Estée Lauder- New Product Development

Samantha Shanahan

About Estée Lauder

In 1946, Estée Lauder founded her own company along with her husband, Joseph, in New York City. Joseph handled the finances and operations while Estée focused on sales, creativity, and product development. She started with only four skin care products. Her simple philosophy was “every woman can be beautiful”.

https://www.elcompanies.com/en/our-brands

1946: Estée Lauder launched her company with only four products:�

• Cream Pack
• Super Rich All Purpose Créme
• Cleansing Oil
• Skin Lotion

https://www.elcompanies.com/en/who-we-are/key-moments#1946-introducing-four-original-products

1953: Estée Lauder launches a fragrance�

• Youth Dew enters the market in multiple forms.
• Creams, lotions, powders, etc are all available to purchase.

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https://www.elcompanies.com/en/who-we-are/key-moments#1953-youth-dew-sensation

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�1956: Estée Lauder launches RE-NUTRIV�

• This cream was made up of 25 ingredients that were “never before blended into one jar of cream.”
• Turtle Oil
• Shark Oil
• Royal Jelly
• Silicone
• Leichol
• It came in 5 jar sizes, 16ounce jars being the largest and most expensive ($115).

https://www.elcompanies.com/en/who-we-are/key-moments#1956-re-nutriv

�1960s:�

• 1960: Estée Lauder land their first overseas account.
• 1962: The company’s first make up collection launches.
• 1963: The company launches the brand ‘Aramis’.
• This is a men’s fragrance brand and treatment brand of men’s grooming products
• 1967: They introduce 24-kt gold-plated Golden Alligator refillable compact.
• There are over 17,000 compacts in the company’s archives to date.
• 1968: The brand Clinique is launched.
• The brand was an industry first, created by a dermatologist and allergy tested, this cosmetics brand is 100% fragrance free.

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https://www.elcompanies.com/en/who-we-are/key-moments#60s-exceptional-growth

1970s:

• Throughout the 70s the company releases multiple fragrances.
• Azurée
• Aliage
• Private Collection Perfume
• White Linen
• Cinnabar
• 1970: Karen Graham is selected to represent the Estée Lauder brand in advertising.
• She is deemed ‘The Estée Lauder Woman”.
• She represents the brand up until 1985.
• 1975: The company begins advertising for their new seasonal color palattes.
• Country Brick
• Runaway Roses
• SunUp-SunDown Colors
• Tea Garden Colors

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https://www.elcompanies.com/en/who-we-are/key-moments#70s-beauty-as-a-lifestyle

�1980s:�

• 1982: Introduce an over-night skin repair product.
• ‘Night Repair’ serum
• 1985: Estée publishes “Estée: A Success Story”, an autobiography.
• 1985: The fragrance, ‘Beautiful’ is introduced to the market.

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https://www.elcompanies.com/en/who-we-are/key-moments#80s-celebrating-success

1990s:

• 1990: The brand ‘Origins’ is added to the portfolio.
• 1993: The company launches in China.
• 1993: The company begins licensing fragrances.
• Its first agreement is with the fashion brand, Tommy Hilfiger.
• 1994: The company buys a majority share in MAC Cosmetics.
• 1995:
• Estée Lauder company goes public.
• The company acquires:
• Bobbi Brown Cosmetics
• La Mer
• Aveda
• Jo Malone

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https://www.elcompanies.com/en/who-we-are/key-moments#90s-building-our-portfolio

�2000s:�

• 2000:
• Estée Lauder Company buys a majority share in Bumble & Bumble.
• The company signs a licensing agreement with Michael Kors for fragrances.
• The company acquires the brand Darphin Paris.
• 2004: Estée Lauder passes away.
• 2005: The company signs with Tom Ford to develop products under Tom Ford Beauty.

