L’ORÉAL

Table of Contents
Memorandum.........................................................................................................................3
Current Situation...................................................................................................................4
The Ask..................................................................................................................................5
Strategy..................................................................................................................................5
Justification............................................................................................................................6
Why make items for pets?................................................................................................................6
Why create a new brand over acquiring an existing company?......................................................6
Why start in North America?...........................................................................................................7
Implementation......................................................................................................................8
Research & Development.................................................................................................................8
Operations.......................................................................................................................................10
Marketing.......................................................................................................................................11
Logistics..........................................................................................................................................13
Human Resources...........................................................................................................................15
Appendix A: Internal Factor Analysis Summary................................................................17
Appendix B: External Factor Analysis Summary................................................................18
Appendix C: Strategic Factor Analysis Summary...............................................................19
Appendix D: Industry Matrix..............................................................................................20
Appendix E: Porter’s Theory...............................................................................................21
Appendix F: Breakdown of Costs........................................................................................22
Appendix G: Pro Forma Income Statement.........................................................................23
References............................................................................................................................24

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To: L’Oréal Board of Directors

From: Lauren Nanne, Consultant
Date: March 19, 2019
RE: L’Oréal will produce a profit of $172,333,667 over five years and enter a new market by launching
Pawfection by L’Oréal, a luxury pet grooming product line that will offer unique, high quality pet
grooming materials.
Memorandum
Purpose
I am writing to you today to propose a new business strategy that will expand the brand portfolio, enter a
new market and increase sales for L’Oréal. The company has seen financial success and has been working
towards a goal of universalization. In order to expand the brands product offerings and expand further
into the personal care industry, L’Oréal must enter a new market with a unique product that will gain
market attention to allow for market penetration and competitive differentiation. In order to utilize
L’Oréal’s resources and strong research and development division, as a company, we need to take what
we are specialized in and develop personal care products for a growing furry market, pets.
The Ask
With your approval, we ask to invest $10,993,000.00 to introduce Pawfection by L’Oréal, a
luxury pet grooming product line that offers grooming items and all natural bathing product formulas.
Strategy
To further expand the L’Oréal product offerings and brand portfolio, we are going to introduce a
new brand Pawfection by L’Oréal into North America. Pawfection by L’Oréal is a luxury pet grooming
product line that will offer unique, high quality pet grooming tools such as bathing products, grooming
tools, and spray fragrances. The brand will develop and distribute products strictly for pets (mainly dogs)
and with natural, chemical free formulas. Through this new brand, we plan to enter into a growing market
that is new to L’Oréal and provide unique offering through a compassionate initiative towards providing
the best quality for pets – always the best for our ‘fur babies.’
Justification
Nearly 70% of U.S households own a pet and with a recent trend called “humanization” where
consumers are treating pets more like people, consumers are purchasing more high quality foods, high
end accessories and more expensive treatments making room for lots of opportunities of providing pet
products or services. L’Oréal will be creating a new brand Pawfection by L’Oréal instead of acquiring a
current company due to the brand recognition that L’Oréal already holds, the ability to control all aspects
of the business, and minimal competition within the luxurious pet care item market. Through a growing
demand for natural pet shampoo, the amount of pets and dogs within the North American households and
the consumer spending cultures, North America is the ideal location to the launch the Pawfection by
L’Oréal product line and is assumed to yield the best sales results.

