Sector research project

Sector research project

BLOT Laure DAVID Anne-Cecile Gauffroy Juliette GACHE Clelia SECTOR RESEARCH PROJECT Introduction For our Sector Research Project we had to choose two companies in the same industry. We wanted to choose a sector concerning us as customers. That’s why we have chosen cosmetics. But the two companies need to be different enough in order to be compared clearly. That’s why we thought about L’Oreal and Chanel. Even if they sell the same kind of products, they don’t concern the same customers. Indeed Chanel’s products are more expensive and are part of the luxury sector.

To obtain informations about the two firms, the first things we searched for were their Head office and web site. For Chanel we have found: 135 av. Charles de Gaulle 92521 Neuilly sur Seine France, www. chanel. com; and for L’Oreal: Centre Eugene Schuller 41 rue Martre 92117 Clichy France, www. loreal. com. I) COMPANIES’ HISTORY Chanel Born in 1883, Gabrielle Chanel is nicknamed « Coco » because of a song. She opens her first shop in 1910 in Paris. Ernest Beaux helps her to create Chanel n°5 in 1912.

The famous answer of Marilyn Monroe to which a journalist required what she was wearing at night: “Some drops

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of Number 5” is an excellent slogan. Since then, Number 5 has become a key product of Chanel. After the creation of some other fragrances, Mrs Chanel established herself at Ritz. Between 1983 and 1996, Karl Lagerfeld old from Balmain and from Patou, is seen entrusting the fashion clothing and Jacques Polge deals with perfumes. Nowadays, fashion glasses and jewellery are part of the key products too. Chanel has become a legend, and there is even a film about Gabrielle Chanel’s life.

L’Oreal In 1907, Eugene Schueller, a young chemist, develops the first colouring for hair (called Aureole). He sells his product to the hairdressers in Paris. In 1909 he names his company “Societe francaise de teintures inoffensives pour cheveux” which will become Oreal later. In 1920 their were three chemists, into 1950 the teams of research counted 100 people, 1000 in 1984 and more than 2500 nowadays. Since 1912 Eugene Schueller exports his products. Today the group Oreal is present in all the countries of the world. In 1933 he creates the magazine “Your Beauty”.

Since 1937 the famous “reclame” DOP on the radio makes swing the whole France. And in 1953, L’Oreal won its first Oscar of publicity, the first of a long series. But L’Oreal is well-known thanks to a lot of key products too: Immedia(1929), Dop(1934), Ambre Solaire(1936), Oreol(1945), Elnett(1960), Dercos(1964), Recital(1966), Maquimat(1966), Minivagues(1967), Elseve(1972), Eau Jeune(1977), Anais Anais(1978), Dakkar Noir(1982), Plenitude(1983), Studio Line(1985), Tresor(1990), Capital Soleil(1993), Amor Amor(2003). II) INTERNAL ORGANIZATION

The legal structure of Chanel is a SAS (Societe par Actions Simplifies) in French, versus L’Oreal , which is a SA (societe anonyme). The difference between both is the presence on the stock exchange market, indeed L’Oreal is divided in shares which cost 56. 65$ each. L’oreal is on the stock exchange market because it is a bigger firm, indeed, there are more employees in L’Oreal than in Chanel: In L’Oreal there are 50500 employees of 98 nationalities around the world, however, in Chanel are working more than 3,000 employees just in France. There is also quite a difference of structure between the two companies.

Chanel’s corporate structure is more traditional than the corporate structure of l’Oreal; Chanel has chosen a corporate structure divided into different departments like financial department, human resources department… L’Oreal prefers a different structure: their departments are divided by consumer targets and products: there is a division for luxury production, another for only the cosmetics , the consumer product department and the professional product department. Both companies differ by their strategy and culture:l’Oreal insist about the communication.

They value diversity as well, they look for “passionate, enthusiastic innovators and entrepreneurs”:it is the research and not even the production for them which makes the difference. Channel would spend money and help research for the quality of products and services and the image building and the dream. Last, l’Oreal gives the image of a very busy company in spite of the respect of the 35 hour week in France . L’Oreal Employees look very motivated and they have above all one objective: the success of their company. III) ECONOMICS Chanel

Chanel is a very discreet company, that is why it is difficult to have figures on it. Annual turnover on December 31st 2003 was of 828 millions €, and profit of 64 millions €. Chanel has a very good image (one of the best mark of luxury products), which is a strength but it is obvious that designer clothing is not a profitable trade. In fact Chanel uses this image in order to sell others products like perfumes or make-up. Chanel is not quoted on the stock exchange list, so there is no share price movement. It is managed by family Wertheimer, which do not want to communicate things about their company.

L’Oreal Annual turnover of L’Oreal has nothing to do with Chanel’s. It was about 14 billions € in 2002. On September 30th 2004 it was 10, 93 billions, and the luxury branch represented 3, 6 billions € in 2002. L’Oreal made 1456 millions € of profit in 2002 and 1653 millions € in 2003, that is to say an increase of 13, 5 %. This company has made a strong progression in North America. An important point too is that L’Oreal always achieves their objectives, but the climate is difficult especially in Europe, and there is a progressive attenuation of the negative impact of the exchanges.

The price of one share is at 56, 65 € for the moment but each year it takes value: for 18 years L’Oreal has been the only company with a disposable income in progression with two figures. Distribution of the capital of L’Oreal: Mrs Bettencourt (27, 5%), Nestle (26, 4%), Shareholders (42, 2%), and L’Oreal (3, 9%: auto control before reducing) The annual turnover is dispatched in Europe (53%), North America (28%) and others countries (19%). IV) COMMUNICATION AND MARKETING Chanel Chanel n°5 was only the fifth perfume in the world instead of being the first serveral years ago.

They decided to reconquer the first place: Nicole Kidman has become Chanel’s new icon for Chanel n°5. She is in a 2-minutes advertising which is very unusual. Chanel choose this actress because she represents elegance and beauty which symbolize the perfume. Chanel will open a building of ten floors in Tokyo in December. It will allow the brand to take root in a country which is very closed. It is the best way to develop their products and to reply to a growing demand in this country. Chanel is one of the most secret groups of luxury of the world.

The Chanel group has several high-class wines (Chateau Canon,… ) which shows that the brand is reserved for the high-society. There is a new collection ready-to-wear created by Karl Lagerfeld Spring/Summer for 2005 presented the 8th October at Paris. The name of the couturier is associated with luxury and it’s the spirit the company wants to keep. Chanel has chosen Altran Europe’s leader in innovation consulting to work on the technological innovations. L’Oreal For L’Oreal, marketing is the priority. With the aim of developing the advertising, L’Oreal search for famous star to promote the brand.

The most important stars are Claudia Schiffer, Mickeal Schumacher, Andie Mc Dowell, Jennifer Lopez, Beyonce, Natalia Umbroglia, Kate Moss, Charlize Theron, Heather Locklear and Milla Jovovitch. These stars come from music, cinema and sport, so everybody knows one or more of those persons and can feel concerned by the advertising. L’Oreal won the first “Global Diversity Award”. Ghinwa Naja, young scientist, is one of the prizes winner of the year for the price L’Oreal-UNESCO “for the woman and science” (research on the new methods of polluted water treatment). It gives to the company a human dimension.