Mindanao State University – Iligan Institute of Technology
School of Graduate Studies
Ombre, Tie-Dye, Splat Hair: Trends or Fads?
A Case Analysis
Laine Marie M. Dulanas
Esther Rose Tabugo
Noeh B. Villacarlos
Wynona T. Cobrado - Tabuada
Group 4
Marketing Management MBA 203
Mr. Anton Cabatingan Jr., MM
September 22, 2018
I. Perspective Held by the Group
The group takes the Marketing Managers’ perspective of the case. As mentioned in the case, L’Oreal
is planning to conduct an analysis of social media data and how it can help the business. The group
wants to show the Marketing Managers’ perspective on the current situation of the company and
how they would address the current challenges that L’Oreal is currently facing in terms of its
marketing strategies and development of new products.
II. Statement of the Problem
A. Main Problem
In the beauty industry, a never-ending succession of trends and fads ruled the market. Before the
advent of social media, companies had to rely solely on secondary data to try to separate trends
from fads. However, nowadays with the rise of social media, businesses across industries had
started to engage in social media listening (SML) which is the process of identifying and analysing
both qualitative and quantitative information on the internet. There is now a need to utilize social
media on distinguishing between a fad and a trend in the hair colouring industry, moreover other
sources of information should also be utilized in addition to social media. Producing much of a
product for something that a company mistakes for a trend will cause a company to incur losses as
the product quickly becomes outdated and sales do not cover the costs of development. On the
other hand, failing to address a trend can be a missed opportunity and be just as costly in the long
run if competitors are allowed to own the market.
B. Sub-Problems
● Once a trend is identified through social media and other sources there is a need to decide
on what specific marketing strategy and social media plan should be adopted. A viable
marketing plan should be developed which includes how to deliver the product to its
potential customers, how it should be branded and named, the price point and how it could
be communicated to customers.
● Since there is an overly competitive market in the hair colouring industry, given the rise of
more affordable products and other substitutes for hair colour, the company has to decide
on what added value should L’Oreal add to its product to maintain its reputation as a leading
brand that excels through its continuous R & D strategy.
III. Objectives
1. To be able to utilize the social media in determining the fads and trends in the hair fashion
industry.
2. To come up with specific marketing strategies that would be used to address an identified
trend that the company would choose to target.
3. To decide on what added value should be added to L’Oreal’s product line for the company to
maintain its reputation as a leading brand in the hair colour industry.
IV. Analysis of Relevant Case Facts
In 1908, a young chemist Eugene Paul Louis Schueller patented an innovative hair dye. The
following year, he formed the L’Oreal company to begin selling his product. A significant
breakthrough occurred for the company during the year 1930 with its development of its bleaching
powder. For centuries, women had bleached their hair using damaging corrosive substances and
L’Oreals development of the product was a huge change in women’s beauty regimen. In the 1950s,
the company had made a revolution in the hair colour market with the reduction of the number of
steps of colouring from 5 to 1. During the 1960s, L’Oreal launched home-colouring kits under the
“Recital” brand with the motto: “research and innovation in the service of beauty. The company had
aimed to make beauty accessible to as many women as possible. By the year 2013, L’Oreal had
become the largest beauty product company in the world. It has a world market share of 7.6%
followed by P&G (7%) and its own Garnier Line (5.1%).
At the start of 2012, the outlook for the growth of the hair-colouring market was not promising.
L’Oreal had been having troubles identifying a new product opportunity in the ultra-competitive
market. It was now the challenge for the marketing managers to come up with a marketing plan that
would identify a trend in the industry and develop product ideas that L’Oreal would push in the
market to beat out its competitors and revitalize its position in the market.
A SWOT Analysis is a tool used for strategic planning and strategic management organizations. This
is used to build certain strategies involving the organization and gaining a competitive advantage in
the industry (Gurel, 2017). According to Thompson et al. (2007), a SWOT analysis is a simple but
powerful tool for sizing up an organization’s resource capabilities and deficiencies, its market
opportunities, and the external threats to its future. A SWOT analysis will be used in this case
analysis to be able to know the specific strengths, weaknesses, opportunities and threats for L’Oreal
and to be able to see a bigger picture of the company’s condition. This will be a tool for the
Marketing Managers in their decision making on the specific marketing approaches that they would
use to address the problem. Presented below is the SWOT Analysis for L’Oreal.
