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L’OREAL China

L’OREAL China. NURSING MININURSE BACK TO HEALTH. Agenda. Introduction of the case . Case Description. L’Oreal bought Mininurse , a Chinese mass skincare brand in December 2003.

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L’OREAL China

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  1. L’OREAL China NURSING MININURSE BACK TO HEALTH

  2. Agenda

  3. Introduction of the case

  4. Case Description • L’Oreal bought Mininurse, a Chinese mass skincare brand in December 2003. • This acquisition is an opportunity to speed up L’Oreal growth in the Chinese market. It is a major step forward in L’Oreal’s development in a market which is strategically important for the company. • Mininurse complements L’Oreal portfolio perfectly and move more quickly into the Chinese consumer skincare market. • Soon after the deal, L’Oreal decided to co-brand Mininurse with Garnier, L’Oreal’s global mass-market brand. • The Garnier name would bring international credentials and bolster Mininurse’s brand equity.

  5. Case Description • However, Mininurse has been struggling lately. • Market data showed that the brand’s market share tumbled from 5.1 percent in October 2003, shortly before the deal, to 3.5 percent 2 years later. • Market Share for Moisturizer Brands in China

  6. Conclusion • China is the world’s second-largest market for luxury cosmetics and is on track to become its largest. • L’Oreal saw Mininurse as a platform to further develop its mass market Garnier range in China.

  7. Current Situation • New customers make up L'Oreal sales in China • SHANGHAI - Millions of new Chinese customers helped to drive up sales for the French cosmetics giant L'Oreal SA. • Sales in China in 2010 rose to $1.38 billion, an 11.1 percent increase over the previous year, and a double-digit gain for the 10th consecutive year. • Although was quite challenging,L'Oréal managed to achieve growth in both sales and profits, and expand it market share, largely through innovations, new product launches, the development of new market categories and a deepening of distribution. http://www.chinadaily.com.cn/cndy/2011-03/08/content_12132214.htm

  8. Current Situation • L'Oreal has done quite well in localization strategies. • From the formula (of the cream), and the packaging, to the shooting of the advert and the choice of advertiser, all of these were done in China. • Apart from plans to expand in China's first- and second-tier cities, L'Oreal also entered some third- and fourth-tier cities. • Mininurse can reach the consumers that other brands can't reach. At the current stage, is still the "great asset". http://www.chinadaily.com.cn/cndy/2011-03/08/content_12132214.htm

  9. Case questions and Discussion • Q1.Was the MININURSE acquisition really worth the wait and the effort for L’Oreal? • Long-term strategy. • Mininurse with forecast sales of Euro 40 million and built up distribution network of 280,000 outlets. • It has a good image in the Chinese market, and its prices are reasonable. • It was one of China's top three skincare firms, with a market share of 5 percent. • Targeting young women with a natural style, Mininurse complements L’Oreal brand portfolio perfectly, and move quickly into the Chinese skincare market. • Chinese consumers thinks that local and foreign brands as equally good. Owning local brands or brands perceived seems therefore essential.

  10. Case questions and Discussion • Q2. What might have been the drivers behind MININURSE’s market share drop? Was the MININURSE- Garnier co-branding a strategic mistake? • L'Oréal uses a multi-brand strategy to cover the mass market in China. But the new Mininurse made big mistakes in terms of target market and sales strategies. - The target customers for Mininurse were defined as young adults, thus the thrifty middle-aged women patrons turn to other brands. - Its low-end image didn't seem to appeal to the potential young ladies. Sales therefore plummeted. • MININURSE- Garnier co-branding a strategic mistake - No clear positioning statement. - Mininurse products quite similar to Garnier. - Customer star to using Garnier rather than Mininurse, because of consumers perceive global brands as being high in quality. http://www.iceo.com.cn/research/leader/1999/1130/176169.shtml

  11. Case questions and Discussion • Q3.What is your prescription to revitalize Mininurse ? Should L’OREAL discard the GARNIER endorsement? Should the brand be repositioned? • Mininurse should reposition in the skincare market. - Brand management and reevaluate the brand basing on the need of the local market. - For example, Mininurse was launched to the market with new formula and package, which turned out to be a great success. • L'Oréal should not discard the Garnier endorsement. - Increase brand awareness for the Gariner family brands, and thus bring brand loyalty. - To implement international strategy and explore new market. - Garnier has a series of skin care products specially for Asian females.

  12. Thank you for your attention

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