Gap Analysis of L’Oreal

i) Background of L’Oreal

L’Oreal was found in 1909 by Eugène Schueller, who is a chemist entrepreneur. During the period from 1957 to 1983, L’Oreal enjoyed a fast growth, when these emblematic products of L’Oreal came into the world. And during the period from1984 to 2000, L’Oreal enjoyed a great fame in the world cosmetic market, driven by modern technology and big investments in products’ research and development. Entering into the 21st century, L’Oreal has been maintaining its dominant position in the world cosmetic market via offering great customer services to customers all over the world. (L’Oreal 2011)

Till the present time, L’Oreal has already become one of the first class cosmetic companies in the world with nearly 64,600 staffs in more than 130 different countries and regions offering about 674 cosmetic patents to customers all over the world (L’Oreal 2011).

And according to L’Oreal’s Chief Executive Officer, its continuing focus on its services for customers has contributed to a good business consequence due to the fact that L’Oreal has been promoting the acceleration in products and services innovations for customers to enable this organization to function ahead of the time and achieve a various needs in customer services from all over them world (L’Oreal 2009).

ii) Customer service evaluation

Vickery, Jayaram and Droge (2003) defined the customer service as an entire activity to identify and satisfy the requirements from customers, which becomes one of the most vital parts of marketing mix. As customers not only focus on the products but also focus on the additional service they received from the products, it is important for companies to create the customer service and improve the good business performance (Bowersox & Closs 2002). Because the importance of customer service for a company, L’Oreal highlights the customer service for customers all over the world.

Next, we’ll have an evaluation on the customer services of L’Oreal in three main aspects including marketing department, HR department and operating department to ensure the good performance of L’Oreal in customer service and find out the weak points to give some suggestions.

To begin with, let’s refer to the seven gaps theory to evaluate the customer service of L’Oreal. According to the seven gaps theory, there are many service gaps between the expectation and actual business performance for a company such as the knowledge gap, the standard gap, the delivery gap, the communication gap and so on in chart 1.0 (Likun 2006). And in the following, we’ll evaluate these gaps above mentioned by L’Oreal

Chart 1.0 Gaps theory

Gap Analysis of L’Oreal

 

a) Knowledge gap

As the knowledge gap refers to the distance between customer’s expectation for the service quality and management’s perception of customer expectations (Pfeffer, J. & Sutton, R. I. 2000). Let have a look at the strategies carried out by L’Oreal to close this gap.

Firstly, in marketing department, some necessary and important market research are implemented by L’Oreal under a clear guidance of the mission to facilitate customers both male and female all over the world to understand and realize the aspiration to become beautiful and show out their individual personalities fully via the service offered by L’Oreal (L’Oreal 2009). These marketing researches carried out by L’Oreal including the understanding of the market trend and the customers’ requirement to meet the need of a variety of beautify.

And then, in the HR aspect, a relatively thorough upward communication between L’Oreal’s management and customers, the working staff and management towards the markets needs on customer needs are also promoted by this company including great investments on products research and development according to the research results, continuous promoting programs on employees’ capability, working environment and welfare, effective communication mechanism established (Hong 2010; L’Oreal 2009).

Performance Excellent results

By and large, via the efforts of L’Oreal in these marketing strategy and HR strategy, the customer services quality has been improve. For example, there are four major products segmentations contributed by L’Oreal to customers all over the world including consumer cosmetics, professional cosmetics, luxury cosmetics and active cosmetics, which tries its best to meet different requirements from different customers to offer them relatively satisfactory customers services via the properly product designing and offering services. Chart 2.0 is the division weight of the four major products offered by L’Oreal aiming to provide careful services for customers to meet their expectation on personal beautify. (L’Oreal 2009)

Chart 2.0 Products’ division weight

Gap Analysis of L’Oreal1

b) Standards gap

The standards gap in customer service quality refers to gaps between the real service designs, standards and the perceptions of management on customers’ expectations. Brief speaking, because of the poor service design, absence of the proper customer driven standards and improper physical evidences and the scope for service, this gap may contribute to customer loss and poor business performance and reputation of the company (Dodds 2003). Measures adopted by L’Oreal to close this kind of gap are reflected by strategies especially in the operating department.

