Company Focus LOral Multi-Brand Architecture The LOral Group, one of the worlds leading cosmetics conglomerates, serves

as an as tounding example for the study of brand architecture, with its amazing maze of b rands and sub-brands in a diverse range of beauty and personal care products. Ov er the years, LOral has acquired a number of companies, thus bringing into its fol d numerous corporate brands. Each of these corporate/umbrella brands in turn has s everal range or line brands and sub-brands in various product categories. Severa l of the companies have overlapping products, but are positioned differently so that the LOral Group as a whole reaches out to the widest possible range of consum ers across all market segments. Keeping the individual corporate brand names dis tinct helps the Group address the premium, midrange and economy markets simultan eously, without facing the problems of brand dilution and customer confusion. Introduction Brand Architecture Brand Architecture refers to the way a company structures its brands. Some of the strategic issues that brand architecture addresses are: han dling of acquired brands, integration of various brands, choice between umbrella and individual brands, and the structuring of brands as part of the marketing m ix. The type of brand architecture that a company would follow depends on a vari ety of factors including depth and breadth of the product mix, the extent of geo graphic coverage, the product category, characteristic buying behavior, if any, and so on. Here, we look at how LOral has developed its brand architecture and use d it as a strategic tool for nurturing a large and successful global business. T he Origins of LOral LOrals story began in 1907 when Eugne Schueller, a young chemist, formulated the first synthetic hair dyes in his kitchen, and sold them to hair s alons in Paris under the brand name Aurole. Within two years, he established the Socit Francaise des Teintures Inoffensives pour Cheveux, which soon afterward became LOral. By the 1920s, the company had extended its busi ness to a number of countries in Europe, North and South America, the erstwhile Soviet Union and the Far East. A Plethora of Brands Currently, the LOral Group has operations in over 130 countries and more than 80% of the Groups sales are gener ated outside the home coun55 March 2008 try, i.e., France. LOral is known as a house of diverse corporate and umbrella bra nds which include LOral Paris, LOral Professionnel, Garnier, Maybelline, Matrix, Bio therm, RedKen, SoftSheen Carson, Lancme, Helena Rubinstein, Cacharel, Shu Uemura, Giorgio Armani, Ralph Lauren, Vichy and many others. Each of these umbrella bra nds, in-turn has under its fold numerous range, line and product MARKETING MASTERMIND 2008 The Icfai University Press. All Rights Reserved. iupindia.org

Company Focus Exhibit 1: LOrals Multi-brand Matrix Architecture Showing the Major M aster Brands Consumer Products Division LOral Paris Garnier Maybelline New York SoftSheen Carso n Le Club des Crateurs de Beaute Professional Products Division LOral Professionnel Krastase RedKen 5th Avenue NYC Matrix Mizani Luxury Products Division Lancme B herm Helena Rubinstein Kiehls Shu Uemura Vichy La Roche-Posay Innov SkinCeuti Giorgio Armani Ralph Lauren Cacharel Victor & Rolf Diesel Active Cosmetics Department That LOral has divided its business into product-based divisions, rather than divi ding it on geographic basis clearly indicates that it is the products and brands that form the focus of the business and not geographic regions. This approach l ays the foundation for a brand architecture, wherein umbrella and range brands p lay an important role. Analysis of the Brand Architecture Design Divisional Architecture Based on Target Markets LOral has classified its business into different divisions based primarily on the target market segments, rather t han on product categories. The brand architecture is designed in such a way that different umbrella brands are focused on each segment, thereby creating synergy , clarity and leverage, in spite of apparently having several competing brands i n the same product categories. Consumers from diverse socioeconomic and cultural backgrounds are thus able to find products suitable to their tastes and spendin g power, without conflict or confusion. Focus on Distinct Identity and Image of Individual Brands L Oral also focuses regularly on strengthening the meanings of i ts brands and fully exploits the advantages which are rooted in the individual b rands. LOral has established distinct identity, image and signage for each of its brands so as to build a close relationship with the relevant target markets. For example, customers have come to associate