L'Oreal and Globalization of American Beauty PDF

Introduction to International Business L’Oreal and the Globalization of American Beauty Accomplished by Group A.7. Abbasov, Farid Collaku, Yll Ezzoubairi, Aya Leon Marquez, Stephanie Paola...

Introduction to International Business L’Oreal and the Globalization of American Beauty Accomplished by Group A.7. Abbasov, Farid Collaku, Yll Ezzoubairi, Aya Leon Marquez, Stephanie Paola Mesfin, Dawit Anteneh Que, Louis Daeniel Ancheta Redko, Danylo Yeganzada, Elmar 10.10.2024 Introduction L’Oréal, founded in 1907, has become one of the most prominent makeup and cosmetic brands with more than 110 years of experience in the beauty industry. Through the innovative strategies in their acquisition of brands around the globe, L’Oréal was able to take over the market and became one of th tyyyl e most important beauty brands for over a century. Despite the circumstances L’Oréall faced, like potential pitfalls and cultural considerations, they consolidated their success in Europe and further expanded into the U.S market, shaping their success in the international market today. How did L’Oreal become the world’s leading beauty company? What was the role of acquisitions in growth? L’Oréal implemented a Multi-brand categories strategy (MiniMBA, Branding), in which different brands were in charge of selling different kinds of products for various markets. For example, Maybelline and Redken helped the company's products become more accessible to a wider range of consumers, as opposed to L’Oréal’s traditional Parisian beauty, which strengthened its position in the American beauty salon market (Jones et al., 2006). In addition, the expansion of premium products that contributed to L'Oréal's dominance in the professional hair care market and the growth of a loyal customer base was not possible without the acquisition of companies such as Kiehl's, Matrix and SoftSheen-Carson (Jones et al., 2006). Another integral move from the L’OréalGroup was to move directly into the international market outside of the U.S., primarily in East Asia. L'Oréal acquired companies such as Yue- Sai and Shu Uemura, gaining a good reputation and expanding its influence in the East Asian market (Jones et al., 2006). L'Oreal also did not forget about the development and promotion of already acquired companies. For example, to attract a younger audience to Maybelline, the brand was renamed Maybelline New York (Jones et al., 2006). ​ Through the use of L’Oréal’s extensive investment in marketing and research and development, they were able to further strengthen the respective brand equity of their brand acquisitions (Jones et al., 2006). For instance, Maybelline, during the beginning of L’Oréal’s acquisition, did not have a strong brand image among consumers. However, because of L’Oréall efforts, they were able to reintroduce Maybelline’s brand image through the use of more modern advertising, and an innovative makeup collection called “Miami Chill”. L’Oréal would then continue to do this with their different brands, strengthening each acquisition’s specific position in the beauty and cosmetics industry. L’Oreal offers consumers worldwide “American” and “French” concepts of beauty. Are there any limits to the national beauty image it can globalize? ​ The main limits that can be found in globalizing American and French beauty concepts are that they are not always applicable to the needs and wants of markets mainly from non-western countries. For instance, beauty standards in the middle-east will generally differ from that of American and French beauty concepts. According to Dr. Bibi Ghalaie (n.d.), as mentioned by Seipp (2024), defining characteristics of beauty in the middle-east generally include almond-shaped eyes, full lips, bold brows, sharp features, and a strong hairline”. Toby et al. (2020), as cited by Primbet (2023), stated that ideals of western beauty consist of being thin or tall, having light or tanned skin, having long hair, large breasts, large eyes, small nose, and high cheekbones. This difference in beauty standards highlights as well the different ways that these respective features can be accentuated. Different articles on the internet can be found to choose the kinds of makeup that are optimal for highlighting individual facial features. To further evidence this claim, Maybelline’s MoistureWhip did not receive well in the Japanese market as it was said to be thick and greasy, but after implementing the Water Shine, a more gentle lipstick for the Japanese, it then became a success (Jones et al., 2006). ​ This is not to say that these limits have hindered any growth for L’Oréal as their implementation of their acquisition strategy was able to cater multiple possible markets around the globe. Even if they did not acquire local brands in a market, they still had a significant ability in selling foreign brands to the markets they wished to sell in. A possible explanation for this could be culture compatibility. For instance, Hofstede’s Cultural Dimensions Theory (Hofstede, 1984) could possibly explain the compatibility of culture. As such Owen-Jones, as mentioned by Jones et al. (2006), stated that “We sell the United States to the Americans, the United States to the Chinese, Italian elegance to the Japanese, French Beauty to the Africans, and Japanese chic to Brazilians”. What are the global opportunities for Kiehl‘s? What are the limits, if any? The acquisition by L'Oréal well positioned Kiehl's for its foray into international markets. By 2004, Kiehl's had opened stores in several key global cities such as London, Hong Kong, and Paris. A resulting trend is that there is high potential to expand into new markets in most of the emerging economies of Asia, Latin America, and beyond, where demand for high-end beauty products is upwards on a growth trajectory (Jones et al., 2006).. However, the main problem of Kiehl’s in its ventures to the international market is the retention of its brand equity. Kiehl’s brand equity can mainly be viewed from a financial perspective (MiniMBA, branding). This MiniMBA highlights that one of the ways brand equity can be viewed is through a financial lens in which a product that is sold to be more expensive may suggest more quality features compared to a product of a lower price. In this case, Kiehl’s is seen for its luxury compared to other products as a brand based in New York. The reason as to why it is so beloved is because of the rarity of shops that can be found all over the globe, boosting customer demand for their products (Jones et al., 2006). Furthermore, the risk of losing this brand equity becomes even higher when considering Farquhar (1998), as mentioned in MiniMBA: Branding, as he suggests building a strong brand also requires fortification in the sense that the brand, in this case Kiehl’s, must sustain a consistent image over time to its customers. However, such aggressive expansion may come at the cost of a loss of unique identity and erosion in customer loyalty as evidenced by Clough stating Kiehl’s as a difficult test for globalization strategy. While L’Oréal was able to overcome this challenge and open up Kiehl’s stores all over the world, the process proves to be challenging still, as moving into a new culture and trying to adapt to local consumer tastes and preferences, while staying true to the core values of the brand, can be a limitation. In fact, this is a very common challenge within the luxury sector—to balance global consistency with local relevance. This is further evidenced in the case study where it is stated that opening Kiehl’s stores are a multistep process and involve long and heavy planning before opening. Conclusion ​ L’Oréal was able to achieve their dominance through the acquisition of multiple brands and their understanding of the various needs that different cultures have when it comes to beauty. Furthermore, their unending determination to improve each brand they had in their portfolio further emphasized their goal to initiate internal growth rather than just swallowing up the competition. By doing so, they were able to make sure that each acquisition acted as a true asset to the overall L’Oréal group rather than as a liability. References: Hofstede, G. (1984). Cultural Dimensions in Management and Planning. Asia Pacific Journal of Management, 1, 81-99. https://doi.org/10.1007/BF01733682 Primbet, D. (2023, March 9). The Bold Glamour filter is proof that Western beauty is still seen as ‘the golden standard’ and I’m tired of it. Glamour. https://www.glamourmagazine.co.uk/article/bold-glamour-filter-western-beauty-standards# Jones, G. (2006). L’Oréal and the Globalization of American Beauty. HBS No. 9-805-086. https://hbsp.harvard.edu/cases/ Seipp, C. (2024, July 25). FROM WESTERNIZED IDEALS TO EMBRACING HOMEGROWN HERITAGE: THE EVOLUTION OF BEAUTY IDEALS IN THE MIDDLE EAST. BeautyMatter. https://beautymatter.com/articles/middle-east-beauty-ideals