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Current Situation
L’Oréal is a France based corporation that manufactures personal cares items and distributes them
worldwide. With over 40 subsidiary brands within the L’Oréal portfolio, the company has become the
largest cosmetics company in the world (L’Oréal, 2019). The company has a strong mission statement to
“offer all women and men worldwide the best cosmetics innovation in terms of quality, efficacy and
safety to satisfy all their desires and all their beauty needs in their infinite diversity” (L’Oréal, 2019) and
operates through a unique strategy of universalisation – globalisation that captures, understands and
respects differences (L’Oréal, 2019). The company has acquired several brands over the past 50 years
(L’Oréal, n.d.) which has contributed to the growth and continued success that L’Oréal has experienced.
Obtaining over 26 billion euros in sales and 4.68 billion euros in operating profits, L’Oréal will be able to
invest in expansion and growth opportunities. Going forward, the company will continue to focus on
providing innovative personal care products and cosmetics to meet the trends and needs of consumers
through the commitment of “sharing beauty with all” (L’Oréal, 2019).
Although L’Oréal is the largest company of cosmetics in the world, the company competes in two
very competitive industries. The personal care and cosmetic industries are seeing significant new entrants
into the market and are needing to adapt and make changes as necessary in order to remain competitive.
Some large corporations that compete directly with L’Oréal include Proctor & Gamble, Unilever, Johnson
& Johnson, the Estée Lauder Company, Coty, and Shiseido (Willett & Gould, 2017). These companies all
hold brands within them that offer either personal care items or cosmetic lines. Along with corporations,
L’Oréal faces more direct competition with some privately held brands such as Lush Cosmetics Ltd. who
has recently started to appeal to several consumers with the environmental responsibility initiative and the
natural, no chemicals added products (Shapouri, 2016). As well, any independently owned homemade
personal care item shops or simply do-it-yourself personal care item recipes (bath bomb, conditioner etc.).
L’Oréal also faces indirect competition not necessarily with companies, but with religious beliefs and
cultural views. Some cultures and religions have adopted makeup free lifestyles or minimal hygienic
habits making certain geographic locations and consumers more difficult to capture in the sense of sales.
L’Oréal has used research and innovation to make continuous improvements and developments to
its portfolio and product lines. By successfully identifying consumer needs and adapting to trends and
technological advancements, L’Oréal is capable of engaging in new opportunities to continue to grow and
succeed in the personal care and cosmetic industries.

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The Ask
With your approval, we ask to invest $10,993,000.00 to introduce Pawfection by L’Oréal, a
luxury pet grooming product line that offers grooming items and all natural bathing product formulas.

Strategy
To further expand the L’Oréal product offerings and brand portfolio, we are going to introduce a
new brand Pawfection by L’Oréal into North America. Pawfection is a luxury pet grooming product line
that will offer unique, high quality pet grooming tools such as bathing products, grooming tools, and
spray fragrances. The brand will develop and distribute products strictly for pets (mainly dogs) and with
natural, chemical free formulas. Through this new brand, we hope to enter into a new, growing market
with a unique offering and a compassionate initiative towards providing the best quality for pets. This
strategy will be focused on a concentric diversification through developing new products that are closely
related to the core L’Oréal focus on personal care item industry and enter into a new market. We feel that
through a competitive differentiation business strategy, we will be able to penetrate the market by using
unique marketing tactics and distribution methods. By implementing this strategy, we will be entering a
new, growing market and be able to continue our diversification, increase revenues, and continue to use
our research and development segment to portray further success within L’Oréal.
This strategy seemed the most adventurous for L’Oréal due to the uniqueness it provides. L’Oréal
has been working to ‘universalize’ its brands and products to attract new markets, meet consumer trends
and adapt to technology advancements. Through various acquisitions, the company has been able to
diversify its portfolio and remain competitive within the personal care item industry as well as the
cosmetic industry. However, the company has continued to focus on the same market in terms of
consumers – those with hygienic routines, those that wear and experiment with makeup regularly and
high class consumers that seek a prestigious image through scents and luxurious consumer products. With
all of that being considered, it seems like this is a good time to adopt a new market with similar products.
Since the brand name has now been widely recognized across the world, and built up to portray a strong
brand image and equity, a new product line would provide a new revenue stream and could attract both
current and new consumers. Finally, this new product line can be continuously developed. Although there
will an initial entry within North America with a small product line of approximately 10 products,
depending on the success, the Pawfection line could launch in international markets in the future and
continue to add additional products as demand appears. I strongly believe that this five-year strategy will
provide increased revenues, follow with the mission statement of “beauty for all” (even pets) and provide
a unique brand that differs from what competitors are offering that will attract consumers.