Lancme with stylish combination of ele gance, charm and daring. Helena Rubinstein is perceived as a cosmetics pioneer, which combines cutting-edge science brands. In effect, the brand architecture that we have is what one may call a mu lti-brand matrix, with a hierarchy of brands which target different groups and l evels of clientele (Refer Exhibit 1). Multi-brand Matrix Architecture Under Four Groups The LOral Groups business is broadly classified under three divisions the C onsumer Products, Professional Products and Luxury Products divisions; and one d epartment the Active Cosmetics department. The Consumer Products Division offers a range of competitively priced hair care, skin care, make-up and perfume produ cts. The most prominent international brands in this division are LOral Paris, Gar nier, Maybelline New York, SoftSheen Carson and Le Club des Crateurs de Beaute. T hese are distributed through mass-market retail outlets. The Professional Produc ts Division serves hairdressers by providing products to meet the requirements o f salon professionals and salon customers. There are five major umbrella brands under this division L Oral Professionnel, Krastase, RedKen 5th Aven ue NYC, Matrix and Mizani. The Luxury Products Division offers up-market premium products to consumers. The major master brands areLancme, Biotherm, Helena Rubins tein, Kiehls and Shu Uemura. The worlds top perfume brand like Giorgio Armani, Ral ph Lauren, Cacharel, Victor & Rolf and Diesel also form part of this division. T his divisions products are mainly sold through department stores, travel retail o utlets, perfumeries, and the respective brands own boutiques. The Active Cosmetic s Department offers skin care, sun care, hair care and make-up products. It has three prominent brands under its fold Vichy, La Roche-Posay and Innov plus the Ski nCeuticals range. These products are sold through pharmacies and specialist reta ilers. They offer consumers proven safety and effectiveness, supported with prof essional advice from pharmacists and dermatologists. Authors Profile

R Harish, Faculty Member, The Icfai Business School, Bangalore. The author can b e reached at harishr58@gmail.com 56 March 2008 MARKETING MASTERMIND

LOral with the art of femininity, glamour, high-performance and luxury. Garnier fu lfills the aspiration of natural beauty for the masses. Emphasis on Cultural Ori gins and Diversity of the Brands L Oral embodies cultural diversity and captures t he cultural cachet of different countries in its brands. Many of LOrals star brands are from different cultures, whose distinct identities and cultural origins hav e been promoted to advantage by the company. This marks a conscious departure fr om the common practice of multinationals trying to harmonize and standardize the ir products and brands for global markets. The most prominent example is that of Maybelline New York, whose cultural association with its country of origin was strengthened by LOral after its acquisition. As a result, Maybellines sales rose dr amatically. It was also pushed into more than 90 countries, positioned as an asp irational brand from the US. It soon became a stylish global brand for women all over the world, from being merely a regional brand earlier. Currently, around 5 0% of Maybellines sales revenue comes from outside the US. LOrals brand architecture provides a platform for a diverse variety of brands by letting each brand retai n its specialty and specific target markets; while at the same time fitting into the overall brand matrix. While retaining umbrella/range brands as endorsers, m any individual brands are promoted under various products. Leveraging Core Techn ology Platforms Across Brands LOral has a strong research and development network. Its innovations always begin at the top with luxury brands, which are then modi fied to penetrate downwards into different price levels and markets. The develop ment of multiple products on the same technology platform reduces the overall co st. The company thus takes advantage of spreading the benefits of a strategic in vestment across different product divisions. For example, LOral first introduced a break-through anti-ageing formula in 1986 under the prestigious Lancme stable, a s Lancme Niosme. This was then implemented under the Vichy brand and eventually ex tended quite successfully to the consumer products division as LOral Plenitude. Le veraging core technology platforms across brands, thus optimizing on development al cost and reducing wastage of resources, is an important factor in successfull y managing a complicated brand architecture having a multitude of brands markete d widely across the world. Aligning the Brand Architecture with the Marketing Mi x Brand architecture is a sub-set of the larger view of the marketing mix. It is closely allied with the marketing practices and distribution channels. Each pro duct division has many brands and sub-brands, and their distinct identities are maintained through conspicuously different packaging, image and advertising. The luxury brands are sold strictly in selected up-market outlets. Professional pro ducts are sold through salons and hair dressers. Active cosmetics products are d istributed through pharmacists. The products which generate maximum revenuesthe c onsumer productsare sold through mass market retailers such as super markets and department stores. 