L'Oréal wants to challenge P & G to challenge the rural route

Although L'Oréal firmly sits in the top spot in the world cosmetics industry, in China, it has never been able to surpass P & G.

The L'Oréal Group has always been known for its multi-brand, and it is no exception in China. Now, in the world, it has more than 500 brands in total, 17 of which are internationally renowned big brands, occupying 94% of L'Oreal Group's total sales, of which 10 have been introduced to China, plus two years ago The nurses and Yuexi in the pocket, L'Oreal has a total of 12 brands in China.

Due to traditionally L'Oréal Group's top brands in the world, L'Oréal Group's brand introduction into China was initially targeted at mid-to-high end. Previously, in the L'Oreal's brand pyramid system, Lancome, Biotherm, and Helena were at the top of the tower; Vichy and Lacedo Fountain were in the tower; L'Oreal Paris, Maybelline, and Garnier were at the bottom of the tower, and these products were basically middle-grade or higher products.

Under the high-end positioning, L'Oréal's cosmetics in China are not “popular” in terms of price: the highest price is Lanfan, and the single product price ranges from 230 to 990 yuan (mainly distributed between 400 and 600 yuan); Followed by Biotherm, single product prices ranged from 230 to 600 yuan (mainly distributed from 200 to 500 yuan); followed by Vichy, single product prices ranged from 128 to 388 yuan (mainly distributed at 160 yuan To 300 yuan); followed by Laoli Fountain, the unit price from 60 yuan to 288 yuan (mostly 100 yuan to 200 yuan); slightly cheaper than the skin is L'Oreal, the unit price range is 65 to 180 (mostly distributed in 100 to 180 yuan).

However, after all, the Chinese market is different from the European, American and Japanese markets. The Chinese market is very large and very diversified. There are many consumption gradients, especially in the part of the base. These products of L'Oreal attract only 30% of the people who have the most spending power. The survey shows that this price factor constrains the purchasing direction of grass-roots consumers.

L'Oreal lacks low-end products below 100 yuan, and this huge market is swept by Procter & Gamble. P & G, with Olay as its main force, has made every effort to expand its mid-to-low-end product line and penetrate into China's mid-to-low-end market with remarkable success.

After stabilizing the low-end market, P&G began to march into the high-end market. In the past few years, Olay has continuously introduced new products. One new product is more advanced than one. For example, the Olay Oil Nutrition Hydration Mask has more than 150 yuan, and the Olay Oil Fresh Skin Replacement Series price is close to 200 Yuan. When launching each single product, P & G will conduct large-scale marketing.

At the same time, L'Oréal also started to focus on the low-end market. According to statistics, the current size of China's high-end cosmetics market is only about 1.5 billion yuan, accounting for only about 4% of the total size of the cosmetics market. What really determines the future market power division is the low-end market. Therefore, Paul Paul, president of L'Oreal China, said, “In China, the larger market is 'popular', and to succeed, the mass market is a must.”

As a result, L'Oreal and P & G, the two giants who originally did not commit any crimes, started to enter the gladiatorial arena.

Diversity challenges specialization

Unlike rivals P & G, L'Oreal never hit the brand of L'Oréal on its brand. In the first eight years of entering China, almost no one knew what the relationship between brands such as Lancome, Biotherm, L'Oreal Paris, and Maybelline was. It was only after the acquisition of the nurses that people learned that those brands were all owned by L'Oréal. And P & G's brand, in addition to SK-II no one knows who its owner is, in addition to Other brands, such as Olay, Icahn, covergirl, etc., almost all are marked with the P & G brand.

In response, many people in the industry believe that due to the implementation of multi-brand strategies, coupled with the understanding of Eastern culture and ethnic differences, L'Oreal Group has a lot of misalignment in terms of diversification and marketing.

At present, all brands under the L'Oreal Group are autonomously managed and operated autonomously. The advertisements of each brand are also self-contained and do not interfere with each other. Although this is very important to maintain the unique characteristics and cultural connotations of different brands, it also results in many repetitive wastes. What's worse, it makes the group brands themselves and does not form a concerted effort. Like the "L'Oreal" and "Maybelline" belonging to the popular brands, the prices are very similar, and the varieties are cross-cutting. This can easily lead to the killing of self-owned brands, which, on the whole, does not increase the revenue, but because of the large number of Advertising expenses cause unnecessary losses. "As of now, a considerable number of consumers do not even know that Maybelline belongs to a brand under the L'Oreal Group. This is really a great waste of resources. It is awesome." An industry source sighed.

Indeed, traditional brand extension strategies certainly have their advantages, such as shortening the time for new products to be accepted by consumers and saving marketing expenses, but their disadvantages are also inevitable. The more product types that the brand extends, the longer the product line that spans, and the easier it is to blur brand positioning.