Essay INS676 – Pull” And “Push” Social Media Strategies At L’Oréal Paris – Global Integrated Communications at L’Oréal Paris – Management Assignment Help

Assignment Task

VP of Global Integrated Communications at L’Oréal Paris

Marie Gulin, VP of Global Integrated Communications at L’Oréal Paris, replayed a clip of  stars walking the red carpet at the 2011 Cannes Film Festival. She had just met with the  marketing team to discuss new hair colour product development. The key issue was whether  L’Oréal should do anything about the exciting new hairstyles they were seeing on the red  carpet, in the press, and online.  

Hair colouring was a mainstay of L’Oréal, but the outlook for growth in the home-colouring  market at the start of 2012 was not promising. Despite a reputation for innovation and  research, L’Oréal Paris was having trouble identifying a new product opportunity in this ultra competitive market. Was there an emerging trend, she wondered, where L’Oréal could jump  in early, beat out the competitors and revitalize its position in the market? She also wondered  how best to use social media once a trend was identified. Having seen the innovative  campaigns that competitors and other industries had implemented, she was convinced that  social media could be a game-changer in the hair colour market.  

L’Oréal  

In 1908, young chemist called Eugène Schueller patented an innovative hair dye. The  following year he formed the L’Oréal Company to begin selling his product. It soon expanded  internationally to hairdressers in the US and Canada. After the First World War, the spending  power of women significantly increased. Beauty products and salon treatments became  increasingly accessible and affordable luxuries. A significant breakthrough occurred with  L’Oréal bleaching powder in 1930. For centuries women had bleached their hair using  damaging corrosive substances and the product was a huge improvement to their beauty  regimes. 

Through both acquisition and product development, L’Oréal continued to expand locally and  internationally. The 1950s saw a revolution in the hair colouring market with the reduction in  the number of steps to dye hair from five to one. Women could now colour their hair without  having to go to a salon. In 1966, L’Oréal launched home-colouring kits under the “Recital”  brand. With the motto “research and innovation in the service of beauty”, the company forged  bonds with professional hairstylists through education and training. It aimed “to make beauty  accessible to as many women as possible” – irrespective of income level, nationality or race.  

In 2011, L’Oréal spent €791 million (3.5% of sales) on R&D and registered 611 patents, and  had five hubs in the US, Japan, China, India and Brazil, 22 research centres and 17 evaluation  centres, alongside numerous collaborations with universities, research centres and start-ups.  Its brands included L’Oréal Paris, Lancôme, Kiehls, The Body Shop, Vichy, Garnier and  Softsheen Carson. By 2013, L’Oréal had become the largest beauty products company in the  world. 

Competition in the Hair Colour Market  

Overview  

The Consumer Products Division (CPD) of L’Oréal controlled three main lines: L’Oréal  Paris, Garnier, and Maybelline. Both L’Oréal Paris and Garnier had hair care lines, while  Maybelline focused on make-up. On a worldwide basis, L’Oréal Paris had the largest market.

share (7.6%) in hair care (dyes, shampoos, and conditioners), followed by Procter &  Gamble’s (P&G) Pantene line (7%), and its own Garnier line (5.1%) in third. P&G’s Pantene  line included shampoo, conditioner and styling products but not hair dye, whereas L’Oréal  Paris focused mainly on colouring. The rankings varied from one region to another. In Latin  America, L’Oréal Paris was second (8.7%) to Unilever’s Sunsilk (10.9%) brand, with Pantene  third (6.7%) and Garnier fourth (6.1 %). In its domestic market, Western Europe, L’Oréal  Paris was number one, commanding a 15.5% share. Garnier was third with 9.4%.1  

Hair Colour Categories 

Three main categories define hair colouring: temporary, semi-permanent and permanent dyes.  Permanent dyes do not wash out (they must be grown out or re-coloured). It made up 70-80%  of the colour market in Europe, where 60% of women and 5-10% of men coloured their hair  in 2011.2 In the US, approximately 50% of women coloured their hair and the market was  expected to continue to grow as customers aged.  