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Justification
Why make items for pets?
For this specific strategy, all the products created under the Pawfection by L’Oréal line will be
made specifically for pets (mainly dogs). In addition to the fact that pets are cute, cuddly, loveable and
deserve to be treated with love and care, there are several business reasons for why we are chosen to
pursue this market. The pet industry is made up of the products and services that keep the pets alive,
happy and healthy (food, training, toys, beds, grooming products and medical services etc.). Nearly 70%
of U.S households own a pet with approximately 60.2 million households hosting a dog and 47.1 million
households holding a cat (Danziger, 2018). Even though households of all income levels host pets, 60%
of the total spending within the pet industry comes from high-income households (Francise Help, n.d.) –
and those that always want the best of the best. The pet industry was expected to bring in $72.13 billion in
revenue in 2018 and is consistently growing year after year (American Pet Product Association, 2018).
The revenue comes from several different pet segments such as food, supplies, grooming etc. with the
highest revenues being from food ($24 billion estimated for 2016) and grooming products and services
expected to bring in $5.73 billion in 2016 (Franchise Help, 2018). A recent trend called “humanization”
where consumers are treating pets more like people and seek out higher quality items to make them just
like anyone else in the family, or providing them with ‘the royal treatment’ (Young, 2017). With
consumers purchasing more high quality foods, high end accessories and more expensive treatments –
makes room for lots of opportunities of providing pet products or services. Building a line that offers
premium products that hold value towards pets and their wellbeing (e.g. natural products), these products
are likely to be purchased by consumers and utilized by the furry friend, child, sibling etc. Plus, L’Oréal
has completely stopped animal testing and is 100% natural and organic in nature and hence is the choice
of animal lovers making our brand favored amongst others for this initiative. Businesses that cater to
these niche products and services are seeing super high success rates and are penetrating the market
(Franchise Help, 2018). This product line will also be most utilized by our primary target market for most
of our other current offerings, women. Women have widely recognized our brand and will be our target
market for this specific product line as well, as women are most likely to be concerned about their pets’
beauty and cleanliness making them the primary user of the product for at-home use.

Why create a new brand over acquiring an existing company?

Brand creation involves the introduction of a brand that is new to a firm and the market versus a
brand acquisition involves a firm’s acquisition of an existing brand offered in the market by another firm
(Raggio, Damoiseau, & Black, 2011, p. 3-4). L’Oréal will be creating a new brand Pawfection by L’Oréal
due to the brand recognition that L’Oréal already holds, the ability to control all aspects of the business,
and minimal competition within the luxurious pet care item market. The main reason for creating our own

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brand versus acquiring an existing company was to correlate the current, recognized L’Oréal brand within
the creation of the new brand, hence Pawfection by L’Oréal. By directly correlating the new brand with
L’Oréal brand equity and brand recognition that the company currently holds will allow for consumers to
use their buying behaviors towards their perspective of the brand in terms of quality and familiarity.
According to a survey distributed by Nielson, 59% of consumers prefer to buy new products from brands
familiar to them (Gregory, 2018). The creation of a new brand also allows for L’Oréal to have full control
over all areas of the new brand in terms of the formulas that are uses, the branding, where and how the
product will be distributed, and have quality assurance in place (Raggio, Damoiseau, & Black, 2011, p.
4). Although the company may be assuming more risk through the full creation of the product line, by
utilizing the resources that L’Oréal has, the creation and execution can be successful. Finally, these types
of product lines are very sparse and many product lines are independently owned and owners are not
willing to sell, too low-scale or the brand and products are not fully developed leaving a lot of work for
L’Oréal to assume. The only company that we have come across that has a brand and products similar to
what Pawfection will offer is a low-scale business called Les Poochs that operates out of New York and
holds a small variety of high class grooming tools and materials for dogs (Les Poochs, n.d.). However,
this company seems to be still in the growth stage where L’Oréal may be assuming too much risk by
acquiring this business with such a lack of awareness within the market. There is also no guarantee that
the company would be willing to give up control and allow L’Oréal all the rights to the business concept
and brand. This also proves that L’Oréal will not have any extremely threatening competition making
brand creation the most viable strategy for this specific product line (Raggio, Damoiseau, & Black, 2011,
p. 5).

Why start in North America?

North America has demonstrated the highest pet care market, and although other markets are
attracted to pets and pet care, we feel that for initial introduction purposes, North America will yield the
best results. Through a growing demand for natural pet shampoo, the amount of pets and dogs within the
North American households and the consumer spending cultures, North America is the ideal location to
the launch the Pawfection by L’Oréal product line. The natural pet shampoo market is expected to grow
over 4.5% between 2017 to 2024 (eight years) ("Global herbal pet shampoo market size, demand, growth
& revenue opportunity (2017-2024)," 2019). Due to rising health awareness amongst pet owners all over
the world, natural products are favored to ensure that the pets are not being bathed in substances that
contain harsh chemicals and dyes that can cause harm to the animal. North America is expected to be the
largest market and grow significantly out of all regions ("Global herbal pet shampoo market size, demand,
growth & revenue opportunity (2017-2024)," 2019) which is why this is the best place to launch the

