 2003).
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L’Oréal strategy for expansion into China:
Local consumers were not familiar with cosmetics. Before letting l’Oréal enter into their market, Chinese authorities wanted to make sure that L’Oréal wouldbe beneficial for Chinese customers, who are interesting in innovative products. L’Oréal had to convince them that they would understand their needs and create new products to fit their expectations, on the long-term business. In order to do that, they started their own manufacturing units, and according to the document “L’Oréal in China” of the ICMR (Centre for management research) they “investedheavily in conducting research on the skin and hair type of the Chinese as well as on understanding their social and cultural needs”. Then, L’Oréal developed its first objective of gaining confidence and increase market share into the Chinese cosmetic industry, but first of all they needed to educate this population who did not know so much about the use of makeup, before its opening in 1970s.A. Marketing strategies:
According to studies, l’Oréal realised that Chinese people had a strong nationalistic feeling, this is the reason why they tried to involve more Chinese people in their advertising campaign and maximise the respect of their culture and traditions. L’Oréal employed many local and young people in order to help them to have a better understanding of their needs and togain popularity among customers. For example only 8 employees were foreigners among the 3,000 people they employed. The people employed had quite the same age that the targeted one. The Chinese market changed quickly and had a very fast adaptation. It became a more dynamic and competitive market than other developing countries. Moreover, Chinese people were demanding and selective. L’Oréal knew...