SWOT Analysis of L’Oreal – L’Oreal SWOT Analysis [Explained]

This article presents a detailed SWOT Analysis of L’Oreal. SWOT Analysis of L’Oreal focuses on Strength, Weaknesses, Opportunities, and Threats. Strengths and Weaknesses are internal factors and Opportunities and Threats are external factors. SWOT Analysis provides a well-tested management methodology that enables L’Oreal in comparison with competitors and industry to assess its business performance.

L’oreal is a French organization and it has many amazing products in its portfolio. L’oreal is the real superstar in the beauty and cosmetic industry. L’Oreal is known for its super brand L’Oreal Paris. L’oreal sells and own numerous top brands like Maybelline, Garnier, Essie and many others. L’Oreal also owns The Body Store, which reveals all its labels plus more of them.

L’Oreal has around to 30-40 products and these products are traded in 130 countries. L’oreal has of widespread distribution. L’Oreal Product range are divided into various product categories and has a good market reach. Some of the products are in the L’oreal Luxry segment.

Let’s Discuss the SWOT Analysis of L’Oreal.

Strengths in the SWOT Analysis of L’Oreal – L’Oreal SWOT Analysis

  • Largest makeup/cosmetics manufacturer: L’Oreal is probably the largest beauty and cosmetics business in the country. Where other businesses have a product line focusing on cosmetics and personal care, L’oreal is fully concentrated on beauty products as a brand, which is really the reason for the company’s remarkable success in this market.
  • Continuous R & D- When it comes to beauty and makeup, the way to go is not just pure development. Dermatology, cosmetology, skin care, hair care, sun health, and different sciences may be included in this. The effect of a cream can be very distinct under hot and cold conditions. Therefore at L’oreal, there are extensive Research & Development studies to ensure the safety of its users and also to continue trying new goods.
  • Fantastic merchandise and product portfolio-The product range of L’oreal’s is very wide. Garnier focuses on better hair and personal maintenance, Maybelling focuses on embellishment. And all of them are perfect brands in there segment. L’oreal has ensured that each brand holds the emphasis on its core strength that contributes to the strengths of L’Oreal’s SWOT analysis.
  • High product quality- A brand image is created only after the customer buys the product and is pleased with the quality and then consistently buys the same brand again and again. Many customers are brand loyal towards L’oreal Paris, Garnier, Maybelling, Body Shops, L’oreal Luxe brands, and the numerous other l’oreal brands.
  • Strong Communication Channel: With strong marketing communications L’oreal Products are recognised. Not only are these brands known for their publicity strategies above the border, but they are still very successful at their point of sales marketing. Maybelline, Garnier and L’oreal Paris are three main products in L’oreal’s brand portfolio. They are very good names in the brand portfolio. These brands contribute a great deal to L’oreal’s bottom line and allow the other brands to prosper and thrive. With the benefit of these brands, L’oreal is able to invest in its other products and brands and achieve more growth.
  • Good Distribution Network. Due to the existence of the brand in 130 nations, widespread distribution contributes to economies of scale and the sharing of fixed costs such as stores, manufacturers and others. The cost of the goods is also therefore regulated. Dealers and Retailer margin is also good and they are promoting L’Oreal Products.  
  • Organic and Natural Products: Now a days people prefer organic and natural products. L’Oreal is using Organic and Natrual material to manufacture its products. L’oreal has suspended animal experimentation entirely since 1987. In nature, it is 100 per cent humane and sustainable and hence the preference of animal lovers.
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Weaknesses in the SWOT Analysis of L’Oreal – L’Oreal SWOT Analysis

  • Large Operation Base: The handling of such a large operation is often riddled with concerns and difficulties, and in L’oreal it is a similar situation. Because of the many sub departments it has the organisation is considered to be sluggish and bulky in design. Employee management in L’oreal is also a concern, as the company has up to 60,000 employees. Thus, spending on human resources is massive.
  • Garnier is one brand that struggles from the intensity of competition because it is in the hair care market where there is a lot of competition from both HUL and P&G. Hair care market is a saturated market and facing tough competition. Sunsilk and Head and Shoulders, both very strong in the hair care market.
  • Low Profit Margin: Higher R&D expenses, organic processes and massive distribution costs mean that L’oreal’s profit margins are marginally lower relative to competitors. However, while this was a drawback, L’oreal has already been made one of the best brands in the cosmetics category by R&D.

Opportunities in the SWOT Analysis of L’Oreal – L’Oreal SWOT Analysis

  • Market potential- Market Potential for Personal care and beauty products is growing. Developing economies are evolving as new market for L’Oreal. Exploring these new markets would provide L’oreal with greater revenue down the road than remaining in the same crowded markets.
  • Demand for organic cosmetics: The demand for organic cosmetics is on the rise. Increasing demand of organic cosmetic is a positive sign for L’oreal Products. L’oreal has a organic Research & Development approaches from the beginning.
  • Product Range: Expanding the product ranges as well as adding additional products in the product mix would result in the expansion of the full product mix-something that will also be the goal of L’oreal management.
  • Body shop: The body shop is going through a recession and has not really taken up as a shopping outlet. The capacity has yet to be studied. L’oreal will make the Body Shop the go-to place for people who love to deck themselves out by investing in rejuvenating the brand.
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Threats in the SWOT Analysis of L’Oreal – L’Oreal SWOT Analysis

  • Dynamic nature of the cosmetics industry: With the continuous upgrading needed in the cosmetics industry, it is essentially very difficult to keep up with the times. You can’t at once make everyone happy, and that appears to be the conundrum. Plus, the rivalry will not stay silent and they will try to come up with their own clever strategies. As a result, the beauty industry’s competitive existence holds the brand on its own.
  • A brand such as L’oreal, which has so many sub-brands, has to break the money it receives into many distinct divisions. As a consequence, if the economy slumps, it will face a massive challenge. In one nation or another, economic issues are still there and the cash inflow from that country ceases as a result. This causes general cash flow issues and it becomes impossible to control working capital. Nevertheless the economy as a whole, including European countries and Asian countries, is weak. For the business, this has triggered a cash shortage and danger looms if the economy slumps.

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