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product line initially. Along with the growing demand for pet shampoo, North America is also a great
market to start in due to the amount of households and consumers that own a pet. In the U.S. alone, nearly
70% of all households own a pet (Danziger, 2018) of which 50% of U.S. households own a dog
specifically (GfK, 2016). When you add Canada to the mix, 61% of Canadian households own a pet with
33% of the pet owning households having a dog as a furry companion (GfK, 2016). These two countries
alone provide a huge market and sales opportunities for this product to be distributed and used. Finally,
consumers spending behavior is significantly important when deciding on a location to sell to ensure that
consumers will be have stable income and be willing to spend money on their pets. In reviewing
American spending habits, American’s spend an average of $126 every month on their pets, for dogs
specifically consumers spend upwards of $140 a month, which results in nearly $1700 annually
(Michaels, 2018). Having pets considered as a child or ‘baby’ to owners, provides all the reason for
consumers to want to spoil their pet and ensure they are happy and healthy. Comparing other regions and
their spending behaviors towards their pets, made North America very apparent for being the highest
potential for this specific pet product line. Those consumers in China are expected to spend
approximately $2.6 billion on their pets by 2019 which is nearly 50% more than 2016, but when looking
at the U.S. and its expectation to exceed $72 billion on pets in 2019 (Wolen, 2018) the market reveals to
be a large revenue prospect.

Implementation
Research & Development
Program Name: Product Formulas and Item Development
Program Objective: To create natural, chemical free formulas that work on dog hair/fur and create
quality tools for grooming purposes.
Task Time Responsibility Budget Status
Frame
Research various animal Four Months R&D Manager & Team $1,200,0000 Daily
hair types & skin types
Research which items Four Months R&D Manager & Team $500,000 Daily
would be most used by
consumers and grooming
businesses
Create initial formulas Six Months R&D Manager & $4,000,000 Weekly
that can be used on Product Development
different hair types Manager
Identify which Three Head of Logistics $200,000 Weekly
distribution methods Months
would yield most sales

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Continue to create and Ongoing R&D Manager & Absorbed As

improve product formulas Product Development through R&D Necessary
Manager segment
Total $5,900,000

The research and development within this strategy has a main focus on dog fur and skin
technicalities and determining natural formulas that will hold quality and actually portray desired end
results. Research needs to be done to determine the various types of animal fur/hair to establish products
changes that need to be made in order to be effective on dog fur instead of human hair and ensure no
reactions will occur on their skin. L’Oréal also must do some significant market research to determine
which grooming products are most likely to be used for at-home grooming or within grooming
businesses. This will determine which items are made to yield the best sales. Once research is conducted
and finalized the initial development of various formulas should begin and testing of the formulas should
follow. This step is extremely important to determine if the products are meeting quality standards, are
made with all natural ingredients and are going to display the desired results whether it be to clean the fur,
deodorize the fur, detangle fur etc. Along with the formula development, the research team needs to
collect data and work alongside the logistics division to observe consumer buying behavior to determine
which methods of supply and delivery need to be considered in order the most effective distribution
methods to generate the most sales. Finally, an ongoing initiative to conduct continuous improvements to
enhance products and improve current formulas. Making sure that quality is always meeting the highest
standards and high demand products are being developed according to consumer trends within the pet
industry is crucial to the success of this line.

Control and Evaluation

The research conducted by L’Oréal for this specific product line is very important and will be
controlled through the implementation of quality standards (identified within operations) and various
testing initiatives. In order to see if research was thorough and accurate, we are expecting less than 10%
of product formulas to fail quality standards and testing processes. If more than 10% of the formulas are
showing reactions or unsuccessful results, product research will need to be continued in order to make
products meet the quality standards and be effective. In terms of the research conducted on products to
create, this will be evaluated based on sales volumes. Any products that sell at least 75% of the forecasted
sales volumes will be considered an in-demand product and has met the desired sales quota. Distribution
methods selected will be evaluated based on the number of sales that come through each channel. If a
channel is seeing less than 20% of sales come through, it will be considered an ineffective distribution
method and must be re-evaluated to see if improvements should be made to get consumers to utilize the

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channel or if the method should be removed from the distribution methods. Finally, all continuous
improvements will be made on an ongoing basis and will be evaluated based on consumer suggestions,
pet industry trends and on defects (where an animal has a reaction to a product) that occur. New products
will be identified through consumer suggestions to the brand and based off trends that arise within the pet
industry. Defects that are reported must be evaluated immediately and a resolution should be made within
one month. We are expecting a defect rate of less than 5% to ensure that products are meeting needs of
the pet and consumer.

