Case Study “L'Oréal (A): Fighting the Shampoo Battle”
Case Study “L'Oréal (A): Fighting the Shampoo Battle”
Case Study “L'Oréal (A): Fighting the Shampoo Battle”
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CEMS <strong>Case</strong> <strong>Study</strong><br />
“L’Oréal (A): <strong>Fighting</strong> <strong>the</strong> <strong>Shampoo</strong> <strong>Battle”</strong><br />
<strong>Case</strong> <strong>Study</strong><br />
“L’Oréal (A): <strong>Fighting</strong> <strong>the</strong> <strong>Shampoo</strong> <strong>Battle”</strong><br />
At <strong>the</strong> end of June 1997, L’Oréal’s Chairman and CEO, Lindsay Owen-Jones, called a<br />
meeting to study <strong>the</strong> European shampoo market. Although L’Oréal had several<br />
shampoo brands, among <strong>the</strong>m Elsève, <strong>the</strong> shampoo market had never been one of <strong>the</strong><br />
company’s main priorities because margins were extremely narrow. In addition to that,<br />
consumers perceived very few differences and <strong>the</strong>refore positioning and differentiating<br />
a particular brand was a trying task.<br />
Still, Lindsay Owen-Jones was convinced that L’Oréal’s Elsève brand had a lot of<br />
potential. It was <strong>the</strong> market leader in France and <strong>the</strong> challenge was to make it a leader<br />
throughout Europe. This would involve constant research on new formulas, targeting<br />
new market segments, introducing new packaging, a new communications strategy and<br />
maybe even changing <strong>the</strong> trademark, typography and colours.<br />
L’Oréal couldn’t ignore <strong>the</strong> competitive environment that surrounded <strong>the</strong> firm.<br />
Competitors were very active and aggressive. Procter & Gamble had recently<br />
introduced Wash & Go, a 2-in-1 shampoo and conditioner. One of <strong>the</strong> meeting’s main<br />
subjects of discussion was <strong>the</strong> high penetration rate that this product had achieved in its<br />
introduction. Would <strong>the</strong> 2- in-1 concept be valid in <strong>the</strong> long term or was it just ano<strong>the</strong>r<br />
passing fancy? How should Elsève react to <strong>the</strong>ir competitor’s new product?<br />
Nei<strong>the</strong>r could L’Oréal overlook <strong>the</strong> fact that <strong>the</strong>re was serious competition from o<strong>the</strong>r<br />
major brands –among <strong>the</strong>m Pantene, <strong>the</strong> European market leader– which were very<br />
international and increasingly using global marketing strategies. The question was<br />
whe<strong>the</strong>r Elsève could become part of this international group of brands. Elsève’s<br />
experience and <strong>the</strong> keys to its success in France were very likely points to keep in mind<br />
when designing a global strategy for <strong>the</strong> rest of <strong>the</strong> world...<br />
Copyright © 2000 CEMS.<br />
This case was written by Josep Franch, Professor of Marketing at ESADE (Barcelona), and Neus<br />
Quintana, Teaching Assistant. The authors would like to thank L’Oréal for <strong>the</strong>ir information and<br />
assistance.<br />
The case is intended to serve as a basis for discussion and not as an example of appropriate or<br />
inappropriate management of a particular situation.<br />
No part of this material may be reproduced without written authorisation from CEMS.<br />
–1–
L’Oréal: Company Background<br />
CEMS <strong>Case</strong> <strong>Study</strong><br />
“L’Oréal (A): <strong>Fighting</strong> <strong>the</strong> <strong>Shampoo</strong> <strong>Battle”</strong><br />
L’Oréal was founded in 1907 by chemist Eugène Schueller when he invented <strong>the</strong> first<br />
non-damaging syn<strong>the</strong>tic hair dye. Since its beginnings L’Oréal’s policy has been one of<br />
constant innovation, research and hard work in a field which would eventually come to<br />
be known as marketing. The fact that its founder was a chemist still influences <strong>the</strong><br />
company’s research orientation, as witness <strong>the</strong> 300 new patents L’Oréal takes out every<br />
year, enabling <strong>the</strong> company to launch 200 new products annually.<br />
The first hair colour dyes were called Auréale. In 1909, Eugène Schueller created La<br />
Société Française de Teintures Inoffensives pour Cheveux 1 , which subsequently became<br />
L’Oréal. The name was intended for products, not for <strong>the</strong> company itself. It is a<br />
combination of two of <strong>the</strong> endings most used in French company names in <strong>the</strong> early 20 th<br />
century: “or” and “al”. “Or” was also <strong>the</strong> name of one of Auréole’s range of warmcoloured<br />
tints. Joining “or” et “al” produced <strong>the</strong> name L’Oréal, which was reminiscent<br />
of <strong>the</strong> company’s first brand of hair colour: Auréale.<br />
During <strong>the</strong> 1930s L’Oréal extended its product portfolio to include skin care and<br />
suntanning products. Following World War II, <strong>the</strong> company diversified its products and<br />
brands to gradually include all types of cosmetic products and conserve its position in<br />
<strong>the</strong> distribution networks. Steady growth soon made L’Oréal a world class operation.<br />
In 1997, L’Oréal was a leader in beauty products, selling 500 brands and 2,000 different<br />
products (80,000 SKUs 2 ) throughout <strong>the</strong> world. The company had more than 47,000<br />
employees, and operations in 150 countries handled by 400 subsidiaries, 100 import<br />
agents, 60 offices and 42 factories. L’Oréal’s export sales increased from 50% in 1987<br />
to 80% in 1997. Although 58.6% of <strong>the</strong> company’s sales were made in Europe, <strong>the</strong>re<br />
was enormous growth potential in Asia, where sales amounted to only 6.8% of total<br />
billings. Forecasts for future growth <strong>the</strong>re were very optimistic (See Appendix 1 for<br />
company figures). While still a European company, L’Oréal was becoming increasingly<br />
global, as witness its acquisition of <strong>the</strong> US Maybelline brand in 1996, for which <strong>the</strong><br />
company paid $758 million.<br />
The holding company Gesparal owned 53.7% of L’Oréal’s capital. Gesparal was 51%<br />
owned by Madame Bettencourt –daughter of L’Oréal’s founder, Eugène Schueller– and<br />
49% owned by Nestlé. The remaining 46.3% of L’Oréal’s shares were traded on <strong>the</strong><br />
Paris Stock Exchange, and through <strong>the</strong> London SEAQ and American Depository<br />
Receipts in <strong>the</strong> United States.<br />
1 Literally, The French Non-damaging Hair Dye Company.<br />
2 Stockkeeping Units.<br />
–2–
How L’Oréal Was Organised<br />
CEMS <strong>Case</strong> <strong>Study</strong><br />
“L’Oréal (A): <strong>Fighting</strong> <strong>the</strong> <strong>Shampoo</strong> <strong>Battle”</strong><br />
