In an age when Instagram stories are used to promote practically anything and everything, L’Oréal India’s profile on the social media platform is a tad bit disappointing. However, switch over to its YouTube channel and the scene is refreshingly different.
Short and crisp video clips featuring some of Bollywood’s leading ladies are bound to make you pause and want to know more about the products being endorsed. These don’t play out like your usual commercials, but are detailed tutorials where Aishwarya Rai Bachchan enlightens you on her makeup routine at home and Deepika Padukone tries convincing you why the French cosmetics major’s clay-based shampoo is a must-have. Apart from these marquee names, a handful of beauty bloggers aka ‘influencers’ will leverage their social capital to educate you about the latest launch.
The story’s the same for its beauty and wellness brand Garnier India’s YouTube page, where youth icon Alia Bhatt makes a case for a makeup remover launched in December last year called Micellar water. A commercial that has not yet been released for a prime time TV slot but is the highlight of its social media platform reflects the company’s belief in a digital-first strategy. “People have been using removers for many years, but getting an effective one has always been a problem. We concentrated only on YouTube. We got 22 million views in the first month of the launch,” claims Aseem Kaushik, director, consumer products division, L’Oréal India, that overlooks categories such as hair colour, makeup and skin care.
While Kaushik declines to share the actual sales volume resulting from the digital approach for the product above, the country head, Jean-Christophe Letellier’s beliefs affirm that the brand is counting on this strategy to garner a higher market share. “Social media and digital have become omnipresent in our lives. We are entering, what we call at L’Oréal, ‘an era of social beauty’. It is an era where beauty is becoming more essential, where your looks are becoming more important, and this is translating into a boom for categories like makeup and hair colour,” explains the man at the helm of the Indian operations for the past five years. India had over 220 million Facebook users, 200 million YouTube subscribers, and around 2 billion shares around the beauty theme last year. “When it comes to L’Oréal, our role is to lead this social beauty transformation. Today 50% of our advertising is directed towards digital,” Letellier adds.
This seems to work favourably for the brand that has been an urban-centric player, given that it is indeed that section of the country that is looking up beauty products online. Kaushik informs us that there has been an unprecedented surge in beauty-related online search queries, almost 2 billion last year. It’s a no brainer then that the big names in the cosmetics segment are moving online to cater to this rapidly growing consumer base.
And as L’Oréal’s digital strategy gets more extensive, it is building strong in-house capability for the same. Its digital head Shashibhushan Udyavar says, “The idea is to make L’Oréal’s products relevant for the Indian consumer with the ultimate goal of driving sales online.” This explains why content plays an important role in the brand’s digital outreach campaigns. With millions of consumers looking up advice on product application and reviews, influencers and content creators are indispensable elements. “We partner with 200 influencers and create our own content,” he adds.
In order to satiate the rising aspirations of its well-informed clientele, L’Oréal ropes in Bollywood A-listers as ambassadors. “We get them to post key makeup techniques from their social media handles. There are also a lot of other celebrities and advocates of beauty products, who are given the products to review,” explains Udayavar.
Expanding the palette
While L’Oréal may be the global makeup category leader, it trails Hindustan Unilever-owned Lakmé in India. Kaushik says, “For channels like modern trade and e-commerce, we are at par with the market leader”. L’Oréal may not match Lakmé’s reach and price points (Lakmé declined to participate in the story), but there is no let up in its quest to increase its market share. To do that, Kaushik has a three-fold strategy in mind — focus on trends, target the urban shift, and leverage e-commerce.
The parent’s portfolio comes in handy when it comes to staying trendy. “While we innovate for India, we look at the world for inspiration. We do that through both our brands L’Oréal Paris, which is connected to the Parisian runway, and Maybelline, which is affiliated to the New York runway,” says Kaushik. The latest initiative on this front has been a collection with European designer, Balmain. Maybelline has also just launched another line of products in collaboration with widely-followed American supermodel, Gigi Hadid. “The idea is to keep bringing in not only innovation but also the latest fashion to Indian consumers, who are now aware of everything happening around the world,” says Kaushik. But the campaign didn’t stop at just those big names. Udyavar elucidates, “We realised that for high-end makeup, you need to show Indian women what are the possibilities. Everyone wears a red lipstick, but how will she look in a purple or a blue one? We created content for the same in collaboration with 35 influencers. L’Oréal Paris Balmain produced videos with actress and one of the brand’s Indian ambassadors Sonam Kapoor, only for digital platforms. That’s how we built fashion and makeup credentials for the Balmain collection.”
Testing new swatches
Apart from getting more social media savvy, the brand is also leveraging the emergence of e-commerce platforms such as Amazon, Flipkart and Nykaa. “While India will never be an online-only market, e-commerce has opened new avenues for us. Products can reach most pincodes with some of these players,” says Letellier. Online beauty and wellness retailer, Nykaa has been the largest contributor to L’Oréal’s online sales.
