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Table of Content
Table of Content........................................................................................................................3
Executive Summary...................................................................................................................4
Company Introduction...............................................................................................................5
Indian Cosmetic Market............................................................................................................5
L’Oreal in India.........................................................................................................................6
Product.......................................................................................................................................7
Factors influencing Consumer Decisions..................................................................................8
Culture.......................................................................................................................................9
Personal Factors.........................................................................................................................9
Changing Demographics.......................................................................................................9
Demand for Luxury Cosmetic Brands:..................................................................................9
Cosmetics for Men:..............................................................................................................10
Perceptions...............................................................................................................................10
Colour Selection:.................................................................................................................10
Fair Skin Syndrome :...........................................................................................................10
Beliefs and Attitudes................................................................................................................11
Harmful chemicals in cosmetics:.........................................................................................11
Ayurvedic/Herbal Products are good for the skin :............................................................11
Social Factors...........................................................................................................................12
Boom in Salon Care :...........................................................................................................12
Bollywood Influence on Cosmetic Industry :......................................................................13
Packaging :...........................................................................................................................13
Trends:.................................................................................................................................13
Hair Care and styling:..........................................................................................................14
Conclusion...............................................................................................................................15
References................................................................................................................................16
Page 1 9/04/2023
Executive Summary
Cosmetic industry is one of the most profitable businesses globally. Over the past 15 years
the cosmetic market has grown on average by 4.5% a year. Resulting from the natural
increase in the population and the raising levels of income in a large number of countries
there is a huge potential for further growth in the cosmetic markets globally. However, the
sales growth in mature markets in the western world is slowing and the focus is now shifting
to the east.
In the past 10 years due to improvements in the overall Human Development Index and per
capita income most emerging markets particularly the BRIMC (Brazil, Russia, India,
Mexico, China) there is more awareness of personal hygiene and more consciousness about
personal grooming. Cosmetic producers and distributors globally have identified this
potential and are expanding their businesses in to these new markets.
With the increase in per capita income, urbanization , awareness about personal grooming
and changing lifestyles India’s cosmetic market has huge development potential. With the
demand for cosmetics increasing Indian markets are opening up to more and more
multinational cosmetic companies.
Since the liberalization many international brands like Avon, Burberrys, Calvin Klein,
Cartier, Christian Dior, Estee Lauder, Elizabeth Arden, Lancome, Chambor, Coty, L'Oreal,
Oriflame, Revlon, L'Oreal, Yardley, Wella, Schwarzkopf, Escada, Nina Ricci, Rochas, Yves
St. Laurent and Japanese cosmetics company, Shiseido have entered the Indian market. (State
of Israel Ministry of Industry Trade & Labour)
L’Oreal founded in France is at present the world’s largest cosmetic producer by revenue.
L’Oreal’s global network is very well established in emerging markets and is at present
contributing to 33% of the sales. L’Oreal entered the India in 1990 and at present is one of
the key foreign players in the Indian cosmetic Market.
It is a challenge for any company to be successful in international markets as the factors
affecting consumers buying decisions vary from one market to the other. The purpose of this
assignment is to conduct a survey to explore the factors influencing Indian consumers
purchasing decision of cosmetics and how L’Oreal has addressed these factors.
Page 2 9/04/2023
Company Introduction
The L’Oreal group was created in 1909 by a French chemist Eugene Schueller. By 1950 the
company had acquired 100 products was present in Holland, Austria and Italy. Soon they
expanded their business to US, South America, Russia and Far East.
At present the L’Oreal group is the worlds largest cosmetic and beauty company represented
in 130 different countries and owns a wide brand portfolio of 500 different brands providing
diverse products ranging from hair colour, permanents, styling aids, body and skin care,
cleansers and fragrances.
L’Oreal also well known for its research and development work in the dermatological
industry. 3% of its sales revenue is spent on research on cosmetology and dermatological
research. It is also active in dermatological and pharmaceutical field and at present is the
largest nanotechnology patent holder in the US.
The distribution channels are diverse from hair salons to super markets and hypermarkets,
health and beauty outlets and direct mail.
