BCG Matrix of L’Oreal 

L’Oreal BCG Matrix (Boston Consulting Group) is a strategic analysis tool that allows you to analyze the business units and product portfolio of the company. The key insight gained from the BCG matrix analysis offers you further investment opportunities. Today, we’ll discuss the BCG matrix of L’Oreal as a BCG matrix analysis example; it analyzes the market share and growth potential of every business unit and market share in the form of four main quadrants; stars, cash cows, question marks, and dogs.

Eugene Schueller established the personal care and cosmetic company L’Oreal in 1909. L’Oreal is the world’s leading and largest cosmetic brand. Some of the main products and services of cosmetic and personal care product manufacturing company L’Oreal in different categories are as follows;

Some of the main subsidiary brands of L’Oreal are as follows;

• NYX Cosmetics
• Maybelline
• Lancome
• Kiehl’s
• Garnier
• Aesop
• Matrix Essentials
• Ambi
• Acne Free
• CaraVe

Some of the leading products of L’Oreal in the British market are as follows;

• Shampoo
• Hair Conditioner
• Face Cream & Lotion
• Face powder and tinted moisturizer
• Eye makeup
• Cleansing cream
• Hairstyle product
• Lipstick

Bruce Henderson founded the BCG Matrix or the growth-share matrix in 1968, and it allows you to analyze the different market share and growth rates of the portfolio product. The matrix comprises two dimensions; market share and growth rate. It has four quadrants like the following

• Stars are when a high market share and high growth rate
• Cash cows have when high market share and a low growth rate
• The question mark is low market share and high growth rate
• The dog is when low market share and low growth rate

Let’s discuss the BCG matrix of L’Oreal as a BCG matrix analysis example;

BCG Matrix of L’Oreal 

The four main quadrants of the BCG matrix of L’Oreal are as follows;

Stars of L’Oreal

I-Consumer Products

The consumer products of L’Oreal have earned a position in the star quadrants of the matrix because they have a high market share and high growth rate. Some of the star consumer products and brands are as follows;

• L’Oreal Shampoo
• Maybelline
• Lancome
• L’Oreal Paris
• Garnier

These brands have established a strong position in the global market and a large database of customer markets. The analysis of high market share and high growth rate outlines that the consumer products of L’Oreal have a high growth potential and high revenue. As a result, the high growth rate and revenue would attract the attention of the market and a lot of competitors.

II-Defensive Approach

In order to retain market share, revenue, and profitability, L’Oreal has to invest a significant amount of capital resources to defend the cosmetic company’s market position. The investment as a defensive strategy helped the company in the following ways;

• Retaining current customers
• Attracting new customers
• New geographical market penetration
• Product line expansion

It would impact the product lifecycle and the market growth rate; it would slow down the product movement from a high growth rate of star to the slow growth rate of a cash cow position.

III-Product Innovation

L’Oreal invests a significant amount of resources in research and development. It has allowed the company to launch innovative products and offer unique customer experience. That’s how the cosmetic brand has fought off the competition and retained its position in the market.

Cash Cows of L’Oreal

I-Professional Products & Brands

Professional products and brands have earned a position in the cash cows quadrants of the matrix. It outlines that they have a high market share and slow growth rate in the mature and saturated market. Some of the main professional products and brands in the cash cows quadrants are as follows;

• Vichy
• Garnier
• Pureology
• REDKEN
• KERASTASE

Usually, cash cows are the most stable area of any business or company, and the objective of the company is to retain its market share. These brands offer high-quality products and they have established a large market share. When the market is growing, the acquisition rate is slow and the customer retention rate is higher.

II-Cash Surplus

Slow growth and high market share mean that the cash cow professional products are generating a significant amount of cash surplus for the company. L’Oreal reinvests the cash earned from the professional unit to the other consumer product units of the company because they usually require a large investment. However, it shows that the earned revenue from the professional department is much more than its investment.

Question Marks of L’Oreal

I-Luxury Products & Brands

The luxury products and brands of L’Oreal earned the position in the question marks quadrants of the BCG matrix. It shows that those products and sub-brands have a low market share and high growth rate. Some of the luxury products and brands of L’Oreal in the question mark segment are as follows;

• IT Cosmetics
• NYX Cosmetics
• LANCOME
• KES SAINT Laurent

The analysis of luxury products and brands in the question market shows that they have a high growth potential to become the star. Newly acquired brands and small brand projects usually fall under this category, but they face fierce competition in the

II-Capital Investment

In order to attract the attention of customers, L’Oreal should invest a significant amount of capital resources in the growing products and sub-brands. The invested resources carry a lot of resources, they may either pay off or would result in the form of wastage of investment.

However, new customer acquisition is a great strategy of the company that helps a company to transform question marks products into cash cows and stars.

Dogs of L’Oreal

I-Active Products

The active products and sub-brands of L’Oreal earned a position in the dog quadrants of the matrix. The dog quadrants mean that they have a low market share and slow growth rate. Some of the active products and sub-brands of L’Oreal fall in the dog quadrants as follows;

• SKIN CEUTICALS
• VICHY
• LA ROCHE-POSAY

The dog quadrant analysis shows that they are smaller brands and they haven’t attracted the attention of the customer market and face the challenge of tough competition.

II-Divestment

The cosmetic brand should carefully analyze these segments, if they don’t show any sign of improvement, then the company should consider divestment and sell them off. Divestment is a great strategic approach for the dog quadrant products. Instead of wasting resources on non-growing products and brands, L’Oreal should focus on growing products.

Conclusion: L’Oreal BCG Matrix 

After an in-depth study of the BCG matrix of L’Oreal; we have the realized that BCG (Boston Consulting Group) matrix is a highly useful tool for analyzing market share and growth rate. If you are learning about L’Oreal BCG matrix analysis as a BCG matrix analysis example of a cosmetic brand, then you should keep in mind the abovementioned elements involved in the quadrants of cash cows, stars, question marks, and dogs.