Client Name

L’Oréal Pakistan

Faculty Advisor

Ms. Madeeha Omer Lakhani

SBS Thought Leadership Areas

Behavioural Studies

SBS Thought Leadership Area Justification

Our Experiential Learning Project namely, Price Elasticity Analysis for L’Oréal Pakistan falls squarely in the domain of Behavioral Studies, since the subject matter is all about capturing how consumer behavior, perceptions and psychology can impact a buying decision in the FMCG industry specifically and personal care segment L’Oréal Pakistan ((L’Oréal Paris, Garnier, Maybelline) in particular. PED is frequently discussed as purely economic notion, but in the actual sense, it is profoundly influenced by non-rational, behavioral factors. Based on primary surveys and focus groups we observed that consumers do not take decisions basing only on price. Instead, their decision is affected by brand loyalty and emotional attachment, perceived quality of the product, ethical concern and psychological biases. We also inculcated behavioral theories like the prospect theory (how customers view gains/losses due to discounts), anchoring bias (previous prices that make customers unwilling to pay more currently) and loss aversion (customers unwilling to change brands). These frames caused us to view values of elasticity in a more subtle, behaviorally-informed manner. Afterall, the outcome of this project is the combination of data analytics and behavioral understanding, which provides L’Oréal with pricing strategies that take into account the actual psychology of people - our research can therefore be very applicable to the Behavioral Studies area of thought leadership.

Aligned SDGs

GOAL 4: Quality Education

Aligned SDGs Justification

The Price Elasticity Analysis of L'Oréal Pakistan is a project that is aligned with multiple Sustainable Development Goals (SDGs), as it supports ethical consumerism and behavior, economic integration, gender equality, and climate-neutral decision-making in the FMCG industry. A breakdown of alignment with the top SDGs is as below:

  1. Quality Education (SDG 4): A good example is the L’Oréal Professional Academy that trains disadvantaged young people, particularly women, to become professional hairdressers and salon managers. This educational undertaking boosts capacity development and empowers the participants to obtain sustainable livelihoods anywhere in the world.
  2. Gender Equality (SDG 5): In our study, we have outlined the impact of brand allegiance and price consciousness on the female buyer, particularly in the cosmetics industry. Also, training and inclusion initiatives carried out by L'Oréal support women economically, as both consumers and professionals, which fosters wider gender inclusion.
  3. Decent Work and Economic Growth (SDG 8): Our project contributes to the increase of revenues and creation of jobs by allowing more effective pricing decisions based on the insights into elasticity. This covers the employment in retail, supply chain and salons, which eventually enables the inclusivity in economic involvement.
  4. Responsible Consumption and Production (SDG 12): One substantial part of our project evaluated the consumer preference to sustainably priced products. More than 70 percent of respondents in our focus groups and surveys were appreciative of eco-friendly operations. These lessons aid corporations in profit and purpose balancing.
  5. Climate Action (SDG 13): Psychological knowledge on sustainable buying affects environmental behavior of companies. L’Oréal has the opportunity to cut emissions through reformulation of logistics, packaging, and manufacturing, which is backed up by our evidence on the demand side.

NDA

Yes

Abstract

This Experiential Learning Project (ELP) analyzes the Price Elasticity of Demand (PED) across L’Oréal Pakistan’s portfolio—L’Oréal Paris, Garnier, and Maybelline—spanning 400+ SKUs in haircare, skincare, and makeup. Combining quantitative (price indexing, laddering) and qualitative (focus groups, surveys, retail audits) methodologies, the study evaluates consumer responsiveness to price changes across Modern Trade (MT), General Trade (GT), and e-commerce channels.

Key findings reveal category-specific elasticity:

- Inelastic demand for premium serums (L’Oréal Paris) and mascaras (Maybelline), driven by brand loyalty and perceived efficacy.

- High elasticity in GT for shampoos and boxed hair dyes (Garnier), where affordability trumps brand preference.

- Behavioral biases (anchoring, loss aversion) influence price sensitivity, with discounts significantly impacting purchase decisions.

The report provides actionable recommendations, including tiered pricing, bundling strategies, and channel-specific promotions to optimize revenue while retaining price-sensitive consumers. Aligned with SDGs 5, 8, and 12, the project underscores the intersection of behavioral economics and commercial strategy in Pakistan’s FMCG beauty sector.

Document Type

Restricted Access

Document Name for Citation

Experiential Learning Project

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