Hedge, your happiness. What If L’Oréal Made One Decision That Could Weaken Every Brand It Owns?

I voted that L’Oréal would be worse off if it moved to a single umbrella brand.

Although a Branded House can strengthen one corporate brand and create marketing efficiencies, I don’t think it would give L’Oréal a stronger competitive advantage. Its success comes from understanding that different groups of consumers want different things. Using segmentation, targeting and positioning (STP), L’Oréal has built brands that speak to very different audiences. Someone buying Lancôme is looking for something completely different from someone choosing CeraVe or Maybelline, even though all three are within the same company.

Aaker (1996) argues that a well-managed brand portfolio allows a business to compete across multiple segments without weakening individual brand identities. That is exactly what L’Oréal has achieved. Each brand has its own personality, positioning and customer base, while the company still benefits from shared research, innovation and distribution behind the scenes. I really didn’t know that Kiehls was owned by them or I would’ve expected more of them I guess now I do Feel disappointed because I’m not a fan of that product. But I am a fan of CeraVe And quite shocked their part of the business.

Keller’s (2013) Customer-Based Brand Equity model also helps explain why this works. Consumers build trust, memories and expectations around individual brands over time. Those associations are part of what people are paying for. If everything became simply L’Oréal, some of the exclusivity and specialist credibility that brands like Lancôme or CeraVe have built could easily be lost.

Although listening to my husband that works for UBS can see why investors often favour a Branded House because it concentrates brand equity into one name. From a marketing perspective, though, I think L’Oréal creates more value by protecting the identity of each brand while using the scale of the parent company where consumers never really need to see it.

On the other hand I can see why you chose a Branded House. A single brand could make marketing more efficient and help strengthen the L’Oréal name across every product.

Where I see the challenge is that beauty products are often bought because of what a particular brand represents. People don’t just buy a moisturiser or lipstick. They buy into the expertise, image and identity attached to that brand. I think L’Oréal would risk losing some of that differentiation if every product sat under one umbrella, especially in its luxury and dermatological ranges. Look at all the different factions of Ralph, Lauren Polo, etc. etc. it’s kind of like you can’t afford the Ferrari but you can buy the hat.