Describe the brand’s current product strategy (Product/service characteristics, product mix depth and breadth, product classification (convenience, shopping, specialty, or unsought) and any implications of its classification, new product development, packaging, customer service)

In speaking to the product characteristics, it became relevant to narrow the scope used in our analysis. While we continue to look at the products found within the L’Oreal brand, we would like to further state that we are more so examining the fragrances released by Ralph Lauren, as this is the brand under which we would like to release our product. Therefore, further analysis will be conducted over Ralph Lauren, specially within their fragrance lines. Narrowing our scope allows us to adequately assess the brand and recognize how our product could fit into their existing collection of products.

Looking at Ralph Lauren’s fragrance characteristics, we see a lack of variety. The women’s fragrances tend to come in clear glass bottles, displaying the color of the fragrance to the consumer. While they vary in size slightly (5.1 oz, 3.4 oz, 1.7 oz, 50 ml, or 100 ml) the overall concept remains the same. The perfumes advertise one clear scent, rarely straying from a floral scent. The male colognes again lack a large amount of diversity. Here the bottles also contain a variety of sizes but are solid colors instead of the glass found in their perfumes. All of the bottles within the brand are square shape with either rounded edges or sharp corners.

As far as product breadth is concerned, Ralph Lauren contains 7 different fragrance lines at the moment, with various spontaneous introductions. Women’s perfume is given one flagship fragrance entitled “Woman” as well as access to a line of fragrances that are one scent (such as sage or orange) marketed towards both males and females. With this said, the extension of the women’s line contains shower gel, lotion and the perfume itself. Looking further at the men’s perfumes, it is clear this is where the brand spends most of their attention. The remaining 5 product lines are purely focused on the men, each with a title reflecting the color of their bottle (for example, black). In addition to these 5 lines, the men are also encouraged to purchase the single scents that are also marketed towards females. As far as product depth is concerned within the colognes, each line has deodorant, after-shave, shower gel and body spray in addition to the cologne itself.

We would argue that Ralph Lauren fragrances are currently a shopping product. While the company does toe the line of becoming a specialty product due to their high prices and perceived prestige, they still remain firmly within the shopping category simply due to their standing within the marketplace. While highly priced and with greater quality in comparison to fragrance brands such as Bath and Body Works, Ralph Lauren still remains firmly in the middle of the market. Consumers are able to shop around and test this product against others but do not feel an extremely high degree of involvement. With that said, we believe brand loyalty is key within this segment. Ralph Lauren may not want to pursue a mass marketing campaign, as it is unlikely they will obtain masses of consumers looking to pay higher prices for fragrances if they already have a chosen brand. Instead, the company should work hard to maintain those customers they already have, as it is clear they are partial to their scents. They should also focus on customers who prefer comparable brands such as Calvin Klein or Lacoste, as these customers have expressed their ability and willingness to pay premium prices for a quality fragrance. The company must emphasize not only the scent of each fragrance and its benefits, but the value in having their brand, as it will be what truly sets it apart from competitors.

Brand Audit

a.      Identify the brand’s key brand elements (Chapter 4 and ppts) and evaluate them based on the criteria provided in that chapter and class discussion.

Ralph Lauren’s first brand element is the name itself, Ralph Lauren. This name is memorable, as consumers immediately associate it with the brand and protectable, as the name itself is trademarked. We would argue that the name is also meaningful, as the brand has done a remarkable job in leading the consumer to believe that the name itself indicates the type of person who would buy the brand, someone with a sense of luxury and class. As far as likability is concerned, we believe it is hard to quantify, as it varies from person to person. While we do not believe this element is easily adaptable, it is transferable, as the brand can make anything from clothing to homeware and simply add ‘by Ralph Lauren’ to create an association with the brand.