57 March 2008 LOral also adopts different advertising and promotional methods according to the b rands position in the market. The mass brand Maybelline is promoted mainly throug h TV advertising and brand ambassadors. La Roche-Posay, the brand positioned at solving skincare problems, is promoted through dermatologists, skincare speciali sts and professional beauty salons. LOral Paris relies to a significant extent on public praise by professional cosmetics consultants. LOral has created a brand mat rix with a strong power of integration. Thus, new brands merge into the existing structure taking full benefit of available resources, related to both technolog y and marketing. The company leverages upon the strength of its brands and adver tises brands rather than the products. It focuses on building a strong relations hip between the brands and the market segments that they are targeted at. In eff ect, LOral emphasizes on brands rather than on product features, and thus uses bra nds as strategic marketing tools. The value of a brand lies in its ability to be hedonistic. It also reduces perceived risk and generates much more customer val ue as compared to an equivalent product, which too may otherwise have the same l evel of utility, quality and various tangible features. Integrating Acquired Bra nds into the Brand Architecture Firms that aim for strengthening their market po sition internationally, tend to make acquisitions and hence bring in new brands

into their brand architecture. LOral has continuously pursued the strategy of acqu iring well-positioned brands in related businesses, from different geographic re gions. The acquisition of the American brand Maybelline MARKETING MASTERMIND

Company Focus and the Japanese brand Shu Uemura are prominent examples. This str ategy also helps compete effectively with strongly entrenched local brands and g ain access to local distribution channels in different markets. Competing Brands Within the Group Help Beat the Competition While it is true that multiple brand s in the same category are aimed at different market segments, it is equally tru e that some brands do compete with each other. LOral is at times described as a fe deration of competing companies. For example, LOral Paris and Maybelline New York are prima facie quite different the former has distinct sophistication and supre me elegance, while the latter is a street smart value-for-money brand for the yo unger generation. But the two do compete with each other to varying degrees in d ifferent markets. Having multiple self-competing brands is a sure-shot way of ma intaining creativity in a large and geographically dispersed multinational firm. This would ensure that different research centers and marketing groups are cons tantly on their toes and try to beat each other. While they do so, they also bea t the competition. Moreover, the so-called competing brands often serve as flank ing brands for the lead brand in a category. By offering alternative brands to m eet the needs of various market segments, the company tries to retain different categories of customers in its fold, who may otherwise have flocked to competito rs brands. A Complex Hierarchy of Umbrella, Range, Line and Product Brands LOral ha s acquired numerous companies and has many subsidiaries big and small, in differ ent parts of Exhibit 2: LOrals Consumer Products Division Major Master Brands Source: http://www.lorealv2.com/_en/_ww/brands/consumer_products/index.aspx Exhibit 3: LOrals Professional Products Division Major Master Brands Source: http://www.lorealv2.com/_en/_ww/brands/professional_products/index.aspx the world. It has quite a complicated brand architecture with numerous corporate /umbrella brands, range brands, line brands and product brands. For example, LOral Paris is an umbrella brand that has a number of range brands, one of which is D ermo-Expertise. Under Dermo-Expertise, one has several line brands and product b rands such as Pure Zone, HydraFresh, Happyderm, Nutrissime, Refinish and Renovis te. The umbrella/range brands