Assignment on

Distribution Network
Of L`oreal

Submitted to : Submitted by:

Mr. Neeraj Gupta Vineet Kumar

Nishant Sharma

Prashant Kumar Singh

1|Page
 No. Particulars Page No.

1 Introduction

 L’Oreal In India 3

 Divisions in India 3

 L’Oreal India at glance 4

 Brands Of The Company 4

2 Segmentation 5

3 Elements of Marketing Strategy 6

4 Major Competitors 8

4 Distribution Channel 8

5 Presence in rural area 10

10 Suggestions 10

2|Page
L’Oreal in India:
The company began doing business in India in the early nineties through a distributor and later
established L’Oreal India, a wholly owned subsidiary of the L’Oreal Group. L’Oreal - the
second ranked international cosmetics company in India - claims that revenues in the country
increased five-fold over the past five years.
The new factory in Pune is the latest step in the group's rapid development in the subcontinent.
The high-tech plant is to manufacture hair care, hair colour and skin care products to meet rapid
increases in demand. The Pune site is one of the first within the company to implement
L’Oreal’s newest GHP or Good Hygiene Practices.
"These new requirements have a profound impact on the way buildings are designed, the way
production units are organized and on the installation layout. GHP zones are protected by
airlocks to allow for a controlled atmosphere, and processing vessels are isolated in dedicated
areas physically separated from the rest of the facility," said a spokesperson for L’Oreal.

L’Oreal operates three divisions in India, including,

 The Consumer Products Division - L'Oréal Paris,, Maybelline New York and Garnier

 The Professional Products Division, which manages the salon business, and

 The Active Cosmetics Division with the Vichy brand of dermo-cosmetics.

When L'Oreal's Professional Products Division entered India in 1997, there wasn't a sniff of
structure in the hairdressing industry. Organised education was absent, training considered
redundant and hairdressers content with dubious domestic brands and prohibitively expensive
foreign ones.
L'Oreal had the vision to realise all that would change and invested heavily in hairdressing
education and training. Today, the hair care industry is pegged at Rs 200 crore (Rs 2 billion),
growing in double digits, and L'Oreal Professional Products -- Professionnel and Kerastase --
are market leaders.
L'Oreal Professional Products prides itself on a product they believe is technologically
unmatched. "3.5 per cent of our sales are pumped back into research & development. "They
skim the top 100 cities in India and have the largest salon base in the country, of which 20 per
cent is exclusive to them, contributing to 40 per cent of their revenue." SA "Their biggest cost
is the education of their trade. They have over 40 trainers; it's an entire machine that needs
constant oiling."

But competitors are eating into the same strategy. Both Schwarzkopf, at the number two
position in the industry, and Wella have launched technical training centers. Schwarzkopf even
launched a by-invitation-only hairdressers club and flew 150 members to Goa for an inaugural
meeting.

3|Page
L’Oreal India at glance:
L’Oreal, world leader in cosmetics, has a modern and efficient growth model that is always
looking to the future.

 100 years of expertise in cosmetics

 5 key areas of expertise: hair care, hair color, skincare, make-up & fragrances
 23 global brands
 Products distributed in 130 countries
 €17,5 billion consolidated sales in 2008
 €581 million in R&D investments
 628 patents filed in 2008
 67,662 employees worldwide
 4.6 billion Units manufactured in 2008.

Brands of the Company:

1. Consumer products
High technology products at competitive prices distributed through mass-market retailing
channels.
 L’Oreal Paris
 Maybelline
 Garnier

2. Professional products
Portfolio of brands that meet the requirements of hair salons and provide customers with a wide
range of innovative products.
 L’Oreal professional
 Kerastase
 Matrix

4|Page
 3. Luxury products

Prestigious brands which offer customers products and premium service in department
stores, specialty stores and travel retail outlets.
 Lancome
 Ralph lauren
 Biotherm
 Giorgo Armani
 Diesel

4. Active cosmetics
Dermo-cosmetic products sold in pharmacies and specialist retailers and supported
by advice from pharmacists and dermatologists.

 Vichy
 La roche posay

L'Oréal uses brand segmentation to drive growth

Premium

 L'Oréal operates strict brand segmentation across its portfolio to retain its exclusive
brand identity. For each of its brands L'Oréal maintains distinct retailing channels
to keep its brand image intact. Its premium ranges Lancôme and Yves Saint Laurent
are marketed through department stores. Its mid- and lower-tier mass brands
L'Oréal Paris and Garnier share the same retailing space in Western markets but the
distinctions are made on the basis of price and product offerings.

Mid-tier

 Cutting edge formulations are found more under L'Oréal Paris than Garnier. L'Oréal
also sells its premium range formulations under L'Oréal Paris when demand in the
premium range slows down. L'Oréal uses Garnier to penetrate low-income
consumers in emerging markets whereas L'Oréal Paris is reserved for urban
consumers.

Mass

5|Page
  The economic downturn necessitated L'Oréal to use its brand portfolio carefully to
exploit any growth potential. For example, hair care launches were made under
L'Oréal Paris as it was originally a hair care brand, while for colour cosmetics the
mass brand Maybelline was used to drive growth. L'Oréal used Lancôme to appeal
to a wider global consumer base, whereas Yves Saint Laurent was used to appeal
to Western European consumers. For premium and mid-tier brands, it launched
more targeted products whereas for mass brands such as Garnier the focus has been
on multi-functionality.