The company’s other brand element is their logo. An image of a male polo player in the midst of a swing, the logo creates the ideal image for the brand itself, invoking a sense of sophistication and class as well as activity. We believe this brand element is memorable in the sense that few brands utilize a person actually performing an activity within their logo. Additionally, its clear association with the sport of polo has created high sense of meaningfulness. In regards to likability, we would argue that this is split. Those who are familiar of the brand and the sport would agree that this logo is extremely likeable. However, for those who are not fans of the sport or do not stand by the brand and their target consumer, this logo would not be likeable. Both transferable and adaptable, the logo has seen several updates and is now associated with a variety of product categories such as formal wear and linens. Finally, the logo is protectable as it is trademarked by the company. The main problem with this trademark, however, is when other brands or associations with the term polo begin to utilize similar images. Ralph Lauren has remained staunch in its protection of the trademark and will continue to do so.

b.     Describe the company’s Brand Portfolio – describe branding strategies: identify individual vs. family branding (and specify the type of family branding used),  extent of line and category brand extensions, consistency, etc. What roles are represented (pp. 128-129)? Does their portfolio make good sense? Discuss any holes you feel they have (and make recommendations in the recommendations section below).

In regards to the company’s brand portfolio, we see that Ralph Lauren primarily utilizes a family branding strategies. Similar to other brands, Ralph Lauren employs the sub-brand technique by creating new products and brands and then attaching the Ralph Lauren name. For example, with the creation of a brand of homewares, the title given to all products was Ralph Lauren Home and Paint. To date in the perfume sector, Ralph Lauren has extended their product line to include shower gels, deodorants, body sprays, after shave, lotion, body cream, candles, and diffusers. While the company has also extended their categories to include homewares, bars, and a variety of clothing brands, we feel it is best to focus on their attachment to the perfume industry, as this is where they connect to L’Oreal. At the moment, however, it is impossible to separate the Ralph Lauren fragrance line from the brand of Ralph Lauren itself.

Many roles can be found within Ralph Lauren’s assortment of brands. Their cash cow exists in the form of Polo, Lauren, and Ralph Lauren. These brands account for the majority of sales within the brand, with Ralph Lauren being the primary brand for the company. A flanker can be seen in their brand Chaps which is sold at lower end department stores and serves as a mid-range priced clothing option. Lastly, while all of their brands have a sense of prestige associated with them, their most prestigious product can be found in their fine watches and jewelry. This brand was developed in conjunction with Compagnie Financière Richemont SA and gives an even higher sense of luxury for the brand.

We feel that the assortment of brands created by Ralph Lauren make an incredible amount of sense. The company has been able to extend their products into all areas of retail while not losing their era of sophistication. While some brands appear to simply be side projects, such as the bar attached to the flagship store, they work extremely well with the image that Ralph Lauren aims to promote. Additionally, the partnerships with L’Oreal and Compagnie Financière Richemont SA provide and even more authenticated product that creates more value for the consumer. In saying this, we feel that the one area in which Ralph Lauren is lacking can be seen within their Chaps brand. As it stands, there is no association between this brand and the Ralph Lauren brand, something that the company may desire but currently goes against the strategy the company employs.

4.    Distribution:  How will your product be distributed?  Be specific – types of outlets, number of levels, level of intensity, any potential channel conflict?