L’Oréal was divided into five functional areas, four divisions and three geographic<br />
territories, all of which answered directly to Chairman and CEO Lindsay Owen-Jones.<br />
The functional areas were Communications and Public Relations, Human Resources,<br />
Finance and Administration, Manufacturing and Logistics (which supervised <strong>the</strong><br />
company’s 42 factories), and R&D which had more than 2,000 employees and a budget<br />
equal to 5% of group sales.<br />
The four divisions were organised on <strong>the</strong> basis of <strong>the</strong> four main distribution channels for<br />
cosmetics and beauty care products: Salon Division, Consumer Division, Perfumes and<br />
Beauty Division and Active Cosmetics Department.<br />
The Salon Division (Coiffure) was world leader, with 25% of <strong>the</strong> market. 1997 billings<br />
amounted to around 7,000 million French francs, up 12% over <strong>the</strong> previous year. The<br />
division manufactured and marketed hair care products for use by professional<br />
hairdressers and products sold exclusively through hairdressers’ salons. The leading<br />
brands were Kérastase, L’Oréal Professionnel, Inné and Redken.<br />
The Consumer Division (Produits Public) registered 31,700 million French francs in<br />
sales in 1997, up 18.1% from a year earlier. This division handled all products and<br />
brands distributed through mass-market channels, making L’Oréal products available to<br />
<strong>the</strong> largest possible number of consumers (see Appendix 2 for <strong>the</strong> Consumer Division’s<br />
organisation chart). The division was made up of several companies, each of which<br />
marketed its own brands: L’Oréal Paris (Elnett, Plénitude, Elvive/Elsève/El’Vital,<br />
Studio Line), Laboratoires Garnier (Neutralia, Belle Color, Ambre Solaire, Fructis,<br />
Ultra Doux), LaScad (Dop, Fluoryl, Narta), Gemey Paris (Gemey, Kookaï, Naf Naf,<br />
Club Méditerranée), Maybelline New York and Jade.<br />
The Perfumes and Beauty Division (Parfums et Beauté) registered 15,600 million<br />
French francs in sales in 1997, an increase of more than 12% over 1996 sales. The<br />
division commercialised a range of up-market international brands selectively<br />
distributed through perfume and cosmetics shops, department stores and travel retail<br />
shops throughout <strong>the</strong> world. Leading brands were Lancôme, Bio<strong>the</strong>rm, Helena<br />
Rubenstein, Cacharel, Guy Laroche, Ralph Lauren, Paloma Picasso, Giorgio Armani<br />
and Lanvin.<br />
The Active Cosmetics Department (Cosmétique Active) registered 2,800 million French<br />
francs in sales in 1997. It produced and marketed several brands of cosmetics, skin care<br />
products and hair treatments, which were distributed to a select group of pharmacies.<br />
The division’s leading brands were Laboratoires Vichy, Phas and La Roche-Posay.<br />
The four divisions were independent of one ano<strong>the</strong>r. Each division consisted of different<br />
business units, among which <strong>the</strong>re was also a certain degree of independence.<br />
Occasionally, various businesses belonging to a single division competed with one<br />
ano<strong>the</strong>r. For example, Elsève and Fructis, produced by Laboratoires Garnier, competed<br />
in <strong>the</strong> mass market. But this competition was actually encouraged by L’Oréal as it<br />
allowed <strong>the</strong> group to sum up <strong>the</strong> sales of all its brands, making it <strong>the</strong> market leader.<br />
–3–
CEMS <strong>Case</strong> <strong>Study</strong><br />
“L’Oréal (A): <strong>Fighting</strong> <strong>the</strong> <strong>Shampoo</strong> <strong>Battle”</strong><br />
The different business units also competed among <strong>the</strong>mselves when a new formula was<br />
discovered and sometimes it was difficult to decide which business would benefit from<br />
<strong>the</strong> discovery.<br />
Outside of Europe L’Oréal was divided into geographic territories. The three territories<br />
were North America, Latin America and Asia. The managers of each one of <strong>the</strong>se<br />
territories were in charge of all L’Oréal’s activities in <strong>the</strong>ir particular zone, keeping in<br />
constant touch with <strong>the</strong> managers of <strong>the</strong> four operating divisions.<br />
In 1997, L’Oréal was <strong>the</strong> world leader in hair colour, styling agents and home perms,<br />
with market shares of 35.1%, 17% and 12.9%, respectively. It ranked second in salon<br />
hair care products, with a world market share of 13.6%. Market shares of 8.4% in<br />
shampoos and 8.2% in conditioners made L’Oréal <strong>the</strong> third-ranking company in <strong>the</strong><br />
world. Its position in 2-in-1 products was not as good, with a 5.2% market share,<br />
making it <strong>the</strong> fourth ranking company in terms of sales.<br />
In 1997, L’Oréal’s share of <strong>the</strong> European market amounted to 30%. Market shares in<br />
Latin America and Eastern Europe were also fairly strong, amounting to around 15% in<br />
both zones.<br />
Corporate Culture<br />
L’Oréal group employed 47,242 people, 38,308 of whom worked in cosmetics. 2,100 of<br />
<strong>the</strong>m were cosmetics researchers. L’Oréal’s corporate culture was rooted in dynamics,<br />
teamwork, growth and research. As <strong>the</strong> company’s CEO put it:<br />
“I am personally attached to this melting pot of individual dynamism,<br />
openness and entrepreneurial skills. It’s what makes L’Oréal strong.”<br />
(Lindsay Owen-Jones)<br />
L’Oréal tried to make employee relations as personal as possible. The company cut<br />
through red tape and kept paper work to a minimum, encouraging oral communication<br />
through numerous meetings and team work. It was not surprising to note that many of<br />
<strong>the</strong> company’s employees were on a first-name basis.<br />
The company shaped loyalty and efficiency by making employees thoroughly<br />
acquainted with <strong>the</strong> company, its structure, its management methods and objectives,<br />
ensuring that <strong>the</strong>y understood not only <strong>the</strong> company’s corporate culture but also <strong>the</strong><br />
many different cultures that made up <strong>the</strong> organisation.<br />
L’Oréal looked for employees with an innovative, pioneering spirit, ready to travel to<br />
new countries and open new markets. The company looked for people who were<br />
independent, had initiative, creativity and were willing to take responsibility.<br />
–4–
CEMS <strong>Case</strong> <strong>Study</strong><br />
“L’Oréal (A): <strong>Fighting</strong> <strong>the</strong> <strong>Shampoo</strong> <strong>Battle”</strong><br />
L’Oréal: Elsève and o<strong>the</strong>r brands of hair care products<br />
Elsève's history dates back to 1971 when a conditioner in small green bottles was<br />
