L’oreal in France and America Case Study
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Dear All,Question 1: Compare and contrast the offering of L’Oreal in France and America from the perspectives of the 4 Ps. Why did it retain some and change the others?Comparing US and France SituationsFranceUSStandardizedProduct PositioningClass of Mass/Premium QualityBasis for Quality—technologySameStar System of concentrating promotional dollars on new productSameCreativeModern Woman/Live with timesTechnologically Advanced ProductsSameAdaptDelays Signs of agingProduct (heavy based)Reduces Signs of agingSome AdjustmentDifferentSingle product Introduction 14 SKU Line IntroductionCompetition negligibleP&G (According to the case)Customer Sophisticated and knowledgeableSoap and WaterSalons primary distribution channelsKmart/Wal-MartThe key issues that need focus is 14 SKU introduction – challenge of customer acceptanceKmart and Wal-Mart stores are self service stores while salons are assisted stores—Is consumer behavior the same?Question 2: What is the market share of each of the 3 main players in the Daily Moisturizers Market and the treatment moisturizers market? Based on this data, who is a greater threat to L’Oreal, Oil of Olay or Ponds?
There are three major players in the US skin care market: Olay, Ponds, and Plenitude. Each offers products in the three segments of the market: Treatment Moisturizers; Daily Moisturizers; and Cleansers. Some players like Noxzema offers only cleansers while there are some others who offer only moisturizers.Exhibit 8A shows the pricing details; Table on page 7 gives the retail dollar sales of moisturizers and cleansers and also the units breakdown of moisturizers (between daily and treatment). Our job is to find the dollar sales of treatment, daily and cleansers of each competitor. Here’s how we do it!  For any firm suppose thatM = Dollar sales of moisturizersT = %Treatment moisturizers unit sales as a % of all moisturizers sales for the firmD = % Daily moisturizers unit sales as a % of all moisturizers sales for the firmT avg = Average Treatment moisturizer priceD avg = Average Daily moisturizer price Then; % of moisturizer dollar sales for treatment is given by(T Ă— T avg )/ { ( T Ă— T avg) + (DĂ—D avg)} —————————————- 1We can rewrite 1 as (by replacing D in the denominator by (1-T)(T Ă— T avg )/ { ( T Ă— T avg) + ( (1-T)Ă—D avg)} —————————————- 2 Now, divide the equation 2 by D avg both in the denominator as well as numerator, we get(T Ă— T avg/D avg )/ { ( T Ă— T avg/D avg) + ((1-T)} —————————————- 3In this equation T avg/ D avg is called the price premium. Basically this is the price the firm gets for the costlier product over the cheaper product. So, we can now put the values collated from Exhibit 8A and Table on page 7BrandMoist Sales in $% Unit Treatment (T)Average Price Treatment (T avg)Average Price Daily(D avg)% Dollars Treatment$ Treatment SalesPlenitude65.965%12.148.1673%48.11Olay132.812%7.467.5012%15.94Ponds71.149%13.098.1960%42.66