Archive for the ‘Mktg – Distribution Channels’ Category

L’Oréal Wants to Give Brazil a Makeover

February 4, 2011

TakeAway: Brazilian women are among the biggest spenders on beauty products anywhere, but L’Oréal isn’t raking in reales. 

Brazilian women have traditionally bought their skin creams and mascaras from door-to-door sales representatives, not the shops where L’Oréal sells its brands. 

To compensate, L’Oréal is introducing personal beauty advisers at department stores and trying to tailor its makeup to the consumer.

For example, foundation, a strong L’Oréal category world-wide, isn’t a big seller in Brazil because women find it increases the oiliness of their skin, so the company has been charged with creating a foundation from natural ingredients.  

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Excerpted from WSJ, “To L’Oréal, Brazil’s Women Need New Style of Shopping” , January 21, 2011

For L’Oréal, winning over Brazilian women is crucial if it is to meet its goal of adding one billion consumers—a doubling of its current clientele—over the next decade. L’Oréal currently makes about a third of its €17.5 billion ($23.36 billion) in yearly sales from emerging markets, and it wants to increase that to half by 2020.

Getting Brazilians to alter their buying habits won’t be easy. The two major players who use the door-to-door method claim roughly 50% of all color cosmetics sales and 42% of skin-care sales. Natura Cosméticos, the market leader in beauty and personal care, has one million salespeople across the country, and U.S. cosmetics company Avon has built up a larger market share in Brazil than L’Oréal thanks to its expertise in direct sales.

L’Oreal’s challenge also reflects the rising competition that global consumer-goods companies face from local rivals who understand the tastes and peculiarities of their home markets. Door-to-door vending is a longstanding custom in Brazil that has ushered millions of Brazilian women into the middle class. Some 2.5 million women, out of a total female work force of 42 million, earn a living from direct sales in Brazil.

Two years ago, L’Oréal was looking for new ways to grow as the financial crisis hit its core European and U.S. markets, and Brazil, the world’s third-largest cosmetics market after the U.S. and Japan, seemed an obvious target. While it had been in Brazil for 50 years, it had mainly focused on hair products.  Combined, makeup and skin care account for less than 15% of L’Oréal’s sales in Brazil, a paltry amount compared with the nearly 50% of sales the two categories provide the company world-wide.

For L’Oréal’s makeup offensive, it is focusing on department stores like Lojas Americanas, which is similar to Kmart in the U.S. The company is currently negotiating with the chain to expand its makeup walls country-wide. For skin care, it is targeting pharmacies and drugstores.

Edit by AMW

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Buying Designer Duds on TV at 3 am? Don’t Mind If I Do…

December 13, 2010

TakeAway: TV shopping is thriving at a time when, by many accounts, it should have died under a crush of new online competition.

High-end fashion designers are flocking to sell their first mass collections on the air, entering a space once dominated by obscure exercise equipment and dowdy tchotchkes. 

While traditional retailers have had to contend with a fickle consumer, TV-shopping sales this year have been robust.

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Excerpted from WSJ, “The Golden Age of TV Shopping” By Elizabeth Holmes, November 11, 2010

QVC and HSN dominate the business, with sales last year of $7.4 billion and $2 billion, respectively. Each reaches just under 100 million U.S. households and broadcasts live 24 hours a day, every day of the year except Christmas.

One surprising source of support: online shopping. The Internet has helped make consumers more willing to buy merchandise without first seeing or touching it in a store.

The model also benefits from the data the networks gather on their shoppers, which allow for carefully targeted marketing. Viewers convey their opinions when they call in to pay, through calls on the air and via website reviews . HSN even keeps track of sales by the minute, which helps it to evaluate its designers and hosts and to adjust its sales pitch. As each segment is filmed, producers can watch a monitor that shows the number of items sold and other data, including the number of callers waiting to buy the item.

TV-shopping networks’ proximity to customers is a big draw for high-end apparel designers, many of whom rethought their businesses during the recession. As retailers cut inventories, designers became more open to other sales channels. The average price of an item sold on HSN is around $60, but the influx of high-end designers is helping to push the average price higher. HSN also adopted a softer selling style pitched to more-upscale customers. Rather than using high-pressure tactics, it emphasizes making the item seem desirable—in an entertaining way—by showing how a garment drapes on a model, for instance.

The proposition wasn’t risk-free for the designers. Adding a new outlet could upset the department stores that account for a big chunk of their sales, and cheaper goods could potentially tarnish their image.

Edit by AMW

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