Elements of Marketing Strategy

Market penetration

L'Oreal gained over of 15.8% market share all over the world. Instead of rely on creating new
product and brand, L'Oreal aim to take profit from the growing middle class and the merging
market. The latest researches are focusing on emerging market for example Asia, Eastern
Europe and Latin America. Furthermore, L'Oreal penetrated two profitable markets, the men
older population that is increasingly showing more intention to products such as skin care for
men and anti aging.

Product development

Research and development are the major factor of L'Oreal success. Continuously, the company
is attentive to the market trend and the consumers need in order to meet their expectation and
provide their satisfaction. Each year, there are more than 5000 formulas created, tested and 500
product launched each year. For example, Feria range was specifically innovated for Japanese
people and Soft Sheen Carson for African.

As a result, L'Oreal achieves their target by offering them the newest product with innovative
feature which are marketable and generate an important turnover in diverse segments of the
international market.

Market development

L'Oreal continues to diversify its portfolio integrating new brands and product. Thus, permit
the company to gain new area of development and new lines of growth. In the other hand,
L'Oreal try to adapt their product to the potential market for instance R & D center was
established in Shanghai to improve the competitiveness of their products and make it more

6|Page
appropriate for Chinese customers. Even if their product are existing in over 130 country, the
group is trying to create more demand and increase market share of its brand in news countries.

Diversification

As we can noticed, although their multiple and various product and brand, L'Oreal keep
working and cosmetics and personal care product. We cannot find L'Oreal in other domain
or activities like clothing, food or any domain not related to cosmetics.

Customer Satisfaction (Product; Price)

L'Oreal priority is to meet customer expectation by providing the right product, with highest
quality and innovative features. Through intensive research, the company aim to provide plenty
of new products and to improve the current product. As result customers is offered a wide
variety of brand and product from whom he can choose according to their need and budget.
L'Oreal study different market, with different culture, habits and needs and try to satisfy them
using the information collected to create the suitable product for each task, age and budget.
L'Oreal consumers can stay updated and follow the newest trend just by buying the newest
product. Simply the company adapts their product to the latest trends and even more; set the
trend in the market.

L'Oreal portfolio is for all types of consumers. As well as we can find luxurious brand, there is
also mass market product. However, for L'Oreal each brand and product necessity a deep
research to provide the best quality. The diversity of the portfolio allow the company to adapt
different pricing politic because each brand can cover and finance other in case of decrease in
sell. For luxurious product

7|Page
 MAJOR COMPETITORS

www.loreal.co.in

http://www.fashinvest.com/loreal-india-expands-beauty-market-acquisition-cheryls-
cosmeceuticals/

DISTRIBUTION CHANNEL
Factory

Distribution Centres (Depots)

Distributors

Mass retailing channels – Salons, hypermarkets, supermarkets, drugstores and

traditional stores

Final Customers

 L`oreal has 42 factories worldwide. In India, it is located in Pune.

 One or more distributors are present in mostly cities depending upon the population or
size of the city.

8|Page
  Salons: Loreal has acquired a company named “Cheryl's Cosmeceuticals” which has
10,000 stores in India.
 It has its own stored also named “Loreal professionnel”, “Matrix” and
“Kerastase”.
 Its products are also sold through hypermarkets, supermarkets, drugstores and
traditional stores.
 They don`t have their own transportation facilities so they use public and private
transportation for reaching the distributors from manufacturing units.

References:

 Darshan Lal and sons (Distributor)

Address: Sector 8, Panchkula

PH. No.:-0172-2567790

 Chadha Marketing (Distributor)

Ludhiana-141001

PH. No.:-0161-2730980

Efficiency of Distribution Network

 Salons vs Retailers
Loreal is present in the market through both salons and retailers. For salons, Margin
ranges between 10 to 15% while for retailers margin lies between 6-8 % which is
there for sharing between both distributors and retailers. Distributors keep 20-25% of
the margin given by company and rest is transferred to retailers. Salons give loreal a
better business as compared with retail stores because in stores, people have no other
choice except the use of Loreal products while outside, they may prefer using some
cheap products like Godrej`s and HUL`s

http://in.linkedin.com/pub/sandip-dwivedi/54/203/838

9|Page
PRESENCE IN RURAL AREA
Loreal is present in the Rural Market but it is not very much active or popular there. Reason
behind that is the hard competition from P&G, HUL Godrej and Johnsons and Johnsons etc.
Loreal is considered as a costly brand so that rural population do not prefer or afford to by
loreal.

SUGGESTIONS
1. They should introduce new products according to the need of rural population which
should be simple and easy to use.
2. They should make a new segment for lower middle class families.
3. They should consider manufacturing of soaps, oils etc which are having a larger share
in rural market.
4. They should start their promotional campaigns in rural areas in order to educate and
make them aware about their products
5. They should make their products available in the sachets also as it is more popular in
villages.
6. Garnier is having a better position in India as compared with other Loreal products so
it should promote it more.
7. They can consider reducing the size in order to decrease price. e.g Godrej has
introduced its Cinthol, Fair Glow and other Godrej products in 50 gram packs that are
priced at Rs. 4-5, particularly for the markets of Uttar Pradesh, Madhya Pradesh and
Bihar.

http://archive.indianexpress.com/news/loreal-sets-rs-7000-cr-sales-target-in-india-by-
2020/1057597/

http://ibnlive.in.com/news/india-is-the-future-loreal-india-md/270199-55.html

http://www.loreal.co.in/_hi/_in/index.aspx?direct1=00006&direct2=00006/00002

http://timesofindia.indiatimes.com/life-style/beauty/Indias-cosmetics-industry-may-treble-by-
2020/articleshow/27844855.cms?referral=PM

10 | P a g e