UNIVERSITY OF MUMBAI

PROJECT ON
BRANDING OF LOREAL
(MARKETING)
MASTER OF COMMERCE (MANAGEMENT)
SEMESTER-II
2014-15
In Partial Fulfilment of the Requirement under Semester Based Credit and Grading
System for Post Graduates (PG)
Programme under Faculty of Commerce
SUBMITTED BY
KARNA VORA
ROLL NO. : 31
PROJECT GUIDE
Ms. KHYATI VORA
KPB Hinduja College of Commerce, 315 New Charni Road, Mumbai-400004

CERTIFICATE
This is to certify that Mr. Karna Vora of M.Com Management Semester-II [2014-2015] has
successfully completed the project on Branding of LOreal under the guidance of Ms. Khyati
Vora.
Project Guide

Course Coordinator

Internal Examiner

External Examiner

Principal

Date:

Place: Mumbai

M.Com (Economics of Global Trade and Finance)

SEMESTER-II

BRANDING OF LOREAL
SUBMITTED BY
KARNA VORA
ROLL NO. : 31

ACKNOWLEDGMENT
Every project big or small is successful largely due to the effort of a number of wonderful people
who have always given their valuable advice or lent a helping hand. I sincerely appreciate the
inspiration; support and guidance of all those people who have been instrumental in making this
project a success.
With great pleasure I thank Ms. Khyati Vora, Professor of KPB Hinduja College of Commerce
for being an inspiration in the completion of this project. I thank her for the invaluable help
provided during the completion of this project. I also thank her for providing me guidance and
numerous suggestions throughout the entire duration of the project.
Last but not the least I place a deep sense of gratitude to my family members and my friends who
have been constant source of inspiration during the preparation of this project work.

DECLARATION
I, Mr. Karna Vora of M.Com Management Semester-II (2014-15), hereby declare that I have
completed the project on Branding LOreal. The information submitted is true and original to the
best of my knowledge.

Karna Vora

(Signature)

TABLE OF CONTENTS
CHAPTER

CHAPTER

1.1

INTRODUCTION

1.2

OBJECTIVES OF THE STUDY

1.3

RESEARCH METHODOLOGY

1.4

CHAPTER SCHEME

REVIEW OF LITERATURE

CHAPTER 1
1.1 INTRODUCTION
Brands are like human beings. They are born, fed and nurtured, made strong and responsible so
that they can be faithful friends of the people (customers), form mutually beneficial and
satisfying relationships with them and become their companions for life. Such brands, make their
parents (organization or corporate) proud of them. The best brands are the ones who help in
forming and sustaining strong long term parent-brand-people relationships. These brands form
the potential for present growth and future expansion. They help the organizations conquer peaks
at the time of booms and stay afloat and swim at times of depression.
We come across a number of brands in our daily lives. Our morning starts with using a
toothpaste (Colgate, Pepsodent or Close-up), using a bathing soap (Lux, Fairglow or Cinthol)
and shampoo (Clinic All Clear or Vatika), wearing clothes ( Allen Solly, Levis or Raymonds),
breakfast bread (Britannia or Modern) and butter (Amul) or jam (Kissan), lunch and dinner
(Nature Fresh or Pillsbury flour and Safal vegetables), morning and evening tea and coffee
(Tetley, Nescafe or Bru), going out in a car (Hyundai Santro, Honda Accord or Mercedes Benz).
Talking on the cell phone (Motorola, Nokia, Blackberry or Samsung), watching television in the
evening (LG, Sony or Philips) or listening to music (Philips or Apple) etc. But how often do we
think of what all a company does to put a positive imprint (fight for a shelf space) in the mind of
the customer?
Today nearly all the companies are focusing more and more on building strong brands. The
concept of brand equity and its management has come to the fore like never before. More and
more companies are refocusing on select strong brands.
This project is thus a timely stuffy of the importance of brands, what it takes to build them, what
benefits do they give to different stakeholders (organization, distributors and customers), how
can they be leveraged, what is the impact of modern technology on branding, branding on the
web, branding in mergers and acquisitions etc. examples have been given and cases discussed at
every suitable point to bring out an application oriented understanding of building and
managing brands.

1.2 OBJECTIVES OF THE STUDY

1.3

Understanding the concepts of Advertising and Branding .

To analyze the Branding strategies adopted by LOreal Co. Ltd to woo the consumers into
buying their products.

RESEARCH METHODOLOGY

Collection of data
Secondary data:
This information is been collected from Secondary source such as Reference Book and e-data.