introduced. The conditioner was applied directly to <strong>the</strong> hair in order to revitalise it.<br />
Indeed, <strong>the</strong> word “sève” means “sap” in French, referring to <strong>the</strong> hair’s natural oils.<br />
L’Oréal's strategy was to start by targeting a specialised segment in order to create a<br />
good brand image.<br />
In 1972, L'Oréal launched <strong>the</strong> first Elsève shampoo, using <strong>the</strong> slogan: "The shampoo for<br />
permed hair". When <strong>the</strong> brand had gained a solid foothold in France, it began going<br />
international. The strategy was to introduce a product for <strong>the</strong> mass market, but with an<br />
original, innovative formula. The company <strong>the</strong>refore developed “Balsam”, a new<br />
formula which was used in a conditioner. Elsève thus managed to position itself as a<br />
hair care product.<br />
As of 1978 <strong>the</strong> company began to expand its range of Elsève products. This was not so<br />
easy because <strong>the</strong> brand had such a strong position as a shampoo for damaged hair. At<br />
this time, <strong>the</strong> market was experiencing very important changes: <strong>the</strong> frequency in <strong>the</strong> use<br />
of shampoos increased dramatically and shampoos that were claiming to be gentle and<br />
mild enough to be used every day became more appealing to consumers. Timotei, Ultra<br />
Doux and Mixa Baby –a baby shampoo that became <strong>the</strong> market leader in France in those<br />
days because it was seen as so mild that it could be used every day– became <strong>the</strong> most<br />
popular brands. Elsève had a positioning as a shampoo for damaged hair and was seen<br />
as too rich, too nourishing and too heavy to be used on a daily basis. When planning<br />
Elsève’s brand extension, L’Oréal decided to offer separate products for frequent and<br />
less-frequent shampooing, and later move into products that would produce a certain<br />
desired effect subsequent to shampooing. This gave rise to products such as Elsève<br />
Balsam, Elsève Fréquence, Elsève Volume and Elsève for oily hair. Although <strong>the</strong> brand<br />
was introduced in several different countries, <strong>the</strong> brand name used was not always <strong>the</strong><br />
same. In <strong>the</strong> USA <strong>the</strong> brand was called Vive and in Germany it was called El’Vital, to<br />
give just two examples. In <strong>the</strong> UK, it was called Elsève but <strong>the</strong> brand was to disappear<br />
from <strong>the</strong> market within a few years.<br />
The communications strategy was based on enhancing <strong>the</strong> value of each product,<br />
emphasising its distinctive characteristics. The strategy focused on individual products<br />
ra<strong>the</strong>r than on <strong>the</strong> umbrella brand, enabling <strong>the</strong> company to publicise all <strong>the</strong><br />
technological innovations applied to each product. Unfortunately, this very strategy kept<br />
it from creating a strong, unified brand. The name of each product was better known<br />
than <strong>the</strong> name of <strong>the</strong> brand in general.<br />
In 1987, following a new product introduction by Timotei, <strong>the</strong> market registered a new<br />
trend: active ingredients were in fashion and products started to introduce natural<br />
ingredients and reason-whys in <strong>the</strong>ir product ranges. The Elsève product range was<br />
renewed and L’Oréal decided to target new market segments. The idea was to offer<br />
products for all types of hair, enriching <strong>the</strong> formula with a different active ingredient for<br />
each hair type: Elsève Protein, Elsève Jojoba for long hair and Elsève Vitamines were<br />
introduced. The company had to look for segments that would be large enough to be<br />
profitable and, at <strong>the</strong> same time, make sure that <strong>the</strong> products complemented one ano<strong>the</strong>r<br />
so <strong>the</strong>y wouldn’t cannibalise each o<strong>the</strong>r’s sales.<br />
–5–
CEMS <strong>Case</strong> <strong>Study</strong><br />
“L’Oréal (A): <strong>Fighting</strong> <strong>the</strong> <strong>Shampoo</strong> <strong>Battle”</strong><br />
In 1995, L'Oréal made two very important strategic decisions: The company launched<br />
Elsève Multivitamines and added <strong>the</strong> Technicare line to <strong>the</strong> Elsève product range.<br />
Elsève Multivitamines used a silicone-based formula that tested better than <strong>the</strong><br />
composition of Procter & Gamble’s silicone-based Pantene which at <strong>the</strong> time was <strong>the</strong><br />
European market leader. Launching Elsève Multivitamines enabled Elsève to increase<br />
its target segments, addressing not only consumers with damaged hair or o<strong>the</strong>r hair care<br />
problems but also people with normal hair. Moreover, <strong>the</strong> new formula allowed L’Oréal<br />
to increase <strong>the</strong> prices of Elsève products by 20%. Increased revenue meant that Elsève<br />
could spend more on advertising.<br />
Until 1995 L’Oréal’s products had included <strong>the</strong> Technicare line, which was especially<br />
for damaged hair. The products were fairly expensive, targeted at a highly specialised,<br />
very specific market segment. There were three lines of Technicare products: Energance<br />
(for permed hair), Rayonnance (for tinted hair) y Fortifiance (for damaged hair).<br />
Lindsay Owen-Jones wondered if it was worthwhile to have two brands with such<br />
similar characteristics, strategies and product positioning. He <strong>the</strong>refore decided to merge<br />
<strong>the</strong> two to achieve a critical market share, maintaining <strong>the</strong> colours used in <strong>the</strong><br />
Technicare packaging to identify <strong>the</strong> different product lines. The brand name was<br />
gradually changed: first it was called Energance Elsève, <strong>the</strong>n it became Elsève<br />
Energance and finally Elsève for permed hair. The same process was also applied to <strong>the</strong><br />
o<strong>the</strong>r two product lines. Internally, <strong>the</strong> switchover was handled as it would have been<br />
had L’Oréal acquired an external company. With <strong>the</strong> addition of Technicare, Elsève<br />
managed to acquire 10% of <strong>the</strong> hair care market.<br />
Sales increased and so did prices, due to <strong>the</strong> use of new formulas. Billings went up and<br />
<strong>the</strong> brand was able to increase its advertising budget. This enabled Elsève to address<br />
more segments with differentiated messages, <strong>the</strong>reby fur<strong>the</strong>r increasing its market share.<br />
Elsève/Vive/El’Vital (see Appendix 3 for <strong>the</strong> Elsève product range) aimed to fur<strong>the</strong>r<br />
streng<strong>the</strong>n its competitive position by adopting three key strategic decisions: address all<br />