Operations
Program Name: Production of products
Program Objective: To produce Pawfection products most effectively and efficiently to quality
standards.
Task Time Responsibility Budget Status
Frame
Determine production Two Months COO & Project Manager $10,000 Daily
facility location(s)
Identify and purchase Two Months Operations Manager $2,000,000 Daily
additional equipment and
materials needed to
produce the product
Set quality assurance Six Months COO & Project Manager $200,000 Weekly
programs in place
Determine capacity One Month Operations Manager $100,000 Daily
limitations and desired
production rates
Begin initial production One Month COO, Production $500,000 Upon
& product testing Manager & Project Completion
Manager
Continue production Ongoing Production Manager Absorbed in As
production Necessary
costs
Total $2,810,000

In terms of operational aspects, L’Oréal will need to determine which of our current
manufacturing facilities that the Pawfection products will be produced in. Some facilities may produce
certain products and others may product other products according to the resources available within each
facility. We have chosen to utilize our current facilities instead of creating a new manufacturing facility in
the initial development to save costs and utilize our capacity. However, since we are making similar
products to our current offerings but not identical, we need to identify and purchase additional equipment
and materials needed to produce the products and install them within the production facilities. L’Oréal
will need to put in place quality assurance programs to ensure that all production processes are followed

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and products are consistent and examined prior to distribution to allow for defects to be identified and
make sure that only quality standard products are being released to consumers. Capacity limitations will
need to be determined based on resources available to be able to establish desired production rates to
measure efficiency within the production facility. The initial production and product testing should
commence and go on for approximately one month before the launch of the product to see how the
operations process will work, and ensure all products are being made to quality standards. As well, this
will give L’Oréal enough time to produce enough products for the initial launch of Pawfection by L’Oréal
to meet demand. Production should continue as usual from that point forward always considering demand
and capacity when organizing production scheduling.

Control and Evaluation

The facilities will be controlled by identifying the manufacturing facilities with the least amount
of utilization within North America. In order to minimize shipping costs we want to identify a nearby
location(s) that can provide L’Oréal with the additional space required to produce the Pawfection
products. The additional equipment will be purchased as needed to ensure costs are kept to a minimum –
if any current equipment and materials can be utilized we will use these to save initial costs. Quality
assurance programs will be in place and monitor any defects, if more than 80% of defective products are
noticed prior to being sent to consumers, the program will be deemed effective. Accuracy of capacity and
production rates will be identified in the first year of operations and if production rates come within 10%
of the forecasted rates, the production volume will be considered accurate and can continue for years
forward, if it is not measured accurately bottlenecks will need to be identified and how production can be
further improved. Production will be monitored on a per hour, day, week, month and annual basis to
identify when problems occurred and when production experiences slow periods and peak periods. This
information can be used for future scheduling efforts and ensure that all production facilities are being as
efficient as possible. If production is exceeding capacity on a regular basis and demand is higher than
forecasted numbers, L’Oréal will need to re-evaluate the process and consider purchasing a separate
production facility strictly for the Pawfection products.

Marketing
Program Name: Exposure of the Pawfection by L’Oréal to consumers
Program Objective: To have consumers be aware of the new luxury pet grooming line, Pawfection by
L’Oréal and identifying the benefits the product line provides (natural, no chemical formualas).
Task Time Responsibility Budget Status
Frame
Identify and outline Three Director of Consumer $50,000 Daily

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desired target markets Months Marketing & Project

Manager
Design of Product Four Months Director of Consumer $60,000 Daily
Labelling and branding Marketing
Website Four Months Website Director None Daily
Coupon Promotions Ongoing Project Manager & $1,500,000 Weekly
Director of Consumer
Marketing
Social Media campaign Ongoing Director of Social Media $1,080,000 Daily
(Consumer Marketing)
In-store display Ongoing Project Manager and $1,600,000 Weekly
campaigns Director of Consumer
Marketing
Pet Loving Influencers Ongoing Project Manager & $500,000 Monthly
Director of Consumer
Marketing
Direct Selling to Ongoing Director of Consumer $530,000 Weekly
Grooming Businesses Marketing
Total $5,320,000

