L’Oreal is the largest cosmetics company in the world. It shouldn’t be a surprise that L’Oreal doesn’t sell all of its product lines in every market in which it sells, and the market in the Netherlands is no exception. Upper management of the Netherlands’ L’Oreal subsidiary have to make decisions on which product lines will succeed in their respective market and which ones will falter. In this particular case, L’Oreal needs to decide if it would like to introduce Garneir product lines such as the Synergie skin care line and the Belle Couleur permanent hair colorants line into the Netherlands market. The basic problem is whether or not to introduce these lines into the Dutch market.
In the Netherlands, unlike in France, L’Oreal and Garneir are both sold under the same sales force. This must be taken into consideration considering that L’Oreal has products in both hair colorants (Recital) and in skin care (Plenitude). Fortunately, the Dutch market maybe able to handle both of these product lines from L’Oreal and Garneir if it is felt that they could both be profitable.
When looking at the Dutch market, the most surprising thing is the youth of population. 40% of the population is under the age of 25. This is an important demographic stat because a lot of younger women are the ones who use cosmetics, but it is important to note that the fastest growing populations are those of age 25 and older which might be important to the market of hair colorants. Another interesting trend is the number of Dutch women who work outside the home with a labor force rate of 29% and it is increasing more rapidly than those of other countries like the United States and the United Kingdom. This is very interesting because these women will have more money, independence, and self-confidence. In these terms, these women will more than likely use more cosmetics because of the increase in time that they spend outside of the home. A final insight into the Dutch market shows that Dutch women tend to shop for value, especially in cosmetics, which needs to be taken into account. The overall Dutch market looks somewhat promising to the introduction of Synergie and Belle Couleur lines, but other factors must also be looked at.
While the overall Dutch market is important in the analysis, the product markets might give a better indication of how these products might do. For both of these lines, their markets seem to originate over the prices of the products being sold, from the upper end, to the middle, and farther down to the low end of the price scale. In the skin care market, which is the second largest sector of the Dutch cosmetics market, unit volume has grown at 12% annually in the last five quarters while dollar sales has risen at 16% annually. Also, 50% of Dutch women between 15 and 65 use traditional skin care products. The forecast is also good considering by the year 2000, sales in the cosmetic...