possible market segments, add highly innovative technical features to <strong>the</strong> "stars" of <strong>the</strong><br />
product range and reinforce <strong>the</strong> product image by making <strong>the</strong> brand name more visible<br />
on packaging. The product range was launched in <strong>the</strong> UK in 1997 under <strong>the</strong> brand name<br />
Elvive (see Appendix 4, for Elvive products in <strong>the</strong> UK).<br />
L’Oréal also commercialised o<strong>the</strong>r brands of hair care products, among <strong>the</strong>m Studio<br />
Line and P’tit L’Oréal. It also marketed Ultra Doux, Fructis and Neutralia through<br />
Laboratoires Garnier, and <strong>the</strong> J. Dessange brand through LaScad. L’Oréal had launched<br />
Formula Homme as a brand for men, hoping to break into a market segment which was<br />
underexploited but had a great deal of growth potential, and it was later re-branded as<br />
Progress Homme and reintroduced under Elsève’s umbrella brand. Competing with a<br />
number of different L'Oréal brands enabled <strong>the</strong> company to position its products in<br />
more market segments and compete for market leadership by adding toge<strong>the</strong>r sales for<br />
its different brands. Although <strong>the</strong>re was a bit of an overlap between segments, product<br />
cannibalism was avoided by designing different positioning strategies: every single<br />
product invested in creating its own personality. Consumers identified each and every<br />
one of <strong>the</strong> brands but did not relate <strong>the</strong>m to L’Oréal.<br />
–6–
The Hair Care Products Industry<br />
CEMS <strong>Case</strong> <strong>Study</strong><br />
“L’Oréal (A): <strong>Fighting</strong> <strong>the</strong> <strong>Shampoo</strong> <strong>Battle”</strong><br />
With European sales of 28,865 million French francs in 1997, hair care products ranked<br />
among <strong>the</strong> leading branches of <strong>the</strong> personal grooming and beauty care industry. 1997<br />
figures represented a 4.9% increase in volume but a 6.2% increase in billings.<br />
Considering that <strong>the</strong>se types of products were aimed at a market that was in its maturity<br />
stage in terms of both penetration and use, opportunities for future growth would<br />
depend on creating added value. Hair care products could be divided into three main<br />
categories: shampoos, conditioners and styling agents, such as sprays, mousses and gels<br />
(See Appendix 5 for a breakdown of hair care product sales).<br />
The amount of shampoo used in European countries was on <strong>the</strong> rise. The introduction of<br />
shampoos for frequent use and <strong>the</strong> better evolution of <strong>the</strong> product formulas in terms of<br />
usage quality and mildness helped increase sales tremendously in <strong>the</strong> 1980s. In 1989<br />
Procter & Gamble launched Vidal Sassoon Wash & Go, <strong>the</strong> first 2-in-1 shampoo and<br />
conditioner, which soon led <strong>the</strong> UK market. The silicone-based 2-in-1s were<br />
particularly popular with men because <strong>the</strong> combined product made shampooing faster.<br />
Silicone formulas were a technological breakthrough that produced hair which was<br />
more shiny and less tangled after washing.<br />
During <strong>the</strong> 1990s it was discovered that, although silicone was a fast-acting hair<br />
conditioner, it was not nourishing. As a result, many brands changed <strong>the</strong>ir formulas, and<br />
o<strong>the</strong>r ingredients were added. In 1993, Pantene launched a shampoo enriched with Pro-<br />
Vitamine B5. A major advertising campaign soon placed it at <strong>the</strong> head of <strong>the</strong> UK<br />
market and led many o<strong>the</strong>r brands to revise <strong>the</strong>ir formulas. They began searching for<br />
new, more sophisticated formulas that introduced cosmetic ingredients that perfumed<br />
<strong>the</strong> hair or made it shiny as well as cleaning it. O<strong>the</strong>r brands that were successful with<br />
this more cosmetic approach were L'Oréal's Elsève, Elvive and El'Vital, as it was<br />
known in different countries, and as of 1996 Laboratoires Garnier's Fructis brand.<br />
Fructis included fruit acids, fructose and vitamins, ingredients which were very popular<br />
with consumers, who associated <strong>the</strong>m with healthy, shiny hair. This constant striving for<br />
improved products had revitalised <strong>the</strong> entire hair care products industry. In 1997 ano<strong>the</strong>r<br />
technological breakthrough was about to come: a formula that combined both silicones<br />
and polymers.<br />
While most consumers used shampoo, <strong>the</strong> same could not be said of conditioners. In<br />
1997 conditioners were used by only 16.7% of <strong>the</strong> potential European market, <strong>the</strong>refore<br />
<strong>the</strong>y were far from being a standard product.<br />
The introduction of 2-in-1s obviously affected <strong>the</strong> sale of conditioners. Consumers liked<br />
<strong>the</strong> idea of getting both shampoo and conditioner in a single bottle and 2-in-1s began<br />
cannibalising conditioner sales. But when 2-in-1 sales began to decline, conditioner<br />
sales started picking up because 2-in-1 advertising's emphasis on <strong>the</strong> conditioning agent<br />
had impressed consumers. People were becoming receptive to <strong>the</strong> idea of conditioning<br />
agents and manufacturers began promoting <strong>the</strong> idea of a stronger conditioner to be used<br />
only once a week. The most recently introduced conditioners by Pantene, Elvive,<br />
Organics, and o<strong>the</strong>r brands made consumers aware of <strong>the</strong> importance of using<br />
conditioning products to ensure healthy hair.<br />
–7–
CEMS <strong>Case</strong> <strong>Study</strong><br />
“L’Oréal (A): <strong>Fighting</strong> <strong>the</strong> <strong>Shampoo</strong> <strong>Battle”</strong><br />
Styling agents were brought to market in <strong>the</strong> 1980s when more elaborate hairstyles<br />
began to be popular. Many of <strong>the</strong>se styles meant that some special product had to be<br />
used so that people with all types of hair could wear <strong>the</strong>ir hair in <strong>the</strong> latest fashion. Use<br />
of styling agents increased steadily and manufacturers began to introduce <strong>the</strong>m in spray<br />
and gel forms. From 1990 onwards, <strong>the</strong> popularity of elaborate hairstyles began to<br />
decline in <strong>the</strong> UK, giving way to a more natural look that did not require so much care.<br />
The rest of Europe adopted this more natural look as of 1992, causing sales of styling<br />
agents to drop sharply. It is also important to note that in 1992 most European countries<br />