The Pawfection by L’Oréal line will require significant advertising efforts due to the newness of
the brand and the new market we are entering. In order to be successful, consumers need to be aware that
the brand is directly correlated to L’Oréal and demonstrate a unique aspect of natural products. The first
step is to identify the ideal target market the company is trying to attract. This can consider several
demographics such as age, sex, culture, income etc. and will assist in better placements of advertisements
in order to reach the desired target market(s). L’Oréal will then need to create branding for this specific
product line to be used on product packaging and promotions. Website updates should be made regularly
to hype up new products and show cute images of pets using the products or what the animals look like
after using the products. The company should also be heavily focusing on coupon promotions within the
specific locations of retailers that offer the product to create an initial purchase incentive. This will give
consumers a reason to try the product to encourage repeat buying if they enjoy the experience. Social
media should also be utilized extensively to attract various aged audiences within a reasonable budget by
posting on the L’Oréal page, as well as boosting the posts to audiences to get them to follow the
Pawfection by L’Oréal account to gain awareness. Throughout the initial launch of the product, L’Oréal
should be uniquely displaying the product(s) within retail stores to attract consumers and separate the
products from competitors to encourage sales. Pet loving online influencers should be contacted for
support and provided with a free product to sample and do a blog post, video or social media post with a
review to expose the product to other consumers as well as attach a well known face to the brand.
Influencers are a great way to expose the product for a reasonable price (simply the cost of the product).
Also reaching out to celebrities with pets to test the products will also boost the product line and have the

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celebrity influence boost the brand image. Lastly, L’Oréal should be directly selling the products to high-
class grooming businesses in order to get the groomers to use the products on the dogs it services.
Providing a discount to these businesses will allow for potentially high sales rates with the amount they
use the products are a variety of pets.

Control and Evaluation

The marketing results will be shown through awareness and utilization of resources. The website
clicks on the Pawfection by L’Oréal page segment will demonstrate how much interest the product line is
collecting and will identify how many people are visiting the site without making a purchase. The
branding will be evaluated based on customer feedback and how many people correlate the new brand
with L’Oréal. For the coupon promotions, we desire the use rate to be approximately 10% in order for the
promotion to be considered effective. All social media platforms and posts will be evaluated based on
interactions (how many times it is clicked on), the shares, likes and comments on the post. We will be
able to interact with many potential consumers through social media through comments and address any
concerns of the products or make improvements based on feedback noted. The in-store displays will be
based on sales for the duration of the display set-up, with any sales exceeding 50% of the stocked product
volume, the display will be deemed a success and achieved its intended purpose. The pet influencers and
celebrity influencers results will be based off of video views, blog clicks etc. which will be requested by
L’Oréal to determine effectiveness. Along with that, sales following the promotions done by influencers
will give a better idea of how many people bought the product due to what others were telling them about
the product. Any suggestions made by the influencers within their review will be highly looked into to
ensure the product is meeting the needs of consumers. Finally, direct selling efforts will be evaluated
based on a sales quota put in place. By having the salespeople contacting grooming services to use our
products within their business we hope to have a success rate of over 40% of attempted sales to actually
go through as a regular client. If less than 40% of grooming businesses are not purchasing our product
after a direct selling attempt, the direct selling program will be deemed ineffective and will need to be re-
evaluated or eliminated.

Logistics
Program Name: Selling the Pawfection products through various distribution channels
Program Objective: To sell Pawfection products and get them to consumers in the most convenient,
cost effective way to see positive sales volumes.
Task Time Responsibility Budget Status
Frame
Establish sales One Year Director of Sales $2,000,000 Weekly

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agreements with various

pet stores
Identify an online order One Month Director of Logistics Absorbed by current Weekly
system for Pawfection website
products
Select method of One Month Director of Logistics & Absorbed by current Weekly
shipping to retailers and Director of IT distribution methods
individual consumers
Total $2,000,000

Since Pawfection by L’Oréal is entering a different market and will require different placement
than our current products, we need to establish sales agreements with new retailers. Although this can be
placed in large box retail stores that we already exist in (e.g. Walmart & Target) we need to also go into
pet stores where this product is directly correlated with the products and market and will yield significant
sales volumes. Sales agreements will need to be made in order to successfully get shelf space and have
Pawfection products placed on the shelves and stocked regularly. Along with retail stores, we will need to
identify an online ordering system that can be put in place on the current L’Oréal website under a separate
segment. Since L’Oréal has seen a significant growth in e-commerce sales (L’Oréal, 2019), this is an
important option to add for consumers. All products can be added to this segment with payment
processing identical to how the company takes orders currently. A separate area will be added for retailers
to place orders on a consistent basis. Finally, we must select the best method of shipping to retailers and
directly to individual consumers from online sales. We can offer shipping methods L’Oréal currently uses
to not incur any additional costs to get large quantities to retail outlets. However, shipping costs should be
absorbed by the consumer in the case of an individual online order to reduce variable costs and allow for
effective shipping methods to meet consumer needs.

