L'oral's Sales Structure Essay

4102 words - 17 pages

I.INTRODUCTIONIn 1907 Eugene Shueller a young French chemist developed an innovative hair-color formula. He called this new perfectly safe hair "Aureole". With that the history of L'Oreal began. Eugene Shueller formulated and manufactured his own products which he then sold to Parisian hairdressers. Before long, Eugene Schueller was exporting his hair-coloring products to other countries. As early as 1912, L'Oreal products could be found in Holland, Austria and Italy. A few years later and up to now L'Oreal group is present worldwide through its subsidiaries and agents. L'Oreal group now markets over 500 brands and more than 2000 products in all sectors of the beauty business. They are found in all distribution channels from hair salons and perfumeries to hyper supermarkets, health/beauty outlets and direct mail.II.ANALYSIS OF THE MARKETA.SEGMENTS1.Professional SalonProfessional Salon is comprised of six distinct divisions - Red ken,L'Oreal Professionnel, Kérastase, Mizani, L'Oréal Classic Salon Products and Matrix Essentials - each with its own unique personality and customer base.Developed with the passion and expertise of salon professionals, each division provides its customers with exactly what they need...innovative products formulated with the most advanced industry technologies in the world.Founded on the strength and quality of its salon products, L'OrealProfessional Salon brands are sold exclusively through hair salons and specialty retailers in the United States and worldwide. Dedicated to the development of professional hairdressers through innovative partnerships and educational training programs, the divisions continue to break cultural and beauty boundaries, and lead the way in the world of hair colour and hair care2.Consumer ProductsL'Oreal's Consumer Products Division is dedicated to bringing a wide variety of hair care, hair colour, skincare, colour cosmetics and fragrances to families everywhere -- at prices they can afford. The Division's star properties, L'Oreal Paris and Maybelline, are two of America's most popular brand names. That is one reason L'Oreal USA holds the top spot in the American beauty market. We make L'Oreal style and quality accessible to the broadest possible range of consumer needs and tastes.3.Prestige productsL'Oreal's International prestige brands are managed by the Luxury Products Division. Each brand owns a unique identity and distinct market positioning; all are selectively distributed through department and specialty stores. Luxury Products is a showcase for L'Oreal USA's premium skincare and make-up brands. Three major factors drive the Division's growth:major launches of innovative products for the discerning customersuccessful initiatives in new and existing fragrancesStrong, focused efforts to gain new market share.4.Dermatological sectorL'Oreal USA's involvement in the dermatological sector reflects the company's ambition to be present in every skincare category and distribution channel. Complementary to the rest of the brands, La Roche-Posay is the only prescriptive skincare product line L'Oreal USA currently offers.La Roche-Posay products are dispensed by physicians only. They are an adjunctive therapy to the treatment of pathologies or a complement in aesthetic and reconstructive procedures.B.Strengths and Weaknesses of Competition.The hair caring market is broadly divided into two segments the customer and the professional .L'Oreal company is recognized as the worldwide leader in the production of hair cosmetics. It is estimated to have the 60% of Greek market. Two other companies are the major competitors of L'Oreal in the professional market: Wella which has the 15% and Swarchopht-Rilken which has the 12%.Then other companies follow with smaller percentages such as Clarite, Goldwell and Cramer.Strengths and weaknesses of L'Oreal and its competitors are mentioned in the following table.STRENGTHSWEAKNESSESWella is the leader in the red hair coloring. They are more long lasting than L'Oreal'sL'Oreal's colorings have cosmetic ingredients for better qualityWella Clarite Rilken give bigger discountsCompetitors don't provide their customers technical support through seminars very oftenCompetitive companies have comparative lower prices and attract many hair salonsDon't give legal supportThese companies give credits to their customers after 60 daysL'Oreal works with the best professional hair stylists that introduce fashionIII.INFORMATION ABOUT THE COMPANYA.L'Oreal's Mission and ObjectivesL'Oreal's mission is not only to produce products but also to promote ideas. L'Oreal's purpose is to maintain its leading role in the professional hair styling market .L'Oreal also wants to satisfy its customer needs by providing technical support, advising and problem solving to all its customers in order to develop long-term relationships.The main goal of L'Oreal is to convey the allure of different cultures through its many products whether it is selling Italian Elegance New York street smarts or French beauty 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. As for its sales force their objective is to make sure that their actual sales volume exceeds their sales quota and gain customers' trust.B.Overall Performance & Potential of the companyL'Oreal's CEO is Owen Jones known by his arrivals as the marketing whiz. He has leaded the company to have a great competitive advantage by using his own multicultural background for the good of the company. While many companies seek to homogenize their brands to make them palatable in myriad cultures, Owen Jones has taken L'Oreal's products in the opposite direction. He wants them to embody their country