1.4

CHAPTER SCHEME

Chapter 1:

Introduction

Chapter 2:

Review of Literature

CHAPTER 2:
REVIEW OF LITERATURE
Brand:
A brand is a product, service or concept that is publicly distinguished from other products,
services or concepts so that it can be easily communicated and usually marketed. A brand name
is the name of the distinctive product, service or concept. Branding is the process of creating and
disseminating the brand name. Branding can be applied to the entire corporate identity as well as
to individual product and service names.
Brands are usually protected from use by others by securing a trademark or service mark from an
authorized agency usually a government agency. Before applying for a trademark or service
mark, you need to establish that someone else hasn't already obtained one for your name.
Although you can do the searching yourself, it is common to hire a law firm that specializes in
doing trademark searches and managing the application process, which, in the United States,
takes about a year. Once you've learned that no one else is using it, you can begin to use your
brand name as a trademark simply by stating it is a trademark (using the " TM " where it first
appears in a publication or Web site). After you receive the trademark, you can use the registered
(?) symbol after your trademark.
Brands are often expressed in the form of logos, graphic representations of the brand. In
computers, a recent example of widespread brand application was the "Intel Inside" label
provided to manufacturers that use Intel's microchips.
A company's brands and the public's awareness of them are often used as a factor in evaluating a
company. Corporations sometimes hire market research firms to study public recognition of
brand names as well as attitudes toward the brands.
Here is the famous advertising copywriter and ad agency founder David Ogilvy's definition of a
brand:
The intangible sum of a product's attributes: its name, packaging, and price, its history, its
reputation, and the way it's advertised.

Brands in the field of marketing, originated in the 19th century with the advent of packaged
goods. Industrialization moved the production of many household items, such as soap, from local
communities to centralized factories. These factories, generating mass-produced goods, needed
to sell their products in a wider market, to a customer base familiar only with local goods. It
quickly became apparent that a generic package of soap had difficulty competing with familiar,
local products. The packaged goods manufacturers needed to convince the market that the public
could place just as much trust in the non-local product.
Many brands of that era, such as Uncle Ben's rice and Kellogg's breakfast cereal furnish
illustrations of the problem. The manufacturers wanted their products to appear and feel as
familiar as the local farmers' produce. From there, with the help of advertising, manufacturers
quickly learned to associate other kinds of brand values, such as youthfulness, fun or luxury with
their products. This kick started the practice we now know as "branding".
We tend to think of branding as a modern day phenomenon. Certainly, during the late 1990s and
the early 2000s, branding emerged as a significant area of emphasis not only for companies and
their products but also for municipalities, universities, other non-profit organizations and even
individuals. Branding became ubiquitous. Many of us also know that Proctor & Gamble and
other consumer product companies began branding their products in earnest in the mid-to-late
1800s. But more interesting is how far back in time branding goes. For instance, companies
that sold patented medicines and tobacco began branding their products as early as the early
1800s. Around the same time, some fraternities and sororities branded their pledges (literally)
during initiation rites as a form of identification and bonding, a practice that has long since been
identified as hazing and therefore abandoned.
But that is still recent history -- relatively.
Between the 1600s & 1800s criminals were branded (again literally) as a form of punishment
and identification. For instance, in England, they branded an S on a person's cheek, while in
France; they branded a fleur de lis on the shoulder. As repugnant as it may be to us today, slaves
were also branded roughly during the same time period to connote ownership. In the 1200s,
England required bread makers, goldsmiths and silversmiths to put their marks on goods
primarily to insure honesty in measurement. In the Medieval times, printers also used marks as
did paper makers (watermarks) and various other craft guilds.
But branding goes back even further. As far back as 1300 BC, potter's marks were used on
pottery and porcelain in China, Greece, Rome and India. Branding of cattle and livestock go
back as far as 2000 BC. And archaeologists have found evidence of advertising among
Babylonians dating back to 3000 BC. So, how far back does branding go? At least 5000 years.

What is more interesting are underlying needs from which branding originated: to insure honesty,
provide quality assurance, identify source or ownership, hold producers responsible, and
differentiate, as a form of identification and to create emotional bonding. Interestingly, people
value brands for many other same reasons today. Clearly history provides some insight and
perspective on modern day branding.

