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MB 107 marks milestone with case to boost L'Oreal's profits

May 9, 2012

If someone says L'Oreal, what comes to mind? Vitamins, health spas, pet shampoo? Brazil, China, South Korea? Perhaps not. More likely, you thought about cosmetics and skin and hair care products sold primarily in Western Europe and North America. But when the task at hand is to raise 500 million (that's Euros) in new profits for L'Or al over a three to five-year period, creative thinking is critical.

MB 107
Team 3: Coaches Peter Anderson '12 (left)
and Jared Lackey '14, and Drew Butterini '15,
Hope Spector '15, Stefani Mladenova '14,
Eddie Gemson '15, and Max Schoenfeld '15.

Certainly, that was the case for the 16 student teams participating April 27 in the MB107 executive presentations, the 30 th anniversary of the experiential program in which mostly first-year students pitch business solutions to panels of real-life business executives' and get immediate feedback, including a grade. It's intimidating and invigorating, and it's a great introduction to the business world. 

Says first-time executive panelist Mark Rakov '79, director of business development at Grant Thornton LLC in New York City, "I was expecting to see some well-researched analyses and effective presentations, but I did not expect to see the innovative and highly creative solutions that students proposed in the form of new product launches and strategic initiatives. These were not off-the-wall ideas. They were well thought-out proposals for building out the brands into complementary business lines, or leveraging existing technical expertise to capitalize onL'Or al's brand strength."

A global firm with more than 20 billion in 2011 revenues, L'Or al's first-half sales in 2011 were distributed across the globe: 40 percent in Western Europe, 24 percent in North America, and 36 percent in emerging markets, including Asia, the Pacific Rim, Eastern Europe, Latin America, Africa, and the Middle East. Long-term corporate objectives are to double the customer base to two billion people and to increase the share of sales in new markets from 30 to 50 percent.

MB 107

Team 9: Coach Kelsey Yam '13
(bottom left), Alexia Zarras '14, Hannah Balkin '15,
and Katrina Heiss '13. Jon Schultz '15 (top left),
Max Banartey '15, and Coach Nick Yedibalian '13.

Team number three (see photo) proposed "Beauty Inside, Beauty Outside," a plan for early entry into the single vitamin market (vitamins A, B, C, D, and E) in China. Working with Dutch company DSM, the world's leading vitamin producer, they proposed reaching Gen X'ers through non-traditional media such as micro blogs and selling the vitamins in grocery stores, in part to avoid China's rampant counterfeit market. "The Chinese are moving toward Western medicine," said Hope Spector '15, adding that product packaging would reflect Chinese traditions and color preferences. "It's a good cultural fit." One executive, Deb Monosson, said she was hard-pressed to ingest a brand that she's used to putting on her face. "True," one of the students said, "but we think we can leverage L'Or al's reputation for beauty."

Ultimately, though, the executives were favorable. Says Ed Gemson '15, "I was surprisedhow well the executives reacted to our presentation. I thought we did a good job, but spending months critically attacking our own idea to make it as good as possible made our perception of our idea versus the executives' extremely different. On top of that, many people we showed our idea to didn't seem as excited about it as the executives did."

Team number nine (see photo) suggested leveraging L'Or al's reputation for beauty by being the first major cosmetics company in the U.S. to sell pet shampoo and conditioner. "We believe in beauty for all, encompassing our pets, who after all, are family members," said theater major Alexia Zarras '14, the team's opening presenter. The team's product: Guarnier Poochise, an all-organic product sold in environmentally conscious green bottles. 

Though executives wondered how large the market for pet hair products truly is, they were impressed with the idea and the teamwork.

Other team proposals included:

  • Increasing market share in Brazil by partnering with domestic cosmetics company O Boticario. The idea: co-brand an OB product, Elegancia, by using re-branded and repackaged Matrix and Lanc me products that would be sold door-to-door. This was important becauseL'Or alcurrently does not have any experience with direct sales and it is the traditional way Brazilian consumers purchase cosmetics.
  • Introducing a new line of all-natural moisturizers called L'Or alSeasons for sale in Asian markets that also address seasonal differences in Thailand, Malaysia, Indonesia, and others. The products would be heavily marketed to 30-44-year-old women in major cities and later, to men in urbanized provincial capitals.
  • Entering the wellness industry worldwide by creating Equilibria Spa and Wellness Center, with a focus on fitness and personal care for upper-middle class customers.
  • Creating a line of skin and hair-care products, Mirabela, positioned for the Latin America market.
  • Launching a teeth-whitening product, Shine, targeted for the high-growth markets of China and Brazil.

Says business Professor Caroline D'Abate, who runs the MB107 program,"It never ceases to amaze me how these students, most just 10 months out of high school, accept the challenge before them. They take this actual company,L'Or al, a global firm with over 20 billion Euros in sales in nearly 30 different brands, and come up with creative and unique approaches to very broad and complex strategic challenges."

Summed up executive panelist Rick Kilbride of ING Investment Management, "If Skidmore believes that creative thought matters, what better example than to see the type of analysis, problem-solving, and effective communication skill sets that this assignment develops."

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