bodyshop
KDI SCHOOL
WORKING PAPER SERIES
KDI SCHOOL WORKING PAPER SERIES
CASE STUDY OF L’ORÉAL:
INNOVATION AND GROWTH STRATEGY
Seung-Joo LEE
July 2005
Working Paper 05-06
This paper can be downloaded without charge at:
KDI School of Public Policy and Management Working Paper Series Index: http://www.kdischool.ac.kr/faculty/paper.asp Case Study of L’Oreal: Innovation and Growth Strategy
Seung-Joo Lee
KDI School of Public Policy and Management sjl@kdischool.ac.kr Abstract
L’Oreal is the world leader in cosmetics and beauty products with revenues of $15.5 billion. The company has been able to grow twice as fast as the industry average and has reported double-digit profit growth for the 20th consecutive year in 2004. Its market leadership has been sustained through continuous product innovation, brand renewal and international expansion. This paper examines L’Oreal’s innovation and growth strategies in order to identify its key success factors and learn best practices in strategic innovation, brand management and globalization strategies
JEL classification: L63, M10
Key words: L’Oreal, innovation, growth strategy, cosmetics
1. Introduction
L’Oreal is the world leader in cosmetics and beauty products with revenues of
$15.5 billion as of 2004. The company makes and sells over 500 brands and more than
2000 products in all sectors of the beauty business including hair color, permanents, styling aids, body and skin care, cleansers and fragrances. About 13% of all cosmetics purchases made around the world are L’Oréal brands. Its brand portfolio of 17 core brands hold leading positions in nearly every cosmetics subcategory and includes some of the most recognized brands such as Lancome, L’Oreal Paris, Maybelline, Garnier,
Helena Rubenstein, Biotherm and Redken. Despite its French origin, more than 80% of company sales are generated outside of France.
Exhibit 1: The World’s Top 10 Beauty Companies in 2004
Company
1.
WORKING PAPER SERIES
KDI SCHOOL WORKING PAPER SERIES
CASE STUDY OF L’ORÉAL:
INNOVATION AND GROWTH STRATEGY
Seung-Joo LEE
July 2005
Working Paper 05-06
This paper can be downloaded without charge at:
KDI School of Public Policy and Management Working Paper Series Index: http://www.kdischool.ac.kr/faculty/paper.asp Case Study of L’Oreal: Innovation and Growth Strategy
Seung-Joo Lee
KDI School of Public Policy and Management sjl@kdischool.ac.kr Abstract
L’Oreal is the world leader in cosmetics and beauty products with revenues of $15.5 billion. The company has been able to grow twice as fast as the industry average and has reported double-digit profit growth for the 20th consecutive year in 2004. Its market leadership has been sustained through continuous product innovation, brand renewal and international expansion. This paper examines L’Oreal’s innovation and growth strategies in order to identify its key success factors and learn best practices in strategic innovation, brand management and globalization strategies
JEL classification: L63, M10
Key words: L’Oreal, innovation, growth strategy, cosmetics
1. Introduction
L’Oreal is the world leader in cosmetics and beauty products with revenues of
$15.5 billion as of 2004. The company makes and sells over 500 brands and more than
2000 products in all sectors of the beauty business including hair color, permanents, styling aids, body and skin care, cleansers and fragrances. About 13% of all cosmetics purchases made around the world are L’Oréal brands. Its brand portfolio of 17 core brands hold leading positions in nearly every cosmetics subcategory and includes some of the most recognized brands such as Lancome, L’Oreal Paris, Maybelline, Garnier,
Helena Rubenstein, Biotherm and Redken. Despite its French origin, more than 80% of company sales are generated outside of France.
Exhibit 1: The World’s Top 10 Beauty Companies in 2004
Company
1.
References: Dolan, Robert, “L’Oréal of Paris: Bringing “Class to Mass” with Plénitude,” Harvard Business School Case, 1997 French, Josep and Neus Quintana, “L’Oréal(A): Fighting the Shampoo Battle,” Community of European Management Schools, 2000 French, Josep and Neus Quintana, “L’Oréal(B): Locally Adapting Elseve’s Global Strategy,” Community of European Management Schools, 2000 Rowell, Nicholas, “Parfums Cacharel de L’Oréal,” INSEAD, 2001 Sarvani, V., “L’Oréal—Building a Global Cosmetic Brand,” ICFAI Center for Management Research, 2003 Singh, Neeraj Kumar, “L’Oréal’s Business Strategy,” ICFAI Business School Case Development Center, 2004 The Economist, “Special Report: The Beauty Business,” May 24, 2003 Tomlinson, Richard, “L’Oréal’s Global Makeover,” Fortune, August 15, 2002 Tomlinson, Richard, “L’Oréal’s CEO on Managing Globally,” Fortune, July 12, 2004 UBS Investment Research, “L’Oréal: The End of an Era,” February, 2005 Vemuri, Kalyani, “Lindsay Owen-Jones: L’Oréal’s Global Makeover Strategist,” ICFAI Business School Case Development Center, 2004 www.loreal.com, company news, beauty news, research, finance