Indian Cosmetic Market
The total size of the Indian retail beauty and cosmetic market stands at U.S. $950 million,
showing growth between 15-20 percent per year. This is twice as fast as the growth rate of
United States and European Markets.
The overall beauty and wellness market that includes beauty services stands at about $2,680
million. (Bhattacharya, 2007). Premium brands that are globally recognized are gaining
acceptance amongst the Indian consumers as their exposure to these products have increased
rapidly during the past few years.
The latest trends demonstrates that middle and high class Indian people spend a large portion
of their money in cosmetic product or service. According to the latest Euromonitor report the
Indian color cosmetic market stands at $4113.4 million and skin care at $346.9 million
(Bhattacharya, 2007).
Page 3 9/04/2023
Even with such high growth rates the per capita consumption of cosmetics in India is $0.68
which is very low when compared to other Asian countries $ 40 in Hong Kong, $ 10 in
Malaysia and Taiwan, 12 dollars in Japan and 1.5 dollars of China. (The Times of India,
2008). However, the improvements in the per capita disposable income in India has resulted
in cosmetic products to be considered as necessity products rather than Luxury products in
the past.
The cosmetics industry is dominated by key players who have a strong control on the market.
Hindustan Unilever Limited (HUL), Procter & Gamble, L'Oréal, Garnier, Revlon,
Maybelline, the group of Godrej, Dabur and Lakmé are elements par excellence of this
industry. Many multinationals are also introducing product ranges of its international
portfolio for the Indian market to capture greater market share.
L’Oreal in India
L’Oreal 1st entered the booming Indian hair colour market in 1990, in partnership with MU
group with the Ultra Doux range of hair care & lip care products. L’Oreal set up its wholly-
owned Indian subsidiary operation in 1994 with the launch of its GARNIER range of
products from the low-end brand of their international portfolio bringing the “country-of-
origin” formula to new markets.
Translating from the “Consumer Product” segment to their “Professional Products” range,
L’Oreal set up the Professional Product division in 1997 and set two development centres in
New Delhi and Mumbai to train the salon owners and professional hairdressers.
L’Oréal operates in India through four main divisions: consumer products, professional
products, active cosmetics and luxury products. The biggest contributor to its revenue in
India is the consumer products division led by its strongest brand in terms of sales —
Garnier. L'Oreal products in India are marketed in a variety of distribution channels namely :
mass market, pharmacies and salons.
With the expansion of its market share L'Oreal introduced its skin care and make up offerings
to India. The rise was also reflected in the change of the subsidiary in India from Indelor to
“L’Oréal India Private Limited”.
Page 4 9/04/2023
In 2002, looking at widening the portfolio along with deepening the product lines VICHY
was launched of VICHY marking the introduction of “Active Cosmetics Department” which
is a very niche, premium product from L'Oreal. Over the three years of its presence its
coverage is just 80 chemists all over India.
L'Oréal operates three divisions in India, including the Consumer Products Division - L'Oréal
Paris,, Maybelline New York and Garnier - the Professional Products Division, which
manages the salon business, and the Active Cosmetics Division with the Vichy brand of
dermo-cosmetics.
The main threat that L'Oreal face s in India comes from not just its direct competitors like
Revlon, P&G, Nivea etc. but also from the traditional wisdom prevailing. So L'Oreal is
fighting to bring in a whole new lifestyle here that requires a change in the way the Indian
women think of grooming and also about the expenditure on it.
L'Oreal today is present in over 300 Indian cities accessing 7 international portfolio brands.
Registering a amazing double digit growth L'Oreal looks set to capture the Indian market in
the coming years.
Product
L’Oreal cosmetics are well known amongst women of all ages and have a reputation for
providing budget friendly but high quality cosmetic products. L’Oreal group markets 500
brands and more than 2000 products in all the sectors of beauty business. There are cosmetic
products of European origin, American origin and Asian Origin. Refer Appendix 1
L’Oreal have a complete selection of cosmetic products including hair colour, skin care, Sun
Protection, Make-up, Perfumes and Toiletries.
