Because of the developing technology also increasing in the number of population in Indonesia, in 2010 the total amount for cosmetic sold is 11 billion rupiahs and increasing in 2011 that is 11,88 billion rupiahs. Based on research, the international cosmetic brand is dominating the cosmetic market in Indonesia, which is 55% until 60% of Indonesian cosmetic market (Monalisa, Suwismo, Fitra, 2011). 1. 2 Company L’Oreal is the number one largest cosmetic company group in the world. Eugene Schueller the founder of the company start creating the company since 1904 after he graduates as a chemist.
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In 1907 he demonstrates his idea about his new ideas about the newest formula of hair dye under the name Oreal that using harmless chemical compounds. Because of the hair dye he creates, he became famous and the company is build and become success until now. L’Oreal until 2009 already has 23 global brands in 130 countries and also has employ 66,600 employees and also L’oreal has 612 patents filed in 2010 (L’Oreal, 2010). In 2009, L’Oreal generate the sales until 19. 5 billion euros in the world and 3,192 million sales in Asia, Pacific including Indonesia in 2010.
L’oreal first came in Indonesia is in 1979 by distributing their luxury product Lancome to the market. L’oreal can get in to Indonesia because the company is having a partnership with local firm called PT Yasulor Indonesia. In 2000, L’oreal builds their own branch in Indonesia called PT Loreal Indonesia and watch their operating activities with the newest branch. Now, PT Loreal Indonesia is the one who watch the marketing and distribution activities while PT Yasulor Indonesia is producing hair product for the mass market segment for domestic and South East Asian market. Product Category L’Oreal sells variant types of product but one of them is skin care. In skin care product L’Oreal try to sell face soap, anti-aging cream, cleanser and also sun block. Beside women, L’Oreal also start to sell skin care product to men because nowadays men also care about their skin, not only women. L’Oreal product is a safe product because they did research not only once for the whole world but they also did research in each country they sell to match the condition in the country.
The product of L’Oreal also an eco-friendly product because they use less toxic chemical to harm the environment they also use eco-friendly manufacturing process by cut down the energy. 2. 1 Three Levels of Product 2. 1. 1 Core Product The core benefit of L’Oreal skin care is to make the skin of the consumer to stay healthy and young. Instead of doing surgery that will take a lot of cost and if the surgery is not doing well the consumer face could stay the same or even worse, L’Oreal gives better option to use ‘easy-to-use’ cream to make the consumer skin stay healthy and young just by using the cream at any time suggested. . 1. 2 Actual Product The first actual product of L’Oreal is the brand name. L’Oreal is the number one largest company in the world so it will build consumers trust because the brand is well known and it also makes the consumers think that the quality is good because of the brand is well known. The second actual product of L’Oreal is their types of skin care that gives more choice to the consumers. The consumers are able to choose skin care product that match their needs.
For example, women that need to make their skin looks young, they will buy anti-aging product and for those women who only want to make their skin healthier they can buy the product that gives nutrition to the skin. The third actual product of L’Oreal is the packaging of the product. The size of the packaging convenient and not too big to be put in bags or cosmetic bags so it will be convenient to bring the product everywhere. For example, a consumer is not able to go home because of work, because the packaging is convenient, the consumer bring the product and use it in the office and they still can have a healthy skin or younger skin.
In the packaging also, it is mentioned how to use the product it makes the consumer know how to use the product instead of asking the sales person. 2. 1. 3 Augmented Product The augmented aspect that L’Oreal gives on its product is they give the company’s website on the packaging and in the website there is a special cite for the men consumers to talk to the expertise of the men’s product and also for the women consumers there is a special cite called ‘beauty confidential’ that can give the women consumer beauty advice and ways to keep protect their skin.
Also, in different countries L’Oreal will have a beauty competition by using the L’Oreal product and the winner will get an amount of money. 2. 2 Branding L’Oreal is a good name for branding because it is easy to pronounce, it also has no meaning so the word cannot be translated to other language so in other countries beside France, the name will also be L’Oreal so the name is internationally known. The name also distinctive, there is no competitor that has similar name to L’Oreal and it makes the name unique.
