Nihon L'oréal 2021

Abstract

This case is designed for first-year MBA students in their marketing curriculum and aims at questioning on which of its two divisions (luxury/mass-market) Nihon L’Oréal should allocate the most of its limited budget to, to maximize its impact and increase its market shares. The student will learn about differentiation, customer perception and how to perform a marketing strategy analysis based on several frameworks. The Japanese subsidiary of the Global Leader in the Cosmetic industry is facing, in 2021, an unprecedented dilemma. While the effects of the CEO change are still hard to predict, the pandemic situation has increased the pressure on the only resilient markets in the Asian area. Nihon L’Oréal, historically known as a hub for development for the group, encounter many difficulties in its attempts to penetrate the very complex Japanese Cosmetic industry, whether it be in the luxury or in the mass- market division. On the one hand, the conservatism of the Japanese population, preferring national brands over foreign ones in the mass-market, has pushed the French Giant to focus its marketing efforts on a few flagship products, leaving little room for innovation. But the market huge size and the quick growth of the personal care segment (expected to reach +8.56% in 2021) still makes it very attractive. On the other hand, the luxury division is benefiting from the French origin of L’Oréal, label of quality and elegance in Japan. Also, to strengthen its position, L’Oréal just acquired Takami. But a serious threat is looming on the horizon. The already fierce competition is about to intensify even more due to the reallocation of Shiseido’s budget to the most lucrative segment of the luxury division: the skincare market.

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