As we look at L’Oréal as a whole, it is important to note that Ralph Lauren’s is intertwined within this, as L’Oréal is the owner of this brand. L’Oréal as a whole is a world renowned leader in cosmetic and fragrance industry and operates 150 distribution centers globally. As L’Oréal is focused on more areas of expertise past fragrance, which include professional products, consumer products, luxe products and active cosmetics. They have created a very diverse portfolio of international brands that are unique in the world, and one of these brands that is specific to the luxury perfumes is L’Oréal Luxe brand. “L’Oréal Luxe offers both men and women throughout the world an array of prestigious and modern international brands with unique heritage,” (http://www.loreal.com/group/our-activities/organization). “L’Oréal Luxe is operated by a division of individuals who have expertise in the distribution channel associated with the 16 different high-end luxury brands within the Luxe brand,” (http://www.loreal.com/group/our-activities/organization). L’Oréal Luxe utilizes a business-to-consumer, multi-channel distribution strategy that focuses on selling to customers through brick-and-mortar stores as well online. L’Oréal Luxe does this by implementing a selective distribution channel, as well as an Omni-channel distribution strategy, to work towards the objective of offering high-quality products while respecting the diversity of its consumers. The overall objective of the L’Oréal Luxe division’s distribution strategy is the end customer and how to properly meet their needs. L’Oréal does a really great job of striving to meet these needs due to their prominent focus on locally distributing their products through selective distribution channels. L’Oréal implements a selective distribution strategy because of their ownership of 16 high-end luxury brands, where all products need to be shipped to different, specific stores that promote an environment for the sale of high-end luxury perfumes. Additionally, due to the close proximity of distribution centers, L’Oréal implements a two level indirect distribution channel. The three levels include manufacturers, distributors, and retail stores. Overall, L’Oréal implements a corporate vertical marketing system because they oversee all ownership responsibilities with all of their brands throughout the entire distribution channel. Having L’Oréal as a manufacturer and distributor for their own brands ensures that the quality and safety of the products are emphasized. “L’Oréal manufactures 85.9% of its products in its own plants, a strategy aimed at ensuring safety, quality and compliance with group’s values and ethics,” (http://www.loreal.hk/en-hk/careers/whoyoucanbe/operations/op-fabrication).  With this being said, L’Oréal Luxe products are available through cosmetic stores, department stores, travel retail, but also own-brand boutiques and dedicated e-commerce websites. Through their e-commerce website, L’Oréal is able to also implement an Omni-channel strategy that focuses on distributing to consumers directly. Through this Omni-channel, L’Oréal moves away from the traditional distribution strategy and focuses more on a direct-to-consumer approach by eliminating the third party to distribute products.

In regards to L’Oréal’s intensity of the distribution through its distribution channels, there is evidence of a high level of intensity due to the large amount of distribution centers located globally and their growing e-commerce efforts. L’Oréal is very heavily focused in 6 different regions including, United States, Japan, China, India, Brazil and South Africa, that gives them a global dominating presence. However, in regards to potential channel conflict, because L’Oréal is so focused on distributing locally this could cause of global integration and local responsiveness. “When tacit knowledge must cross borders, it is often reduced to information that moves easily (words and numbers, for instance) but may then fall prey to local misinterpretations that are difficult to detect from afar,” (https://hbr.org/2013/06/loreal-masters-multiculturalism). This is basically saying that sometimes when a company enters into a foreign region, there are often cultural misinterpretations when it comes to developing new products.

As stated previously, L’Oréal has a very diverse portfolio that includes their L’Oréal Luxe division of products that provides luxury items of 16 different high-end brands. Of these 16 brands, Ralph Lauren is included within this division, and it is important to look at their distribution channel at a closer look within L’Oréal’s distribution strategy. Ralph Lauren also has a very extensive portfolio which offers a variety of different products which allows them to operate in three different segments, including, Wholesale, Retail and Licensing. In regards to our focus on the fragrance industry, it is important to note that we will focus on the retail and wholesale segments to fully describe the distribution strategy of Ralph Lauren.

Ralph Lauren is currently in several countries located in Europe, Middle-East, North America, Asia and Latin America. “Ralph Lauren’s current distribution network includes 144 personalized outlets of Ralph Lauren, 493 directly-operated outlets, 272 Polo-Factory outlets and 77 Club-Monaco outlets. The company also operates via 583 concession-shops. It has a global licensing partnership and through it manages 42 dedicated-shops, 93 personalized Ralph Lauren outlets and 133 Club-Monaco outlets,” (https://www.marketing91.com/marketing-mix-ralph-lauren/). In addition to these outlets, Ralph Lauren also owns and operates its own online store as well as 10 e-commerce portals that provide an outlet for customers to shop for their products. Therefore, because Ralph Lauren is located in so many different regions globally, it is evident that their distribution strategy is focused on expanding their presence worldwide as well as creating a luxury experience for their customers through multiple different shopping outlets. Additionally, because Ralph Lauren operates through both brick-and-mortar stores and online, we can safely say that they utilize a multichannel distribution strategy within the retail and wholesale segments.