often serve as endorsers for the line/product bran ds in advertisements and on the packages. The LOral Group has over 500 brands in a ll. A complete and technically precise exposition of LOrals brand architecture and brand portfolio would therefore become very lengthy. Consequently, only the majo r umbrella/ range brands (which in most instances correspond with the names of v arious companies belonging to the LOral Group), the principal 58 March 2008 businesses that they are in and the key line/product brands thereunder, are desc ribed briefly in the following sections. The material is presented under four he adingsConsumer Products, Professional Products, Luxury Products and Fragrances, a nd Active Cosmetics; considering around 20 master/umbrella brands. Brand Architecture Consumer Products LOral Paris The French brand, LOral Paris, offers a comprehensive range of beauty an d personal care products for both men and women. It includes products for skin c are, hair care, hair coloring, make-up and styling. There are several range bran ds under LOral Paris such as Elsve, Studio-Line, Dermo-Expertise and others. In tur n, under each range brand, there are many sub-brands for specific products and p roduct lines. MARKETING MASTERMIND

LOral Garnier The Garnier portfolio (under the subsidiary Laboratoire Garnier Pari s) includes four product lines: Garnier Fructis - hair care products Garnier Nut ritionist - skin care products Garnier Ambre Solaire for sun protection, and Gar nier Nutrisse for nourishing and safeguarding hair color. Maybelline New York Ma ybelline came into commercial existence with the introduction of the first moder n mascara in the American market way back in 1917. Great Lash, launched in 1971 in the US, continues to remain one of its best selling sub-brands to this day. C omparatively recent additions such as XXL Volume+ Length Mascara and DreamMatte Mousse have been quite successful. The Maybelline portfolio now includes more th an 200 products and is available in over 90 countries. SoftSheen Carson SoftShee n Carson, formed in 2000 by the merger of Carson and SoftSheen companies of the LOral Group, is the front-runner in hair care products for persons of African desc ent. The merging companiesSoftSheen and Carson were originally founded in 1901 an d 1964 respectively. SoftSheen was a hair care products company targeted at Afri can-American women. The Dark & Lovely nolye hair relaxer is one of the most popu lar brands from SoftSheen Carson. The other key product and line brands are Opti mum Care, Optimum Crme HairColor with Ionene G, Optimum Multi-Mineral Relaxer, Op timum Oil Therapy, Lets Jam, Magic and Wave Nouveau Coiffure Permanent Wave with Tri-Fusion Technology. While majority of these products are for retail sale, som e are meant for professional use. Le Club des Crateurs de Beaute Le Club des Crate urs de Beaute or CCB Paris is the direct selling arm which offers a range of aff ordable beauty products and programs to women in several countries through telep hone, internet, catalog and direct mail. To locate the above said master brands in LOral consumer products refer Exhibit 2. RedKen 5th Avenue NYC RedKen, founded in 1960, is a hair care brand dedicated to combining scientific approach with be auty, and is focused on continuing research and development. It comprises shampo os, conditioners, styling products, etc. The RedKen range encompasses four produ ct lines and many subbrands: RedKen Hair Care: All Soft, Blonde Glam, Body Full, Clear Moisture, Color Extend, Dandruff Control, Extreme, Fresh Curls, Smooth Do wn, UV Rescue RedKen Styling: This product line comes in four categories Mild Co ntrol, Medium Control, Maximum Control and Urban Experiment. Some of the specifi c sub-brands are Rewind 06, Quick Dry 18, Guts 10 and Rough Paste 12. RedKen Col or: There are three categories under this product linehair color products for fas hion looks, natural looks and covering grey. Prominent sub-brands are Shades EQ Equalizing Conditioning Color Gloss and Color Fusion Advanced Performance Colorc reme. RedKen for Men: This is a line of hair care products for men. Matrix Matri x was originally founded in 1980 for providing an extensive range of professiona l products for hair dressers. Matrix offers affordably priced products together with training programs for salon professionals and also provides insalon marketi ng guidance and support. The key product and line brands are Amplify, Biolage, C olor Smart, Color Sync, Curl Life, Opti.smooth, Sleek.look 4-Step Professional S moothing System, SoColor.beauty and Trix. Brand Architecture Professional Products LOral Professionnel LOral Professionnel includes a range of products for hairstylist s and