The lack of success of L’Oreal Plenitude after 8 years has been launched to United States is primarily caused by making a wrong supposition of the U.S. market and implementing the exact same core strategy used on the French market in the U.S. regardless of the differences. Thereby, a series of problems occurred, which lead to a sales plateau and even a loss in sales. Problems in U.S. Market and Root Causes Discussion
According to the Brand Development chart, L’Oreal Plenitude has a rather low conversion ratio on Awareness to Trial compared with its major competitors—Oil of Olay and Pond’s, but with an acceptable retention ratio. Therefore, it is important to pinpoint the causes of the low level of motivation for Plenitude’s trial on behalf of seeking solutions. First of all, in the U.S., Plenitude followed the equivalent French targeting and positioning tactic. Plenitude targets the so called “modern women” who are “up-to-date and assertive” with an image of “I live with the times.” This brand is positioned as “high end, superior performance but accessible.” However, this targeting and positioning strategy combined with an advertising tagline, “Reduces the Signs of Aging,” misled consumers to perceive Plenitude as a product for relatively older ladies. This is one reason that reduced consumers’ motivation for trial of Plenitude. Second, the strong brand name of L’Oreal is a double-edged sword. Because Plenitude’s brand name has very low awareness, it is good that most customers connect the products to L’Oreal, which ensures the high-quality and advanced technology of its products.
On the other hand, this connection also gives customers the impression of a high price and stops them from trying the products. Furthermore, consistent with the Perceptual Map of Brand Imagery, consumers normally do not consider that Plenitude has “Good value for the money” compared to Pond’s and Olay. Finally, with the intention of educating customers at the point-of-purchase, Plenitude introduced the whole product line with 14 SKU’s in total to the U.S. market. Although some of the consumers give positive comments about the large number of products carried by Plenitude’s product line, most of them think the Plenitude line is overwhelming and complicated in general. Consumers feel confused when they look at Plenitude’s products without sales assistance, because most of the American customers do not have much understanding about skin care products compared to French consumers. Furthermore, the packaging style of Plenitude also prevents customers from trying its products.
First of all, the name of the moisturizer, Excell A, confuses consumers about the functionality of the product. Second, consumers think the information on the package of Plenitude’s products is too wordy. Unlike the sophisticated French users, American customers are less familiar with the ingredients and other terminologies that Plenitude tries to explain on the box, thus this kind of wordy packaging makes Plenitude products look even more complex. Also, some customers complain about the “heavy or greasy” feeling of Plenitude’s products even though adjustments have been made. In addition, Plenitude has pretty small dollar shares for Cleansers accounting for only 3.4 compared to 7.9 for Olay and 11.2 for Pond’s based on the 1995 Dollar Shares chart. This is due to its high price of Cleansers. For Plenitude, the average Cleansers price is $7.57(Exhibit 1.1). However, the average price for Olay and Ponds is $3.90 and $5.34 respectively.
Recommendations and solutions
Various recommendations have been composed in order to accomplish the four key goals for L’Oreal Plenitude. Distribution Strategy
The “class to mass” strategy is recommended to be applied continually, since Plenitude is obviously the premium quality, high tech skin care product among other products sold in the mass market. Therefore, Plenitude is now on the right track. Communication
Changing consumers’ perceptions of Plenitude is important right now. Thereby, adjustment of the advertising “Golden Rules” is required. The reason that featuring a star product succeeded in France was because each product category was launched one by one. Thus, the strategy of focusing on a star product and its superior technology was effective in enhancing brand equity and increasing sales in France. This strategy will not be valuable in boosting sales in the U.S. market since Plenitude introduced the entire product line at once. Due to the large amount of products, solely advertising the superiority of one star product is insufficient.
The new commercial should not only provide evidence of advanced technology, but also deliver a message of target diversification: Plenitude products can be used by both younger and older women. I recommend you create an advertisement with a young and an older woman talk about how they enjoy using Plenitude’s products. The young woman part should aim to endorse the fresh feeling of Plenitude’s Daily Moisturizers with a tagline like “Stay young, and feel Refreshed,” while the older woman part is emphasis on the advanced technology of the Treatment Moisturizers could keep using the present tagline of “Reduces the signs of aging.” (Exhibit 2) Product and Packaging
For Daily Moisturizers, further adjustment for ingredients is required, since young consumers dislike the heavy and greasy feelings of Plenitude’s products. I do not think that the large amount of products is an issue, as long as you can make the function of the products from each category clear to consumers. I suggest that you use different colors to stand for different categories, name each product directly based on its functionality, and simplify details on the front of the packages. Branding
Since L’Oreal already has a strong brand name, there is no need to put effort on building the Plenitude brand name. Additionally, the high technological, premium quality, and high end French brand image of L’Oreal is one reason to use the premium pricing strategy. Pricing
In order to break the sales plateau and ensure the bottom-line remains on track, Plenitude needs to gain market shares for Daily Moisturizers and Cleansers. Since most of the customers considered L’Oreal Plenitude products as department store products, and with the intention of maintaining its premium quality and high-tech image, I suggest keeping the premium pricing strategy, especially for Treatment Moisturizers. The average retail price of Plenitude Treatment Moisturizers is actually lower than the average retail price of Pond’s Treatment Moisturizers. I believe after you change consumers’ perception of Plentitude as products for older women, the market share of Daily Moisturizers will increase and the premium price will lead to a sales increase.
However, I recommend you cut down the average retail price of Cleansers to a price that is closer to Pond’s average retail price of Cleaners, since Plenitude has a really small dollar share on Cleansers (3.4 Million). Additionally, the retailers only carry 22.34% margin for Plenitudes Cleaners, and this margin is about 10% less than the retailers’ margin for Olay and Ponds (Exhibit 1.2). Therefore, based on my calculation you should give up at least 16% of Plenitude’s manufacturer’s margin to allow retailers to decrease the price. This approach will also attract more “Price Conscious Socializers” and “Unconcerned” to gain more market share. Revitallift
For the newly launched star product, Revitalift, I recommend you start to decrease the heavy advertising on it, and focus on point-of-purchase instead, for example you may ask retailers to put all the Revitalift products on eye level, and hang up poster advertisements in store. Because consumers already had a better understanding about the Revitalift due to the substantial publicizing for this product, it is time to transfer advertising focus from the star product to the entire product line so as to change customers’ perception. Meanwhile, paying more attention on point-of-purchase promotion will make it more convenient for consumers who look for the Revitalift and may stimuli impulse buying as well.