L'Oréal mixes global and local

15 August 2011

PARIS: L'Oréal, the beauty group, is pursuing a strategy of "universalisation" - creating brands with a global presence but products adapted to suit local tastes.

Jean-Paul Agon, L'Oréal's CEO, told Beauty Inc this "new concept" essentially moves "beyond globalisation" and forms an essential part of the firm's efforts to add 1bn people to its customer base.

"In order to conquer and loyalise these consumers around the world, the idea is to build from the brands that we have," he said.

"The second step is to make sure that these brands, in every part of the world, have ranges of products that are completely specifically designed, formulated and adapted to the needs and demands of the local consumers. The L'Oréal Paris brand is the same brand in China that it is in the USA or in Europe, but the products are different."

Agon also argued that such an approach could come to define the next ten years, when 2bn people globally will enter the middle class for the first time, including 300m shoppers in China alone.

"What we see around the world is really the unbelievable emergence of the middle class in new countries, like China, India, Indonesia, Mexico, Turkey - in fact, in two-thirds of the world," Agon said.

Innovation will play a vital role in making products that meet the requirements of buyers across these highly varied markets. To this end, L'Oréal now has R&D centres in Brazil, China, Japan and the US.

"The idea is to adapt to the great markets," said Agon. "One, for example, is Greater China, another one will be India and probably all Southeast Asian countries. Another one will be Latin America. It's not country-by-country. It is continent-by-continent."

L'Oréal has also already witnessed the benefits of reverse innovation, where products developed for emerging economies achieve international success, as was the case with its Total Solution 5 haircare range, created in Brazil.

A major shift underpinning L'Oréal's strategy is the rise of new media, currently taking between 3% and 5% of ad budgets, but set to receive more funds going forward.

"With digital techniques today you are closer to the consumers," said Agon. "You can have really direct contact with millions or billions of consumers, and you can share with them the complete universe of a brand ... which is the dream of any brand."

Amended: Data sourced from Beauty Inc; additional content by Warc staff