L’oreal in France and America Case Study

Dear All,

Question 1: Compare and contrast the offering of L’Oreal in France and America from the perspectives of the 4 Ps. Why did it retain some and change the others?

Comparing US and France Situations

The key issues that need focus is

1. 14 SKU introduction – challenge of customer acceptance
2. Kmart and Wal-Mart stores are self service stores while salons are assisted stores—Is consumer behavior the same?

Question 2: What is the market share of each of the 3 main players in the Daily Moisturizers Market and the treatment moisturizers market? Based on this data, who is a greater threat to L’Oreal, Oil of Olay or Ponds?

There are three major players in the US skin care market: Olay, Ponds, and Plenitude. Each offers products in the three segments of the market: Treatment Moisturizers; Daily Moisturizers; and Cleansers. Some players like Noxzema offers only cleansers while there are some others who offer only moisturizers.

Exhibit 8A shows the pricing details; Table on page 7 gives the retail dollar sales of moisturizers and cleansers and also the units breakdown of moisturizers (between daily and treatment). Our job is to find the dollar sales of treatment, daily and cleansers of each competitor. Here’s how we do it!  

For any firm suppose that

M = Dollar sales of moisturizers

T = %Treatment moisturizers unit sales as a % of all moisturizers sales for the firm

D = % Daily moisturizers unit sales as a % of all moisturizers sales for the firm

T avg = Average Treatment moisturizer price

D avg = Average Daily moisturizer price

Then; % of moisturizer dollar sales for treatment is given by

(T × T avg )/ { ( T × T avg) + (D×D avg)} ---------------------------------------- 1

We can rewrite 1 as (by replacing D in the denominator by (1-T)

(T × T avg )/ { ( T × T avg) + ( (1-T)×D avg)} ---------------------------------------- 2

Now, divide the equation 2 by D avg both in the denominator as well as numerator, we get

(T × T avg/D avg )/ { ( T × T avg/D avg) + ((1-T)} ---------------------------------------- 3

In this equation T avg/ D avg is called the price premium. Basically this is the price the firm gets for the costlier product over the cheaper product. So, we can now put the values collated from Exhibit 8A and Table on page 7

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