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L'OREAL THAILAND

Badariah Baharuddin PBS1331387Roziana Mohammad PBS1331432

Mohd Ainul Shah Bachok PBS1331421Norfasha Mohammad PBS1331340

Nor Ain Jafar PBS1331420Jennie Oh PBS1321264

AGENDA

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Introduction

• Country Profile & Company background

• L'Oreal Thailand : Case study background

• Consumer profile

Situational Analysis• Business Segmentation &

Competitors Analysis• L'Oreal Thailand SWOT Analysis

Problem Analysis • Key Issues• Action Plan and Implementation• Result

Conclusion • Evolvement of L'Oreal Thailand :

2001 and beyond• Now & Beyond

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The Kingdom of ThailandThe Kingdom of Thailand

Floating Market

Quick Facts: Thailand

Source : The World Factbook (Central Intelligence Agency), doingbusiness.org

67.0 mil

8.642 mil

Bangkok

18th ease of doing business

119th real GDP growth 6.5%

120th GDP percapita USD5390

37th economic competitiveness

1 of two SEA not taken over by Western power

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Hair ColoringMake UpHair Care PerfumeSkin Care5

L’Oreal Thailand Ltd

Company background - L'Oreal Thailand

1950s’

early 1990s’

1992

1998

1999

Distribution through local agents

• JV with local conglomerate• Manufactured some Lancôme

product• Lancôme products distributed

through counter (department stores) with other luxury L'Oreal brands.

Siampar

• Directly manage import and distribution (mass consumer & professional hair salon products)

• Other product line – hair color, makeup, skin care products

• Merging of Siampar and Thailor

Thailor

Different locations Different internal

cultural Different process Different policies

• Discontinuation of Lancôme local production by JV partner share buy out (Siampar)

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Case Background – L'Oreal Thailand

Under

capitalize

d

"Thai Exception

" manage

ment

Cash Manage

ment Problem

Zero Bran

d Imag

e

Pressured market share,

sales & profitability

Excessive Fixed Asset Investment

Reckless Borrowing

Undiscipline Financial Institution

Asian Crisis 1997

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COMPETITOR ANALYSIS

Skin care12%

Make-up29%

Colora-tion33%

Fragrance26%

The Thai Beauty Market (Year 2000)

L’Oreal7%

BT 26.6 billion

Target Group 20 – 44 years old

Central Thailand & Greater Bangkok Average monthly – Bt 7,000 Expenditure (personal care &

health) Bt 6509

30%

22%21%

14%

10%5%

Skincare Make-up

Haircare Hair Colourants

Fragrances Others

Business Segment vs. Competitors

36%

27%

19%

18%

Personal Care

Foods

Refreshment

Home Care

25%

10%

9%32%

24%

Beauty

Grooming

Healthcare

Fabric Care & Home Care

Baby Feminine and Family Care

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Operating before World War II Involved in beauty and non-beauty sections Thai is the key innovation center Factory as export hub supplying to Asian market Products variety and diversification Leading market position Products appeal to wide range of population Go Green Campaign

COMPETITOR ANALYSIS - UNILEVER

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Involved in beauty and non-beauty sections Has relocated hair care R&D Center from Japan to Thailand with

USD 150m Procter & Gamble has strong brands. Take advantage on high-growth markets in hair care and skin

care Opportunity in health and beauty product for men

COMPETITOR ANALYSIS – P&G

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Strong growth prospects for

China skin care – Estee Lauder

SWOT ANALYSIS - THREAT

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Regulation of cosmetics were highly regulated and inflexible

SWOT ANALYSIS - THREAT

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Substitute products offer cheaper price

SWOT ANALYSIS - THREAT

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SWOT ANALYSIS - WEAKNESS

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Lack of media support – ranked no. 35 in overall media spending in 1999.

– ranked no. 4 in media spending in beauty industry.

Poor brand awareness in consumer division

SWOT ANALYSIS - WEAKNESS

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Too depending on foreigner and no senior local people in management

SWOT ANALYSIS - WEAKNESS

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Reckless borrowing and undisciplined financial institutions

SWOT ANALYSIS - WEAKNESS

Led brands in make-up and hair care industry

SWOT ANALYSIS - STRENGTH

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Excellent image among top professional salon owners

(L’Oreal Professional and Kerastase)

SWOT ANALYSIS - STRENGTH

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Strong R&D + Best technology

SWOT ANALYSIS - STRENGTH

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5 strong brands in Luxury DivisionLancôme, Biotherm, Helena Rubinstein, Giorgio Armani

and Ralph Lauren 16% share

SWOT ANALYSIS - STRENGTH

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Gain

SWOT ANALYSIS - STRENGTH

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Hiring High Profile International, Local Ambassador And Experts (Make Up, Hair Care And Skincare) as product ambassador

SWOT ANALYSIS - STRENGTH

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Focus only in beauty section

SWOT ANALYSIS - STRENGTH

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Online social networks and internet marketing techniques

SWOT ANALYSIS - OPPORTUNITY

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Enter new market such as fragrance industry where less competitor

SWOT ANALYSIS - OPPORTUNITY

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Tap into more prospective distribution channels

SWOT ANALYSIS - OPPORTUNITY

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Metrosexual Trend

SWOT ANALYSIS - OPPORTUNITY

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KEY ISSUES AND HOW DID LOREAL THAILAND TRANSFORM?

