Post #10: Trends / Pricing

Beauty for who? Beauty for all!

“Beauty is a powerful force that moves us”. Only a part of L’Oréal’s purpose, the sentence alone reflects the true goal that moves the French cosmetic company. Beauty for all, to share that beauty with everyone, even if the meaning of beauty differs from one person to another. L’Oréal is determined to create beauty for all, no matter the obstacles and the long nights of research. As we can see, L’Oréal is a customer-orientated type of business, the customer is their focus and will invest time and money in order to create only the best for them.

The world of beauty is always changing. From beauty trends to social issues, even if the company is forward with their intentions and products, customers could easily switch to the competitor’s instead, or find that maybe beauty isn’t worth investing in. That is why L’Oréal has to stay on top of its game, by offering products in mass markets (Consumer Products) or prestige products in select locations (L’Oréal Luxe, L’Oréal Professional), or investing millions of dollars into their research centers in order to find the next advancement in beauty. Some of the major trends in the beauty industry include cosmetics using natural ingredients or ethically sourced ingredients, sustainable packaging, cruelty-free and no animal testing, and companies being vocal and supportive on social issues. Currently, the so called “trend” that poses a threat to L’Oréal is the shift in demand in beauty products, specifically in the area of makeup, due to the ongoing COVID-19 pandemic. Consumers have decreased spending on makeup and cosmetics, either due to income being more constricted or the low need to have makeup (from wearing a mask or not going out).

The beauty industry can be classified as a monopolistic competition. There are many cosmetic companies/brands, or companies that have cosmetic brands under their acquisitions, out in the market, which gives consumers a wide variety of products to choose from. Because of the competitive nature, L’Oréal must constantly find way to highlight their products and make them stand out. Since L’Oréal operates in different target markets, it utilizes differentiated target strategies to market its products. Obviously, they would not use the same strategy used for their Consumer Products on their L’Oréal Luxe brands. The perceived values of the brands would clash and lead into a decrease in brand value and in pricing.

Pricing, in this case dynamic pricing, for L’Oréal is divided by their four divisions since each serve different target markets. For the Consumer Products division, the products are priced at a low or reasonable level since these are the products that are available in mass. Products under the L’Oréal Luxe division and the Active Cosmetics division are more towards the expensive side of the pricing spectrum, since these branded products have a high perceived value. The products under the L’Oréal Professional division are somewhere in between reasonable and expensive, as these products are sold through professional hair salons.

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References:

`Grewal, D., & Levy, M. (2020). Chapter 9&11&14. M:Marketing, McGraw Hill Education

· L’Oréal (2020) .2020 Half-Year Results. (n.d.). Retrieved July 28, 2020, from https://www.loreal-finance.com/eng/news-release/2020-half-year-results

· L’Oréal (2017). Consumers trends in the world of beauty. Retrieved July 28, 2020, from https://www.loreal-finance.com/en/annual-report-2017/research-innovation/interview-marie-charlotte-ponsot-consumption-trends