CHAPTER 3:
PROFILE OF LOREAL CO. LTD
3.1 History
The L'Oral Group is a French cosmetics and beauty company headquartered in Clichy, Hautsde-Seine, France. It is the world's largest cosmetics company and has a registered office
in Paris. It has developed activities in the field \of cosmetics concentrating on hair
color, skin care, sun protection, make-up, perfumes and hair care, the company is active in
the dermatological, tissue engineering and pharmaceutical fields and is the
top nanotechnology patent-holder in the United States.
In 1909, Eugne Schueller, a young French chemist, developed a hair dye formula
called Aurale. Schueller formulated and manufactured his own products, which he then sold
to Parisian hairdressers. On 31 July 1919, Schueller registered his company, the Socit
Franaise de Teintures Inoffensives pour Cheveux(Safe Hair Dye Company of France). The
guiding principles of the company which eventually became LOral, were research and
innovation in the field of beauty. In 1920, the company employed three chemists. By 1950, the
teams were 100 strong; that number reached 1,000 by 1984 and is nearly 2,000 today.
LOral got its start in the hair-colour business, but the company soon branched out into other
cleansing and beauty products. LOral currently markets over 500 brands and many thousands
of individual products in all sectors of the beauty business: hair colour, permanents, hair styling,
body and skin care, cleansers, makeup and fragrances. The company's products are found in a
wide variety of distribution channels, from hair salons and perfumeries to hyper - and
supermarkets, health/beauty outlets, pharmacies and direct mail.
LOral has six worldwide research and development centres: two in
France: Aulnay and Chevilly; one in the U.S.: Clark, New Jersey; one
in Japan: Kawasaki, Kanagawa Prefecture; in 2005 one was established in Shanghai, China, and
one in India. A future facility in the US will be in Berkeley Heights, New Jersey.

L'Oral's famous advertising slogan is "Because I'm worth it". In the mid 2000s, this was
replaced by "Because you're worth it". In late 2009, the slogan was changed again to "Because
we're worth it" following motivation analysis and work into consumer psychology of Dr. Maxim
Titorenko. The shift to "we" was made to create stronger consumer involvement in L'Oral
philosophy and lifestyle and provide more consumer satisfaction with L'Oral products. L'Oral
also owns a Hair and Body products line for kids calledL'Oral Kids, the slogan for which is
"Because we're worth it too".

3.2 Mergers & Acquisitions

LOreal is successfully present in 150 countries all over the world. This was made possible by
creating a diverse mix of brand portfolio all over the globe and aggressively marketing those
brands. The products and the marketing strategies of the company are made in contrast to the
culture and lifestyle of a particular nation. Hence, attracting consumers by understanding and
making an appeal towards their culture and lifestyle. The cosmetic giant acquires local brands,
gives them a makeover and markets them aggressively in the local market giving a new
image to the consumers of different nations worldwide. Basically, LOreal follows the
strategy of product adaptation, which implies alteration of a product or the image of a product to
meet its local needs.
LOral purchased Synthlabo in 1973 to pursue its ambitions in the pharmaceutical field.
On 17 March 2006, L'Oral purchased cosmetics company The Body Shop for 562
million.
On 1 July 1999, L'Oreal took over sales and marketing of the brand Maybelline in Japan
and gradually introduced innovative products recently developed and launched in the US
to the Japanese market.
In 1987, during the growth years of the mail order business, L'Oral and 3
Suisses founded Le Club des Crateurs de Beaut for mail-order sales of cosmetic
products, with brands including Agns b., Cosmence and Professeur Christine Poelman
among others.
In March 2008, L'Oral acquired 3 Suisse's stake, taking sole control of the company.
In November 2013, L'Oral announced that Le Club des Crateurs de Beaut would cease
activity in the first half of 2014.

 In November 2012, L'Oral inaugurated the largest factory in the Jababeka Industrial
Park, Cikarang, Indonesia with a total investment of USD$100 million.
On 11 February 2014 it was announced that L'Oreal has sealed a deal worth 3.4bn to
buy back 8% of its shares from Swiss consumer goods giant Nestle. As a result of the
deal, Nestles stake in LOreal will be reduced from 29.4pc to 23.29pc while the
Bettencourt Meyers familys stake will increase from 30.6pc to 33.2pc.
On 20 February 2014, Shiseido agreed to sell its Carita and Declor brands to LOral for
227.5 million [USD$312.93 million (2014)]
On 18 June 2014, L'Oral agreed to acquire NYX Cosmetics for an undisclosed price,
bolstering its makeup offer in North America where its consumer-products unit has
faltered.
LOral India has made its first acquisition in the domestic beauty market by taking over
the assets of Mumbai-based Cheryls Cosmeceuticals.

