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Oriflame Holding AG SWOT and PESTLE Analysis

ID : 52429053| Jul 2018| 15 pages

COMPANY PROFILE -Oriflame

Business Sector :FMCG

Operating Geography :Sweden, Europe, Global

About Oriflame :

Oriflame Holding AG is a 51-year-old beauty company with a direct reach in more than 60 countries around the globe. The Swedish company aims majorly at achieving innovation by promoting various nature-inspired products that are marketed to at least 3 million Oriflame consultants. Since its genesis in 1967, Oriflame has been promoting its ideology promoting respect for humans as well as nature through its various social and environmental initiatives. The philanthropy of the organization reflects in the various charitable associations worldwide, including the World Childhood Foundation, which is co-founded by Oriflame. The togetherness and the passion within the company and its associates has made it possible to generate an annual sales of around €1.4 billion. Oriflame aspires to achieve local currency sales growth of at least 10 percent per annum and an operating margin of around 15 percent. Oriflame’s vision as per their annual report is “To be the #1 beauty company selling direct.”

Oriflame Revenue :


€1,363.1 million (FY ended December 31st 2017) (y-o-y growth of 9%)
€1,249.4 million (FY ended December 31st 2016)

Ownership / Major shareholders :

Af Jochnick BV - 11.3%, Robert & Alexander af Jochnick & family - 9.7%, Fourth Swedish National Pension Fund (AP4) - 8.8%, Jonas af Jochnick & Family - 7.8%, First Swedish National Pension Fund (AP1) - 4.4%, Handelsbanken Fonder AB - 4.0%. (Top six shareholders as of 31st Decmeber, 2017). Jochnick family combined is the single largest owner of Oriflame with close to 30% of the share capital and voting rights as of 2017.

Competitive Analysis of Oriflame

SWOT
PESTLE
The SWOT Analysis for Oriflame is presented below in a nutshell.
Strengths
Weaknesses
1. Mature and consistent brand
2. Strong and loyal customer base
3. Promotes natural beauty products
4. Accessible in residential areas
5. Offer catalogues released monthly and bi-monthly
6. Business mode suited to modern social networking
1. Depends majorly on word of mouth for its promotion.
2. Available with very few retailers
3. Less knowledge about the brand
4. Consultants with insufficient training
Opportunities
Threats
1. Expansion in Tier 2 and Tier 3 cities
2. Celebrity endorsements
3. Inclusion of other promotional tools
4. Specializing across consumer segments
1. Established brands with deeper penetration
2. Brands with rigorous marketing strategies
SWOT & PESTLE (combined)
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Detailed SWOT Analysis of Oriflame

Strength

1. Mature and consistent brand: Oriflame is a 51-year-old beauty company with a direct reach in more than 60 countries around the globe. Since its genesis in 1967, it has been acing in the beauty sector. With a range of more than 400 products promoting beauty, personal health and wellness, Oriflame portrays itself as a competent and sophisticated brand. One of the major strategic differentiating factor for the company is its entrepreneurial corporate culture which has led to its brand success.

2. Strong and loyal customer base: Oriflame has a network of direct sellers who are also the target audience of the brand. With a constantly growing network and strategy that aces retention of the target audience, the brand is continuously flourishing. Despite the fact that the major marketing tool is direct selling and the awareness is majorly through the word of mouth, only with the help of its strong and a loyal customer base, it is able to thrive in such a competitive market. Also, to keep its audience intact, Oriflame does bring out regular schemes and offers for its consumers.

3. Promotes natural beauty products: Today’s market has a keen tilt towards the organic and natural. The beauty and wellness sector especially, among the upper class, has an exponentially ever growing demand of natural products. From soaps, to spas, natural products are in major demand these days. Here is what Oriflame is a pro at-natural beauty products. With the surety and the trust of the brand and its makers, Oriflame has been able to ace the business of natural beauty products. The audience believes the conduct of the company and promotes the brand even further, majorly for its beauty variants.

4. Balanced geographic footprint with strong consumer outreach: Oriflame has developed a balanced global footprint with operations in more than 60 countires which are primarily growing markets with respect to consumer spending on beauty products. As per Oriflame’s Annual Report 2017, the share of Operating Profit from Asia and Turkey has grown from a meagre 9% in 2010 to 50% in 2017. Current as well as past trends hint towards a significant increase in the spending capacity of the average working female in these countries. Oriflame’s distribution model is expressly based upon the entrepreneurial spirit and network of beauty consultants, which helps the company to reach out to the consumers at a micro level ensuring ease of access. Hence through it’s consultants, Oriflame is better poised to tap into this nascent spending power and the resulting focus on all-round well-being.

5. Offer catalogues released monthly and bi-monthly: Oriflame releases monthly and bi-monthly catalogues that disseminate information about their various brands and collaborations. Every issue of the catalogue has at least one new entry of beauty, wellness or personal care product and sometimes contains even testers for their newly released fragrances. The brand does not let their target audience remain unaware of any development in their product collection. The collaborations with designers are also promoted in the catalogue only. These create a powerful impact on the audience and increase their desirability to buy the brand.

6. Business model suited to modern social networking: Oriflame promotes women selling their products for who would know better about beauty and wellness than women. Also, the women have stronger social circles around in the neighborhood and workplace which makes them a good prospect seller. The fact that the women are great communicators is not hidden from anyone and for a brand that uses direct selling as its major marketing tool, keeping women as the major sponsors works really well. The company works through more than 3.1 million independent Consultants who use various direct selling promotional techniques using digital and traditional networking tools to sell its products directly to friends and family. The company has empowered its consultants with the latest digital tools such as The Oriflame app which helps them to focus on products, offers and managing orders. The Oriflame SkinExpert app helps them in consultative selling of Oriflame’s Skin Care routines. They also use the word of mouth to convince their peers and the others following the chain to buy the Oriflame products which people already have knowledge about.

Weakness

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Opportunity

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Threat

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Major Competitors :

Estee Lauder, L’Oreal, Avon.

Major Brands :

Oriflame, Wellness Pack Woman

Key Business Segments / Diversification :

Oriflame
Skin Care Colour Cosmetics Fragrances
Personal & Hair Care Accessories and Wellness
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TABLE OF CONTENTS
DELIVERY AND FORMAT
WHY CHOOSE US?
References used in Oriflame Analysis Report

1. Oriflame Annual Report - http://vp233.alertir.com/sites/default/files/report/17_annualreport_web.pdf
2. Sustainability Report - http://investors.oriflame.com/sites/default/files/2016_Sustainability_Report_WEB.pdf
3. Making Sustainability Beautiful - https://corporate.oriflame.com/SUSTAINABILITY/Products/Innovation-and-Development/Stem-Cells/
4.Sales of beauty products get boost from recession - https://www.reuters.com/article/us-beauty-sales-recession/sales-of-beauty-products-get-boost-from-recession-idUSBRE86417C20120705

Copyrights and Disclaimer
Oriflame Holding AG SWOT and PESTLE analysis has been conducted by Astha Gaur and reviewed by senior analysts from Barakaat Consulting.

Copyright of Oriflame Holding Ag SWOT and PESTLE Analysis is the property of Barakaat Consulting. Please refer to the Terms and Conditions and Disclaimer for usage guidelines.

Oriflame Holding AG SWOT and PESTLE Analysis
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