This paper examines Estée Lauder Companies Inc. — one of the world's leading manufacturers and marketers of skin care, fragrance, hair care, and cosmetics — and proposes a new promotion campaign strategy. Beginning with a review of the company's founding and rise to prominence, the paper surveys the brand's fragrance portfolio and evaluates which products hold strong market rankings. It then recommends differentiated advertising approaches: a defensive strategy for well-performing brands focused on geographic expansion and user-profile targeting, and a personal selling strategy for lower-performing products centered on in-store sampling, invitation-based promotions, and direct engagement with targeted consumer segments.
The Estée Lauder Companies Inc. is considered one of the leading manufacturers and marketers in the world of products including skin care, hair care, fragrance, and make-up. This paper reviews the company and its products from a fresh perspective and proposes how those products could achieve higher brand shares if promoted with an updated strategy. The paper presents a set of recommendations on proposed advertising for Estée Lauder Inc., beginning with a review of the company and its products, examining the different market segments it appeals to, and then identifying segments where a change in strategy may help products achieve greater market shares.
The company was first founded in New York City in 1946 by Estée Lauder — after whom it is named — and her husband Joseph Lauder. It was largely through Mrs. Lauder's personal efforts that the company reached its pinnacle of success. Estée Lauder started from the very bottom, selling skin creams formulated by her uncle. The products were good, but similar products were available in the market. Estée succeeded because of her marketing strategy and her relentless drive. She was deeply quality-conscious, but her ability to compete as a salesperson was even more impressive. Her management skills were extraordinary. Through her efforts, she first secured counter space at Saks Fifth Avenue in 1948, utilizing that space to the fullest through innovative personal selling. She was ambitious and determined to reach the top — and her efforts bore fruit.
The company's products are now sold under several well-recognized brand names, including Estée Lauder, La Mer, Prescriptives, Tommy Hilfiger, Aramis, Stila, Donna Karan, Clinique, M·A·C, Aveda, Origins, Jo Malone, Bumble and Bumble, Bobbi Brown Essentials, and Jane. (Gerson & Gerson, 2002)
These products are sold in 120 countries around the world, generating $3.6 billion in revenue — a remarkable success. This achievement reflects Estée Lauder's philosophy of thinking globally and acting globally. The Americas region delivered net sales of 61% and operating income of 56% during fiscal year 2000. In the Europe, Middle East, and Africa region, net sales were 26% and operating income was 33%.
Estée Lauder applied sophisticated sales methods to develop beauty into a major business. Whatever she understood about perfumes proved correct, and the basis of her marketing strategy remains relevant today. She was also one of the first to give away samples so that consumers could try her products, appreciate them, and then purchase them.
Today the company controls approximately 49% of the cosmetics market in the United States, and the business is now worth $6 billion — a remarkable growth for an enterprise that once had only one employee. Estée Lauder herself answered all telephone calls and doubled as billing clerk and shipping department as needed. She believed in hands-on selling, visited every new counter that opened, and kept visiting specialty stores until the very end. Her signature technique was to engage potential customers by offering them something they genuinely wanted for free, attracting the people who mattered most to her brand.
The headquarters of Estée Lauder Companies are located on the 40th floor of the General Motors Building in Manhattan. The company has 20,000 employees worldwide. Estée Lauder products remain creative and are essentially feminine in character, though not strictly fashion-forward. She did not try to appeal to the most trend-conscious women — perhaps knowing that fashion is transient at best. She wanted her products to have lasting appeal, appealing to clients over the long term. She made clear that users of her products loved to feel ultra-feminine, and that Estée Lauder products gave women an opportunity to feel beautiful. From its oldest lines to its newest acquisitions, the company remains at the top of its category. By investing in advanced manufacturing technologies and marketing, the company has maintained its leadership. Well-known lines include Estée Lauder, Prescriptives, Clinique, Origins, and Aramis. The company has also acquired lines it recognized as potential rivals — M·A·C, Bobbi Brown Essentials, and Tommy Hilfiger.