STRENGTHS WEAKNESSES
- Innovation
- High Investment in R & D - Products can be perceived as more
- High Quality expensive as compared to its competitors
- Position in the industry - Few distinctions happened in the
- Variation of products for different promotion and campaign of products.
consumer groups
- Partnerships with salons and professional
hairdressers
- Had a clear track-record on hair colouring
market innovation
- Also considered as trend setters when it
comes to hair fashion as they make beauty
accessible to women of all ages, whatever
income, class they come from
OPPORTUNITIES THREATS
- Emergence of substitutes for hair colours
- Partnership with Google in the - Inability to fully utilize social media and
incorporation of the Brand in its search other technological advancements in
engines determining market demands and latest
- Use of Social Media Listening in pulling trends
information from customers in determining - Strong competitors
the latest market demands - Innovation were scarce and marketing
- To create awareness, excite consumer strategies revolved around the creation of
about new products hair colour and celebrity endorsement.
- Creation of loyal advocates. - The products are luxuries that could be hurt
by an economic downturn.
Table 1 : L’Oreal Paris SWOT Analysis
To further analyse the position of L’Oreal in the current situation in the competitive market, it is
also useful to make use of Porter’s 5 Forces. Harvard Business Review Journal (1998) define
Porter's Five Forces as a model of industry competition. It is a tool used to analyze the competitive
environment in terms of five key forces that affect a company's profitability and influence its
strategy. The five forces reveal why industry profitability is what it is. Only by understanding them
can a company incorporate industry conditions into strategy. The strength of each of the five forces
is inversely proportional to the price and profits such that a weak competitive force may serve as an
opportunity, while a strong one, may serve as a threat (Hill & Jones, 2007). Found below is the
analysis of L’Oreal with the use of Porter’s Five Force:
Figure 1 : Porter’s 5 Forces Analysis of L’Oreal
Industry Rivalry is relatively high since there are many competitors in the market. Aside from
L’Oreal, there are many other companies such as P&G and Schwarzkopf offering the same product
variety and are also keen on innovating their products to fit to the consumers needs. Rivalry is also
relatively high since consumers can easily switch from one brand to the other as the companies sell
similar products. The crucial point for L’Oreal now is to gain competitive advantage in the industry,
thus is has to further engage in more research and development activities to add more value to
products to gain an edge over its competitors.
On the other hand, threat of new entrants and bargaining power of consumer are also high because
many new hair colour companies are emerging in the market offering similar products in lower
prices thus resulting to reduction in market share of L’Oreal. With the technological advancements
nowadays, it is much easier to develop similar price. Consumers now have been more keen to
availing products that could produce similar results for a lower price.
Moreover, threat of substitute products can be low. Hair colours had been widely used for the
following reasons: (1) to cover grey hair; (2) to increase self-confidence; and (3) for feel good
reasons. A lot of tutorials and “how to” videos and vlogs had been posted online and some even
suggested substitutes like the Kool Aid (US food coloring) as a substitute to hair colour. Even though
there might be presence of these kinds of substitutes, its effects are quite incomparable to the actual
effect of hair colours as these substitutes normally are temporary and may fade within 24 hours .
In terms of suppliers bargaining power, the threat for L’Oreal is relatively low since there can be
many suppliers present in the market. Bargaining power for suppliers may be high when there are
many buyers and few dominant suppliers. For the case of L’Oreal, they may have close ties already
with their suppliers since these suppliers would tend to be more loyal to L’Oreal because of its
standing in the hair colouring industry. L’Oreal already had the clear track record of being an
innovative and leading hair colour brand thus suppliers would tend to readily meet L’Oreal’s
demands more than bargaining with it.
Given these analysis on the certain qualities of L’Oreal and its strengths on the five forces, Marketing
Managers can now have their bases on what are the things that should be done to address the main
and sub problems.
V. Statement of Strategies and Alternative Courses of Actions
For the Marketing Managers to address the issue of determining fads and trends with the utilization
of social media as well as to promote a product which addresses a particular trend through social
media and add value to their product, they should do the following courses of action:
- Engaging in Interactive Media and Infographics to be able to identify trends as well as to
introduce a new product to the market
- Increasing hair colour products’ flexibility so that it may fit to the different hair needs as
well as be equally flexible in whichever type of hair trend an individual would choose.
VI. Decision Analysis
As L’Oreal’s strength is on innovation, and track record for being a leading brand in the hair colour
industry, it should be highly active in the use of the media nowadays so that it can respond to the
certain threats of competitors, bargaining power of consumers and the threat of new entrants. With
the use of interactive media it would be easier to get information from consumers. According to
Spokal, Businesses usually use interactivity in order to engage and entertain their audiences while
information is being exchanged in a fun and amusing way. Interactive media works with the user's
participation. The media still has the same purpose but the user's input adds interaction and brings
interesting features to the system for better enjoyment.Interactivity can have many practical uses,
such as for informational kiosks or displays. Through this, the company would be able to hear
directly from the consumers on what they want, and what specific hairstyles are trendy. They could
incorporate this interactive media to their facebook page, instagram page, their official twitter
account and official website. With interactivity, the company can get first-hand info from the
consumers themselves regarding their preferences. This would be one way of pulling information
directly from the consumers. However, it can slip into being a fad if businesses aren’t careful with
how they use it. Infographics on the other hand should provide consumers with the latest
information regarding the products that the company have. With the average internet user’s
attention, it became pretty obvious that visuals would play a huge part in online marketing.