The Product Categories
Refer Appendix 2
Page 5 9/04/2023
Products
Consumer Products
Luxury Products
ProfessionalProducts
ActiveProducts
Lancóme, Biotherm, Helena Rubinstein, Giorgio Armani, Ralph Lauren
L’Oréal Professional, Kérastase, Matrix ,Redken
L’Oréal Paris, Garnier, MaybellineNew York, Softsheen•Carson, Club Des Créateurs De Beauté
Vichy, Roche Posay and Innéov
Products
Consumer Products
Luxury Products
ProfessionalProducts
ActiveProducts
Lancóme, Biotherm, Helena Rubinstein, Giorgio Armani, Ralph Lauren
L’Oréal Professional, Kérastase, Matrix ,Redken
L’Oréal Paris, Garnier, MaybellineNew York, Softsheen•Carson, Club Des Créateurs De Beauté
Vichy, Roche Posay and Innéov
Consumer products : High technology products offered at competitive prices through mass-
market retailing channels ranging from haircare, skincare, make-up and perfume products
that meet the aspirations of all of its customers.
Professional products: Products created for salon professionals, ranging from colorants, hair
care, texturing and styling formulas.
Luxury products: Top of the range products made available via selective retail outlets
(department stores, perfumeries, travel retail outlets, and the brands own boutiques)
providing personalized advice at the point of sale.
Active cosmetics : Dermo-cosmetic skin care products that are sold in pharmacies and
specialist retailers. These products offer consumers proven safety and effectiveness
supported by advice from pharmacists and dermatologists.
Factors influencing Consumer Decisions
When making a purchase decision there are many factors affecting the consumer’s decision.
Most often why consumer by what they buy is deeply rooted in their subconscious as, ninety
“ninety-five percent of the thought, emotion, and learning [that drive our purchases] occur
in the unconscious mind- that is without our awareness” (Armstrong et al., 2005)
These factors must be taken into consideration in order to reach target
consumers effectively (see figure 2.1) (Kotler et al. 2005).
When organizing marketing campaigns organizations look at how their products are
positioned against these various factors affecting the purchase decision of the preferred
market segment.
Marketing products such as L’Oreal cosmetics in a non native foreign market such as India,
there are many factors influencing the consumer decision making that are different.
Page 6 9/04/2023
Cultural- Culture- Subculture- Social class
Social- Reference groups- Family- Roles & status
Personal- Age & lifecycle stage- Occupation- Economic situation- Lifestyle- Personality & selfconcept
Psychological- Motivation- Perception- Learning-Beliefs & attitudes Buyer
Figure 2.1; Factors influencing consumer behaviour(Kotler et al., 2005)
Culture
One major factor significantly influencing the consumer behavior of an individual is culture.
In strict terms , culture is defined as a learned , persuasive , and shared set of orientations
within a specific cluster of individuals in a given society (Perner , 2007).European markets
being the home market for L’Oreal there is a vast difference between Indian market in terms
of history, cultures and level of development.
Based on Maslow’s hierarchy of needs cosmetics meet the esteem needs of people as
cosmetic assist them in improving their image to gain acceptance, or to gain social status or
social recognition. Esteems needs being high up in the hierarchy of needs, the Indian culture
has a huge impact on psychology and consumer purchase decision making process at all
levels.
Personal Factors
Changing Demographics : Unlike many countries where the aging population exceeds
the young population creating high dependency ratio, India has a young and rapidly growing
population. It is expected that this new generation will result in an overall increase of 70% of
Indian GDP. Since increasing number of women in the age group 22 to 45 becoming
independent and joining the work force instead being a stay at home moms there is more
demand for cosmetic products . These women have the disposable income and the decision
making power to buy what they want (Bhattacharya, 2007). This has resulted in high demand
for cosmetics in India.
With the increasing literacy rate, Indian consumers are becoming more conscious about
personal grooming and the demand for high-quality cosmetic products has increased rapidly.
Hence, there is a huge demand for world-renowned brands of cosmetic products in India.