Within the Estée Lauder range, certain perfumes have received the highest customer ratings. These should be treated as a distinct group for advertising and sales promotion, and a differentiated strategy is recommended for them. The top-ranked fragrances in the range include:
1. Pleasures for Women by Estée Lauder — 1 oz. at $41
2. Estée Lauder Intuition 1.7 oz. perfume at $40
3. Beautiful by Estée Lauder — Women's 2.5 oz. EDP Spray at $53
4. Beautiful by Estée Lauder — 1 oz. at $36
Second-ranked fragrances include:
5. Estée Lauder Pleasures 0.5 oz. EDP Spray — lowest price: $28
6. Dazzling Silver by Estée Lauder — 1 oz. — lowest price: $35
7. Spellbound by Estée Lauder — Women's 0.5 oz. EDP Spray — lowest price: $24
8. Knowing by Estée Lauder — Women's 2.5 oz. EDP Spray — lowest price: $53
9. Estée Lauder Private Collection 1.7 oz. spray tester — lowest price: $28
10. Estée Lauder Youth Dew 2.25 oz. spray tester — lowest price: $19
11. Estée Lauder Intuition 3.4 oz. spray — lowest price: $48
12. Estée Lauder Intuition 6.7 oz. fragrant body wash — lowest price: $17
13. Estée Lauder Dazzling Gold 2.5 oz. spray — lowest price: $43
14. Estée Lauder Beautiful 2.5 oz. spray — lowest price: $50
15. Estée Lauder Intuition for Men 3.4 oz. spray — lowest price: $43
This represents only a portion of the Estée Lauder fragrance range, which numbers over 100 products. Of those surveyed, only a few carry strong rankings: four are ranked at the top level, and eleven receive some ranking at all. The remainder carry no ranking. The question is: how does this happen when Estée Lauder holds over 40% market share? The company is known to excel in in-shop activities — Estée Lauder herself was a master at that. The challenge is determining what other media channels can be engaged effectively without damaging the brand image of the already well-ranked fragrances.
The experience of both Estée Lauder and Avon demonstrates that perfumes are products that require intensive personal selling and product sampling to secure the first sale. Avon, one of the world's leading cosmetics marketers, sells exclusively through a direct-sales network. Sales representatives are supplied product against advance payment and then sell at a markup, with the difference constituting their income. Representatives also recruit others beneath them in the sales chain, creating a tiered commission structure. These representatives are trained to organize home parties and invite guests, presenting and selling Avon products in that setting. This model has become a landmark case in consumer marketing, and companies dealing in other consumer goods have attempted to adapt it to their own needs.
Consumers typically do not switch brands unless they are convinced that a new product offers a substantially better proposition. In the fragrance category, that proposition cannot simply be a lower price, because fragrance prices are tied to the image they project — not to their cost of production. All perfumes are composed of various aromatic ingredients blended in small quantities to achieve a desired effect. Different consumers respond differently: some like a fragrance and some do not. Those that are well-received in initial trials are then tested more systematically across larger consumer groups. Once a fragrance passes broader testing, production is considered. Packaging and visual design must then be decided — no personal product can succeed without thoughtful packaging, because consumers need to feel that the product is special and personally suited to them.
Most products do not have a true USP (unique selling proposition). Many are not designed to meet a clearly expressed or felt consumer need; they are simply attempts by manufacturers to increase market share by adding another brand name to their portfolio. In a large enough market, with sufficient publicity, some will survive. Whether they do may have as much to do with the product's shape, color, or psychological associations as with the product itself. In practice, no more than 10–15% of new products genuinely succeed, and even then success often owes more to chance than to design. Companies acknowledge this implicitly by launching as many products as they can afford, hoping that some will succeed. When one does, everybody benefits. When a product fails, the resources invested in it are ultimately lost.
Keeping all this in view, the first recommendation is that the promotion policies of the brands that have performed well in consumer studies not be altered. Let them continue to be promoted as they currently are. The only strategic consideration for these products should be geographical expansion — introducing them into new markets and territories.
It would be useful to conduct a user profile study for each well-ranked product. Such a study would reveal more about the consumers currently using these products: Do users share specific demographic characteristics? Are they older or younger? Which income group uses each product most heavily? Once user profiles are established, advertising and promotional efforts can be targeted at the appropriate consumer segments in the most cost-efficient manner. This is essentially a defensive strategy: protect and consolidate rather than disrupt what is already working.
For new or underperforming products, the objective should be to generate as many trials as possible by building awareness quickly. If a product gains traction, continue promoting it. If it does not show signs of growth, simply maintain supply to meet existing demand and allow the product to phase out naturally. Carrying non-performing products indefinitely adds unnecessary cost and complexity to the portfolio without improving overall market share.
"Defensive strategy for high-performing products"
"Invitation-based sampling and direct selling tactics"
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