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L'Oréal CEO Bravely Beefs Up Marketing Spend, Expands Target

Nivea reported yesterday that its profit dropped 14% in the first half but CEO Jean-Paul Agon tells Christina Passariello that the company is pursuing "affordable innovation" to beat back rivals such as the less-expensive Nivea. It appears that core consumers aren't lured as much as they once were by the purported superiority of ingredients such as white clay from the Amazon and are turning to private-label face creams instead.

L'Oréal is laying people off, closing factories and slashing travel expenses to deal with the downturn, Agon says, but at the same time it's beefing up its media and promotion budgets to broaden its target. "It's a brave strategy because when you face a crisis, most companies say I'm going to reduce my media budget," he asserts.

It is also introducing entry-level skincare lines including Basics from Garnier, which is more than half the price -- at below 5 euros -- than the cheapest Garnier-branded product now available. "For a while we've been very obsessed with premium-ization, more performance and higher prices," Agon confesses. "The strategy ... resulted in a narrowing of the target."

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