Abstract
The company L'Oreal describes the story of a French family business which has become the world's number one cosmetics manufacturer. It is a multinational, which continues to remain the market leader by investing in research and development to offer innovative products and recovers its investment through the introduction of new products on the market. L'Oreal uses modern marketing techniques, which it uses to diversify its products, to make profits and increase its market share.
Problem Statement
In the market of cosmetics and toiletries, L'Oreal has to decide whether to introduce the Synergie skin care line and Belle Couleur permanent hair colorants. Both products had successfully been introduced in France. The real question for L'Oreal is whether or not to introduce one new product line or two new product lines. Regardless of the decision taken, the introduction of the new product(s) should not affect the sales, and market share of the current product lines of L'Oreal.
Performance analysis
In 1992, the L'Oreal Group was the largest cosmetics manufacturer in the world. Its sales, in 1992, were $6.8 billion and net profits were 417 million dollars. France, in which L'Oreal is headquartered (Paris), contributed 24 percent of total worldwide sales. Due to the belief that innovation was a critical success factor, L'Oreal invested heavily in research and development. The company recovered its investment through global introduction of its new products. L'Oreal aims to introduce one or two new products each year as brand life cycles for cosmetics could be very short.