• Poor Product Positioning• Product Overlapping• Lack of product localization• Not focus on whitening

products for skin care

Loreal Thailand Key Issues in 1999

Product

Marketing

Financial

PeopleOperations

Management

Brand and Communication

• Negative cash flow• Flat sales – declining sales• Poor financial performance• No budget to increase

marketing spending

• Traditional promotions• Using international celebrities to

be ambassador• Not understanding the local

market• Poor engagement with retailers

• Low brand awareness – Ranked 8th

• Zero visibility in print media• No budget to advertise on TV• Poor image and reputation• Rank 4th in media spending

(beauty industry)• Limited media support• No convincing ambassadors

• Poor inventory control• Account receivable increased to 203

days -6.7 months• Problem of overstocking

• Clash cultures – Siampar and Thailor• Managed by expatriates• Perceived as a Company that has no

vision, no results and no rewards• Under utilized of local talent• Low morale among staff• High labor turnover – 2nd highest

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Loreal products are being segmented by price and distribution channel

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LOREAL PARIS• Loreal Feria Brands• Loreal Plenitude• Loreal Make up• Maybeline• Garnier

LOREAL PROFESSIONALHair colourHair Colour TreatmentOther Products :-Excellence and Natea

LOREAL LUXURY• Bioterm• Kerastene• Helena Rubinstein• Lancome• PCI- Perfumes

Loreal Paris – 1,200 outletsMaybeline& Garnier -5000 stores

Leading brand – Skincare- Plenitude

65% 15% 20%

2000 Top professional salons

Market leader for Hair Products – rapid innovation and true technical superiority

Helena – 6 major dept storesLancome – 34 outlets

Target market : Teenagers and Women

Target market : Hair Salon

Target market : Men and Women

High end market

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Turn around L’oreal Thailand by transforming the following …

PEOPLE

FINANCIAL AND OPERATIONS

MARKETING

PEOPLE – CULTURE REVOLUTION• Change of culture – banned employees from using the

names Siampar and Thailor – formed new entity Loreal Thailand Ltd

• Restructuring of HR Department – 2 units set up : 1) Focus on HR and systems, 2) Focus on training and retention

• Relocate to a brand new office, prestigious building (but cheaper)

• Offer interdivisional transfer – widen opportunities

• Talent Spotting – Key Personnel : Government Relation Manager, Head of IT, Warehouse Manager (Local)

• Talent mobilization –Groom potential local talents to become the next generation leaders

• Use persuasive and creativity method to motivate the talent to stay with L’oreal

• Revisit reward system – Hard work and dedication will be rewarded i.e. Bonus

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FINANCIAL

• Subsidy grant from Loreal HQ in Paris – Bt 50 million – money to exclusively spend on COMMUNICATIONS only

• Restore cash flow and profitability

• Loreal luxury products – Stock coverage at counters reduced from 5.2 months in Dec 1999 to 2.5 months a year later

Improve account receivables from 203 days to 130 days

Improve cash flow

• Focus investments on 2 major outlets, and getting designers from Paris and London to develop the best beauty counters

6 months after – Sales up more than 50%

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MARKETING – UNDERSTANDING THE MARKET -RETAILERS

• Listen and engage with the retailers – tailor made strategies Drug stores – consumer would find rational and highly emotional

benefits from beauty products Carrefour vs Tesco – Carrefour – revamp beauty space, whilst Tesco

concerns on Category Management

• Help retailers to create a better understanding the emotional values of beauty products

• Be more professional in dealing with retailers

• Clearer ideas for product positioning

• Understand market better when launch products

• Support the right communications strategy

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MARKETING – UNDERSTANDING THE THAI CONSUMER

• Skincare products are the most preferred and popular. Most Asean consumers are looking for skin whitening products.

