The world's biggest cosmetics group will release new skincare products in its L'Oreal Paris and Garnier Essentials ranges priced at €9 (£8) and €5 (£4.45) respectively.
It will also introduce smaller sizes of its luxury brands to make them more accessible to shoppers who can't afford the larger size products.
L'Oreal has faced increased competition from supermarkets selling budget lines, such as Aldi's Lacura range and Tesco's recently introduced All About Face range, which both include products that retail for less than £2.
L'Oreal chief executive Jean Paul Agon said the company wants to appeal to every consumer segment and will be able to offer skin care products that range in price from €5 (£4.45) to €250 (£197).
Yesterday L'Oreal reported a 0.6% drop in like-for-like sales for the last three months of 2008. Agon said that it would maintain its spending on product innovation and advertising.
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