While permanent dyes represented the largest share of the market, the demand for temporary  and semi-permanent dyes was on the rise as women – and increasingly men – showed an  interest in products that were individually tailored to their style, hair type or condition. Over  10,000 hair care products had been launched worldwide by the end of 2011, and the global  value of the market was projected to be $57 million by 2015.3 Of the world’s top ten hair care  brands, only #1 L’Oréal Paris, #3 Garnier, #4 Schwarzkopf, #7 Clairol (a P&G brand), and  #10 Wella Professional (P&G) had hair dye.4  

Consumer Motivation for Hair Colouring  

Hair colour products responded to a few key consumer criteria. The most common reason for  purchasing hair colouring products was to cover grey hair, particularly among women over 50  who made up 70-80% of the colour market. A second reason was to increase self-confidence.  A study in the UK, Mexico, China, Russia and the US found that over 88% of women felt that  colouring their hair increased their self-confidence.5 An in-depth study among women in the  UK found that they felt significantly more “…impulsive, sexually exciting, rebellious,  creative, attractive and able to deal with criticism.” Until 2011, the main motivation was  purely functional. However, people were increasingly dyeing their hair for fun or “feel good”  reasons.6 

L’Oréal Paris  

Matching this typology, L’Oréal Paris’s brand portfolio was organized around three key  brands:  

• The Casting Crème Gloss brand, targeted consumers starting to dye their hair, usually  in their 20s to early 30s. As a starter dye, the formula only changed the natural shade of the hair by one or two shades. Positioned as “my first hair colour” product, the  brand included more than 50 shades with a core offering of “luscious colour” for  blondes, targeted at young, urban women keen to stand out from the crowd.  

• The Preference brand, one of the oldest brands of L’Oréal Paris, targeted more  demanding and sophisticated women between 30 and 50. The colour range responded  to a need for variety and novelty, from purples to bright reds in addition to more  traditional shades.  

• The Excellence brand targeted consumers over 50 and offered “colour supremacy” and  coverage for grey hair. Less daring than those in the Preference brand, shades included  blondes, browns and blacks.  

Distribution  

In 2011, the colour market was split between salon services and the home-colouring market.  For a large number of consumers, the trip to the beauty salon represented a treat and a social  experience. For some it was an opportunity to meet their friends while indulging in  professional care. While there was little difference between the quality of professional and  home products for all-over colour, salons could charge 10 times as much for the expert colour  matching and application of professional products. For more difficult techniques such as  highlights, professional expertise was of greater importance as it involved several technical  steps such as applying the product to small sections of hair and wrapping it in foil to achieve  consistent highlights all over, including the back of the head.  

Challenges in the Hair Colour Market 

Despite the many key players with wide product ranges, in 2011 the hair colour market lacked  sparkle. Innovations were scarce and marketing strategies revolved around creating a  variation of a new hair colour and finding a celebrity endorsement. L’Oréal Paris was keen to  break out of the traditional industry and revitalize its hair colour lines.  

Trends versus Fads  

One of the biggest challenges of the beauty and fashion industries is to distinguish fads from  trends. Fads are styles that rise quickly in popularity and then burn out, usually within a year.  Trends last longer – over time they may become “classics”. For example, in the 1980s in the  US, the “preppy” look was a trend. Over time, the “preppy uniform” of khaki pants and navy  blazer became a classic that continues to be worn in many parts of the world, whereas kilts  (for women), also part of the preppy look, have become less fashionable.  

Deciding whether something is a fad or a lasting trend is extremely difficult. Celebrities can  adopt a new style, and designers can launch a new fashion on the runway, but only some will  appeal to regular consumers. When products are inexpensive to produce (like “silly bands” –  shaped rubber bands), it is less problematic if they are just a fad. But when a company designs  and develops a product to take advantage of an emerging style, it is based on the prediction  that it will become an enduring trend. If not, it can be extremely costly: the product quickly  becomes outdated and sales do not cover the costs of development. Conversely, failing to  address a trend can be a missed profit opportunity and be just as costly in the long run if  competitors are allowed to own the market.  

In order to help determine whether a style is a fad or a trend, marketing teams in cosmetics  typically address four key questions:  

1. Is the item/style compatible with a change in consumer lifestyle?  

2. Does the innovation provide real benefits?  

3. Is the innovation compatible with other changes in the marketplace?  

4. Who is adopting the trend?7 

If the answers to all of the four questions point to an innovation or style that has enduring  qualities, it may be a trend rather than a fad. To illustrate: Harem pants (Exhibit 1) were first  seen by millions on M.C. Hammer in 1990, and again on Justin Bieber in 2013. In 1990, the  style was picked up quickly – the pants were comfortable and affordable – yet it turned out to  be a fleeting fad because harem pants could not be worn to work, nor were they flattering, so  celebrities other than rappers did not pick up on the style.  

Food, too, has seen fads and trends. For instance, during the low carb craze of the 2000s,  some restaurants started selling “low-carb burgers” – hamburgers wrapped in lettuce leaves  (Exhibit 2). While this seemed to fit with a low-carb lifestyle and they were sold in many  casual restaurant chains, they were just not practical – it was difficult to eat a loaded burger  wrapped in lettuce without getting messy.  