For example, the high governance standards have been set up by L’Oreal in the recent years to enable the management to focus on the operation strategies, matters and involve in team vigorously in all the battles relying on providing necessary perspectives on analysis, advices and strategic guidance as well (L’Oreal 2009). Such kind of standard setting enables L’Oreal (2009) to enhance its focus and real understanding about customers’ needs and requirements to set up and maintain the necessary and important standard restricting the service quality offered to customers.

Performance Results

As these operating standards set up by (L’Oreal 2011), the real needs of customers on product services and designs are possible to meet to a certain extend and the service quality has been improved as well. For example, with the proper monitor of the governance standards, the products supply chain has been divided into four geographic parts such as the Europe pole, Asia pole, Latin America pole and North America pole to meet and take up some specific challenges in these regions via the assistance of improved customer service with reference to the different preference and customs in these places. Briefly speaking, these strategies and measures in L’Oreal enable this company to shorten the standard gap between the organization’s management and customers to a certain degree, which are relatively effective (L’Oreal 2009).

c) Delivery gap

The delivery gap involved in customer service quality indicated the gap between the expectation on customer service delivery and the real service delivery practices of the company (Allen, Reichheld & Hamilton 2005). Let take the example of L’Oreal in the strategies from HR department and Operating department to evaluate its performance in customer service aspect.

In terms of human resources policy to assist the performance of offered customer service, we may find these evidences. At first, in 2009, L’Oreal was marked more compared to the previous time due to its initiatives in promoting diversity workforce, employing disabled people, enhancing staff’s awareness and so on. These programs including Mature-age employees, First chance, Equality in apprenticeships and European commitment and so on have contributed to a good image for L’Oreal as a employer. Because of this, the sense of belonging of employees have been improved a lot which finally result in the good performance of these employees. (L’Oreal 2009)

In the operating aspect, to better fulfill customers’ expectation on the products delivery, L’Oreal flexiblize its distribution means and manners. For example, to offer customers more satisfactory service plus its professional products, a large number of hair salons have been opened in the world market by offering customers great experience due to the spark from the combination of the fantastic skills from L’Oreal’s hairdressers and the professional products. And at the same time, the distribution channels of L’Oreal’s products have also been expanded including department stores, free standing shops, travel retail outlets, perfumeries, e-commerce websites and so on to improve the convenience, flexibility and effectiveness of these product delivered to customers. (L’Oreal 2009)

Excellent Performance Results

As the working morale and enthusiasm of people in L’Oreal have been improved, they are working more carefully and zealous to offer services to customers including products consulting service, delivery and packaging, which enable L’Oreal to deliver its customers service to the public more active and win a relatively good satisfaction. In the meanwhile, these operating strategies aiming to ease the delivery process and improve the quality of delivery service for customers also did a good job. According to the annual report of L’Oreal (2009), its business has been enjoyed a steady growth even during the economy downturn period, which is the persuasive evidence of the good customer service offered by L’Oreal.

d) Communication gap

Communication gap in the area of customer service quality means the gap between the promise of the company towards their products and service offered and the real quality of the service received by customers (Duffy & Fearne 2005). The reasons for this gap are often from the shortage of the integration in marketing communications, improper management of customer expectations, overpromising and so on (Duffy & Fearne 2005). One common example of this gap is that the overstatement on the function of the products for the customers via some promotion means such as the advertisements (Hong 2010). For L’Oreal, we can also find out the evidences of its efforts in closing the communication gap between customers and its promise and external communication (L’Oreal 2009).

