Loreals New Product Development Strategy Marketing Essay

Loreals New Product Development St come ingy grocery store EssayThis report is based on LOreals spick-and-span harvest-home ontogenesis system and the way they set out supremacyfully managed to achieve considerable food merchandise sh ars by means of consistent RD efforts. The exemplar continues with an insight into LOreals cornerstones that have been a success among the diverse discussion sections of the world-wide trade.LOreal has non unaccompanied followed a comprehensive, long bound RD strategy that has gisted in creating ripe break done merchandises resembling Fructis, nevertheless it has besides tried to sustain its balance between RD and marketing user interface. bon ton everywhereviewLOreal UK is the Groups fourth largest subsidiary in Europe and fifth in the change and has been present in the UK for 75 years. Also A signifi corporationt sham in the UK cosmetics market, turnover in 2006 reached 626 million and 67% of women in the UK occasion on e or more LOreal growth. Approximately 170 million units were produced at the Llantrisant factory in 2006 and nearly 70% of the factory output is exported. oversea Recent investments have included a biological waste urine treatment plant and more efficient heating, ventilation and lighting systems.The untested distribution centre adjacent to the factory covers an area of over 18,000m2 and feces house up to 10 million outputs and 300 people are go fored at the factory. 25% of the permanent staff has worked for LOreal for over 20 years. (www.loreal.co.uk)IntroductionInnovation is the to the highest degree crucial stage for a party and it carries significant risk in the place setting of product failures that skill give right later their plant in the market. The product failure rate can be as low as 30% and as high as 90% in this regard. (Antil, J.1988). The global market is characterised by various taste patterns of consumers. Therefore in the face of rapidly ever-changi ng consumer tastes, technology and competition, companies should continuously provide the global market with naked products that cope with all segments of the market. This requires systematic Research Development and re bracing-sprung(prenominal)ing by companies in methodicalness to throw self-made products that have a considerable market demand. In the case of LOreal, the familiarity has always tried to be innovating through their RD efforts. The case sites the example of LOreals Feria range that was exclusively innovated for Asian people. Product innovation is a difficult task and it requires careful planning by the company based on the above mentioned factors.Today the global market is a fiercely competitive environment in which the important tooshie for companies is to get d accept increasing returns to scale while minimizing / lowering costs of production with gigantic secureness and flexibility (Kotabe, 1990). LOreal as an international chain tries to achieve the se targets through its consistent RD innovations in order to create products that are marketable throughout all international market.LOreals RD innovation expends intimately 20% more for virgin product development as compared to its competitors such as Procter seek and Unilever, occupying round one position in the market.Why is brisk innovation so important for a company like LOrealLOreal is a well found company in excogitate business and in order to bind its superior standing in the global market, it has to concentrate on the strategies it employs for innovation. The speed at which fashion markets change is very high, with very presently product life cycles. Many fashion items have product cycles as short as half a year, or even a some weeks. Consumers preferences depend on the season, on the social and cultural environment and on the effects of previous marketing communication for fashion items or transform products (Mintel, 2005). Responding in a timely way to these c hanging demands is vital for success. Moreover, without new products, firms will certainly be at a stand til now And Research also highlights that early entry of new products can result in competitive advantage and long term market dominance.The characteristics of the fashion industry require companies to make strategic choices about factors such as quality, speed, technology, price and flexibility these factors define the positioning of a company (Abell, 1993). tipple upon the information provided in the case study, it can be suggested that LOreal operates in the take in end of the fashion market with clear market positioning.LOreals targeted market segments can be characterised as fashion trend-setters, and these are the customers in the high and long suit segments. They demand products with innovative styles, with lift-level quality by scientists and shapeers that have built the temper of powerful brands. It should be noticed that firms that operate in the mass segment wh ich targets fashion followers tend to imitate the high performing products of top brands like LOreal and therefore the competitive advantage of top brands recedes over time, do product lifecycle short. Given the high quality expected of its products and the short product life cycle prevailing in fashion, LOreal has adopted a vertical integration, which afforded it a full control of quality and operations (Erica Stefania, 2004).Therefore, innovation is a critical and complex subroutine that has a direct impact on the companys prestige, which justifies the importance of such developments. Therefore LOreal has to come up with such innovations that not only appeal to the various segments of the global market, but also conjure up the companys position once they penetrate the market. hence LOreal would have to invest to a outstanding extent in the plunge of new products and be confident about the usefulness, market king and practicality of these products..Moreover, victorious in novation is likely to earn LOreal a superior market deal and turnover, increasing the value of the company. Also, LOreal has been a front demarcation line of fashion and in order to keep up with the expectations of its consumers, the company has to lay in line new decrees that are cautiously exploreed and tested for their forte. For e.g. when the Japanese people were deteriorate of having black hair and required an alternative to western hair work due to their poor results, LOreal came up with an effective new hair verbalism that first bleached their hair and then dyed them according to their desired colour.Therefore it is clear that in order for a company like LOreal, operating in a volatile and turbulent fashion industry, to create a sustainable competitive advantage should have a degenerate innovative product development cycle. Because LOreal tries to grab the maximum market grapple through the introduction of innovative products that are not only different but also ca ter to the different segments of the international market.Problems of managing Innovation and has LOreal work out these problemsIn order to launch new products successfully, companies like LOreal have to take place a great deal of time and energy in research and development. Thinking profitable/effective new ideas and implementing them are the core issues to be addressed and in this regard LOreals RD performs the task of coming up with successful innovations while the implementation lies in the hands of how these innovations are marketed. If LOreal launches a new product that cannot be marketed effectively, the RD efforts would be marked as inefficient and useless. onwards entry or marketing any new product topically or internationally, a company has to be accredited as shooting that its innovation would be differentiated from other products and is based on consumers preferences. Such ideas are just about likely initiated by marketing and then RD takes over the task. once the RD process is