L’Oreal uses multi-brand strategies for their skin care products. L’Oreal introduces ‘Garnier’ for skin care besides their product name ‘L’Oreal Paris’. Besides multi-brand strategy, they also use line extension strategy because they sell types of skin care such as anti-aging, men expert, cleansing and others. 2. 3 Packaging L’Oreal has various types of packaging on size and materials. L’Oreal is trying to become ethical by using eco-design approach for their packaging.
L’Oreal create a policy called ‘packaging and environment policy’ that is based on these three pillars: respecting the environment and the consumer, reducing packaging weight and volume and replacing raw materials by others with a lower environmental impact (L’Oreal, 2010). From the policy they created they also create ‘Packaging and Environment Guide’ for the packaging teams to become aware of the eco-design and now most of the product such as Garnier, Vichy and Biotherm use 40% of recycled glass for their skin care jars (L’Oreal, 2010). 2. 4 Labeling
In every L’Oreal skin care product, it is easy to notice below the L’Oreal brand name there is a gold logo “Dermo-Expertise”. This logo showing that the product has been analyze and created by an expertise and the quality can be trusted. Beside the gold logo, there are also recyclable label, the size label, the website, the address of the main company, production date and also the label of how to use the product. Recyclable label show the company’s awareness to the society because recently there is a global warning issue and by using recyclable packaging L’Oreal is concern about the issue. Buyer Behavior 3. 1 Internal Factors 3. 1. 1 Psychological Factor In this factor, consumer is influence by the motivation and learning factors. In the motivation factors looking at the Maslow’s hierarchy of needs, people have self-development needs and self-esteem needs to be fulfilled and to fulfill that needs people are motivated to make their skin better by using skin care products so the motivation to look better influenced the consumer to buy skin care products. In learning factors it is the experience that influenced the buying decision.
After trying the product for the first time, either from relatives or buying the product, consumers learn about the product and if they like the product it will influence them to buy more but if they did not like and did not get the benefit and unsatisfied from buying the product, the consumers will not buy the product again. 3. 1. 2 Personal Factor A person’s occupation is affecting their decision to buy a product. If the consumer is on higher-level position in the company, they will buy more qualified product and do not care about the price because the have higher income.
For buying L’Oreal’s product, because the price is relatively high, only consumers with high income will be influence to buy the product. 3. 2 External Factors 3. 2. 1 Social Factors Status and household type are also affecting consumer’s behavior. Consumers who have higher status and love to socialize usually will have high prestige and because of that that type of consumer will be influenced by people around them for example in the household, if their neighbor just bought a new skin care, for example L’Oreal, there is a probability that the consumer will also buy L’Oreal product. 4 Micro Environment 4. 1 Competitors
There are so many competitors nowadays in the whole world for L’oreal who also produce skin care. For example in Indonesia there are some global brand such as Revlon, Unilever, Shiseido, Kanebo and also the local brand such as Martha Tilaar Oriflame because they create similar products with similar prices and it makes L’oreal is hard to be identified in the positioning strategy because it is hard to differentiate between L’oreal product and competitors’ product. Also the price between L’oreal and the competitors, for example between L’oreal product such as Garnier and Unilever product such as Pond’s is similar.
Pond’s also produce product for anti-aging same as L’oreal products. In price, L’oreal price also relatively higher than local products but similar with the global brands. 4. 2 Customers L’oreal aim their skin care product mostly for age between age 20 until 35 years old because based on research women start aging since they their late teen years (Newman, 2009). People start aging at age 20 because, skin can get worse (dried and then wrinkles) when the person is always has activity outdoor which can get contacted with the sun and at age 20, people are tend to have activity outdoor more than age below.
Beside for age 20 until 35 L’oreal also aim the skin care product to people that thinks that natural ingredients are better for skin instead of any surgeries (L’oreal, 2010). They also targeted the product for people who currently graduated university and start working because they are more educated and well informed about the science so they will know that natural ingredients will be so much better than surgery. 5 Macro Environment 5. 1 Technology Environment
The technological environment changes could effect the company because like mentioned above about the competitors, cosmetic surgery, it happens because of technology developed and it makes L’oreal, who produce natural ingredients cosmetics will get decrease in sales. But also because the technology is developing L’oreal can improve the science side by using less energy machinery to produce product that is eco-friendly. It can be seen from the table 1. 1 that after using the eco-friendly machinery, the water consumption becomes less and the energy consumption also become less and the waste recovery index increases.
