Statement of the Problem
How can L’Oréal sustain Kiehl’s integrity as a brand while it is introduced to the global market?
a. Ability to meet demand was poor.
Before the L’Oréal acquisition, Kiehl’s had no more than some placements in 5 high-end department stores and its original New York store. Its exclusive reputation and high quality meant more demand but the fact that Kiehl’s operations were so small, Kiehl’s on its own would have had a difficult time meeting demand. b. Worldwide exposure risks Kiehl’s exclusive appeal.
Kiehl’s products’ exclusive nature has helped boost its products’ charm. Worldwide availability risks exactly that.
A. Maintenance of Kiehl’sexquisite NY appeal.
Unlike many other industry player of its time, Kiehl’s availability in the US Market was unique in a way that it was only available in New York and a few selected stores. Its rarity gave Kiehl’s its exclusive appeal that worked to its advantage. This characteristic, the feeling of having something exclusive, something rare, and something from New York, was unique to Kiehl’s products. B. Maintenance of its high level of quality.
From the time Kiehl’s was created, so much dedication was poured into each product’s research. This dedication gave its products a reputation of being high quality. C. Meet existing demand.
Kiehl’s reputation for being exclusive and of high quality made it highly coveted. However, at the time of acquisition, there were no more than some placements in 5 high-end department stores and its original New York store. The mail-order system Kiehl’s had in place was a success but it was slowly showing its weaknesses. Demand was growing but the company had limited ability to meet them. D. Grow.
At the time of acquisition, L’Oréal did not have an American luxury cosmetic business. Kiehl’sprimary purposewas to put a plugto that gap. However, to achieve yearly revenue increases, the company will have to expand its operations outside New York.
II. Analysis of Relevant Case Facts
We have outlined all the relevant case facts into a Strengths, Weaknesses, Opportunities, Threats table.
|Strengths |Weaknesses | |Reputable (L‘Oréal) |Scale of globalization: Decentralization (L’Oréal) | |Solid capital funding (L’Oréal) |Perception of being too costly (L’Oréal/Kiehl’s) | |Modernized leaders (L’Oréal) |Low brand recognition (Kiehl’s) | |Excellent history of internal growth and acquisition– strong |Production could not keep up with demand (Kiehl’s) | |corporate background (L’Oréal) | | |Conglomerate focus on the cosmetics/parfum/skincareindustry | | |(L’Oréal) | | |Massive marketing abilities (L’Oréal) | | |Top of the line research and development funding | | |(L’Oréal/Kiehl’s) | | |High quality products (L’Oréal/Kiehl’s) | | |Unorthodox marketing strategy(Kiehl’s) |...
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