3.3 Market of LOreal& its Competencies

On the basis of product usage the cosmetic industry can be divided into four segments: luxury,
consumer or mass-market, professional & pharmaceutical. Globally the European cosmetics
industry has maintained its position as the leader since 1980s. In 2000, the European cosmetic
industry generated almost E50 billion in sales, which was twice the sales volume of Japanese
cosmetics industry and one third more than the US cosmetic industry.
LOreal has remained the global leader in the industry with a 16.8 per cent market share followed
by Estee Lauder with a 10.9 per cent market share and Procter & Gambler with 9.3 per cent
market share.
Establishes in 1946, in New York, US, Estee Lauder competed with LOreal in the luxury
segment with brands like Estee Lauder, Aramis, Clinique, Prescriptives, Origins, M.A.C, Bobbi
Brown Essentials, Tommy Hilfiger, Jane, Donne Karan, Avede, La Mer, Stila and Jo Malone.

Procter & Gambler, the US based FMCG manufacturer competed with LOreal in the mass
market segment with skincare, haircare and bodycare products. Some of P&Gs well known
brands include Biactol, Camay, Cover Girl, Ellen Betrix, Infasil, Max Factor (skincare), Herbal
Essence, Loving Care, Natural Instincts, Nice n Easy, Pantene Pro-V, Rejoice, Vidal Sassoon,
Wash & Go (haircare), Laura Biagiotti, Hugo Boss and Helmut Lang (perfumes). The US based
Revlon Inc. also competed with LOreal in the mass market segment with brands like Charlie,
Colorsilk, Colorstay, Fire & Ice and Skinlights.
Other companies like Avon, Kose, Coty and Shiseido competed globally in the mass market
segment. LOreal remained the overall industry leader, as it was the only company that competed
in all four segments.

L'Oreal's Market Share of Global Hair Care Market: Hair Care Market Share for L'Oral
declined from 24.3% in 2009 to 22% in 2012 before bouncing back to 22.4% in 2013. The
company pulled out its Garnier brand from China in a bid to focus exclusively on prestige beauty
products in the region. We currently forecast L'Oral's share of the Hair Care market to grow
from 22.4% in 2013 to reach 25% by the end of our forecast period. There could be a marginal
downside to Trefis price estimate if the market share remains flat at current levels.
L'Oreal's Market Share of Global Skin Care Market: L'Oral's Skin Care Market Share expanded
steadily from 12.3% in 2009 to 13.9% by 2013. We currently forecast L'Oral's share of the Skin
Care market to grow from 13.9% in 2013 to about 16.8% by the end of our forecast period. There
could be a 4% downside to our Trefis price estimate if the market share were to remain flat at
current levels.
3.4 Products
LOreal successfully maintained its presence in all the four segments of the cosmetic industry
with a minor overlapping in customers and outlets, and the unique distribution channel it uses.
LOreals diverse mix of brand portfolio is divided into four groups, 4 out of 20 brands are
consumer products and are sold through discount and drug stores, there are 13 luxury
products which are sold through department and specialty stores, 4 are professional products
used in salons, and 4 are pharmaceutical products sold by dermatologist or other specialists.
The product division is as follows:
1) LOreal Luxe
LOral Luxe opens a unique world of beauty its international brands incarnate all the facets of
elegance and refinement in three major specializations: skin care, make-up and perfume. LOral
Luxe products are available at department stores, cosmetics stores, travel retail, but also ownbrand boutiques and dedicated e-commerce websites.

It includes brands such as:

Lancome
Giorgia Armani Beauty
Yves Saint Laurent Beauty
Biotherm
Kiehls
Ralph Lauren
Shu Uemura
Chacharal
Helena Rubenstein
Clarisonic
Diesel
Victor&Rolf
Yue Sai
Maison Martin Margiela
Urban Decay
Guy Laroche
Paloma Picasso

2) Active Cosmetic Division

The Active Cosmetics Division brands meets a range of different skin care needs from normal to
blemish-proned, in healthcare outlets worldwide, including, pharmacies, drugstores, and medispas. . Thanks to its highly complementary brands, developed and endorsed by health
professionals - dermatologists, pediatricians, cosmetic doctors - the division is the world leader
in dermocosmetics.
It includes brands such as:

Vichy
La Roche Posay
SkinCeuticals
Inneov
Roger&Gallet
Sanoflore

3) Consumer Production Division

The Consumer Products Division makes the best of cosmetic innovation available to the greatest
number of people on every continent. Its brands are distributed in mass retailing channels
hypermarkets, supermarkets, drugstores and traditional stores. These brands offer a wide range of
coloring products, hair care, makeup and skin care.
It includes brands such as:-

LOreal Paris
Garnier
Maybelline New York
Softsheen.Carson
Essie

4) The Body Shop

All-natural, distinctive and socially engaged: the Body Shop values are more relevant to the 21st
century than ever. Its creative and innovative products that really work appeal to consumers
worldwide. Available in The Body Shop Brand outlets all over.