of origin .So he has turned what many marketing gurus conceder a narrowing factor, into a marketing virtue. Also Owen Jones gains knowledge from the street that helps him keep his executives sharp. He is known for taking his managers over the coals in meeting, hammering them with scepticism. This tactic is followed by all region managers. All the strategies mentioned above make L'Oreal the leader with 60% of market share and give potential to maintain this position and meet all its objectives.C.ProductsL'Oreal provides a variety of products and the appropriate equipment in order to satisfy any possible need concerning hair styling hair careL'Oreal is mostly known by Kerastase a category product which represents the 35%of their total sales.Kerastase has a series of products for hair caring like: masks, shampoos, conditioners, ampules, emulsions and oils. All these products are produced to satisfy all different needs for dry, normal or oily hair. These products are also made to apply to special occasions like for customers with depilation, dry skin, dandruff or for more simple tasks like stabilizing colour or to protect from sun.Another category of products that have a high share on L'Oreal's total sales are their dyeing products which are:Majirel (includes all natural colours)Majiblond (includes shades of blond)Majicontrast (vivid shades of red)Mjimesh (highlights)Diacolor (permanent dyeing)Decapaz (for blond Highlights)L'Oreal also provides technical products to its associates like the equipment needed for perm and highlights.There are also other category products: Redken which is a new brand here in Greece but is the second more important brand in USA, Matrix which includes products of really low prices and finally INNE .All these category products include sprays, gels, wax, mouse, silicon and glossers for all types of hair.IV.ORGANIZATIONAL STRUCTURE OF L'OREAL'S SALES DEPARTMENTA.Independent Agents vs. Internal Sales peopleWhen they came into the Greek market they used external sales force, taken from a competitive company. This decision though didn't seem to be the best.These agents were not to be trusted because they were hired by other competitive companies and they were pursuing their own short run objectives.Since their sales were increased they realized that the cost of agents increased too. Considering the above they decided that it is more reliable and confident to rely on their own sales force rather than using independent agent who they can't control. So L'Oreal inverted its sales force from agents to internal sales people.B.How responsibilities & activities are divided within sales departmentL'Oreal is selling a variety of complex products that's why it divides responsibilities and activities within the sales department more specifically it is structured as product operating. It divides its sales department according to the three major products, Kerastase, Redken and technical products. There is also a separate division for their major accounts. The first three categories are also divided by geographical as shown below.Kerastase products are distributed to 800 places by 6 salespeople and 1 sales manager and the budget reaches 1, 5 billion drachmas. This is the major brand of L'Oreal' and is promoted to whole Greece.Redken products are distributed more selectively, to only 200 hair dresser salons by 3 sales people in all over GreeceTechnical products are divided to 3 districts, North-Central-South Greece by 6 sales people in each regionFinally there are 2 key account managers for whole Greece and products.In general each sales person is responsible for 200 to 240 customers and they have to travel to province twice a week. They are also obliged to be present in all shows of L'Oreal and all the trips with customers even if some of them take place in weekends or other holidays.C.How important are the major accounts to total sales of the companyL'OREAL has developed separate structures and programs for dealing with major Accounts. These customers are extremely important to the company and because of that they use 2 key account managers for the professional division and 3 sales people with one regional manager for the product marketing. The two Key account managers have the authority to make decisions about price and allocation of manufacturing facilities. They serve the account customers who represent a large amount of their total sales. These are chain coiffure (more than 3 coiffures). The chain coiffures are approximately 17-20. The major account customers of this category are listed below:1.Aggelos 80.000.0002.Dino 120.000.0003.Jino 100.000.0004.Nicolas 50.000.000The 3 sales people with the regional manager are occupied mostly with the product market and serve to supermarkets and beauty shops. The major account customers for L'OREAL are:1.Hondos 400.000.0002.Beauty Shop - ???????????? 