Control and Evaluation

The goal of the logistics program is to overall have the Pawfection by L’Oréal products available
for consumers in a convenient way that will attract consumers to purchase the product. With strong
logistics in place we are hoping to yield the best sales results possible. Through our sales agreements with
new retailers we are forecasting to have approximately 75% of the Pawfection by L’Oréal products
purchased in store. With the newness of the brand and the use of the products, we feel that in-store
purchases should be our highest focus to create awareness and establish repeat sales. However, with
recent growth in our online e-commerce platforms we aim to see 25% of the sales come from online
orders. Our online orders are expected to take approximately 5 business days from receiving the initial
order to ship from the fulfillment location. The online system is expected to see minimal issues with
glitches since it will be done through the original L’Oréal North American websites. In order to be the

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most cost effective, shipping costs should not exceed 10% of the product price to ensure that profits are
still achievable with the added variable cost. No control needs to be put in place for shipping for
individual shipments due to the shipping costs being absorbed by the consumer placing the order.
Consistent tracking on our courier will be done as part of L’Oreal to ensure that we are continuously
working with the most cost-effective company and ensuring consistency and prompt shipping times to our
consumers.

Human Resources
Program Name: Hiring employees to oversee, product and sell Pawfection products
Program Objective: To hire a group of people to complete various tasks for the Pawfection segment
and ensure all training is available for quality assurance purposes.
Task Time Responsibility Budget Status
Frame
Hire a Project Manager Three Director of Human $10,000 Weekly
Months Resources
Hire other employees for Three Director of Human $20,000 Upon
administrative and Months Resources & Project Completion
production duties Manager
Training of Employees Three Project Manager Included in Daily
Weeks salaries
Total $30,000

In order to execute this new line within the segment, a project manager must be hired to oversee
all aspects of the Pawfection by L’Oréal line. This will require an internal posting going out as well as an
external posting to attract various applicants. This should be done within reasonable time in order to get
the project flowing effectively and meeting deadlines. Once the Project Manager has been hired, job
postings must be released for other positions within the new brand, such as administration personnel,
production crews and sales people. We are assuming to hire a total of approximately ten new employees
to cover these areas. All hiring must be completed within three months so that all employees can
complete training and be ready for constant production beginning towards the end of year one. Training
programs will be created based off of current L’Oréal training programs with additional programs specific
to the Pawfection production and sales methods. All training will be included in salaries as the employees
will be trained during work hours and will be completing various on-the-job training aspects.

Control and Evaluation

The hiring of the project manager will be controlled by the Director of Human Resources to
ensure that recruitment efforts are being displayed and that L’Oréal is receiving both internal and external

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applicants for this specific role. Keeping all hiring aspects completed within three months is a necessity to
ensure time frames for the remainder of the products are going to be feasible and achievable. The Project
Manager will receive regular performance evaluations to deploy improvements and address any issues
that may arise within the Pawfection line and operations. All other employees will also receive regular
performance evaluations to ensure efficiency, and effectiveness within their assigned duties. Salespeople
will be required to reach at least 75% of their sales quotas in order to be considered an effective employee
and exceed 100% of their sales quota to receive bonus compensation. Productivity will be measured on a
per person, per hour basis (for example: two employees produced 750 bottles of shampoo during a five-
hour shift = 75 bottles per person/per hour). All production employees will be expected to meet a
forecasted rate of 80 products per person/per hour in order to be considered a productive employee.
Training will also be evaluated on production and effectiveness within the specific areas as well as
meeting quality standards. Any employees considered ineffective or unproductive within an average will
require further training to enhance skills and expertise.

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Appendix A: Internal Factor Analysis Summary

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Appendix B: External Factor Analysis Summary

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Appendix C: Strategic Factor Analysis Summary

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Appendix D: Industry Matrix

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Appendix E: Porter’s Theory

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Appendix F: Breakdown of Costs

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Appendix G: Pro Forma Income Statement

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