were in a recession period and consumers stopped using styling agents because <strong>the</strong>y<br />
considered <strong>the</strong>m an unnecessary expense that could be eliminated when money was<br />
scarce.<br />
Mousses were <strong>the</strong> styling agent least affected by declining sales. They were <strong>the</strong> product<br />
that adapted best to any kind of hairstyle and were less dependent on fashion fads. Gels<br />
were also able to hold <strong>the</strong>ir own thanks to an increasing tendency among young people,<br />
particularly adolescents, to adopt a more extravagant look. In those days manufacturers<br />
were trying to win back young people and reach new age groups. According to an<br />
article published in LSA Le Journal de la Distribution, thirty to fifty year olds were<br />
particularly interesting targets because <strong>the</strong>y were so difficult to satisfy: women in this<br />
age group considered <strong>the</strong>mselves too old to use styling agents and too young to use<br />
standard hair sprays. Therefore <strong>the</strong> slowdown in styling agent sales might also be partly<br />
due to <strong>the</strong>ir extremely young product image.<br />
The molecules discovered and added to shampoos and conditioners were also added to<br />
styling agents. Although styling agent sales were on <strong>the</strong> decline in terms of both volume<br />
and value, manufacturers saw <strong>the</strong> increase in <strong>the</strong> sale of gels as an encouraging sign.<br />
However, <strong>the</strong>y were trying to redirect <strong>the</strong>ir advertising message and no longer talk only<br />
about using styling agents in order to be able to wear a particular hairstyle, but also<br />
attempted to explain to consumers that styling agents could also make <strong>the</strong>ir hair more<br />
attractive.<br />
Among L’Oréal's most important competitors were multinationals like Procter &<br />
Gamble, Unilever and Henkel, to mention only a few (See Appendix 6 for data on <strong>the</strong><br />
company's leading competitors).<br />
As leader of <strong>the</strong> world shampoo and 2-in-1 market, Procter & Gamble embarked on a<br />
strategy of rapid growth in 1985, acquiring o<strong>the</strong>r companies in order to increase <strong>the</strong>ir<br />
product portfolio, not only in <strong>the</strong> hair care products market but also in cosmetics.<br />
Procter & Gamble’s goal was to create and maintain customer loyalty to its brands,<br />
offering quality and value in innovative products backed by heavy investments in<br />
advertising. Research and development and advertising were <strong>the</strong> pillars of Procter &<br />
Gamble’s strategy to develop truly global brands, such as Pantene Pro-V, Vidal Sassoon<br />
Wash & Go and Head & Shoulders.<br />
Brand names for hair care products had also been one of <strong>the</strong> pillars of Unilever strategy,<br />
aimed at maximising <strong>the</strong> value of both established and new brands throughout <strong>the</strong> world<br />
and making <strong>the</strong> company more global than ever. Organics was Unilever’s most<br />
successful hair care product. It was positioned as a shampoo that nourished hair from<br />
<strong>the</strong> roots to <strong>the</strong> tips, thanks to an ingredient called Glucasil Complex.<br />
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The brand was first introduced in Europe and subsequently in o<strong>the</strong>r regions. It was <strong>the</strong>n<br />
available in seventy countries, with variations in order to adapt <strong>the</strong> product to consumer<br />
habits in <strong>the</strong> different markets.<br />
In 1995, Henkel purchased Schwarzkopf and became ano<strong>the</strong>r major player in <strong>the</strong> hair<br />
care market. Although Henkel enjoyed a solid position in Europe, it was little known in<br />
North America, The acquisition of Schwarzkopf also opened <strong>the</strong> door to interesting<br />
business opportunities for Henkel in Latin America and Sou<strong>the</strong>ast Asia.<br />
The shampoo market<br />
<strong>Shampoo</strong>s were used by 83.5% of <strong>the</strong> population, although <strong>the</strong>re was little brand loyalty<br />
and it was extremely difficult to create any. There was a widespread belief in Europe<br />
that changing shampoos frequently was good for <strong>the</strong> hair because o<strong>the</strong>rwise it would get<br />
used to a particular shampoo and <strong>the</strong> results would not be so satisfactory. As a<br />
consequence, manufacturers –who could not explain <strong>the</strong> origin of <strong>the</strong>se beliefs– had<br />
serious problems getting consumers to repeatedly buy <strong>the</strong> same brand. The main<br />
European markets were Germany, France, UK, Italy and Spain (see Appendix 7 for<br />
market volumes and Appendix 8 for Elsève distribution coverage).<br />
The hair care product market was heavily influenced by <strong>the</strong> evolution of consumer<br />
habits and technology. In <strong>the</strong> 70s, consumers wanted washing frequency, later <strong>the</strong>y<br />
wanted to have more conditioning and detangling, and in <strong>the</strong> late 90s <strong>the</strong>y wanted<br />
shinier hair. Product formulas had also evolved a great deal: Manufacturers launched<br />
new products with new qualities, which consumers <strong>the</strong>n demanded. Increasingly heavy<br />
investments in marketing and new product development had gradually shortened <strong>the</strong> life<br />
cycle of <strong>the</strong> products which had not adapted <strong>the</strong>mselves to <strong>the</strong> market. In contrast,<br />
Elsève was a successful example of brand renovation and long product life with<br />
absolutely no sign of decline because it continuously offered new products in its own<br />
range. Still, manufacturers were continually launching new products and brands, which<br />
was a costly activity, in <strong>the</strong> hopes of making a strong and immediate impact on <strong>the</strong><br />
market.<br />
The hair care product market had been traditionally female. However, during <strong>the</strong> 1990s<br />
manufacturers began increasingly addressing two segments with a high growth<br />
potential: <strong>the</strong> male segment and <strong>the</strong> children’s segment. Many companies had launched<br />
specific lines for men, although not always successfully, as was <strong>the</strong> case with L’Oréal’s<br />
Formule Homme line. A number of companies had tried presenting <strong>the</strong>ir products as<br />
unisex brands, among <strong>the</strong>m Procter & Gamble’s Wash & Go and L’Oréal’s Studio Line.<br />
In addition, <strong>the</strong> children’s market was particularly interesting in France, Germany and<br />
Italy. L’Oréal’s LaScad led <strong>the</strong> French market with P’tit Dop, competing with o<strong>the</strong>r<br />
