The Problem of L’Oreal Plenitude as of April 1996 Case Study

L’Oreal Case Analysis
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L’Oreal Case Analysis
L’Oreal is a world renowned cosmetics firm that was established in the year 1907. While it is headquartered in Paris, France, its products are sold all over the globe. The company’s Plenitude skincare line is one of its top product lines in the United States. This report provides an analysis of L’Oreal Plenitude’s problem in America as of April 1996 and covers the root causes of that problem. A plan of action that the Senior Vice President of Marketing Carol Hamilton should take is described.
Problem Analysis
The problem of L’Oreal Plenitude as of April 1996 was how to increase sales and profitability of the Plenitude line of products in the United States, and how to improve the position of these products in the country. In essence, the Plenitude product line was not making any money, with the exception of the newly introduced Revivalist. The year 1988 marked the introduction of L’Oreal Plenitude product line to the American market. Eight years following this introduction, the product line became the number two brand in the US only to lose this position later on to another major competitor called Pond’s. In addition, L’Oreal Plenitude hit a 4-year sales plateau and was not making any profits in America. The root causes for this include the following: firstly, the company had wrong assumptions of the target market in the United States. Secondly, it applied a market strategy basing upon those wrong assumptions. Thirdly, it continued to do for a long time period, even when results were poor. These are explained in detail in the next paragraphs.
When the French company planned to launch the L’Oreal Plenitude product line in the American market, it wrongly presumed that what succeeded for the market in France would also be successful for the American market if the same formula is employed. In France, the model of an executive woman had mass appeal and was therefore very successful. Nonetheless, as demonstrated by the 1995 market studies, the market segments which mostly attracted the L’Oreal Plenitude product line were the aged focused and stressed out segments, and these only comprised 40 percent of the entire United States market. In addition, the rejector/acceptor studies showed that customers view the L’Oreal Plenitude product line as particularly targeting women who are older. An analysis of the Moisturizer Units Sold table and the Dollar Shares table indicate that the product line is leading in the treatment category. Conversely, the L’Oreal Plenitude product line comes third in the daily category. This contributes to the fact that the product line actually lacks the mass-market appeal it required in the US market in order for the class of the mass strategy to be successful. Plenitude was perceived by consumers as only for older women, more costly than the competitors’ offerings, a step-up, and high-end. Clearly, what would work for the French market would not necessarily work for the American market as consumer behavior in these two countries is different.
The class of the mass strategy utilized for Plenitude in the American market ...