5) The Professional Product Division

The Professional Products Division distributes its products in salons worldwide. Through its vast
array of brands, the division can meet the needs of different hair care salons, for color, shape and
styling, shampoos and general hair care needs. A privileged partner of hairdressers, this division
offers them products made with the best technologies as well as high-level training, to ensure
professional service.
It includes brands such as:

LOreal Professionnel
Kerastase
Redken
Matrix
Pureology
Shu Uemura Art of Hair
Mizani
Essie

CHAPTER 4:
BRAND MANAGEMENT
4.1 Brand Management
Brand Management is a communication function that includes analysis & planning on how that
brand is positioned in the market, which target public the brand is targeted at & maintaining a
desired reputation of the brand. Developing good relationships with target public is essential for
Brand Management. Brand Management is nothing but an art of creating & sustaining a brand.
Brand Management includes managing the Tangible elements which is the product itself, look,
price, the packaging, etc. The Intangible elements are the experience that the consumer takes

away from the brand & also the relationship that they have with that brand. A brand manager
would oversee all these things.
Definition:
the process of creating a relationship or a connection between a companys product & emotional
perception of the customer for the purpose of generation segregation among competition &
building loyalty among customers.
Brand Management begins with having a thorough knowledge of the term brand.
Following are important concepts of Brand Management:

Definition of Brand
Brand Name
Brand Attribute
Brand Positioning
Brand Identity
Sources of Brand Identity
Brand Image
Brand Identity v/s Brand Image
Brand Personality
Brand Awareness
Brand Loyalty
Brand Awareness
Brand Association
Building a Brand
Brand Equity
Brand Equity & Customer Equity
Brand Extension
Co-branding

LOreal is considered as an epitome of brand management. In the narrow market of the cosmetic
industry, LOreal owns about 20 brands, hence known as the house of brands, and is able to
successfully market and sell those brands in the same market. This success is due to the high
level of differentiation, clarification and leverage (Prophet.com, 2014).
4.2 Development of Brand Equity
Brand Equity
Brand Equity is the value and the strength of the Brand that decides its worth. It can also be
defined as the differential impact of brand knowledge on consumers response to Brand
Marketing.
Brand Equity exists as a function of consumer choice in the market place.

The concept of Brand Equity comes into existence when consumers make a choice of a product
or service. It occurs when the consumer is familiar with the brand and holds some favorable
position strong and distinctive brand associations in the memory.
Brand Equity can be determined by measuring:

Returns to the Share Holders

Evaluating the Brand Image
Evaluating the brands earning potential in long run.
Evaluating the increased volume of sales compared to other brands of same class
The price premium charged by the brand over the non-branded products
From the prices of the shares that an organization commands in the market
OR, an amalgamation of all the above methods.

Using the financial perspective, one measures brand equity by determining how much more
consumers are willing to pay in direct relation to the brand name. This gives marketers essential
insight into the financial value of the brand. When viewing brand equity from this perspective,
one must naturally consider overhead, such as costs of advertising.
Using the consumer-based perspective entails considering how the attitude strength of consumers
is directly influenced by the brand name. This perspective operates under the assumption that the
consumer has had extensive experience with the product in question.
The consideration and development of brand equity is vital as its benefits are wide reaching. One
can consider brand equity as an asset, as it can increase cash flow via the widening of a
companys market share and the allowance of higher pricing policies.
LOreal Brand Equity
LOreal has been successful in generating a worldwide Brand Identity only because of the
companys powerful and efficient Branding Strategy.
LOral has been one of the most reputed brands in the cosmetics field. The brand has made its
presence felt in more than 100 countries, thanks to its numerous acquisitions worldwide. With
several brands in its kitty, LOral has carved a niche for itself with its unique strategies and
stands out from the other cosmetics brands.