products that were directed exclusively at children and featured fun packaging and<br />
special fragrances. The German market for children’s shampoos doubled between 1992<br />
and 1997, with brands such as L’Oréal’s Laboratoires Garnier and Procter & Gamble’s<br />
Vidal Sassoon for Kids. The children’s market in Italy began really taking off in 1996,<br />
with <strong>the</strong> introduction of L’Oréal’s Piccol’o.<br />
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People were washing <strong>the</strong>ir hair more frequently than ten years ago. Europeans washed<br />
<strong>the</strong>ir hair on an average of 3.5 times a week. Expectations of clean, soft hair had given<br />
way to demands for shiny hair with extra body. Demand for cosmetic features had<br />
forced manufacturers to enhance <strong>the</strong>ir products with innovative value-added features in<br />
order to position <strong>the</strong>m as high quality products and increase <strong>the</strong>ir market shares. The<br />
principal innovations were polymers, silicones, provitamin B5 and Ceramide-R.<br />
Elsève’s competition<br />
Elsève competed with o<strong>the</strong>r brands of cosmetic shampoos which also had such broad<br />
product ranges that <strong>the</strong>y could reach all market segments. In order to do this,<br />
manufacturers basically used TV commercials as a way to position <strong>the</strong>ir cosmetic<br />
shampoo brands. Elsève’s most important competitors were Pantene, Organics, Timotei<br />
and Wash & Go (See Appendixes 9, 10 and 11 for market shares and average prices of<br />
<strong>the</strong> leading brands in selected countries).<br />
Most brands tried to position <strong>the</strong>mselves carefully in order to differentiate <strong>the</strong>mselves<br />
from <strong>the</strong>ir competitors. As in any o<strong>the</strong>r industry, one of <strong>the</strong> problems was that <strong>the</strong>re<br />
were some competitors that were followers of <strong>the</strong> major leaders. They waited for <strong>the</strong><br />
leaders to introduce some new innovation and <strong>the</strong>n launched similar products at a lower<br />
price.<br />
Pantene led <strong>the</strong> market for cosmetic shampoos and ranked second to Elsève in<br />
conditioners. Manufactured by Procter & Gamble, Pantene’s formula was based on Pro-<br />
Vitamine (B5). Pantene's technological progress was due to constant research and<br />
innovation, which were key factors for success in this branch of industry. Pantene<br />
advertising sought to reinforce its brand image, positioning itself as “specialists in hair<br />
care”. Its slogan was, “Hair so healthy it shines”, with Pro-Vitamine (B5) <strong>the</strong> reasonwhy.<br />
Pantene commercials demonstrated how <strong>the</strong> vitamin acted from <strong>the</strong> roots to <strong>the</strong><br />
tips of <strong>the</strong> hair. Commercials usually featured “slice of life” scenes with which a broad<br />
segment of <strong>the</strong> public could identify. Pro-Vitamine marketed itself as <strong>the</strong> solution for<br />
consumers’ hair problems.<br />
Wash & Go was ano<strong>the</strong>r important Procter & Gamble brand. At first its advertising<br />
message was that Wash & Go was fast and practical, but hair care and o<strong>the</strong>r features<br />
had gradually been introduced. The brand usually used active, sporty-looking models in<br />
order to reach a mixed male/female market segment.<br />
Organics was a Unilever brand that communicated <strong>the</strong> message that healthy hair was<br />
vitally important and must be very well cared for. The product name had connotations<br />
of natural animal or vegetable ingredients. Its principal ingredient was Glucasil, which<br />
nourished <strong>the</strong> hair. Knowing this, one can understand its ads, which depicted hair as<br />
something that had its roots in <strong>the</strong> earth. Organics attempted to position itself as a<br />
shampoo that made hair strong, healthy and shiny. At first Organics’ ads contained an<br />
essentially symbolic message, but this had gradually been revised and shampooing<br />
scenes added. The target public was exclusively female and more interested in cosmetic<br />
features than in healthier hair.<br />
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Unilever also marketed Timotei, which had traditionally related shampoo with nature.<br />
Its message was that <strong>the</strong> hair was nourished and protected thanks to natural ingredients<br />
which made it more beautiful, stronger and resistant. Timotei was directed excusively at<br />
women and did practically no advertising for its conditioners. Timotei’s advertising was<br />
becoming increasingly global and institutional, emphasising <strong>the</strong> brand ra<strong>the</strong>r than <strong>the</strong><br />
individual products. Its advertisements usually did not mention why <strong>the</strong> products give<br />
users such strong and shiny hair.<br />
Although it was marketed by one of <strong>the</strong> L’Oréal companies, Laboratories Garnier, Ultra<br />
Doux had to be also considered one of <strong>the</strong> Elsève competitors. Ultra Doux was<br />
positioned as <strong>the</strong> ultra-mild shampoo, targeting all <strong>the</strong> people in <strong>the</strong> family. It was a<br />
shampoo for frequent use, made of natural ingredients. Its advertising message was<br />
“Extrême douceur puisée au coeur des plantes” 3 .<br />
Everyone in <strong>the</strong> industry invested heavily in advertising. Advertising and sales were<br />
closely correlated: <strong>the</strong> more advertising was done, <strong>the</strong> more products were sold. The<br />
main advertising medium was television, followed by press advertising. Since 1995<br />
shampoo advertising had been increasing at a slower pace, unlike advertising for hair<br />
colouring and permanents, which had registered an increase (See Appendix 12 for <strong>the</strong><br />
advertising budgets of <strong>the</strong> leading brands).<br />
A constant technological challenge<br />
Research and development was essential in order to discover new ingredients which<br />
could be added to product formulas, giving <strong>the</strong>m an extra value that would be perceived<br />
by consumers and enable <strong>the</strong> manufacturer to secure a larger share of <strong>the</strong> hair care<br />
products market.<br />
But not just any innovation translated to an increased market share. Industry<br />
manufacturers had to find ingredients that gave consumers added value and enabled<br />
<strong>the</strong>m to differentiate a particular product from its competitors. Market research showed<br />
that after shampooing consumers wanted <strong>the</strong>ir hair to be soft –detangled and fluffy– and<br />
smell nice, and that <strong>the</strong> trend for healthy and shiny hair had gained popularity.<br />