complete, the launch of new product requires the companys scientists/engineers to observe the market reality and employ different ways of marketing their product. Any negligence in this context would not only result in product failures once they are launched, but would also harm the companys image.For companies like LOreal which continue to thrive on innovation because good ties between marketing and RD to perform their activities during the process of launching innovative products in the global market.However, reality appears a bit complex because studies have shown that RD and marketing tend to have different perceptions and interpretations of the characteristics of a new product, particularly in terms of its technical innovation and the extent to which it affects the formal consumption patterns. In reality, marketing perceives a more critical parting of a new product for positioning in a market segment than RD. Also marketing perceives a higher degree of customiza tion of soulfulness products than RD. Wang and von Tunzelmann (1997)However, the need for long-term innovation always exists and the scientists need to be disposed some independence to design new formulas that are not unveil unless desired.The different views of innovation-marketing are influenced by their different personality, cultural background, time orientation, ambiguity, gross profit and level of detail of language used (Griffin and Hauser, 1996). Therefore for companies like LOreal the innovation-marketing interface necessarily to be managed in such a way that it satisfies twain the needfully of innovation as well as marketing.According to a study conducted by Wang in 1997 the innovation and marketing functions were found to have collaborated in accomplishing tasks in deuce-ace areas.* Conceptual development, identifying and evaluating relevant information* strategical development, market positioning and product differentiation* Implementation, Internal and external communication.For LOreal these three functions are an important consideration in the process of innovation without which innovations might involve a high degree of risk, resulting in product failures. Once the concept for new product is developed through thorough research, LOreal focuses on identifying its target market segments for effective market positioning followed by set a much greater emphasis on differentiating its products from its competitors like Procter Gamble and Unilever. Therefore it has to maintain a careful balance between fanciful innovation-marketing.An important link also exists between the innovation-marketing management. For instance, a strong couple between what is desired by customers and what is developed by LOreal would reduce the companys ability to predict market response to its new product. This would result in a reduced level of confidence on the effectiveness of marketing (Shankar, 1999). Therefore, in this context, a clear understanding of custome r needs would be adjuvant in determining a companys innovation timing. This means that by effective management of innovation and marketing interfaces, firms can come up with relegate strategies both in terms of resource allocation and entry timing.It has been seen that most companies that spend great deal of time and effort on innovation to come up with new ideas, have created such products that resulted in a technological break-through, captivating a huge market share.In case of LOreal, the company has been spending a lot on its innovation department, (spending about 20% greater than its competitors).LOreal employs 2500 chemists, biologists, pharmacists and the companys RD aims to deliver 2000 new ideas to its marketers in order to launch 2000 new products annually. It not only has to develop successful ideas, but also find a perfect marketing strategy that addresses the target markets for the new products, their positioning, sales, market share and profit goals at initial stages . It therefore tries to maintain the balance between creative innovation marketing.The company not only analyzes the marketability of its new products but also tests its effectiveness through its careful innovation process. For e.g. when the marketers desired a fruit based shampoo for the European market, LOreals RD took over the task and it took the company 10 years to come up with Fructis, which captured LOreal a 28% share in the European market alone. This was, in fact, a result of the long term RD efforts of the company and LOreal tries to follow a three-level strategy for efficient management of innovation to marketing interface. Also the company launched a sun lotion exclusively for children, the Ambre Solaire Childrens Sun Lotion, which took three years for its launch and development. Therefore LOreal has tried to solve most of the problems resulting from an imbalanced innovation-marketing interface and needs to lay a greater emphasis on satisfying the idiosyncratic needs o f innovation and marketing respectively. It needs to continue by having a clear focus of the technological innovations and fashion trends.LOreal takes on the new product development cover charge task during its innovation phase when the company evaluates ideas generated from its own advanced research and whatever is being done externally (outside the company). LOreal makes sure that in order to boost the excitement of its products among consumers it needs to evaluate the effectiveness of its new formulas and offer a clear benefit to the consumers in order to get it accepted by the masses. It was this new product development screening process that resulted in the launch of Ambre Solaire childrens sun lotion by LOreal after three years of full research, thus, coming up with a formula that offered maximum protection to childrens delicate skin that instilled the confidence of their parents in the new product.LOreal has tried to launch its products which are characterized by these thoro ugh screening processes, and it has succeeded to a considerable extent. However, during the screening process LOreal also needs to make sure that its new product developments are consistent with the companys objectives, that they are feasible in terms of product design and are suitable for the identified target markets.CONCLUSIONAfter analysing this case in great detail, both in terms of marketing literature and practical application, it can be undersood that global companies like LOreal have to keep in line with the technological changes as they bring about marked product or process design transformations. Innovation plays a significant role in this regard, without which any new formula/idea is unable to be processed into a tangible new product. This requires professional scientists/engineers to be hired by companies and LOreal expends a great deal on hiring such professionals who can come up with effective, innovative and marketable ideas.The need to respond quickly to the dynami c global market forces requires companies to integrate rapidly to the perceptions and needs of both product developers and potential consumers Therefore, in todays fierce global competition, it is tough to differentiate. products and companies are required to have equal knowledge about their target markets/segments locally as well as internationally. Therefore product screening is another important process that needs to be carried out by companies in order to have a closer look at competitive products and evaluate their own product demand and LOreal seems to stand out in this regard as it employs professionals who carefully monitor competitors products in great detail.All this needs to be synchronized with an effective marketing strategy that is in balance with innovation functions of the company, which in the end builds up new products image in the various targeted segments, hence, boosting the companys prestige. It is not easygoing to gain customer satisfaction without long ter m effort.