Table 1. 1 5. 2 Demographic Environment Demographic environment changes could effect the company because some parents nowadays are both working and it makes them very busy and do not have time to go outside or go to the mall for the skin care in the outlet. By using L’oreal product in their home, instead of using their free time to go to the skin care clinic they can use their free time to spend some time with family and relatives. This method also goes for men.
Men is taking all the responsibility for family so men are even more busy then women and it makes them don’t have enough time to take care of their skin but because of the L’oreal products they can bring the product to the office and use the product in the office. 6 Segmenting, Targeting and Positioning 6. 1 Segmenting Segmenting also can be described as mass marketing (Kotler, Ang, Leong, Tan, 2003). In segmenting the sellers should be able to have mass production, mass distribution and mass promotion of one product to consumers (Kotler, et al. , 2003).
Market Segment consists of group of people that have similar wants (Kotler, et al. , 2003). 6. 1. 1 Psychographic Psychographic factors are those that think about the consumer’s interests, values, hobbies and habbit (Hoang, 2007). L’oreal applied this segmenting for their market. Status is the factors that L’oreal chose to choose their target market. L’oreal products are more suitable for the middle and upper class people who has higher income because their products’ price is relatively expensive. Beside that L’oreal also targeted the market to people who is like to socialize.
People who likes to socialize usually is a fashion followers and will think about their beauty, not only women, men nowadays also think about their beauty and fashion. Because they think about their beauty, these people will take care of their skin to make their fashion become better. 6. 1. 2 Demographic Demographic factors are those that are relating about human population in certain area (Hoang, 2007). L’oreal applied this segmenting factors by age and education. They targeted their skin care products for people age between 20 until 35 years old.
Beside age they also targeted their market to people who is well educated because their products are using natural ingredients and educated people will know that natural ingredients would be so much better for their skin instead of using any surgery. 6. 2 Targeting After segmenting the market, the firm needs to choose the best segment(s) that they want their products to be sold in these segment(s). They can choose their segment by considering which segment would give them the best profit and how the competitors or substitute that they will face and are they have available resources to produce the goods.
After choosing the segment(s) the firm needs to think about how they will serve the target market, how to distribute, how to promote and what about the price. There are three market-coverage that L’oreal can choose to serve their customers. L’oreal choose the differentiated market coverage as their targeting strategy because they do not have only one product for one segment and they treat each segment differently. In fact, they offer products that to fulfill different target market.
For example, L’oreal sell consumer products that will be used by customers age 20 until 35 that able to buy the product such as L’oreal paris, Garnier, luxury products that is aimed for people who has higher income such as Yves Saint Laurent and Lancome, professional products or business product that will be used for businesses that is placed in high class places, such as Matrix and Kerastase, Active Cosmetics such as Vichy and La Roche-Posay and Body Shop. 6. 3 Positioning After targeting the market, L’oreal has to build an image in customer eyes by positioning.
Positioning is how the product is differentiated from the other products (Kotler, 1994). In consumer’s eyes, L’Oreal product’s price is quite high compared to the Unilever product, Pond’s. L’Oreal have almost similar position with Revlon because Revlon also sell at high price and their company also quite big for a cosmetic industry. 6. 3. 1 Product Because the price is quite high and it is produced by the largest company in the world, the product must be qualified in costumer’s eyes. L’Oreal uses chemical that will not harm the consumer and they always making product based on the consumer needs.
The price of the product is quite expensive because they uses raw material that will not harm the society and it usually cost more because creating an environmental packaging is quite hard. 6. 3. 2 Promotion The promotion for L’Oreal skin care in Indonesia is mostly using television commercials. Most of the commercials, the company uses famous Indonesian actor and actresses to become the model. An informative promotion is needed for L’Oreal skin care product because the product is shopping product, which need more information because the price is higher than the convenient product or ‘fast moving consumer goods’ product.
A shopping product needs higher involvement than the convenient product, if the consumer bought the wrong product, it will gives the consumer inconvenient because they have to buy a new product and it will cost the consumer more, and this buying behavior is called dissonance reducing buying behavior. 6. 3. 3 Place L’Oreal skin care products can be found in big supermarkets in Indonesia such as Hypermart, Carrefour and Giant. L’Oreal skin care product cannot be found in small market and convenient store because consumer cannot buy the product in impulse, consumer needs more information before buying the product.