colorists. The products are developed in close collaboration with hair dre ssers, and include: Color Products: Majirel, Diacolor, Luo Color, Platinium, etc . Hair Styling Products: Tecni.Art, Srie Expert, X-Tenso (for long lasting hair s traightening) and Dulcia perm lotion. Krastase Paris The Krastase hair care produc ts were first introduced in 1964. They comprise a variety of luxury and aspirati onal hair care products that are sold for professional use by service providers through salons and spas across the world. The Krastase Collection comprises aroun d 50 distinct products to address a wide range of hair care needs such as nouris hing, revitalizing, recharging, curling, smoothening, blowing/expanding, sculpti ng, color protection, etc. It includes six line brands designed for different ty pes of hair Nutritive, Reflection, Dermo-Calm, Resistance, Specifique and Soleil . 59 March 2008 MARKETING MASTERMIND

Company Focus Mizani The word Mizani means balance in Swahili. The Mizani range, l aunched in 1991, comprises a superior line of professional hair care products me ant for the people of African descent, sold exclusively through salons. To locat e the above said master brands in LOral professional products refer Exhibit 3. Exhibit 4: LOrals Luxury Products Division Major Master Brands Brand Architecture Luxury Products and Fragrances Lancme Lancme is a British luxury brand offering an exclusive range of skin care p roducts since 1946. It was bought by LOral in 1965. The star brands in the Lancme r ange are: Skin care: Absolue, Blanc Expert, Hydra Zen, Primordiale, Rnergie and Rs olution Make-Up: Color ID, Flextencils, Juicy Tubes, Photognic and Rouge Absolue Fragrances: Attraction, Hypnse, Miracle and Trsor. Biotherm Biotherm was founded i n 1950 and offers an extensive range of face care, body care, sun care and skin care products for men and women. It was acquired by LOral in 1970. Many of Biother ms products are based on a patented technology that uses an active ingredient ext racted from thermal plankton a vitamin and mineral-rich natural product found in spring water. The star sub-brands are: Age Fitness, Aquasource, Biotherm Homme ( i.e., Biotherm Men), Lime Peel Wrinkle Corrector, Olosource, Skin Loving Colors M ake-Up and Source Therapie. Biotherm is priced 20% to 30% lower than Lancme and c aters to a younger age group. It focuses on pure skin care, youth and freshness; with less emphasis on anti-ageing and make up. Source: http://www.lorealv2.com/_en/_ww/brands/luxury_products/index.aspx Exhibit 5: LOrals Active Cosmetics Department Major Master Brands Source: http://www.lorealv2.com/_en/_ww/brands/active_cosmetics/index.aspx Helena Rubinstein Helena Rubinstein Inc. began its journey in 1902 with a beauty salon established by its eponymous founder. It was acquired by LOral during the 1 980s. The Helena Rubinstein portfolio includes a sophisticated range of cosmetic s focused on femininity and glamour. The key brands are: Skin care: Collagenist, Life Pearl and Prodigy Make-up: Color Clone, Full Kiss and Lash Queen. Kiehls Ki ehls was founded in 1851 as a pharmacy. During the early part of the 20th century , it offered herbal and homeopathic medicines, over the counter drugs, essential oils and the first Kiehls brand name products. Today, Kiehls offers skin care and hair care products that utilize unique, natural ingredients; and the products a re often prescribed to customers by Kiehls well-trained customer representatives. T he key brands are: Kiehls Lip Balm, Abyssine Cream, Blue Astringent Herbal Lotion and Crme de Corps. 60 March 2008 Shu Uemura Shu Uemura, a brand created in 1983 by a Japanese make-up artist and skin care specialist of the same name, is active in make-up, skin care and profe ssional tools. The brand relies on quality sales outlets that provide high stand ards of service. The important products are Shu Uemura Cleansing Oils, Depsea Wa ter, Depsea Therapy, Eye Lash Curler, UV Mousse Underbase and Beta-Glucan skin c are ranges. Giorgio Armani (Fragrances) Created by Giorgio Armani, the Armani br and has a well-differentiated line of fashion and personal care products which m eets a wide range of consumer needs. The Giorgio Armani fragrance was first laun ched in 1982. The key subbrands in the fragrances category are Armani Eau pour H omme, Armani Mania, Acqua di Gio and the Emporio Armani duos (Emporio Armani He & She, Emporio Armani White & Emporio Armani Night), Sensi and Armani Code. The Giorgio Armani cosmetics range is distributed exclusively through select departm ent stores. MARKETING MASTERMIND

