Fighting the Shampoo Battle

The case study LOral (A): Fighting the Shampoo Battle discusses how LOral decided to become a leader in the European shampoo market, a market that only a few years earlier had not been a company priority because competition was very much based on price and margins were too narrow. Elsve was LOrals shampoo brand leader in the French market and the challenge for the company was to make it a leader throughout Europe.

LOral (A): Fighting the shampoo battle

Questions for discussion:

1. 2. 3. 4. 5.

What is the problem presented in the case? What is the European hair care products market like? What has changed recently? What are the key success factors in the hair care products industry? What are main issues in this industry? What is Elsves competitive position? Is it the same for LOral? If not, what is the difference? What could Elsve do to conquer the European shampoo market? What are the advantages and disadvantages of your ideas? Which one would you prefer and why?

International Marketing Dipl.-Kffr. Verena Ltke

LOral (A): Fighting the shampoo battle

1. What is the problem presented in the case?

Is it a problem of positioning? Of adding value to the products? Is it a problem of brand globalisation? Of globalising a French brand? Is it a problem of new product introduction? Of whether or not to launch a 2-in-1? Is it a problem of renewing the brand? Is it a problem of changing the competitive strategy and defining new priorities?

International Marketing Dipl.-Kffr. Verena Ltke

LOral (A): Fighting the shampoo battle

2. What is the hair care products market like?

mature market: saturated, high penetration and low growth percentages trend towards increased use of hair care products increase in shampooing frequency target group traditionally female, new segments are targeted fashion-influenced little brand loyalty few product differences perceived by consumers

International Marketing Dipl.-Kffr. Verena Ltke

LOral (A): Fighting the shampoo battle

Why is LOral considering the European shampoo market at this point in time? What has changed recently?

technological innovations contribute to add value to the products consumers are willing to pay more for innovation the market is no longer competing solely on price margins are higher LOral woud be able to reach a larger number of consumers; shampoo can be found in every household

International Marketing Dipl.-Kffr. Verena Ltke

LOral (A): Fighting the shampoo battle

3. What are the key success factors in the hair care products industry?

operating with global brands knowledge of market and its trends strong market orientation market segmentation and product differentiation innovation and R&D, continually launch new products distribution network and time-to-market communication and advertising support a good corporate umbrella brand

International Marketing Dipl.-Kffr. Verena Ltke

LOral (A): Fighting the shampoo battle

4. What is Elsves competitive position? Is it the same for LOral? What is the difference?

Elsve: shampoos: market leader in France, second to Pantene in Europe conditioners: European leader solid experience and know-how high quality cosmetic shampoo brand continuously renewed and repositioned innovative brand, incorporates technology wide range of products: solution for any hair problem just starting to globalise female product image mid-range prices communication centered on individual products
International Marketing Dipl.-Kffr. Verena Ltke 7

LOral (A): Fighting the shampoo battle

LOral: world leader in cosmetics and beauty products becoming a global company multi-brand strategy well-known in many markets good positioning and glamourous image strong R&D orientation solid financial background operating through four distribution channels strong corporate values competitive positions of Elsve and LOral differ!

International Marketing Dipl.-Kffr. Verena Ltke

LOral (A): Fighting the shampoo battle

5. What could Elsve do to conquer the European shampoo market? What are the advantages and disadvantages of your ideas? Which one would you prefer and why?

unification of brand name: different names in different countries pro: establishment of a global brand with global image con: brand could lose its current identification with some languages and its brand awareness centre communication strategy on Elsve and not on each product: pro: saves money, reduces number of commercials to be used, reinforces brand con: characteristics of single products are no longer communicated separately increases risk of cannibalisation, weakens positioning of innovation and technology reinforce LOral umbrella brand in communication: pro: reinforces French origin, price increase possible con: positioning could confuse consumers and be too sophisticated for mass market target new segments: men, children pro: being the first entrant, having less competition, increasing market share, economies of scale con: high cost and time required, cannibalisation of other company products
International Marketing Dipl.-Kffr. Verena Ltke 9