• Thai Skin is unique – Not Caucasian, Indian, Oriental Hispanic or Black

• Consumers like to see the products further segmented for different age groups and skin types

• Motivation and needs – Brighten skin, fulfilling emotional needs and uplifting self esteem – Brighter skins means high status

• Thais often associate the made-in Japan image with high-quality or premium products, which encourages Thai consumer’s willingness to pay a premium price

• Factors to purchase cosmetics – Quality and Price

• Preferred means of cosmetic info – Magazines (79%), TV (64%) and friends (58%)

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MARKETING – PRODUCT POSITIONING

• Reposition of Loreal Paris, Maybelline and Garnier, by redefining pricing strategy

• Increase SKUs of hair colour products from 15 to 20 compared to 7 of Sunsilk’s (Main competitor)

Increase shelf space from 50 to 90% at Watson

Matching the hair color demanded by consumers

• Consider Whitening Skin Product as one of the killer skin care product

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MARKETING - COMMUNICATIONCONVINCING LOCAL AMBASSADOR

Before - The boring and lacking in self confidence ambassadors

After - The WELL KNOWN LOCAL STAR – enjoys widespread respect and credibility achievement at international level – represents as Thai icon

Laila Boonyasak (White Perfect Laser

Ann Thongprasom (Revitalift / L’Oreal

Excellence)

Araya Alberta Hargate (Total Repair / Revitalift

white / UV perfect /

Areeya Sirisopa(Fall Repair)

PRINT MEDIA AND POINT OF SALE

Print media – Use to explain technical innovationPoint of sale and Merchandising – Use for product innovation i.e product testing Communication message - Thai women are highly sophisticated and understand

beauty!

ARAYA ALBERTA HARGATE

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Choompoo as a nickname Famous Thai Superstar Born in 1981 A Thai-British born Model, Actress, TV Host

and Singer A graduate in Bachelor in

Arts Won many awards i.e FHM Sexiest Actress in

Thailand Awards 2007 – 2010, W Style Awards, Siam Dara Stars Awards, and The Best Actress Awards

FACES OF LOREAL

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AS A RESULT, FINANCIALLY BOOSTED UP

1. 1.Customer credit cover days improved for all product lines especially the Luxury Product Division!

2. NEGATIVE Cash Flow has turn into POSITIVE!

3. Sales improved tremendously by 80% up!

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• Change in organizational capability and morale• No. of talents of recruited increased• Job distribution was more structured• The brand - the asset in attracting new talent• Lower labor turnover rate averaged around 4%• Local “real stars” developed to run the division

• Engage with retailers closely – focusing extra value that Loreal tailor made strategies would bring them – win-win situation

• Strong and aggressive marketing & sales team contributed to the faster turnaround – move fast in the market with good innovations

• Launched of the 4th Division - Active Cosmetics (for sensitive skins or affected by dermatological conditions)

Local talent being recognized…

Better engagement with retailers and strong sales and marketing team led to Loreal’s success in winning the heart of Thais. Launching of Active Cosmetics has strengthen Loreal’s market position.

CULTURAL CHANGED AND MOTIVATED EMPLOYEES CONTRIBUTED TO THE LOREAL THAILAND OUTSTANDING PERFORMANCE

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ALL IN ALL, LOREAL THAILAND HAS SUCCESSFULLY TRANSFORMED…

Understand the Market

Get the right products

Communicate Effectively with Consumers

Get the right resources to implement WINNING STRATEGY

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CONCLUSION

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NOW & BEYOND…

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HONESTY RESPECT COURAGE TRANSPARE

NCY

COMMITMENT

S & TARGE

TS FOR 2020

PRODUCING Redu

ce their footprint by

60% - CO2

= -60%

- H2O = -

60%

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MISSION (OFFERS BEAUTY TO EVERYONE)

BEAUTY IS ITS- Create products that meet needs

& desires Deliver innovative & quality

cosmetics

BEAUTY IS UNIVERSAL - Different researches explore new

ideas - Innovative products inspired

beauty

BEAUTY IS SCIENCE - Brainstorming to innovate &

inspire creativity - Suit the local community

BEAUTY IS THE COVENANT - Diversify universalization the

brand perfectly

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AIMTo reach 1B new

consumers around

the world

Beauty 4 everyoneBeauty 4 Individual

Opportunity to reach beauty

Accelerate regional

specialization

Local Observers on innovation

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28 International

brand

World No. 1 in cosmetics business

Sold 22.98B Euros in 2013

Be in 130 countries

77,500 employees

624 patents in 2013

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• Support by L'Oreal, France Foundation with MoE, government agencies and private organizations

• Provide training with great facilities, learn professional skills • For ages of 15 - 40 years, have insecure income • Creating beautiful and social equality • After project, participants stand on their own with skills

SPECIAL PROJECT

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“A diversified workforce in every function and on all levels strengthens

our creativity and our understanding of consumers and it enables us to

develop and market products that are relevant”

JEAN-PAUL AGON, CHAIRMAN AND CEO OF L’ORÉAL

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