KARACHI: “L’Oreal does not just sell beauty in a jar, rather it sells technology in a jar” according to Managing Director L’Oreal Pakistan, Musharaf Hai, highlighting that the company is driven by technological innovation.
Since its inception in Pakistan in April 2009, L’Oreal has expanded rapidly capturing more than ten percent of the market for hair colour in the ten biggest cities of the country. L’Oreal has also started local production through contract manufacturing. “In less than two years, we have rolled out skin creams which are absolutely international quality and these are priced starting from just Rs 99″, said Hai.”We are investing capital in the country and by the end of this year we intend to be producing our Garnier products locally, including hair colour”, she revealed.
But, even as the Company expands L’Oreal appears to have clearly charted its growth plans. Musharaf Hai pointed out while L’Oreal owns many luxury brands; the Company’s approach in Pakistan has been to cater to the middle-income urban market first.She refers to the “masstige” market, as the ever-expanding pool of self-conscious men and women who believe that “beauty is not just skin deep; but, it has to do with their self-esteem, confidence and personality”.
The business model
L’Oreal Pakistan Private Limited is a wholly-owned subsidiary of the L’Oreal Group. The Company’s business presently is divided into two divisions: consumer products and professional. The consumer products’ business is made up of three brands: L’Oreal Paris, Garnier and Maybelline New York.These three master brands, each have several differentiated franchises, such as Excellence, Dermo Expertise, Colour Naturals, Studio Line, Skin Naturals and Elvive, which cater to diverse beauty and personal care needs.
The professional division caters only to salons and focuses on hair products and services. “From hair colour to care, cleansing, serums and treatment, we are unique for providing such a vast range of products that deliver instant and significant results.”While the company has chosen to target the middle-income market first, it has plans in future to launch its luxury brands in the country as well such as fragrances including Diesel, Armani, Lancome and YSL. Hai is confident that the biggest growth drivers will be the Company’s hair colourants, high-end skin care products; like anti-ageing, make-up, men’s grooming and fragrances.
Recalling the early days of the company in Pakistan, Musharaf Hai said “there is a lot of scepticism given that the overall economic situation in the country is in the doldrums”. However, L’Oreal used a three-step formula for assessing viability of its business in the country: observation, validation and testing.While the company has built a team of dedicated professionals in the country, it has not hesitated in outsourcing functions that require targeted expertise.
“We have outsourced those functions which are transactional or better skill set exists elsewhere, while core expertise in brand marketing, defining strategies for growth, managing the P&L remains with us”, she stated, explaining that the Company has enlisted the help of cosmetologists, beauticians and other experts to build an enabling environment for the company and its clients.
“Marketing gurus will always say that products fulfil existing needs. But we, at L’Oreal; first develop the technology and then create the demand for it. The technology defines how we package the product and how we sell it”, said the managing director.Hai explained that due to its commitment to research and innovation, the Company has pioneered many skin, hair care, hair colour and make-up products that cater to every conceivable need of men and women for all age groups. The challenge, the Company contends with, is ensuring that an individual finds the products that are right for their need.
“Since technology is our basic differentiator, education and awareness are crucial for our expansion”, said Hai. She revealed that the Company has established 50 flagship stores in major cities, where trained beauty advisors assist customers. These advisors receive extensive training hence they understand skin and hair care; and also use L’Oreal products themselves. “By disseminating knowledge about beauty today, we will establish market leadership in the future”, she explained.
L’Oreal has also adopted some innovative practices for its marketing. The Company publishes “advertorials” in print media, which create awareness, testimonials and other information about the products. Marketing activities focus on face-to-face contact with consumers, creating an experience through expert consultancy.
For its Garnier brand; the Company has established platforms such as “wedding animations” and “mall animations” where men and women can interact with L’Oreal products and experts. Hai insisted that the cosmetologists and other experts the Company brings to various platforms are “not mouthpieces for the Company”, but their advice for customers inevitably leads them to selecting quality products.
Having more than two decades of experience as a fast-moving consumer goods manufacturer; Musharaf Hai has learnt that the L’Oreal business is fundamentally different from FMCG’s. “Our starting point is quality, image and then price. We are obsessed with quality. We believe that we must be fanatical about beauty and must never compromise on quality”, she explained.
Really pretty future
“The potential market for our products in Pakistan is unlimited and vastly untapped”, explained the chief executive. She highlighted that “out of a total population of over 180 million, at least 60 percent are under the age of 25 years”, citing the potential for sales growth in the future.Hai added that lifestyles have changed over the past few years and that the new generation is much more socially conscious, empowered and extroverted. “Today’s generation is not watching only PTV; they could be walking down any street in London or New York and they will be able to relate to that culture”, she said suggesting that “the media boom has increased their exposure to the world around them”.
“Cell phones have propelled the connectivity of people and social media has increased their ability to reach out to others and for their opinions to be heard. Social patterns are instant, mobile and connected”, she added.The market for cosmetics and beauty care products in the country exceeds Rs 35 billion at the moment, according to her, while it is expanding at an average of 10 percent, annually. Musharaf Hai mentioned that along with economic indicators, social and lifestyle indices are equally important.
“Women in Pakistan are graceful, elegant and well groomed. They are obsessed with beauty and so are we and this obsession is a social indicator which persuades L’Oreal of the immense potential of this market”, she concluded.All information and data used are from reliable source(s) and subjected to extensive research after diligent and reasonable efforts to determine the soundness of the source(s). This analysis is not for the benefit of or discredit to any person, scrip or tradable instrument.
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