In L’Oreal’s marketing strategies, these boastful propagation are relatively seldom, which more focus on the reality and the cost performance of its products to customers. And meanwhile, many testers are distributed to customers to make them experience the actual function of L’Oreal’s before purchasing. And meanwhile, some customer experiencing promoting campaigns have been promoted and implemented by L’Oreal to reach and attract more customers to get close to the service and products of L’Oreal by offering professional cosmetology knowledge from experts to address the products’ function and advantages to customers with a more practical channel. (L’Oreal 2009)

Performance Results

With these relatively pragmatic promoting measure and services offered to customers, actual product information transmitted to customers via thoughtful customer service such as the consulting services, promoting campaigns and so on. As this information is relatively proper and trustworthy, the communication gap between customers’ expectations and the actual quality of the service and products received can be shortened to a certain length. That is why the business performance of L’Oreal is so satisfactory during those years compared with other competitors as chart 3.0 shows. (L’Oreal 2009)

Chart 3.0 Financial performance

Gap Analysis of L’Oreal2

 

iii)

 

 

 

 

Gap Analysis of L’Oreal3

Conclusion and Recommendation

According to the evaluation of the customer service performance of L’Oreal, we have witnessed its good excellent activities while there are some insufficient points requiring consideration and modification.

In the delivery gap aspect, these practices and services offered by L’Oreal aren’t seemed enough, there is a need to strengthen and improve this field’s services. In the following chart, we suggest 6 tips for L’Oreal follow. For example, as the tip 3 indicate it is important for L’Oreal to treat every customer equally and thinks of their suggestions and interactions as the precious resource for the modification and development of its business due to the essential role played by customers for every business (Allen, Reichheld & Hamilton 2005).

Chart 4.0 Six actions to close delivery gap

 

Gap Analysis of L’Oreal4

Source: Allen, J., Reichheld, F.F. & Hamilton, B. 2005, Closing the delivery gap, Bain & Company, New York,

In the knowledge gap part, the training programs and developing plans for both upper management and ordinary employees may also need increasing considering the current level (L’Oreal 2009). As the practice makes perfect, we suggest L’Oreal offering more chances for the management staff and ordinary staff to experience and work in the front line such as the sales people or the assistance in the cosmetic department to experience and get close to the real needs and requirements of customers. Only by this means, may these staffs in L’Oreal can get a relatively thorough understanding of the customers’ preference and requirements on products and services to help L’Oreal retain the customer loyal (Pfeffer & Sutton 2000).

Reference

Allen, J., Reichheld, F.F. & Hamilton, B. 2005, Closing the delivery gap, Bain & Company, New York,

Bowersox, D.J. & Closs, D.J. 2002, Supply chain logistics management, MC-Graw Hill, Boston,

Dodds, B. 2003, Managing customer value: essentials of product quality, customer service and price decision, University Press of American, Oxford,

Duffy, R. & Fearne, A. 2005, Reconnection in the UK food chain: Bridging the communication gap between food producers and consumers, British Food Journal, Vol. 107, Issue 1, pp.17 – 33

Hong, L. 2010,  (Market analysis on the global cosmetics market), news.c2cc.cn, viewed 22nd Novermber 2011,
<http://news.c2cc.cn/rhx/data/201006/478920.htm>

Likun, W. 2006, A comparative study on Kano Model and Gaps Model of service quality, World Standardization & Quality Management,

L’Oréal 2009, Annual Report: General brochure, vol.1 electronic version, loreal.com, viewed 21st November 2011,
<http://compte.ile-des-medias.com/redirect.asp?parm=000500000137>

L’Oréal 2011, Company overview: Our mission, loreal.com, viewed 20th October 2011,
<http://www.loreal.com/_en/_ww/html/our-company/mission.aspx?>

Pfeffer, J. & Sutton, R. I. 2000, The knowing-doing gap: how smart companies turn knowledge into action, Harvard Business School Press, Boston,

Vickery, S.K., Jayaram, J. & Droge, C. 2003, The effects of an integrative supply chain strategy on customer service and financial performance: an analysis of direct versus indirect relationships, Journal of operations, Vol. 21, Issue 5,

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