All shampoos had some more or less common ingredients, such as water, perfume, and<br />
cleansing agents. Before 1994, a polymer compound was added to <strong>the</strong> product in order<br />
to revitalise <strong>the</strong> hair. Polymers acted on <strong>the</strong> most damaged parts of <strong>the</strong> hair fiber,<br />
revitalising and restoring its health. But this type of molecule was more revitalising than<br />
cleansing, so when used by people with normal –or only slightly damaged– hair <strong>the</strong><br />
result was hair that was somewhat lank and rough, which consumers did not like.<br />
3 “Extreme mildness coming from <strong>the</strong> heart of <strong>the</strong> plants”.<br />
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From 1994, L’Oréal developed a silicone-based formula that replaced polymers.<br />
Silicones treat each stand of hair individually, leaving it very soft and easy to comb as it<br />
was thoroughly detangled. Consumers noticed this immediately and Elsève successfully<br />
entered <strong>the</strong> normal hair segment of <strong>the</strong> market. But silicone also had a drawback: it was<br />
not nourishing. By combining polymers and silicones, L’Oréal was able to profit from<br />
<strong>the</strong> advantages of both ingredients: <strong>the</strong> nourishing action of polymers and <strong>the</strong> soft,<br />
detangled hair that was produced by silicone. Combining <strong>the</strong> two ingredients in <strong>the</strong><br />
shampoo formula gave L’Oréal a major advantage over its competitors.<br />
Whenever <strong>the</strong>re was a technological innovation industry competitors were faced with an<br />
alternative: <strong>the</strong>y could ei<strong>the</strong>r launch a new product concept that contained <strong>the</strong> new<br />
ingredient or <strong>the</strong>y could introduce <strong>the</strong> new ingredient in an already-existing product and<br />
inform consumers of <strong>the</strong> change through advertising and new package designs.<br />
But introducing an innovation could sometimes be a risky business. If it was not as<br />
successful as hoped it could affect <strong>the</strong> entire brand image. So when L’Oréal was not<br />
absolutely certain of <strong>the</strong> outcome it introduced new formulas under a secondary brand<br />
name. L’Oréal Paris was <strong>the</strong> group’s flagship brand. It focused on <strong>the</strong> long term and<br />
always sought sustainable product concepts because <strong>the</strong> L’Oréal brand was too highly<br />
valued to risk launching anything whose success was not assured.<br />
These were <strong>the</strong> sorts of issues that <strong>the</strong> marketing team at L’Oréal was facing in <strong>the</strong>ir<br />
strategic design to become <strong>the</strong> European shampoo market leader…<br />
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Appendix 1: Key figures for L’Oréal<br />
L’Oréal Group 1993 1994 1995 1996 1997<br />
Net sales (million FF) 40,163 47,624 53,371 60,347 69,120<br />
Operating profits (million FF) 4,493 5,352 5,886 6,632 7,762<br />
Net profits (million FF) 2,936 3,472 3,796 4,225 4,739<br />
Number of employees 32,300 38,972 39,929 43,158 47,242<br />
Earnings per share (FF) 44.4 46.2 50.0 55.2 62.2<br />
Cosmetics & Toiletries<br />
Net sales (million FF) 32,238 38,858 43,280 48,988 56,163<br />
Operating profits (million FF) 3,711 4,452 4,649 5,120 5,878<br />
Net Sales % of total % growth<br />
Year 1997 (million FF) sales 1994/1997<br />
Western Europe 40,472 58.6% 25.5%<br />
North America 15,872 23.0% 171.0%<br />
Asia-Pacific 4,730 6.8% 33.9%<br />
Rest of <strong>the</strong> world 8,047 11.6% 34.3%<br />
Total 69,121 100.0% 45.1%<br />
Regional shares North Latin Western Eastern Africa &<br />
(% value) America America Europe Europe Asia M. East Australasia<br />
Colorants 28.2% 35.7% 54.8% 22.3% 4.6% 31.0% 28.9%<br />
Conditioners 3.9% 3.9% 24.1% 19.3% 0.4% 10.2% –<br />
Home perms 4.0% 6.6% 33.4% 11.9% 2.5% 2.6% –<br />
Salon hair care pdts’ 8.2% 48.3% 27.4% 0.2% 9.9% 19.2% 48.3%<br />
<strong>Shampoo</strong> 4.4% 3.7% 18.4% 15.2% 0.4% 8.7% –<br />
Styling agents 5.5% 27.8% 30.4% 12.5% 1.4% 24.3% 3.5%<br />
2-in-1s 1.8% 0.3% 15.4% 8.6% 0.1% 7.5% –<br />
Total hair care 9.3% 14.4% 30.2% 14.5% 1.4% 11.8% 4.8%<br />
Source: Euromonitor, based on company records<br />
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Appendix 2: Organisation chart<br />
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Appendix 3: Elsève product range<br />
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Appendix 4: Elvive product range for <strong>the</strong> United Kingdom<br />
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Appendix 5: Hair care industry data<br />
Industry sales Million FF Million units<br />
Western Europe 1996 1997 1996 1997<br />
<strong>Shampoo</strong>s 12 068 13 194 853 912<br />
Conditioners 4 359 4 600 247 261<br />
Hair sprays 6 870 6 993 410 411<br />
Mousses 2 173 2 249 120 123<br />
Gels 1 607 1 829 97 108<br />
Industry total 27 077 28 865 1 726 1 816<br />
Source: AC Nielsen<br />
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Appendix 6: Financial highlights for L’Oréal’s main competitors<br />
Procter & Gamble 1994 1995 1996 1997<br />
Net sales (million $US) 30,385 33,482 35,284 35,764<br />
Operating profits (million $US) 3,670 4,244 4,815 5,482<br />
Net profits (million $US) 2,211 2,645 3,046 3,415<br />
Number of employees 103,000 96,500 99,200 106,000<br />
Earnings per share ($US) 1.54 0.85 2.14 2.43<br />
Cosmetics & Toiletries<br />
Net sales (million US$) 5,912 6,507 6,914 7,108<br />
Operating profits (million US$) 570 728 966 1,066<br />
Source: Euromonitor from company records<br />
Unilever 1993 1994 1995 1996 1997<br />
Net sales (million £) 27,863 29,666 31,516 33,522 29,766<br />
Operating profits (million £) 1,944 2,526 2,526 2,874 2,386<br />
Net profits (million £) 1,296 1,559 1,473 1,610 3,335<br />
Number of employees 294,000 304,000 308,000 306,000 287,000<br />
Earnings per share (£) 17.36 20.90 19.66 21.47 44.55<br />
Personal Grooming Products<br />
Net sales (million £) 4,018 4,433 5,986 6,940 6,852<br />
Operating profits (million £) 343 472 658 770 801<br />
Source: Euromonitor from company records<br />
Henkel 1993 1994 1995 1996 1997<br />
Net sales (million DM) 13,867 14,069 14,198 16,301 20,065<br />
Operating profits (million DM) 550 671 725 1,011 1,373<br />
Net profits (million DM) 385 464 488 555 1,127<br />
Number of employees 40,470 40,590 41,728 46,377 53,753<br />
Earnings per share (DM) 3.20 3.35 3.35 4.00 5.35<br />
Cosmetics & Toiletries<br />
Net sales (million DM) 1,410 1,404 1,377 2,677 2,972<br />
Operating profits (million DM) n.a. n.a. n.a. n.a. n.a.<br />
Source: Euromonitor from company records<br />
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Appendix 7: Total hair care sales by country<br />
(Million US$) 1993 1997<br />
US 5,770 7,177<br />