Hair Colour Style Variations in 2011  

In the beauty industry, a never-ending succession of trends and fads ruled the market.  Wearing hair long or short, up or down, slicked back or buzz cut, changed over the years, with  some styles more enduring than others. Hair colouring essentially consisted of two types: (1)  one colour from the roots down, or (2) highlights spread vertically throughout the hair.  

However, the styles that the L’Oréal Paris team started to notice did not fall into these  categories. Celebrities such as Giselle Bunchen, Drew Barrymore and the Kardashian sisters  were sporting a new type of highlights or lighter coloured hair, starting at the jawline and  down to the tips. Instead of highlights throughout the hair, the colour was applied horizontally  at the ends, like growing out sun-lightened hair after a summer at the beach. Online and in the  popular press the look was referred to as ombre,8 or in the UK as dip-dye (Exhibit 3).  

A second bolder look, preferred by Nicki Minaj and other celebrities, was tie-dye. Instead of  sun-kissed ends, they had hues of pink, green or other bright colours (Exhibit 4), and often  multiple colours at the same time, hence the name tie-dye or “rainbow hair”. Lauren Conrad,  for example, first sported the ombre look and then switched to tie-dye.  

A third trend, “splat hair”, was both a style and a brand of hair colouring, achieved by  applying bright colours to make splashes of colour on the hair, either at random or all over. It  was different from regular hair dye due to the rainbow colours used (Exhibit 5). Splat hair was  semi-permanent or non-permanent colour that either washed out or faded after washing and  was popular for Halloween and costume parties. 

Marketing 2.0 (A): The “Pull” Challenge  

Before the advent of social media, fashion companies had to rely on secondary sources to try  to separate trends from fads, often with limited results. Social media provided a novel  opportunity for companies to have faster access to consumer insights. With millions of  customers searching for information online or engaging in fashion-related conversations on  forums and platforms such as Facebook, companies started to think about how they could  leverage this new data. Marie and her team were eager to distinguish between hair trends and  fads.  

Social Media Listening: “Pulling” Information from Consumers  

Since the early 2000s, businesses across industries had started to engage in social media  listening (SML), the process of identifying and analysing both quantitative and qualitative  information on what was said about one or several target(s) (e.g., a company, a celebrity, a  product) on the internet. For instance, after being criticised online, the Switzerland-based  company Nestlé developed a dedicated internal task force and centre not only to monitor and  respond to potential attacks but also to listen to what people said online and incorporate the  findings at various intervals along the value chain. Alternatively, companies could use  external providers to listen and monitor online content for them. SML was becoming  increasingly popular. A 2011 survey found that about a third of the companies had used social  media data to get insights about consumers or competitors,9 and were seeking the services of  companies such as Google that could generate insights about emerging consumer trends.  

L’Oréal Paris & SML  

Capitalizing on its existing partnership with Google, the L’Oréal Paris team began to  systematically incorporate Google research on what consumers searched online and talked  about when discussing or looking for information related to hair. Deciding whether of these  styles (if any) would be an enduring trend or simply a fad was challenging: both ombre and  tie-dye were coming up strongly in the data, but the qualitative view of the two was showing a  slightly different story.  

The popular press and blogs had diverging views on the looks. Given the popularity of tie-dye  (or rainbow) hair, Fashionista.com website said it was set to be the next wave and that  ombre’s popularity seemed to be ebbing.10 Ombre’s time was over and tie-dye was the new  trend to follow. Cosmopolitan magazine published a review of the stars who had had ombre  but had changed their look since the trend was “over”. According to the press, tie-dye was the  up-and-coming trend. Splat also had its followers, and one company had already launched  hair products specific to splat colouring.  

Every day there were more and more Facebook posts about ombre and tie-dyeing as well as  “how to” videos on YouTube. Unlike the celebrities’ salon treatments, most bloggers used  generic hair bleach or highlighting kits bought at a drugstore. They applied the product with a  brush or a comb, their hands, a squeeze bottle – or even a toothbrush or children’s paintbrush  – to get the desired effect, wrapping treated sections of hair in foil to help the process.

Task

• Engaging Customers: Social Media
• Why Is Engagement So Hard? 
• What Is Customer-Brand Engagement?
•  Why Customers Share Online Content 
• Customer Engagement Strategy  
• Create and Curate Content 
• Customer Engagement Strategy: How to Gatecrash and Stay Invited?