Demand for Luxury Cosmetic Brands: With the rapidly increasing number of
millionaires in India, the market for luxury brands is growing annually at a compound
average growth rate (CAGR) 35% especially since the emerging young urban population of
India, combined with high disposable income are increasingly looking for lifestyle-oriented
Page 7 9/04/2023
and luxury products with an internationally recognized brand. Based on Nielsen Global
Luxury Brand study (March 2008) India has the 3rd highest brand conscious population in the
world. L’Oreal being an internationally recognized cosmetic brand has introduced luxury
product lines such as Lancôme, Bodyshop and active cosmetics such as Vichy to India.
Cosmetics for Men: Cosmetics and toiletries are not just the domain of women any
longer. Men are the emerging market of cosmetic and skin care. (SPC Asia, 2006) Indian
men are increasingly taking to the use of more and more body sprays, perfumes and other
cosmetics and toiletries. With rising demand from men, the Indian cosmetic market is getting
enlarged and many players are coming out with cosmetic products especially skin care
products for men. The market size of men's personal care segment is estimated at
approximately US$ 165million, with Gillette having the largest market share. Other major
players in this segment include Godrej, J.L. Morison and HLL. L’Oreal has introduced their
“Menexpert” and “Garnier” cosmetic range for this new consumer segment in India. Refer
Appendix 3
Perceptions
Colour Selection: The culture has an impact on people’s perception of shapes, colours and
space. How people interpret different colours can be based on their job, age, gender, status or
even religious beliefs. For an example red is considered to be a colour of celebration for
Indians where black is considered to be colour of mourning. In cosmetic fields, the choice of
Aishwariya Rai to represent L’Oreal Paris is also a symbol of Indian beauty.
When producing colour cosmetics these perceptions are taken in to account as it drives the
consumer demand. L’Oreal has large range of colour pallets to suite specific Indian consumer
preferences. For an example introduction of gold and colors, jade, Indian pink, turquoise,
orange and browns for Indian cosmetic markets.
.
Fair Skin Syndrome : Almost all cultures around the world have a preference towards fair
skin tone. The desire for pale skin amongst Indians are emerging from the history where
based on the complex social hierarchy or the cast system. In addition to this history of
Page 8 9/04/2023
colonization by lighter-skinned invaders from the west for 200 years, the concept of fairness
being superior is embedded deep within the Indian psyche.
According to Mr. Venkatramani who oversees the skin care category at Unilever's Indian
unit, the definition of beauty in the Western world is linked to anti-aging," where "In Asia,
it's all about being two shades lighter”. Skin lightening creams are by far the most popular
categories in India skin-care market and valued at $318M.
L'Oréal has identified this huge market potential and has entered this specific market 1st with
“Garnier” and next with their super highend line “Vichy”. However, L’Oréal products so far
have a small market share. The major players in this segment are Lakme, Ponds, Fair &
Lovely with a 50 percent market share, followed by players such as Nivea, Godrej
and Revlon.
Beliefs and Attitudes
Harmful chemicals in cosmetics: Customer possesses specific belief and attitude
towards various products mostly driven by cultural norms. These beliefs and attitudes make
up brand image and affect consumer buying behaviour.
Even though cosmetic products are regulated and tested prior to be made available in the
markets, there are still concerns amongst consumers regarding the presence of harmful
chemicals in these products. Since consumer protection regulations with regards to cosmetic
product are not present in India, Indian consumers are much more reluctant to accept safety
of cosmetic products.
L’Oreal has identified theses consumer concerns and has taken steps to gain consumer
confidence for their products by promoting the concept of “caring through makeup” by
highlighting the products’ natural ingredients when advertising.
Ayurvedic/Herbal Products are good for the skin :Ayurveda is known to originate in
India around 1500 BC influenced by Hindu religion and is embedded in to the Indian culture.
Products that initially originated as Ayuvedic medicine expanded to herbal products and
Page 9 9/04/2023
herbal cosmetics. The Indian “herbal” care market is currently valued at $630 million.
(Bhattacharya,2007)
Made from natural local herbs extracts or plants like Turmeric, honey, tulsi, pudina, saffron,
herbal/ ayurvedic products are very close to Indian consumers. Indian women influenced by
Ayurwedic treatments use herbs and natural ingredients as part of their beauty care.