4.3 Competitive Advantage of Brand Loyalty

Brand Loyalty is a scenario where the consumer fears purchasing and consuming product from
another brand which he does not trust. It is measured through methods like word of mouth,
public repetitive buying, price sensitivity, commitment, brand trust, customer satisfaction, etc.
The extent to which consumer constantly buys the same brand within a product category. The

consumers remain loyal to a specific brand as long as it is available. They do not buy from other
suppliers within the product category.
There is a palpable correlation between the efficient branding of a product or service, and the
display of brand loyalty in consumer purchasing patterns. In this instance, loyalty is defined as a
deeply held commitment to re-buy or re-patronize a preferred product/service consistently in
the future, thereby causing repetitive same-brand or same brand-set purchasing, despite
situational influences and marketing efforts having the potential to cause switching
behavior".
Brand loyalty is a direct consequence of the ability to better satisfy the desires of a customer that
main competitors do. It now becomes clear that a modern day marketers principal objective is to
build sustainable forms of loyalty between a company and its consumers, instead of focusing
solely on the individual sale of products.

Brand Loyalty is the consumer's conscious or unconscious decision, expressed through intention
or behaviour, to repurchase a brand continually. It occurs because the consumer perceives that
the brand offers the right product features, image, or level of quality at the right price. Consumer
behaviour is habitual because habits are safe and familiar. In order to create brand loyalty,
advertisers must break consumer habits, help them acquire new habits, and reinforce those habits
by reminding consumers of the value of their purchase and encourage them to continue
purchasing those products in the future.

CHAPTER 5:
BRAND NAME
5.1 Features of a Good Brand Name.

While branding any product, the producers should give proper Brand Name to their products. A
Brand Name may be good or bad. It may promote sales or may cause decrease in sales volume. It
may reinforce reputation, image & goodwill of the producer firm or may spoil. The selection of
good Brand Name is not easy. However, the following factors should be kept in mind while
selecting Brand Name:

It should be unique / distinctive (for eg. LOreal, Maybelline)

It should be extendable.
It should be easy to pronounce, identified & memorized.
It should give an idea about products qualities & benefits.
It should be easily convertible in foreign languages.
It should be capable of legal protection & registration.
It should suggest product / service category.
It should indicate concrete qualities.
It should not portray bad / wrong meanings in other category.

5.2 Process of Selection

Following is the process of selecting a renowned and successful Brand Name:-

Define the objectives of branding in terms of Six criterion descriptive, suggestive,

compound, classical, arbitrary and fanciful. It is essential to recognize the role of brand
within the corporate branding strategy and the relation of brand to other brand and
products. It is also essential to understand the role of brand within the entire marketing
program as well as detailed description of niche market must be considered.
Generation of multiple names Any potential source of names can be used; organization,
management and employees, current or potential customers, agencies and professional
consultants.
Screening of names on the basis of branding objectives and marketing considerations so
as to have a more synchronized list The brand name must not have connotations, should
be easily pronounceable, should meet the legal requirement etc.
Gathering more extensive details on each of the finalized names There should be
extensive international legal search done. These searches are at times done on a
sequential basis because of the expense involved.

 Conducting consumer research Consumer research is often conducted so as to confirm

management expectations as to the remembrance and meaningfulness of the brand names.
The features of the product, its price and promotion may be shown to the consumers so
that they understand the purpose of the brand name and the manner in which it will be
used. Consumers can be shown actual 3-D packages as well as animated advertising on
boards. Several samples of consumers must be surveyed depending on the niche market
involvement.
On the basis of the above steps, management can finalize the Brand Name that
maximizes the organizations branding & marketing objectives and then formally register
the Brand Name.

CHAPTER 6:
POSITIONING / SEGMENTATION / TARGETING
6.1 Brand Positioning
Positioning can be defined as:Berkowitz, Kerlin, Rudelius
Product positioning refers to the place an offering occupies in the consumers mind on
important attributes relative to competitive offerings.

Brand positioning refers to target consumers reason to buy your brand in preference to others.
It ensures that all brand activity has a common aim; is guided, directed and delivered by the
brand benefits / reasons to buy; and it focusses at all points of contact with the consumer.
Brand Positioning must make sure that:
Is it unique / distinctive v/s competitors?
Is it significant and encouraging to the niche market?
Is it appropriate to all major geographic markets & businesses?
Is the proportion validated with unique, appropriate and original products?
Is it sustainable - can it be delivered constantly across all points of contact with the
consumer?
Is it helpful for organization to achieve its financial goals?
Is it able to support and boost up the organization?