Both the retail segment and wholesale segment are essential in Ralph Lauren’s efforts to expand its global presence through multiple different channels. Similar to L’Oréal, Ralph Lauren uses an Omni-channel strategy by using channels both in stores and online to sell directly to customers through factory stores, concession-based Shop-within shops, Club Monaco stores, and e-commerce websites. “Our retail business sells directly to customers throughout the world via our 466 retail stores, 619 concession-based shop-within-shops, as well as through our various e-commerce sites. We operate our retail business using an Omni-channel retailing strategy that seeks to deliver an integrated shopping experience with a consistent message of our brands and products to our customers, regardless of whether they are shopping for our products in one of our physical stores or online,” (http://www.annualreports.com/HostedData/AnnualReports/PDF/NYSE_RL_2016.pdf).  In addition to the retail segment, when looking at the wholesale segment, Ralph Lauren distributes to specialty stores, golf and pro shops, and many upscale and mid-tier department stores, including Macy’s. “Macy’s contributes 25% to RL’s wholesale revenue,” (http://www.vault.com/company-profiles/general-consumer-products/ralph-lauren-corporation/company-overview). Within these department stores, products are sold through Shop-within-Shops and the Basic Stock Replenishment Program. The Shop-within-Shops is a critical element of the distribution to department stores to enhance brand recognition, to differentiate the presentation of products, and to certify complete merchandising of all product lines within department stores. And in regards to the Basic Stock Replenishment Program, this is crucial for distribution because wholesale customers can order at any time through this program and will receive shipments within days of the order. These elements within the wholesale segment is important for Ralph Lauren because it allows them to differentiate themselves from competing luxury fragrances and to strengthen the brands image to further drive sales.

Therefore, it is clear to see that Ralph Lauren uses a number of different channels in two different segments to efficiently utilize its multichannel distribution strategy. There is evidence of an indirect type of channel through a traditional distribution network that involves three levels. “To facilitate global distribution, our products are shipped from manufacturers to a network of distribution centers around the world for inspection, sorting, packing, and delivery to our retail locations and e-commerce and wholesale customers,” (http://www.annualreports.com/HostedData/AnnualReports/PDF/NYSE_RL_2016.pdf ). Because Ralph Lauren does not manufacture its own products and relies on third parties around the world to create these products, a contractual vertical marketing system is implemented. In addition, Ralph Lauren demonstrates high level of intensity in regards to distribution because of their efforts to distribute products through a variety of different channels all around the world. However, there could be a potential conflict in regards to the changes in political, social and economic conditions in the foreign countries that Ralph Lauren operates in and sources from. With these fluctuation climates of foreign countries, there are risks of changing exchange rates import restrictions that would dramatically affect the costs associated with distribution channels.

Ralph Lauren does a very good job of implementing a distribution strategy that focuses on expanding their global reach, which can be seen as a major strength. In comparison to other competing luxury brands not owned by L’Oréal, it can be very challenging to gain this type of widespread distribution through multiple different types of channels while still maintaining a luxury feel for their products. Another strength to point out is their growing expansion through their online platform. By focusing on their e-commerce websites, this gives Ralph Lauren a better advantage to reach new markets that they were once missing with their brick-and-mortar stores. However, in regards to the weaknesses associated with Ralph Lauren’s distribution strategy, because the manufacturing for their products is not done in house and is sourced from a third party, there is a risk associated with the quality of the items. Because they are not manufactured in-house, there is a greater risk of the products not always meeting quality standards. And lastly, customer perceived values of department stores can act as a weakness for Ralph Lauren’s distribution strategy. If a consumer shops at a particular department store that they find to be less luxurious in comparison to others, the Ralph Lauren brand can also be affected by this negative association and sales can be representative of this. Ralph Lauren can improve their distribution strategy by making efforts to only distribute their products to department stores that have a high standing reputation based on that geographic region, to efficiently represent the brand in the best light possible.