Taking the opportunity of growing concerns of harmful chemical in cosmetics consumer
preferences Indian Herbal/ ayurvedic cosmetic producers like Himalaya, Lotus and Jovel are
drawing customers to their all natural cosmetic products. Even the existing players too have
expanded their range to include herbal variants for an example Hindustan Lever recently
introduced the herbal version of Fair & Lovely fairness crème.
L’Oreal has more than 70% certified organic ingredients in their products. L’Oreal brand
Body Shop recently introduced its Ayuvedic product range “Nutriganics “to attract this
consumer segment.
Social Factors
Boom in Salon Care :For a customer who needs more than a trim, a visit to a hairdresser
in India has traditionally been something of a hair-raising experience.(O’Connor, 2010)
However, beauty salons in India are no longer only about the usual hair cut-and-dry routine.
With the out-look towards personal grooming and beauty is changing in the Indian society.
Beauty is no longer for the rich and famous. With the boom in the salon and spa industry
there is large demand for salon and spa care products in India.
L’Oreal salon care products lead in this industry because they were the trend setters where
they opened up the L’Oreal Hair & Beauty Academy to train salon professionals in 2006.
Over the past decade they have trained close to 30,000 professionals. Today, L'Oreal markets
its range of specialized hair care products exclusively through salons and beauty parlours.
L'Oreal currently is the only company in the market that has a hair colour range tailored
exclusively for parlours.
Page 10 9/04/2023
Bollywood Influence on Cosmetic Industry :Indian film industry “Bollywood” has a
tremendous influence on the growth of the cosmetic industry in India. Actors and actresses
are considered as style icons of youth of India.
L’Oreal has identified the impact of Bollywood and movie star glamour on building
consumer confidence as well as improving sales of their cosmetics range. L’Oreal has
selected young and trendy Sonam Kapoor and Miss World pageant winner and established
Bollywood actress Ayishwarya Rai and Bollywood heartthrob John Abraham to endorse
their new product lines. Refer Appendix 4
Packaging : Packaging is an integral part of the product and identity. It also preserves
efficacy and performance in different local conditions of storage, distribution and use.
Given the price-sensitivity of the Indian consumers, they do not normally prefer to spend a
large sum of money at one time. Hence, many cosmetic and toiletries companies launched
their products in smaller pack sizes to make them more affordable and attractive to the
average consumers. By selling products in tubes instead of bottles, for example, or by using
smaller-format bottles or sachets, L’Oréal is able to offer consumers in all markets
innovation at the right price
Trends: Trends are long lasting because they emerge from collective needs of consumers
that is part of their culture. With the popularity of satellite Television and a wide variety of
television channels as well as Internet, more and more Indian consumers are constantly
exposed to wide variety of global cosmetic brands creating more brand awareness which
often translates to sales. They are linked to consumers’ behaviour and psychological patterns
that refect their unique culture.
With the increased exposure to global fashion trends, lifestyle trends and glory in
international beauty pageants, has given a boost to the Indian cosmetic industry. The Young
Indian population are more interested in keeping up with global fashion trends such as
whitening boom, eco friendly trend, natural trend, peter pan trend as well as neo-femininity
trends. Refer Appendix 5. Cosmetic producers such as L’Oreal has been innovative in
predicting these trends and making right products available at the right time.
Page 11 9/04/2023
Hair Care and styling: As has always been the case in every country since history began,
hair still possesses powerful symbolic and reminiscent properties. Dark Eyes, long black hair
are two things that are considered as attraction in the Indian culture. At present 85% of
Indian women have long hair. Most young girls are encouraged to wear their hair from young
age. When maintaining long to medium long hair, hair fall and breakage are main issues
faced by Indian women. In the past hair care meant oil massage and shampoo, now more and
more users have started adding conditioners to their hair care list. They do like to use hair
serums as a way to tame frizz and improve shine. L’Oreal has introduced “Total Repair 5”
shampoo and conditioner to meet these specific consumer demands.
Traditionally Indians have been non experimental with hair styling. Due to increase in
awareness, with more available global fashion trends, Indian consumers are more open to
styling their hair by, perming, colouring, straightening ,re-bonding or even using hair spray,
gels and hair cremes. L’Oreal professional dominate these growing markets. L’Oreal has
even introduced its Kerastase Institute’s premium hair care service to create more awareness
and feed the fashion and beauty aspirations of India consumers.