It should be remembered that positioning is more a reflection of a product and that it stifles the
rich meaning of the brand without taking into account all its potentialities.
Positioning applies to the process of emphasizing the brands distinctive and motivating attributes
in the light of competition.
It is based on the analysis of response to the following four questions.
POSITIONING
Why?
For whom?
When?
Against whom?
Brand Positioning is a medium through which an organization can portray its customers what it
wants to achieve for them and what it wants to mean to them. Brand Positioning forms customers
view and opinions.
6.2 Usefulness of Positioning

As competition intensifies & brands proliferate, consumers tend to differentiate between brands
in their own way. Positioning is a conscious attempt on the part of the marketer to accentuate this
natural tendency & in the process, impart a distinct identity to his own brand to make it stand out
among the competitors. The basis on which this differentiation is achieved reflects consumer
preferences or attitudes. The marketer, through his diverse & coordinated actions, tries to
influence this process.

The concept of positioning is also important in various other aspects of the marketing strategy.
Once one is clear about the position one wants, the other marketing decisions like product
design, packaging, pricing, method of distribution, etc., become clearer.

6.3 Elements of Positioning

Evidence has shown that there are four distinct variables that affect the position of a given
product. These are:1)

The product itself

2)

The company behind it

3)

The competition

The Product: - How important the product is or what meaning it has for the consumer &
how he relates to it. The fact that a product involves better ingredients or processes is a
matter of indifference unless this knowledge offers distinct advantages to the consumer.
The Company: - A product comes from a company & every company has its ownhistory.
Generally, the stronger the companies profile the better the image of its products. For
instance, consumers may perceive a better the image of a product if it comes from a
reputed house like Tatas.
The Competition: - Product positioning is invariably done in relation to various
competitive offerings. In most cases, the consumers have a tendency to judge a product in
comparison to the dominant brand, e.g., all photocopiers are compared with Xerox, all
PCs with HCL, toothpastes with Colgate & so on. Leading brand enjoys some edge over
others.

The Consumer: - It should be reiterated that positioning is essentially based on consumer

perception rather than factual evaluation. Hence, it becomes necessary to examine how
the consumer views a product. Here, it becomes necessary to examine how the consumer
views a product. Here, the consumers self-perception comes into play along with his
cognitive & connotative factors.

6.4 Errors in Positioning

There are various positioning errors, such as: Under Positioning: This is a scenario in which the customers have a blurred and unclear
idea of the Brand.
Over Positioning: This is a scenario in which the customers have too limited awareness
of the Brand.

Confused Positioning: This is a scenario in which the customers have a

confused opinion of the Brand.
Double Positioning: This is a scenario in which customers do not accept the
claims of the Brand.

CHAPTER 7:
UNDERSTANDING CONSUMERS AND MARKETS
7.1 Understanding Consumer Buying Behavior
Definition
Consumer behavior refers to the mental and emotional process and the observable behavior of
consumers during searching, purchasing and post consumption of a product or service

Consumer behavior involves study of how people buy, what they buy, when they buy and why
they buy. It blends the elements from psychology, sociology, socio psychology, anthropology and
economics. It also tries to assess the influence on the consumer from groups such as family,
friends, reference groups and society in general.
Buyer behavior has two aspects: the final purchase activity visible to any observer and the
detailed or short decision process that may involve the interplay of a number of complex
variables not visible to anyone.

7.2 Factors Affecting Consumer Buying Behavior

Consumer buying behavior is influenced by the major three factors:
1. Social Factors
2. Psychological Factors
3. Personal Factors.
1. Social Factors
Social factors refer to forces that other people exert and which affect consumers purchase
behavior. These social factors can include culture and subculture, roles and family, social class
and reference groups.
Example:
By taking into consideration Reference group, these can influence/ affect the consumer buying
behavior. Reference group refers to a group with whom an individual identifies herself/ himself
and the extent to which that person assumes many values, attitudes or behavior of group
members. Reference groups can be family, school or college, work group, club membership,
citizenship etc.
Reference groups serve as one of the primary agents of consumer socialization and learning and
can be influential enough to induce not only socially acceptable consumer behavior but also
socially unacceptable and even personal destructive behavior. For example, if fresher student
joins a college / university, he/she will meet different people and form a group, in that group
there can be behavior patterns of values, for example style of clothing, handsets which most of
group member prefer or even destructive behavior such as excessive consumption of alcohol, use
of harmful and addictive drugs etc. So, according to how an individual references him / her to
that particular reference group, this will influence and change his/her buying behavior.
2. Psychological Factors

