Case Study: L’Oréal’s Customer- Based Brand Equity (CBBE) Model

Customer-Based Brand Equity is defined as the differential effect that brand knowledge has on consumer response to the marketing of that brand.The Customer-Based Brand Equity Model approaches brand equity from the perspective of the consumer – whether this be an individual or an organization. Understanding the needs and wants of consumers and organizations and devising products and campaigns to satisfy them are at the heart of successful marketing.


Created in France, L’Oréal Paris brings the sophistication and elegance derived from its French heritage to women and men all over the world. L’Oréal Paris offers leading-edge products that out-perform the competition to people who care more about the way they look. Our passion for innovation, performance, style and a sense of premium is encapsulated in the ‘because you’re worth it’ philosophy. Our core values are supported by our strong investment in scientific research and technology.

Over a third of the L’Oréal Group’s total turnover in this country is generated by L’Oréal Paris, making it the company’s largest division in the UK. Today there are strongly established L’Oréal Paris brands across all of the key areas of the beauty market, including the Plenitude skincare range, Elvive haircare and Studio Line styling products. Other brands include L’Oréal Paris Colour Cosmetics, Elnett, Rcital, Excellence, Fria, Perfect Blonde, Open, Casting and L’Oréal Kids.


Branding Strategy of L’Oreal has enabled the company to spread its’ business not only in Europe but also in Asia and Latin America. In the year 2005, the Brand L’Oreal was ranked first among all the cosmetics companies of the world.

L’Oreal Branding Strategy has achieved success throughout the world. Over the years, the company is successfully producing and selling different cosmetic products, haircare and skincare products in almost 150 countries of the world. This has been possible because of the well established Brand Name and Brand Image of L’Oreal.

L’Oreal has been successful in generating a worldwide Brand Identity only because of the company’s powerful and efficient Branding Strategy. This successful Global Branding Strategy of L’Oreal helped the company to earn significant levels of revenue in the past years In the year 2005, L’Oreal was valued as a $18.89 billion company. In 2004, total value of the L’Oreal Brand was $5902 million. In 2003, the company recorded a value of $5600 million.

 In fact, from the year 1989, the Brand L’Oreal experienced continuous growth. The company recorded double digit growth rate in consecutive years and in the year 2005, it became the largest cosmetic company of the world.


L’Oréal 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, L’Oréal has carved a niche for itself with its unique strategies and stands out from the other cosmetics brands.
The L’Oréal group develops several important communication campaigns every year that underline the ability and the growth of the group. It is omnipresent across several media channels and the constant presence enables the brand to retain its reigning position in the market despite stiff competition from numerous cosmetic brandThe commercial communication of the group is made at a world level. The group proposes the same products and leans on the same advertising campaigns. In that case, visuals are the same, the text identical, the slogan is unchanged, and the ads are only translated with respect to countries. However, in spite of its global presence, the group realized that it could not sell the same product to all its consumers. The group knew how to diversify towards American, Asian or Latin brands.


Few of the women in the admiring crowd realize that the trendy ”New York” Maybelline brand belongs to French cosmetics giant L’Oreal. In the battle for global beauty markets, $12.4 billion L’Oreal has developed a winning formula: a growing portfolio of international brands that has transformed the French company into the United Nations of beauty. Blink an eye, and L’Oreal has just sold 85 products around the world, from Redken hair care and Ralph Lauren perfumes to Helena Rubinstein cosmetics and Vichy skin care.

Thanks to this strategy, masterminded by L’Oreal Chief Executive Lindsay Owen-Jones, the French company has not only enjoyed a decade of double-digit growth but has pioneered new ground rules for staying on top in a fiercely competitive industry. L’Oreal’s net profits rose 12% in 1998, to $768 million, while its stock has soared 900% in the ’90s.

