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Case Analysis: L'Oreal Nederland B.V.

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Ranee Sirirushneekorn MKTG901-49 10/23/04 Case Analysis: L'Oreal Nederland B.V. Situation Analysis L'Oreal was one of the largest cosmetics manufacture in the world. L'Oreal invested heavily in R&D to be able to compete in the global industry. L'Oreal tried to introduce the products worldwide to offset with the high R&D costs. However, international subsidiaries in the case Director of the Netherlands subsidiary could make decision by themselves whether yes or no on those new introduced products. By the way, any products introduced had to be financed by that country operation. With the limited resources in Netherlands operation, the products will be marketed with the same sales force. The important thing is Dutch consumers had a little awareness of Garnier and brand image. In order to succeed in the Dutch market, the products needed to offer the unique, differential competitive advantages. Without that, it will likely to fail and also create the negative image with the Garnier family name. Thus, it will destroy the future of the Garnier lines introduction to Netherlands. Problem Definition L'Or´┐Żal Netherlands marketing manager was considering introducing the new product lines of Garnier Family brand. They were "Synergie", which is skin care product lines and "Belle Couleur", which is hair dye product. Besides, those products lines were successfully market in France. By the way, the target market, consumer behavior and also perception towards the products in Netherlands were not quite the same with those France. The problem is which one or both of them should be offered to Dutch consumers. ...read more.


* There is no direct competition exist in the mid-price range. In the market of hair colorant, there are just upper end and lower priced offer to the market. This is considered as the price advantage. Cons * The result of the market testing was somewhat unfavorable for the result of hair color. Most of the participants dissatisfied with the final color, they thought their hair was too dark and it didn't cover gray. The product didn't modify for the Dutch market. It is just like market what you produced, not produced the product that market want. * Same as the Synergie, there is currently L'Oreal product in the hair color market in Netherlands. That is Recital. Thus, the cannibalization will exist. The new product will probably meet the expectation of these existing target markets. It is possible for the satisfied L'Oreal (Recital) users to shift to the lower price brand (Belle Couleur). In other words, Belle Couleur offers the same quality products to satisfy the same need of the same target of the Recital product with lower price. * Belle Couleur required about 1.5 meters for the retail shelf space, which is quite large amount of space. It is not easy to negotiate with that much of space in the drugstores, or any retailers. In order to let them carry our lines, L'Oreal needs to have the evidence of consumer preference, and the rationale for product development which both are difficult criteria to meet for the Belle Couleur lines. ...read more.


And the France manufactures will not reformulate or customize the product for Dutch market. If the Netherlands operation decide to introduce the Garnier lines of products, there are some issues that need to be considered too; Limited resources-there is a limited sales force. It is stated that Netherlands division will use the same sales force for both L'Oreal existing product and Garnier new product lines. This might lead to ineffective work. L'Oreal needs to come up with the solution such as the compensation, incentives, etc. to improve motivation. L'Oreal existing products-Due to less time and money to maintain the lines, this might lead to sales drop or ineffective management of the currently lines. Also, L'Oreal need to develop the defend strategy for the Plenitude and Recital to defend their position against the competition. Recital's losing market share - this line now requires attention from the managements. In my perspectives, it mostly depends on the budget of the Netherlands division and also the market situation. If there is the budget enough, they might be able to promote the Synergie- skin care lines. They must evaluate the situation by comparing the cost-benefit analysis. Keep in mind that to develop the demand, L'Oreal needs to heavily promote Synergie in the natural ingredients themes in order to differentiate it from the Plenitude. This also helps protect from the competitors to launch the natural ingredients concern before L'Oreal. For Belle Couleur, they should not introduce it because it will create the negative image towards the Garnier brands because it is not customized for the Dutch market. It would loss reputation for the future of the Garnier family brands. ...read more.

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