200.000.0003.Daphnis 150.000.000D.How do they serve their major accountsThese customers are extremely important to L'Oreal because they account for a disproportionably large share of sales volume and profit.Because of the importance of these customers L'Oreal provides special offers like discounts, as it is sawn in the following paper, trips with special seminars all over the world. Also it gives its customers the opportunity to train their major employees to the best institutions like Vidal Sassoon and Tony &guy. The company organizes contests among its customers named COLOUR TROPHY and gives several kinds of prices like free travels and advertisements to special hair-styling magazines.E.Interaction between Sales and Marketing departmentFrom a strategic perspective, it is essential that marketing and sales are closely aligned. The mother company which residence in France decides the demand of development and the share of the company, in the Greek market of the following year. The marketing department should take those orders and draw upon designing product/market strategies.Marketing is charged with the responsibility of providing the sales force with the marketing tools they need to sell more effectively such as advertising, support, service, and sales promotions.The marketing department elaborates those orders; they translate them into marketing objectives and then make them objectives for the sales department.Salespeople have the primary responsibility for implementing marketing strategies, so as to accomplish the targets that the mother company has asked. Sales activities are a part of marketing, a company should do more than simply coordinate its sales and marketing activities. ConsequentlyL'OREAL production and sales department work together in order to avoid operational problems.IV.MANAGING THE SALES DEPARTMENTA.Recruiting Sales peopleL'Oreal has developed a job profile of the king of person the firm is seeking so it selects and hires people according to some specific skills the person must have:Potential sales person must have communication skills meaning they must be able to establish close and long term relationships with customer. In order to achieve that they must in all cases have a positive attitude, milling ness and strength to be helpful in any problem.A sales person must be ambitions creative and have lots of patient. Also since the major way of promoting its products is through presentation, sales people must have a good knowledge of the products, be friendly and interactive.L'Oreal is a huge company that's why it recruits sales people even when no immediate need for new sales people exists.Then when an opening does occur the time and costs of filling that territory will be relatively slow.The sources that L'OREAL uses to find the right people are several. They use advertisements through internet, voluntary applicants, referrals meaning people that are recommended by other individuals of other company's, and finally people within the company that they were working to other departments like production, and are acquainted with the product and also have been indoctrinated in company policies and programs.B.Selecting Sales peopleL'Oreal in order to select its sales people uses interview. These interviews are used basically to determine a person's fitness for the job. That's because personal interviews disclose characteristics that are not always observable by other means. The potential sales person will be interviewed by several executives these are the Regional manager, Sales manager and Human resources manager.On these interviews the interviewer wants to find out their marital status, their willingness or ability to travel and be away from home for 15 days and characters that are important for aspect life, patience, strength, and if they are social.They main purpose of the interview is to find out the experience the candidate have, if they are good in public relations. Degrees are not considered to be of importance. What L'OREAL seeks for is experience and ambition.C.Hiring Sales peopleFinally manager's purpose is to decide which one of the candidates has the best skills for the job according to their objectives.Another main goal of the responsible manager is to make a good offer to the person the firm wants if that person in not very interested.D.Training Sales peopleThe training program is a vital link in the process of the converting the recruit into a productive sales rep. The money is spent on recruiting and selecting sales people may be wanted if their selection is not followed up with the proper training programs. Additionally, experienced reps may not improve or even maintain their productivity if they are not provided with an adequate amount of continual training.The training programs that L'OREAL uses are divided into several steps.First of all sales people who are hired by the company have to learn all about L'OREAL (what it wishes to accomplish, what should they sell, to whom they sell, etc.).1. Then they attend the seminars which are taught to the professionals in order to be able to answer any question of the customer and to sell confidently to their customers. Those are:Introduction to the company's productsSeminars for permanentThe key for hair colouring No1 & No2Highlights2.Additionally, seminars related to the improvement of the total human image.Make-up seminarsStudy on the face imageStudy on the colouring(mix of colours)These are a part of their training education in order to support their customers efficiently3.Seminars for Account Manager4.Seminars for communication with customers5.Logistic seminars6.Seminars to teach controlling their time7.There are also special seminars for the salespeople who deal with major account customersThe sales managers decides who will be trained and how much to train them.According to their experience as sales persons and the customers who they deal with and determined who will be trained. L'Oreal trains its salespeople 3 to 4 times a year and in conformity to the problem arising. The training programs are decentralized and they take place inside the company, to hotels and during bonus trips.E.Motivating Sales peopleAn important task L'Oreal must perform is to motivate its salespeople meaning the effort salespeople want to make towards various aspects of their jobs.Motivational effort must include intensity, which refers to the amount of effort its salespeople expends on a given task and persistence meaning how long the salesperson will continue to put more effort and choice which is the choice a salesperson