LOral Ralph Lauren (Fragrances) Ralph Lauren perfumes were originally introduced i n 1978, and are now a division of LOral. The important product brands are: Polo, P olo Black, Ralph, Ralph Rocks, Romance and Romance for Men. Cacharel (Fragrances ) In the early 1960s, Cacharel was one of the first design houses to introduce r eady-to-wear clothing as an alternative to couture designs. The brand was extend ed to fragrances in 1978, with the launch of the feminine perfume brand - Anas An as. The Cacharel perfume range is now part of LOral. Other major fragrance brands u nder the Cacharel line are Amor Amor, Eden, Noa, Promesse and Loulou. Viktor & R olf (Fragrances) This is a fashion brand launched by the Dutch designer duo Vikt or and Rolf. Flowerbomb was their first womens perfume, which is now marketed by LOral. Diesel (Fragrances) Italy-based Diesel is a renowned denim brand; whose fra grances business is taken over by LOral. It is best known for its Fuel for Life frag rance brand for men and women. To locate the above said master brands in LOral lux ury products refer Exhibit 4. brands under Vichy are: LiftActiv, Capital Soleil, Dercos, Equalia, Myokine, Novadiol, Normaderm, Thermal Fix and Vichy Men. La Ro che-Posay La Roche-Posay Laboratoire Pharmaceutique is the brand strongly rooted in dermatology. La RochePosay was purchased by LOral in the late 1980s. It offers a complete range of daily skin care and make up products for all types of skin. All the products are formulated with the La Roche-Posay Thermal Spring Water, w hich contains selenium, a substance known for its anti-radical properties. The l eading brands are: Lipikar, Active C, Anthlios, Effaclar, Hydraphase, Novalip lip stick, Redermic, Respectissime mascara, Tolriane and Unifiance foundation. Innov I nnov Laboratories products take off from the premise that diet has an effect on be auty. The product range comprises pills and nutritional supplements for improvin g the health and beauty of skin, hair and nails. Innov Firmness is a re-densifyin g nutritional supplement for face and body, meant for improvement of dermal dens ity and skin micro-texture. Innov Hair Mass is another nutritional supplement des igned to boost the growth of thick, dense glossy hair. SkinCeuticals Founded in 1997, SkinCeuticals pioneered the development of vitamin Cbased cosmeceutical pr oducts designed to combat the signs of aging, caused by environmental damage. It provides skincare solutions through dermatologists, medical spas, plastic surge ons and other skincare professionals in over 35 countries worldwide. To locate t he above said master brands in LOral active cosmetics refer Exhibit 5. 61 March 2008 Conclusion The LOral Group has indeed been successfully managing an amazing array of brands a cross the globe, with a complicated brand architecture and brand portfolio, havi ng multiple brands in several product categories. Its approach to retaining and nurturing the identities and cultural origins of different brands exhibits a dis tinct departure from the practice commonly followed by multinationals, which oft en try to harmonize their products and brands for a global market. Most of the u mbrella/master brands and the numerous range/line/ product brands thereunder hav e come into LOrals fold as a result of a series of acquisitions over several decade s. LOral has taken a conscious and considered decision to retain and nurture the l egacy of the various brands that it has acquired from time to time. This has bee n used as a marketing strategy, which in turn has led to the present brand archi tecture. Regardless of the reason and history behind the present brand architect ure, it is nonetheless quite evident from LOrals excellent financial and market per formance that it is managing the brand architecture and portfolio quite well, in spite of the vicissitudes of the market and intense competition. A professional company treats brand architecture as a high level strategic decision as it has several strong managerial implications including resource allocation. Brands hav e to be nurtured and built over many years and the brand architecture therefore has long-term implications. LOral has built a brand architecture that outclasses c ompetition, and thus provides a lesson to other companies in similar competitive situations to follow, for using brand architecture as a tool for growth. r Reference # 10M-2008-03-11-10 Brand Architecture Active Cosmetics

Vichy Vichy Laboratories offers a complete range of skin care products formulate d with active ingredients stemming from pharmacological research, combined with Vichy Thermal Spa Water, which is renowned for stimulating the skins natural defe nse mechanisms. Vichys products address the issues of moisturization, nutrition, ageing, sun protection, hair loss and others. The prominent MARKETING MASTERMIND