These are internal to an individual and generate forces within that influence her/his purchase
behavior. The major forces include motives, perception, learning, attitude and personality.
Example:
Attitude is an enduring organization of motivational, emotional, perceptual and cognitive
processes with respect to some aspect of our environment. Consumers form attitude towards a
brand on the basis of their beliefs about the brand. For example, consumers of Sony products
might have the belief that the products offered by Sony are durable; this will influence those
customers to buy Sony products due to this attitude towards the brand.
3. Personal Factors
These include those aspects that are unique to a person and influence purchase behavior. These
factors include demographic factors, lifestyle, and situational factors.
Example:
Lifestyle is an indicator of how people live and express themselves on the basis of their
activities, interests, and opinions. Lifestyle dimension provide a broader view of people about
how they spend their time the importance of things in their surroundings and their beliefs on
broad issues associated with life and living and themselves. This is influenced by demographic
factors and personality.

7.3 Consumer Buying Decision Process

Consumer buying decision process is the processes undertaken by consumer in regard to a
potential market transaction before, during and after the purchase of a product or service.
Consumer decision making process generally involves five stages:
A. Problem Recognition
Purchase decision making process begins when a buyer becomes aware of an unsatisfied need or
problem. This is the vital stage in buying decision process, because without recognizing the need
or want, an individual would not seek to buy goods or service.
There are several situations that can cause problem recognition, these include:
Depletion of stock
Dissatisfaction with goods in stock
Environmental Changes
Change in Financial Situation
Marketer Initiated Activities

Its when a person recognizes that she cannot make a call from her mobile phone thats when she
recognizes that her phone has been damaged i.e. the phone has hardware problems and needs to
be repaired or buying a new piece.
B. Information Search
After the consumer has recognized the need, he / she will try to find the means to solve that need.
First he will recall how he used to solve such kind of a problem in the past, this is called nominal
decision making. Secondly, a consumer will try to solve the problem by asking a friend or goes
to the market to seek advice for which product will best serve his need, this is called limited
decision making.
Sources of information include:
Personal sources
Commercial Sources
Public sources
Personal experience
C. Alternatives Evaluation
Consumers evaluates criteria refer to various dimension; features, characteristics and benefits
that a consumer desires to solve a certain problem. Product features and its benefit is what
influence consumer to prefer that particular product. The consumer will decide which product to
buy from a set of alternative products depending on each unique feature that the product offers
and the benefit he / she can get out of that feature.
D. Purchase Action
This stage involves selection of brand and the retail outlet to purchase such a product.
Retail outlet image and its location are important. Consumer usually prefers a nearby retail outlet
for minor shopping and they can willingly go to a far away store when they purchase items
which are of higher values and which involve higher sensitive purchase decision. After selecting
where to buy and what to buy, the consumer completes the final step of transaction by either cash
or credit.
E. Post-Purchase Actions
Consumer favorable post-purchase evaluation leads to satisfaction. Satisfaction with the
purchase is basically a function of the initial performance level expectation and perceived
performance relative to those expectations. Consumer tends to evaluate their wisdom on the
purchase of that particular product. This can result to consumer experiencing post purchase
dissatisfaction. If the consumers perceived performance level is below expectation and fail to

meet satisfaction this will eventually cause dissatisfaction, and so the brand and/ or the outlet
will not be considered by the consumer in the future purchases. This might cause the consumer to
initiate complaint behavior and spread negative word-of-mouth concerning that particular
product.

CONCLUSION
LOreal has reached the top position due to its excellent brand management strategies, locally
and globally. The diverse mix of brand portfolio has been able cater the needs of customers of
different cultures globally. Its acquisition, global brand management and multi brand strategies
have widely been appreciated and looked upon by competitors. L'Oreal aims to boost the selfesteem of their customers. The company fosters itself as a source of confidence and strength to
its customer rather than just a cosmetic company. L'Oreal aims to promote a positive outlook

towards the brand among its customers by making sure that the products and services they
provide caters to every needs of the customer.

BIBLIOGRAPHY
Kevin Lane Keller (2004), Strategic Brand Management, 2 nd edition, Pearson Education,
New Delhi
Diploma in Business Management notes provided by the university
Consumer Behavior, 6th Edition, by Lean G.Sehiffman and Leslic lazan Kanuk.

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