The purpose of this article is to describe the rationale behind and analyze the results of a strategy in regards to changing conditions and market share dominance. For more than 20 years, with the growth in available product varieties, product and brand proliferation have become increasingly evident in many consumer markets.
This article examines how three L’Oréal mass market businesses, i.e. L’Oréal Paris, Lascad and Gemey-Maybelline-Garnier (GMG), managed proliferation activities between 1988 and 2012 on their domestic market. Data were extracted from the information resources, inc. (IRI) Census and Sample Databases (retail panel data), and information was collected from internal sources and semi-structured interviews with top executives. Brand performance was assessed using panel data structure analysis, as recommended by IRI and Nielsen. Some data, as they remain confidential, were not included in the paper.
The study reveals that when opportunities are lacking, demand is declining, and competition is fierce – the situation that marks most mature markets – a proliferation strategy actually can yield diminishing results and reduced brand dominance.
Offering broader lines appears to generate confusion and to be counterproductive in relation to theoretical assumptions. Additional research on proliferation strategies is needed, particularly in declining market conditions, which implies diminished demand and market saturation due to increased competition and isomorphic practices.
When deciding to extend product lines, managers should take into account competition and more qualitative factors than those included in the models developed by and for store brands. The respective positioning and marketing strategy (i.e. challenger and leader) of the brands involved have also to be considered.
Prior research on proliferation strategies has relied on strong assumptions such as increase in demand and unsaturated markets. Through these case studies, this article shows that making the shelf space denser affects brand dominance, particularly when market conditions change. These results challenge current thinking as, in facing internal and external contingencies, managers might think which scenario is most favorable for maintaining a dominant position: changing the structure of the market by reducing (i.e. concentration) or increasing the number of brands/products in the market.
The author would like to thank L’Oreal Group for its support. The author benefited from a Research Contract in 2010 at L’Oreal’s Consumer Product Division based in Paris/Saint-Ouen (France).
The author would like also to thank Grenoble Ecole de Management for its support.
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