L'Oréal Networking

Tweeting Beauty

Source: Frank Beer für Handelsblatt
Mr. Hiernonimus knows how to sell luxury.
  • Why it matters

    Why it matters

    The L’Oréal executive says that social networks will require the company’s marketing professionals to think in completely new ways.

  • Facts

    Facts

    • L’Oréal’s luxury division is the cosmetics group’s fastest growing segment and accounts for half of its sales today.
    • The company’s approach to acquisitions is to nurture and protect the brands.
    • Small, innovative brands stand to benefit from L’Oréal’s longstanding retail relationships and international marketing expertise.
  • Audio

    Audio

  • Pdf

Frenchman Nicolas Hieronimus, now 51, joined L’Oréal at the age of 23. He spent 18 years in the company’s consumer products division, during which time he held the positions of general manager of Garnier in Britain and later L’Oréal Paris in France, before creating the international L’Oréal Paris brand that he managed for nearly five years. He remains in charge of the luxury division, the group’s fastest growing segment. Mr. Hieronimus, who has exhibited a talent for uncovering trends, has been touted as a possible successor to Chief Executive Jean-Paul Agon.

Handelsblatt: You’re a man responsible for products targeted primarily at women. Do you know what female customers want?

Mr. Hieronimus: Of course. Men, you know, have always been trying to divine the dreams of women and turn them into reality.

So you rely entirely on your intuition?

Of course not. Marketing is about market research and numbers. Our local teams spend a lot of time talking to female consumers and tracking the various markets to spot new trends and requirements right away. And sometimes we also acquire a local, young brand that offers us something new.

Can you give us an example?

Yes, look at the makeup brand Urban Decay, which we acquired two-and-a-half years ago. As the head of the luxury division, I wanted to have a makeup artist brand in our portfolio, one that appeals to an Internet-savvy generation.

So a brand that’s also used by professionals in the fashion industry?

No, I mean a brand developed by makeup junkies for makeup junkies. We didn’t have one. During our search for such a brand, our team in the United States discovered Urban Decay. We met with the founder, Wendy, and her CEO, Tim, and recognized immediately that it was a perfect fit.

Doesn’t a brand like that lose its soul in a large corporation?

When we buy a brand, the first we do is identify its DNA. Then we protect it as if it were under a cheese dome. We make sure that we keep the most important employees, and we usually allow the brand to remain where it was created.

 

L'Oréal Results-01

 

So how does being a part of L’Oréal benefit this type of brand?

The group can take it to a completely different level internationally. We take advantage of all the strengths of L’Oréal market research, as well as our worldwide network. We have people who know their way around every detail of international business, such as licensing requirements in China. These are things that often prove to be the undoing of smaller brands.

But you also have to win over retailers.

Yes, and we can do that, because we have partnerships that have existed for decades. A good example is the introduction of electric facial cleaning brushes in Germany two years ago, a completely new field for us. At the time, we assured Douglas that Clarisonic would be a success. Then the brushes were launched exclusively in more than 100 outlets, and they were a hit. The brand’s founders in Seattle would hardly have been able to do that with a sample case.

Your competitor Procter & Gamble takes a more ruthless approach. After acquiring Wella, it shut down the company’s headquarters in Darmstadt.

We have a different strategy: We want to protect the roots of a company we acquire. And we also focus on areas that we know very well.

Could Wella find a new home at L’Oréal?

No.

Why not?

As the world market leader, we are already very well positioned in hair salons with our own brands.

To what extent do you have to adjust brands to conform to local conditions?

Such adjustments are necessary in the mass market. Here in Germany, it may be important to have German ambassadors who make our brands more relevant for female consumers. Approachability is key. The luxury segment is different, however. It’s more about arousing desires. The same brands are desirable for German, American and Chinese customers. That’s why there are more commonalities than differences around the globe.

Are luxury consumers really the same around the world?

Not entirely. In Germany, people are more impressed by facts than glamor. Look at Kiehl’s, for example. The fact that it’s a cool brand from New York drives sales in some countries. For Germans, it’s more important to know that a New York pharmacist created the brand. It’s even more extreme in Japan, where we need to talk almost exclusively about dermatology.

 

L'Oréal employees and sales by division 01

 

So do you need more new brands? Will you continue to make new acquisitions?

We already have an optimal brand portfolio today, and are growing one-and-a-half times as fast as the market worldwide. But we’re always looking for new opportunities.

Even if you have all the brands you want, you still have to market them to customers. What role do social networks like Facebook and Twitter play?

It’s very important for luxury brands to maintain a presence in social media. Young consumers are just as heavily influenced by bloggers, vloggers and friends as by classic advertising. But that’s just the beginning. We are all still learning new things. Social networks require marketing professionals to think in completely new ways.

Does the new way of thinking lead to cuts in your marketing budget, as Procter & Gamble has announced?

I see no reason for radical cuts, because we need both classic advertising and digital media. I see only one savings effect – namely that digital channels allow us to reach our consumers in more targeted ways. When you run a TV ad for Lancôme, only about 20 percent of viewers can actually afford the product. In other words, about 80 percent of the budget for the ad is a giveaway. If we manage to improve how we appeal to target groups, we can use our money in more optimal ways.

Where?

We will continue to improve the retail shopping experience. The more people obtain their information online, the more important it becomes to turn their purchases in stores into an emotional experience.

Can you also gain more male customers for cosmetics products in your own stores?

Well, first of all, many men use cosmetics. There are even regions in the world where men spend a lot of money on cosmetics, regardless of whether there are dedicated retail outlets for the brands.

Where?

Mostly in Asia. In China, for example, the market for skincare products is almost as big for men as it is for women. Sales of beauty products for men are also growing in Germany.

What convinces men to use cosmetics?

We use athletes as role models and brand ambassadors, because they are more likely to appeal to men than models. It’s a little different with fragrances, because women often buy them for their husbands. That’s why we show attractive men in our fragrance advertising. I suspect that women hope that their husbands at home will magically come to resemble the model.

We’ve talked a lot about the luxury business. You’ve been running it so successfully that there is speculation that you could succeed CEO Jean-Paul Agon. Do you have ambitions?

My ambition has always been to do my job at L’Oréal as well as possible. The selective brands for which I am responsible make up half of group sales today. This is a huge responsibility and, most of all, it is work I enjoy very much. Jean-Paul Agon, the CEO, manages the group with energy and great success. We work together very well, and I am honored by his confidence in me.

 

Christoph Kapalschinski  and Georg Weishaupt conducted this interview. Mr. Kapalschinski  covers the consumer goods, textiles and food industry for Handelsblatt. Mr. Weishaupt covers the building sector, solar and wind energy for the paper. To contact the authors: kapalschinski@handelsblatt.com  and weishaupt@handelsblatt.com

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