Pursuit of Competitive Advantage

Porter’s Generic Business Strategy. L’Oréal is pursuing the broad differentiation strategy within Porter’s Generic Business Strategy. Companies that use this specific focus strategy do not necessarily concentrate on particular niche markets, rather they provide different products and services to fill the needs of many different customers. L’Oréal targets the customer that desires quality products, confidence, and higher status, where price is not necessarily a main concern. They desire to conquer every category at every price point. Agon states, “We don’t even like the idea of niche, because for us… a nice niche brand is a brand that becomes big one day” (Fernandez, 2017, para. 21). The market is considered a broad market because they are striving to help all different types of customers solve specific beauty problems, with their products. L’Oréal serves customers in their market exceptionally well because they are able to recognize the dynamics of the market and the unique needs of the customers within it. By solving these daily problems, they gain brand loyalty and retain customers in the long run. L’Oréal provides specialty products and services and produces products or services at different price points.

Broad differentiation helps defend against the Porter’s Five Forces in many ways. Firstly, when it comes to competitive rivalry, broad differentiation decreases price sensitivity, increases competence in advertising and product R&D, and increases brand loyalty. It also creates the perception within the customer that there are no comparable alternatives to the product. When it comes to threat of entry, factors that provide differentiation also provide barriers including brand loyalty, access to distribution channels, and proprietary technology and patents. Buyer power is decreased because of decreased price sensitivity, increased brand loyalty, and the fact that they know what they are willing to pay more for due to set expectations for quality and service. Broad differentiation can also defend against the power of suppliers because companies are able to pass increased costs onto customers because they believe that there is no comparable alternative. Lastly, the broad differentiation strategy defends against the force of substitutes due to brand and product loyalty, the aspect of price/performance tradeoff, and that companies are aware of changes in consumer tastes and expectations and can meet those.

Warfare Strategies. L’Oréal, in the battle for consumers, have chosen to compete against their competitors with the defensive marketing warfare strategy. This strategy helps L’Oréal when it comes to their marketing tactics because it helps them not only grow, but have the greatest influence in the industry. Because L’Oréal is the largest cosmetics/beauty company in the industry, they do not have to take many offensive strategies to maintain their position, instead, they design marketing strategies in order to maintain customers and defend their spot on the top. In an interview with L’Oréal’s Consumer Marketing Director Chad Sotelo, Josiah Go, a bestselling author and the Chief Marketing Strategist of Mansmith and Felders, Inc., delves into how the company uses defensive marketing and military warfare techniques in order to defend their spot on top. Sotelo explains that being the number one beauty company in the world gives L’Oréal two big competitive advantages in defending their turf. He explains, “Given our huge investment in our Research & Innovation division, we have thousands of winning products available globally that we can easily bring in” (para. 1). L’Oréal constantly ranks as one of the world’s top companies that allocate the most resources to research. Therefore, they are able to not only investigate company activities, but they are also efficient in successfully improving current products and procedures, which subsequently leads to the development of new products and procedures. Additionally, Sotelo explains the second competitive advantage that puts L’Oréal in a position of strength when it comes to defending their turf. Sotelo explains that given L’Oréals remarkable presence in the multiple beauty categories across a number of countries, “there is a wealth of market winning beauty ideas that [they] can easily bring in as well” (para. 2).

L’Oréal represents the position of Market Leader because they are dominant in the industry, maintaining a substantial market share. A company representing this market dominance strategy is characterized by having extensive distribution arrangements. They also continuously develop innovative products and business methods. L’Oréal “is the uncontested world leader in skin care, makeup, and hair color and a close second to P&G in hair care worldwide” (Doz & Hong, 2013, para. 5). L’Oréal because of its market leader position has the resources to develop new products and strategies like the Technology Incubator mentioned later in the paper.

Growth/Stability/Consolidation Strategies. L’Oréal has used many different types of strategies when it comes to the product market expansion grid. Recently, L’Oréal has delved into the market development strategy, introducing many of its same products, but into new markets. L’Oréal is attempting to expand its reach by entering into the Indian beauty market. According to experts, “India’s retail beauty and cosmetics industry is likely to reach $2.68 billion by 2020, growing at an annual rate of 15-20%, a rate that is twice as fast as that of the U.S. and European Markets” (“Here’s How L’Oréal” para. 1). While L’Oréal has been able to become a leading operator in the region, they were struggling to reach a particular segment of the market including low-income customers. In order to grow its reach to this target market, L’Oréal made the decision to transition to smaller packaging to make its products more affordable to the less wealthy regions of the country. L’Oréal’s decision to take existing products and modify them is allowing them to improve their market share in India. What the article refers to as “Sachet Size” products, are tending to the cultural preferences of smaller packages of products.