Germany 2,063 2,287<br />
France 1,791 2,072<br />
UK 1,055 1,328<br />
Italy 1,037 1,055<br />
Spain 430 529<br />
Ne<strong>the</strong>rlands 388 438<br />
Greece 166 291<br />
Sweden 217 258<br />
Switzerland 178 218<br />
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Appendix 8: Distribution coverage<br />
Distribution coverage (June 1997) France UK Germany Spain<br />
Market total<br />
Numerical distribution 100,0 96,0 86,0 96,0<br />
Weighted distribution 100,0 100,0 100,0 100,0<br />
Elseve / Elvive / Elvital<br />
Numerical distribution 99,0 30,0 34,0 n/a<br />
Weighted distribution 100,0 91,0 89,0 n/a<br />
Source: AC Nielsen /IRI Infoscan<br />
Note:<br />
Numerical distribution measures <strong>the</strong> percentage of outlets that sell a particular brand or<br />
a product category. Weighted distribution is <strong>the</strong> market share (in value) of <strong>the</strong>se outlets<br />
in <strong>the</strong> overall product category.<br />
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Appendix 9: Market shares for <strong>the</strong> main shampoo brands<br />
Market shares (%) Volume Value<br />
Western Europe 1995 1996 1997 1995 1996 1997<br />
Alberto 1,2 1,3 1,2 1,2 1,5 1,3<br />
VO 5 0,7 0,8<br />
Beiersdorf 2,9 2,9 2,9 2,8 2,7 2,6<br />
Nivea 2,8 2,8 2,9 2,7 2,7 2,6<br />
Bristol Myers 0,4 0,5<br />
Clairol Herbal Essence 0,4 0,4<br />
Colgate 4,7 5,0 4,6 3,6 3,6 3,3<br />
Gard 0,8 1,1 1,0 0,6 0,7 0,6<br />
Palmolive 2,6 2,8 2,6 1,6 1,8 1,7<br />
Respons 0,9 0,9 0,8 1,0 1,0 1,0<br />
Henkel / Schwarkopf 7,8 8,6 9,0 6,8 6,9 6,9<br />
Henkel 2,7 2,7 2,8 2,6 2,4 2,4<br />
Poly Kur 1,4 1,4 1,3 1,2 1,1 1,0<br />
Schwarzkopf 5,1 5,9 6,2 4,2 4,5 4,4<br />
Schauma 2,9 3,6 3,9 2,1 2,4 2,5<br />
Glem Vital 0,7 0,6 0,6 0,5 0,5 0,5<br />
Gliss 0,6 0,7 0,7 0,6 0,7 0,6<br />
Johnson & Johnson 3,0 2,6 2,5 3,7 3,3 3,2<br />
L'Oréal 20,2 20,2 21,6 19,3 19,3 21,4<br />
Elsève 5,9 6,2 7,3 6,1 6,2 7,6<br />
Studio Line 1,0 0,7 0,5 1,0 0,7 0,5<br />
P'tit L'Oréal 1,1 1,0 0,9 0,8 0,8 0,8<br />
Ultra-Doux 4,2 4,4 4,4 3,6 3,8 3,9<br />
Fructis 0,0 0,3 1,7 0,0 0,3 1,8<br />
Neutralia 1,5 1,3 1,1 1,5 1,3 1,2<br />
J. Dessange 1,5 1,4 1,1 1,7 1,6 1,3<br />
Procter & Gamble 19,2 19,3 19,3 23,2 23,2 23,4<br />
Vidal Sassoon 5,4 4,1 3,1 6,5 4,9 3,7<br />
Pantene 8,9 10,7 11,8 11,0 12,7 14,0<br />
Head & Shoulders 2,3 2,4 2,7 3,3 3,6 4,1<br />
Shamtu 0,9 0,5 0,3 0,6 0,3 0,2<br />
Petrol Hahn 1,1 1,1 0,9 1,0 0,9 0,7<br />
Revlon 1,3 1,1 1,1 1,5 1,2 1,1<br />
Unilever 13,6 12,9 12,2 14,0 13,4 12,5<br />
Timotei 4,8 4,2 3,6 4,5 3,9 3,3<br />
Sunsilk 0,7 0,4 0,3 0,7 0,4 0,3<br />
Organics 3,1 4,2 4,3 3,7 5,0 4,8<br />
Clear 1,2 1,0 1,0 1,2 1,0 1,1<br />
Dimension 0,7 0,6 0,7 0,5<br />
Wella 2,7 2,7 3,1 3,1 3,1 3,5<br />
Source: AC Nielsen and IRI Infoscan<br />
Wella Balsam 0,6 0,5 0,6 0,8 0,6 0,7<br />
Crisan 0,8 0,8 0,7 1,0 0,9 0,8<br />
–21–
CEMS <strong>Case</strong> <strong>Study</strong><br />
“L’Oréal (A): <strong>Fighting</strong> <strong>the</strong> <strong>Shampoo</strong> <strong>Battle”</strong><br />
Appendix 10: Market shares in selected countries<br />
Market shares 1997 France UK Germany Italy Spain<br />
(% in volume and value) vol. val. vol. val. vol. val. vol. val. vol. val.<br />
Alberto 4,8 4,8<br />
VO 5 2,3 2,3<br />
Beiersdorf 0,2 0,2 10,0 9,7 0,2 0,1<br />
Nivea 0,1 0,1 10,0 9,7 0,2 0,1<br />
Colgate 7,7 5,5 0,1 0,1 4,9 3,5 2,9 2,3 0,3 0,3<br />
Gard 4,3 2,8<br />
Palmolive 6,8 4,7 0,1 0,1 2,3 1,7<br />
Respons 0,7 0,6 0,6 0,7<br />
Henkel / Schwarkopf 1,8 1,9 2,1 1,7 23,5 18,2 4,0 3,3 2,4 2,4<br />
Henkel 1,8 1,9 4,5 3,9 4,0 3,3 2,4 2,4<br />
Poly Kur 4,5 3,9 1,7 1,7<br />
Schwarzkopf 2,1 1,7 19,0 14,2<br />
Schauma 16,5 11,8<br />
Glem Vital<br />
Gliss 0,3 0,3 2,0 1,9<br />
Johnson & Johnson 4,7 6,5 0,2 0,3 5,6 6,3 6,2 7,1<br />
L'Oréal 57,1 59,3 8,6 8,6 11,1 11,9 26,4 26,4 11,4 11,6<br />
Elsève / Elvive / Elvital 10,5 11,1 6,3 6,4 5,9 6,5 7,7 7,7 5,4 5,5<br />
Studio Line 1,8 1,9 1,1 1,0<br />
P'tit L'Oréal 2,9 2,4 1,9 2,1<br />
Ultra-Doux 8,0 8,0 3,6 3,3 9,6 8,9 5,1 5,1<br />
Fructis 7,4 7,9 1,8 2,1 0,5 0,6<br />
Neutralia 2,8 3,1 2,3 2,3 0,8 0,8 0,3 0,3<br />
J. Dessange 5,6 6,9<br />
Procter & Gamble 10,5 12,5 25,6 31,8 18,5 20,7 18,5 22,0 27,0 33,2<br />
Vidal Sassoon 1,7 1,8 4,7 6,0 3,5 3,8 6,9 8,1<br />
Pantene 2,8 3,2 14,2 17,1 13,3 15,0 16,9 20,3 13,9 17,0<br />
Head & Shoulders 1,8 3,8 6,7 8,8 0,5 0,9 6,2 8,1<br />
Shamtu 1,1 1,0<br />
Petrol Hahn 4,2 3,8<br />
Revlon 1,6 1,9 10,3 9,2<br />
Unilever 8,4 8,5 15,2 15,1 7,8 7,3 12,9 14,0 12,0 12,9<br />
Timotei 3,4 3,0 3,7 3,6 5,1 4,2 1,5 1,2 6,3 7,6<br />
Sunsilk 1,2 1,2<br />
Organics 2,6 2,9 8,7 8,8 2,8 3,0 3,0 3,4<br />
Clear 1,2 1,5 6,6 7,9<br />
Vasenol 2,6 1,9<br />
Dimension 4,7 4,8<br />
Wella 0,1 0,2 5,7 5,5 4,8 5,9 1,0 1,1 1,9 1,8<br />
Wella Balsam 0,1 0,2 1,7 1,5<br />
Crisan 2,7 3,3<br />
Source: AC Nielsen and IRI Infoscan<br />
–22–
CEMS <strong>Case</strong> <strong>Study</strong><br />
“L’Oréal (A): <strong>Fighting</strong> <strong>the</strong> <strong>Shampoo</strong> <strong>Battle”</strong><br />
Appendix 11: Retail prices in selected countries (figures in French francs)<br />
Average retail prices (FF) France Germany UK Spain<br />
Beiersdorf<br />
Nivea 13,4 13,6 12,4<br />
Henkel<br />
Poly Kur 12,1 14,8<br />
Schwarzkopf 10,6 14,8<br />
L'Oréal<br />
Elsève/Elvive/El'Vital 14,5 15,6 18,0 15,2<br />
Fructis 14,8 17,3<br />
Ultra Doux 13,8 14,5<br />
Procter & Gamble<br />
Vidal Sassoon/Wash & Go 14,7 15,3 21,2 17,4<br />
Pantene 15,7 15,8 21,2 17,8<br />
Head & Shoulders 28,4 23,7 23,1 18,8<br />
Unilever<br />
Timotei 12,0 11,7 17,4 17,6<br />
Organics 15,2 15,4 17,9 16,3<br />
Source: AC Nielsen and IRI Infoscan<br />
–23–
CEMS <strong>Case</strong> <strong>Study</strong><br />
“L’Oréal (A): <strong>Fighting</strong> <strong>the</strong> <strong>Shampoo</strong> <strong>Battle”</strong><br />
Appendix 12: Share of voice in selected countries<br />
Share of voice 1997 (%) Europe France UK Germany Italy Spain<br />
Beiersdorf<br />
Nivea 2,1 7,3<br />
O<strong>the</strong>r brands 0,3 1,1<br />
Henkel<br />
Schwarzkopf 4,0 0,1 15,0 2,3<br />
O<strong>the</strong>r brands 1,6 0,7 5,7 1,0<br />
L'Oréal<br />
Elsève / Elvive / El'Vital 10,9 14,0 10,6 11,5 9,3 8,9<br />
Fructis 3,6 10,8 7,8 2,6<br />
Ultra Doux 4,3 5,2 5,0 4,8 4,3<br />
O<strong>the</strong>r brands 5,1 23,1 0,5 0,1 7,8 3,5<br />
Procter & Gamble<br />
Vidal Sassoon/Wash & Go 4,8 0,8 6,6 5,0 12,2<br />
Pantene 20,9 12,6 24,9 25,5 15,6 22,7<br />
Head & Shoulders 6,9 6,6 8,4 5,9 14,2<br />
Unilever<br />
Timotei 2,4 2,3 0,1 2,0 8,8<br />
Organics 6,6 5,5 18,0 3,9 4,9<br />
O<strong>the</strong>r brands 3,1 7,8 5,9<br />
O<strong>the</strong>r manufacturers<br />
Alberto Culver 0,8 3,8<br />
Bristol Myers 0,6 0,3<br />
Colgate 0,3 0,1 0,3<br />
Eugene Perma 1,5 8,7 0,4<br />
Johnson & Johnson 1,2 2,5 4,4<br />
Revlon 0,3 0,4 1,5<br />
Wella 3,5 5,3 5,1 4,8 2,1<br />
Industry expenditures (million FF) 4 182,6 614,2 828,6 865,8 837,6 723,7<br />
Source: Adex (AC Nielsen)<br />
–24–