Analyst

L'Oreal of Paris: Bringing "Class to mass" with Plenitude

Ana Paula Terzi-Palombo

1) Describe Plenitude's position in the US market in the early 1996. Why has it apparently been less successful in the US than in France when the French "success" formula was used in the US?

Because L'Oreal had a commitment with the trade that they would keep investing and supporting its brands financially and considering that P&G had a very strong market position in the "masstige" skin care category, long term ROI and profit were forecasted for the following years. It was planned that L'Oreal would gain share and well establish its brand Plenitude.

Despite careful planning, L'Oreal failed to meet profit targets 8 years after the US introduction of Plenitude due in past to Ponds' price strategy and Oil of Olay maintaining its leadership amongst other issues (see answer to question 2).

L'Oreal then decided to carefully study through research why The French success formula was not very successful in the US.

The French formula was a little twisted when it was transferred to the US: Plenitude was launched in France with one "star" product that became successful and other products then followed its footsteps. In the US, 14 SKU's were introduced at the same time with complicated technology terms written all over the carton and package to convey to the mass consumer that technology was their competitive advantage. Amongst other reasons, I state in question 2 that are complementary to this answer, it should be mentioned that general cultural background is important and should always be taken into consideration when a local initiative seems to have good potential for geographic expansion.

Desk research should have been extended way beyond French borders. Marketing is a complex discipline that is influenced by culture, business environment, technology development and of other factors. This means that a 'one-size-fits-all' approach is unlikely to achieve results across the board. Cultural context is established by performing extensive market research into the culture of the market concerned. The marketer must conduct a survey with a large sampling of subjects from the target culture, asking pertinent questions involving preferences, social norms, values and lifestyle customs, to determine cultural traits. Had L'Oreal done their research prior to introducing Plenitude in the US, they could have had a better assessment of the marketplace and therefore avoid some mistakes they made when Plenitude was introduced in the US.

2) Based on your understanding of the situation and the market research data, what is L'Oreal's problem?

Overall, L'Oreal failed to realize and correct certain aspects of its line that were not in line with consumers tastes in the US. Some of the main points are stated below:

*Main competitors (Oil of Olay, Pond's and, Nivea) were situated in the HBA aisles of the stores while Plenitude products were merchandised in point of sales in the cosmetics' aisles next to L'Oreal cosmetics where the consumer is looking for cosmetics not skin care. The skin care consumer is in the HBA aisles!

*Too many product types were launched at the same time with little differentiation and too much technology for the consumer to understand and digest.

*Cleansers were launched as a complement to the Plenitude line as a response to competition, yet cleansers did not fit with the overall differentiation through technology positioning of the brand.

*Consumers were not able to differentiate basic moisturizers from treatment moisturizers.

*Even though L'Oreal states that they adjusted their formulas to be lighter and less fragranced than the French formula, consumer research proved that the products specifications were out of the US tastes.

*French ads were basically translated into English and the "I live with the times" image sought. Even though it doesn't say anywhere in the case that ads were not specifically designed for the US market, it is my opinion that people are sensitive to ethnocentric advertisings and they can read, interpret and distinguish differences concluding that they don't mirror that image. On conscious or unconscious level, the American consumer may have developed a cultural sensitivity to the L'Oreal ads presented in our case.

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