L'oreal Plentitude Case Study

Plentitude P&L in 1995

Based on the P&L information provided in the case, Plentitude has been struggling to achieve their goals of turning a profit and to become the market leader in the U.S. Plentitude was first test marketed in Atlanta and Dallas in 1988. The U.S. strategy was to introduce the entire line as it had been developed in France. In 1990, its first full calendar year on the market, Plentitude sales were $31.77MM; total advertising and promotion costs $35.5MM; and $25.4MM pre-tax loss. By 1995, net sales doubled while advertising expense increased to $38.3MM as Plentitude introduced new products which required support in a competitive market. In 1995, Cost-of-Goods-Sold were 25% of gross revenue, giving Plentitude a $12.5MM pre-tax loss. By 1995, Plentitude managed to become number three in dollar share for moisturizers, but still lagged far behind competitors in the cleanser market. Revitalift, known as a “face lift in a jar,” was introduced in 1995 and quickly grew to account for 20% of Plentitude sales. From 1990 to 1995, Plentitude’s moisturizers and cleansers have not seen much growth in market size or brand shares.

Exhibit 11

L’Oreal has lagged behind U.S. competitors in brand development, ranking 8th in brand awareness and percentage of current users. Performance though does seem to be improving as 1st quarter 1996 dollar volume sales increased by 32%. The market research company conducting the study presented in exhibit 11 summarized the research as showing that “Plentitude has room to grow but must first establish a more secure place among skin care consumers.” To me, this information illustrates that Plentitude may have a problem with positioning their brand. Competition-based positioning, affiliating a brand with a category that users can readily grasp and differentiate from other products, may not be the best approach.