Page 12 9/04/2023
Conclusion
India is one of the emerging in the cosmetic industry. Being a country rich in culture there
are many elements affecting the consumer purchase decisions. Potential growth in Indian
cosmetic market is unlimited. There are lot of customers who have the resources to buy what
they want. If company within the marketing industry properly and effectively advertises their
products or services, there would be a great demand for them. Therefore, it is important to
know how to properly market the specific product within the Indian culture.
In conclusion as a global cosmetic brand L’Oreal has been up to date very successful in
moving away from its self reference criteria and embracing the Indian culture to gain
consumer acceptance. However, the market conditions are fast changing. Hence, continuous
efforts needs to be taken to ensure proactive solutions are offered to Indian consumers to
capture the growing market share.
Page 13 9/04/2023
Page 14 9/04/2023
References
Bhattacharya, P. (2006) India’s Cosmetic Market Ready for Big Leap,. Global Cosmetic
Industry. Issue 1,
Retrieved on :Wednesday, 22 December 2010 from :
http://www.gcimagazine.com/marketstrends/regions/bric/30806969.html
India's cosmetics market set to grow, (Jan 6, 2008), The Times of India
Retrieved on Wednesday, 22 December 2010 from;
http://timesofindia.indiatimes.com/business/india-business/Indias-cosmetics-market-set-to-
grow/articleshow/2678458.cms#ixzz18xh6erla
Kotler, P., et al. ( 2005), Principles of Marketing
Sankhe, S., at all (2010), India’s urban awakening: Building Inclusive Cities, sustaining
economic growth, Mckinsey & Company
Retrieved on Wednesday, 25 December 2010 from :
http://www.mckinsey.com/mgi/reports/freepass_pdfs/india_urbanization/
MGI_india_urbanization_fullreport.pdf
State of Israel Ministry of Industry Trade & Labour, Indian Cosmetics Market – 2004,
Retrieved On: Wednesday, 25 December 2010 from :
http://www.tamas.gov.il/NR/exeres/2F7DC4F0-48C2-45BE-AFB3-86E5E9CF993C.htm
O’Connor, A.(2007), Sharp-eyed L’Oreal gets head start in India, The Sunday Times,
Retrieved on Wednesday, 22 December 2010 from;
http://business.timesonline.co.uk/tol/business/industry_sectors/consumer_goods/
article2980264.ece
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Appendix 1
L’Oreal Cosmetics Range
Page 16 9/04/2023
Appendix 2
Product Range
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Appendix 3
Page 18 9/04/2023
Appendix 4:
Page 19 9/04/2023
Appendix 5: Trends
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High perceived benefits like longer lasting beauty.
Synthetic products contains chemicals that can harm your health.
Ayuwedic products are naturally clean and good for health.
Natural Trend
Using eco friendly products.
Go green trend and environment friendly packaging
Green cosmetics
Eco-Beauty Trend
Natural Look
Emphasize on creating bright and radiant skin.
Nude look, flawless finish, groomed and sophisticated.
Looking younger, less make-up.
Back to Basic Trends
Femininity Fever : Show feminine side and bring out the sex appeal of women but still have the elements of confidence and modernity
Changing perspective of gender role: Support the traditional gender role-cute fragile and lovable rather than being equal to male counterpart
Neo Femininity Trends
Fear of old age: Fear of old age, wrinkles and aging. Preventative care to slow the aging.
Happiness in Life: Remaining attractive to stable happy family life.
Fit In/Feel Confident : Feeling less confident with age. Need to look young to catch up with peers of same age.
Peter Pan Trend
Pinking White: Beautiful skin is pinkish white,look natural just like a baby’s skin..radiant like having aura.
Healthy & Flawless: Beautiful skin is not pale white butradiant and flawless skin. Overall the skin must be healthy
Natural White: Beautiful skin is white and bright with fine texture.no need to be white like European people.Must look natural
Whitening Trend: New Interpretations