L’Oreal’s success is proof that when done right, global branding can speed growth in mature consumer-products companies even when global markets themselves are shaky. Asia’s economy is a mess, Latin America is lottery. Other worldwide marketers, such as Procter & Gamble Co., are suffering partly as a result. But L’Oreal is surging in markets stretching from China to Mexico. Its secret: conveying the allure of different cultures through its many products. Whether it’s selling Italian elegance, New York street smarts, or French beauty through its brands, L’Oreal is reaching out to more people across a bigger range of incomes and cultures than just about any other beauty-products company in the world. That sets L’Oreal apart from one-note marketers such as Coca-Cola Co., which has just one brand to sell globally.

L’Oreal’s strategy positions it beautifully to profit even further when the middle class begins to grow again in emerging markets. Says Veronique Adam, analyst at J.P. Morgan Securities Inc. in Paris: ”L’Oreal is the only real global leader in every segment of the industry.”

For Owen-Jones, the trick will be staying ahead in the game as his powerful rivals seek to play the global branding game. From giant P&G to niche players such as Los Angeles-based cosmetics maker Stila, L’Oreal’s competitors are hustling to catch up. ”L’Oreal want to become more of a global company like L’Oreal,” says Yoshikuni Miyakawa, a general manager of the cosmetics-marketing division of Shiseido Co., Japan’s No. 1 cosmetics company. Already, Shiseido is dominant at home and now expanding around the world. Meanwhile, the French company is No. 10 in Japan, trailing rivals such as Clinique and Estee Lauder.


It is customers emotional responses and reaction with respect  to the brand. “L’Oreal” formed in France, Paris, brings the sophistication and elegance consequent from its French heritage to women and men all over the world. L’Oreal Paris offers leading-edge products that out-perform the competition to people who care more about the way they look. The passion for innovation, performance, style and a sense of premium is sum up in the customers money spending worth and also it’s’ philosophy. The core values are supported by strong investment in scientific research and technology.

The L’Oreal Group total turnover by the Paris franchise making it the company’s largest division in the world. Today there are strongly established L’Oreal Paris brands across all of the key areas of the beauty market, including the Plnitude skincare range, Elvive hair care and Studio Line styling products. Other brands include L’Oreal Paris Color Cosmetics, Elnett, Rcital, Excellence, Fria, Perfect Blonde, Open, Casting and L’Oreal Kids. The Consumer Products Division in the Europe is dedicated to offering consumers innovative, high technology beauty products from global brands at competitive prices. This is delivered through a global strategy combined with a local understanding of the needs of women and men of all ages.


The L’Oreal Group has three international brands named as L’Oreal Paris, Garnier and Maybelline that offer hair care, sun care, hair coloring, skin care and make-up products. All of these available from mass market retail outlets such as supermarkets, drugstores and leading chemists throughout the world. L’Oreal Paris remains the finest mass-market brand. It is offering consumers reachable luxury for skin care through providing its consumers leading-edge products that outshine the competition. “Garnier”, on the other hand, Europe’s no1 brand for natural beauty products in hair care category that offers a complete collection for healthy hair. Similarly, Maybelline offer world class quality for on screen requirements. The L’Oreal Group performance is marvelous due to its distribution channel too. The company focuses on “go native” strategy mean hire local firms in every country to distribute its products. Secondly, “First landing” strategy that is first commercialization is bad thing if the product is not available in a particular place. It has two bad impacts on the company: one would be if product is not at a particular place and company runs there commercials the negative word-of-mouth generate due to the consumers effortless struggle to search the product. The other is the huge advertising budget shatter due to pointless direction. The company by itself monitor, control and evaluate its channel performance especially distributors. The company follow same marketing mix foe the whole world with a little bit variation according to the economic conditions of a certain country. L’Oreal is known for its strong control over its promotion, place, price and packaging strategy, which is decided from the headquarters. For these points, only minor product adaptations are made in different countries such as labels’ languages. All controls are very frequently checked to comply with prices and selling places of the group marketing strategy.

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