But the six-year-old start-up that raked in 48% of its revenue from cosmetics alone last year is not merely a sales platform. “We have a strong content strategy. We produce extensive buying guides and videos that assure consumers about products. We’re constantly updating customer reviews and ratings,” describes Nihir Parikh, chief marketing officer, Nykaa. How does that work for something like makeup, which requires a customer to experience it before making a purchase? Letellier describes how e-commerce platforms have developed tools to bridge that gap, “If you log on to Nykaa’s website, you will see how a consumer can experience every shade with the help of augmented reality tools. You can preview how the colour or product will look like on your hair or skin”. Apart from Nykaa, L’Oréal has partnered with Myntra as well. “We have a separate e-commerce team that works closely with them to ensure that they understand brand goals and challenges,” says Udyavar. He strongly believes that e-commerce contribution is only set to grow exponentially in the years to come. “E-commerce already contributes 10% to overall sales and in categories like makeup; the sales contribution is much higher. L’Oréal India was the sixth largest e-commerce market worldwide for the parent two years ago, and we are already at third place today,” he adds.
Apart from making its products available across e-commerce platforms for the new-age buyer, digital platforms also allow L’Oréal to target their marketing campaigns more efficiently. MV Natarajan, chief business officer, VLCC Personal Care, says, “Social media platforms help target specific groups at a much lower cost. But targeted marketing and activations do help generate product trials in the skincare business.” Udyavar concurs, even as he adds that it’s not just about targeting the right group of customers but getting the timing of your campaign right. “The task is about education and reminders. Going to them at the right time is very important. It may be during marriage season or vacation or the beginning of the month. For example, in categories such as hair and skin care, a lot of purchases happen in the beginning of the month, which is when the time is ripe for digital promotions.”
But digital marketing in the beauty category isn’t as simple as ticking off a few boxes detailing customer preferences. The category is very complicated and personal. “So we work very closely with them (brands) in creating a joint marketing plan to build consumer connect. We are an important retailer but also a very large marketing partner,” states Parikh.
Online exclusive launches with a Nykaa or Amazon or Myntra have also been gaining good traction. Parikh elaborates, “L’Oréal looks at their launch calendar and picks a product that we feel our customers will appreciate. Then we curate a marketing plan for that product range.” Maybelline’s recent Gigi Hadid and Balmain collections started off as online exclusives. “We were sure that we wanted to focus on a younger consumer, someone who wants to understand how to highlight her hair from the comfort of her home. So this particular product was done only through digital,” says Kaushik.
However, the French cosmetics major is not the only one experimenting with digital strategies, its local competitor in the hair colour category (which contributes 10% to L’Oréal’s kitty each year), Godrej Consumer Products isn’t far behind. Sunil Kataria, business head, India and SAARC, Godrej Consumer Products, says, “Digital is embedded in the strategy itself. Our ad spends have been going up and within that, digital has been taking the lead since the past two years.” He describes how the introduction of its crème-based hair colour priced at 30 in 2012 forced MNCs such as L’Oréal to follow suit. For a brand that receives 30% of its sales from rural markets, it has adopted a unique way to grow further, “At a company level, we have a programme called OneRural, where we identify priority markets for rural, brand by brand. Then we release specific marketing campaigns in all these markets simultaneously. We communicate in rural dialects and have used digital especially for mobile.”
Unlike L’Oréal, which is currently focused on urban areas, Kataria foresees a potential disruptive technology play in rural and suburban markets in the coming years. “Over the next two-three years, I believe growth will be driven by middle and rural India, riding on technology”. However, Technopak’s Arvind Singhal believes that given L’Oréal’s premium positioning and focus on the urban clientele, digital and e-commerce adoption would work well for it. “Being a global company it cannot create products only for the Indian market. I think it will have to straddle only the premium and luxury market, which it has done reasonably well.”
L’Oréal’s premium positioning helps it in targeting its core customer base well. This explains why it doesn’t see any merit in heading to the hinterlands any time soon. “Of course we were pioneers in creating the first Colossal Kajal, which does well, and goes much deeper in terms of overall presence because of its traction in tier-2 and tier-3 cities. But right now given the products and price points we have for makeup as a category, we will remain urban-centric,” says Kaushik. He believes that even today at a price point of 160, the Colossal Kajal remains out of reach for a large number of customers. Four years ago, L’Oréal had to launch small sachets of its crème-based hair colour at a price point of 47, to reach out to the mass market.
Hair care and skin care have traditionally been very high penetration categories, with prevalence of very low price points. Now that L’Oréal perfectly understands its strengths and limitations, the beauty major has tried to carve out niche sub-categories for itself here. For example, it was the first to launch Garnier men’s cleansing category, where it is a market leader. Letellier, who is fascinated by “social beauty” trends believes that India is a very undervalued market. He plans to address the ever rising aspiration for global products and believes, “India will be in the top five markets for beauty products over the next five to 10 years”.