According to Burke (2017), Infographics is an easy way to provide a visualization of information to
internet users who were less likely to engage with long-form pieces of content. These type of
graphics would provide the summary of what benefits a consumer can get from the product. It
should be a form of promotion that would immediately catch the attention of their consumers.
However, the use of this technique can also be easily imitated by competitors as they only have to
hire graphic artists to make this for them. The only way that L’Oreal could have an edge over this
strategy is present to the consumers its position in the market and to show to them that they are
already a proven and tested leading brand.
Adding value to the product is also a crucial factor for L’Oreal as many competitors have been also
keen on providing new varieties of product to the market. Since L’Oreal already has a variation of
products for their target markets and has already categorized their products according to the type
of consumer that will use the product, they could consider making their product more versatile to
different hair needs. Such that their product could be used for the different emerging hairstyles. In
this way, they could introduce a brand wherein they could tell the consumers that through the
product, “freedom of expression” is found - they can be who they have always want to be since the
product is fitted for all. They could introduce all-purpose hair colours in the market that can still be
varied among permanent, semi-permanent, and temporary but of all-purpose uses. The
development of product versatility would answer to any hair need so that whatever trend or fad
there would be they could readily address it, they could make it as a home kit hair colour or could
also distribute it in salons since some prefer their hairs colored in salons because of the expertise
and the convenience of having to pamper themselves.. However, this can be quite costly for the
company since utmost research is needed for them to develop such products. But in the long run
this would also provide the company with savings since they won’t be changing the product
anymore due to its flexibility thus a reduction of product development costs. All they will be
needing to do is just to re-brand the product or maybe change the product packaging then promote
a new style or hair trend.
VII. Conclusion
In a Marketing Manager’s perspective, the group had identified the social media utilization for
identifying fads and trends and adding product value as L’Oreal’s main dilemmas that should be
addressed readily in order for them to maintain their reputation of being a leader in innovation and
a leading hair colour brand in the market. To obtain these, the Marketing Managers should engage
in interactive media in order to get first hand information from the consumers. Interactivity
promotes a fun way of engaging the consumers to the products and hearing insights from them.
Through this, the marketing managers can fully utilize social media by gathering first-hand data
thru interactivity. Infographics on the other hand would also add to awareness of the consumers on
what L’Oreal has to offer. The company just have to maintain its reputation as a leading brand that is
proven and tested through decades in their infographics.
To answer to the emerging competitors in the market as well as to address the bargaining power of
consumers, L’Oreal has to add further value to its product so that it would stay as the leading brand.
To do this, they could make their product more versatile in such a way that it could fit to any hair
needs and any hair style. This could be a bit costly on L’Oreal’s part however this could provide
them with long-run savings in the future as there is no need for more product improvement due to
product flexibility. With this the company would be able to add more value to its product.
VIII. Recommendations
The company could make their social media pages more interactive and accessible to their
consumers. They should be always updated on the latest social media trends and be readily active
on what is trending so as to promote interactivity among its consumers and to grasp a first-hand
information from them. On the other hand they should also not disregard the secondary sources of
data and the actual interviews and engagement with salon owners and hairdressers as they also
provide legit and reliable information on the trends and fads. When a trend is identified through the
utilization of these sources, they should be readily be able to come up with a marketing strategy on
how to promote their product and build a stand on the prevailing trend. They can make use of
infographics and also make use of the opportunity of the existence of video vloggers who have many
social media followers to promote their product. They can make use of this certain personalities as
they had begun to become influential nowadays.
In terms of adding value to their product, the Marketing Managers should consider making the
product more versatile and will readily answer to any hairstyle trends. Another recommendation of
the group is for the company to adapt sustainability in making their products. Be it in the packaging
and raw materials used. They should also acknowledge the existing trend of more people preferring
to use products with organic contents. They can add value to their product by making it more
organic. This way, they could promote the product by highlighting its benefits on health and the
environment. This could attract health conscious and environment conscious people as well.
Lastly, L’Oreal must always find their competitive advantage among their products to rise the hype
and lessen the fad. They should never stop on leading the innovation on the hair colour industry by
continually doing more research and find some unmet areas if possible.
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