must make in specific actions to fulfil tasks related to the job.L'Oreal in order to motivate each salesperson uses extrinsic (such as satisfying salaries, mobile, free trips, bonus, recognition of other employers and the company in general) and intrinsic rewards.F.Compensation PlanThe objectives of the compensational plan are to motivate each salesperson, to control their activities, to ensure proper treatment of customers and to attract and keep them competent.L'Oreal's compensation plan secures income and incentive income, simplicity and fairness L'Oreal's compensation methods are:Straight salaries which is a fixed element related to a unit of time, during which the salesperson is workingsalaries plus bonusesBesides the above methods L'Oreal uses indirect monetary compensation.Except recognition among other employees there are also same other items referred as fridge benefits such as retirement plans vacations and insurance.G.How do they supervise their Sales ForceL'Oreal supervises its salespeople through personal contact. The supervisor, which is a sales person of higher rank, visits sales representatives on the job and tries to help them with whatever problems are evident. Their objective is to assist the sales people and evaluate their performance. Another way by which L'OREAL identifies a problem is sales reports which include the number of calls made, number of orders taken, and miles traveled, and days worked and new accounts sold.If sales reports show that representative are not routing themselves properly a supervisor is sent. He tries to help with the problem by taking the place of the trainee and tries to find out how the sales person does his job.A supervisor must be able to notice a problem and give a constructive feedback. It is very important to get the sales person agreement on the problem considered extenuating circumstances design an action plan for improvement and get the sales persons agreement on the action plan.Supervisions very important because it entails a multitude of activities that the sales manager undertakes daily to ensure that the sales force operates effectively while the ultimate goal is to increase sales while reducing costs.IV. COMMENTSA.Weaknesses of Sales Force StructureL'Oreal as it is already mentioned is one of the most successful companies worldwide, with the leading role in the hair cosmetics market, however it has some weaknesses in the way it has organized its sales force. Although it is organised by product specialisation which gives the advantage that each sales person gives a specialized attention to each product line, there is also a major drawback: sometimes more than one sales person calls on the same customer. Not only is this duplication of coverage expensive, it also can evoke ill will form the customers. Also this kind of structure as well as the geographical structure that is followed in some products has the weakness that the product sales managers have no staff assistants in advertising, sales promotion or other specialized marketing activities.B.How safe do you feel in investing money in L'Oreal?L'Oreal places very well in the ranking of the 2001 "world's most respected companies", according to a survey commissioned by the Financial Times. The international cosmetics group was particularly noted for its ability to create value for its shareholders. Fund managers interviewed by Price Waterhouse Coopers for the English daily paper ranked L'Oreal 5th worldwide amongst companies that create the most value for shareholders. The group is also the only French company included in the list of the 30 worldwide groups that are most respected by directors for their ability to create wealth for their shareholders.Amongst the reasons for the interest that the group attracts, the London daily newspaper noted that the L'Oreal group is considered as having been "very stable and constant over the years", and that it has "a good sustainable business model". The study also places the group in 2nd position amongst the most respected companies in the consumer goods sector throughout the world. In the general ranking, L'Oreal came in 31st place amongst the top 50 "most respected companies". In the French ranking, L'Oreal is the most respected company from amongst all sectors, bar none. Mr Lindsay Owen-Jones, the group's CEO, is also listed amongst the world's 30 "most respected" directors.C.Career opportunities in L'OrealL'Oreal's goal is simple: to offer anyone valuable professional experience and help to get a better idea of what kind of company L'Oreal is.1.To make the exchange more fulfilling, L'Oreal gives real operational responsibilities. Completely integrated into the company's functioning, an employee has a sense of responsibility and can gauge the challenges in his or her area of interest.2.Also L'Oreal by "internship" gives the chance to its employees to see how they feel about L'Oreal as a potential employer and discover their capabilities. As for the company, they discover their employee's personality, temperament, enthusiasm... An internship is a much more effective manner to get to know employees, than campus visits, career forums, or even interviews. It is for few months to understand the company culture and the way of functioning. It's an opportunity to immerse employees in a profession and meet colleagues. The internship supervisor - as well as Human Resources - meets with the potential employees regularly, doing everything possible to make internship with L'Oreal as smooth as possible.Because of all the above we think that if a position in L'Oreal's sales department was offered the best decision would be to accept the offer

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