L’Oréal is expanding its potential market through new users in new geographic segments. Although the company “was not looking to create small packages of its products, the company now believes that it cannot survive in India if it does not have tiny packages” (para. 2). It is important to note that not every region in India has the same standard of living, so L’Oréal is catering to each region as they best see fit. They are adapting to the market by offering a wide range of packaging and prices. By creating smaller packages at a lower price, they are able to target the non-buying customers and making their business more profitable. L’Oréal’s ability to lower their prices comes from the decision to use a local production plant that uses raw material supply in the region. Specifically, “L’Oréal’s production plant in Pune, India accounts for nearly 90% of the sub-continent’s needs and the company also has research and innovation centers in Mumbai and Bangalore” (para. 2). The research and understanding of the customer and the culture has been extremely beneficial; L’Oréal is looking into expanding these efforts and modifications to other countries and regions around the world that have the same preferences. By adapting their products, they favorably increased their profitability.  L’Oréal’s introduction of the modified, smaller products in India exemplifies their successful implementation of the market development strategy.

Additionally, L’Oréal is continuously striving to diversify itself through creating new products and introducing them into an existing market. Through its ever-prosperous R&D, L’Oréal has identified aspects of products that were missing and is creating new products for its existing consumer base. Recently, L’Oréal developed a unique technology team called the L’Oréal Technology Incubator, which is a group of scientists who are attempting to use their expertise in scientific computing to better the cosmetics industry. This team is working blur the lines between the beauty industry and the technology industry. The technology incubator is the place where technology and beauty meet. This team developed leading product innovations including wearable technology and applications that sync to beauty products, that connect cosmetics to consumers in a new way. These products are not only revolutionizing the industry, but they are allowing the customer to feel more in touch with the products because they are customized and designed to meet each customer’s individual needs. For example, Guive Balooch, the global vice president for L’Oréal’s Technology Incubator and his team, have developed the Kératase Hair Coach Powered by Withings. This silver hairbrush is labeled as the world’s first smart brush. Balooch explains, “The device aims to banish bad hair days by offering technical insights into the state of the user’s locks, plus personalized advice on how best to care for them” (Gomelsky, 2017, para. 7). With the fast moving pace of industry growth and innovation, L’Oréal is marking their territory by putting a new spin on beauty. Alongside this brush L’Oréal’s La Roche-Posay skin care brand has introduced a project product called the My UV Patch that may be life saving.

The My UV Patch is a “heart-shaped patch [that] is a wearable adhesive containing photosensitive dyes that change color when exposed to UV rays” (Gomelsky, 2017, para. 24). This device is which is a type of wearable technology that is linked with skincare. La Roche-Posay created this product, in an attempt to link sophisticated technology with skincare. L’Oréal has mastered the product development strategy, and is currently leading the industry because of innovative products that link the electronics industry, with the skincare industry. By attempting to branch out of the traditional ways of the skin-care or cosmetics industry with the introduction of technology, L’Oréal is setting themselves apart from their competitors. They are continuously maintaining their Market Leader position by diversifying products and focusing on innovation. L’Oréal is known for their product breadth and mix because of all of the brands that they have bought over the years from its beginnings. Balooch states, “We want to build a series of products in coming years that are the link between technology and beauty. That’s not only around just wearables. It’s around personalizing, customizing cosmetics” (Hunter, 2016, para.17). This is where L’Oréal stands out and is using product development and innovation strategies to demonstrate its ability to meet the needs of customers in the future.

This strategy requires ongoing research and development and the continuous assessment of customer needs. Balooch specifies that L’Oréal’s position as a company is focused on bringing technology into the market in order to empower the choices of consumers (Hunter, 2016, para. 24). He specifically states, “The more we have technologies [to] understand what [the consumers’] individual needs are, the more we can develop better products” (Hunter, 2016, para. 24). It is evident that L’Oréal is taking steps to bring the industry to another level with product development approaches that make them stand out against their competitors.