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https://www.elcompanies.com/en/who-we-are/key-moments#2000s-leadership-transition

�2010 to Present Day:�

• 2010: Estée Lauder acquires SmashBox, a cosmetics company.
• 2012:
• For the first time, the company surpassed $10 billion in sales.
• The brand AERIN Beauty is developed.
• 2014: The following brands are acquired:
• RODIN Olio Lusso
• Le Labo
• GlamGlow
• 2016: The following brands are acquired:
• By Kilian
• BECCA
• Too Faced

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https://www.elcompanies.com/en/who-we-are/key-moments#2010s-the-global-house-of-prestige-beauty

About Estée Lauder

• Social Media: Over 50 million followers across social media platforms.(2)
• The company does business, both online and in person, with over 150 countries. Estée Lauder is the parent company to 29 brands. Each of these brands operates individually, pertaining their original identity and purpose.(2)
• Brands: (29) AERIN Beauty, Aramis, AVEDA, BECCA, Bobbi Brown, Bumble and bumble, Clinique, Darphin Paris, DKNY, Donna Karen, Dr.Jart+, Editions De Parfums Frederic Malle, Ermenegildo Zegna, Estee Lauder, GlamGlow, Jo Malone London, Kilian Paris, Kiton, La Mer, Lab Series, Le Labo, MAC, Michael Kors, Origins, Rodin, Smashbox, Tom Ford Beauty, Tommy Hilfiger, Too Faced. (1)

(1) https://www.elcompanies.com/en/our-brands

(2) https://www.elcompanies.com/en/who-we-are

Mission Statement

To provide consumers with unmatched quality products, expert beauty advice, and outstanding customer service.

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https://www.elcompanies.com/en/who-we-are/culture-and-values

Vision Statement

“Bringing the best to everyone we touch and being the best in everything we do.”

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Current State of Business- Sales

According to the chart in the next slide:

• Estée Lauder’s overall sales are currently down when compared to 2019 sales.
• Overall sales are still up from 2018.
• Skincare and Makeup products make up for a majority of sales.
• Skincare Product sales have increased from 2019.
• 2019 sales: $6.5 billion
• 2020 sales: $7.4 billion
• Makeup Product sales have decreased from 2019.
• 2019 sales: $5.8 billion
• 2020 sales: $4.8 billion
• Fragrance, haircare products, and products that fall outside of these categories have decreased from 2019.

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https://www-statista-com.rocky.iona.edu/statistics/267987/net-sales-of-estee-lauder-worldwide-by-product-category/

https://www-statista-com.rocky.iona.edu/statistics/267987/net-sales-of-estee-lauder-worldwide-by-product-category/

Current State of Business- Company Stock

• The company has been publicly traded since November 16, 1995.
• The stock is traded on the NYSE.
• The Estée Lauder Companies Inc’s ticker is ‘EL’.
• When the stock went public in 1995 it opened at $8.13.
• From 1995 until the beginning of 2009 the stock was steady, never dropping below its original opening price.
• From around the beginning of 2009, the stock steadily increased up until March of 2020 when the pandemic hit.
• When the pandemic hit in March of 2020, the stock dropped from about $217 to $156.
• As of October 2020, the stock has since bounced back to about $220 from that initial drop in March.

https://www-statista-com.rocky.iona.edu/statistics/267987/net-sales-of-estee-lauder-worldwide-by-product-category/

• The chart on the bottom right displays the top 10 leading beauty manufacturing companies worldwide in 2020
• Estée Lauder Cos comes in at 3^rd on that list.
• Estée Lauder Companies has many competitors, but I am going to narrow it down to two for this project.
• L'Oréal and SHISEIDO
• The Estée Lauder brand competes with multiple brands under each of those two parent companies.

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https://www-statista-com.rocky.iona.edu/statistics/243722/brand-value-of-the-leading-15-cosmetic-brands-worldwide/

https://www-statista-com.rocky.iona.edu/statistics/243871/revenue-of-the-leading-10-beauty-manufacturers-worldwide/

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Competition

Competitors:�L'Oréal

• Founder: Eugène Schueller
• Founded: in the year 1909 in Paris, France
• According to their website, L'Oréal owns 35 brands, which they have grouped into 4 different divisions.
• Through their multiple brands the company offers a multitude of products at multiple price points.
• Products include:
• Skincare
• Make-up
• Haircare
• Hair color
• Fragrances
• Hygiene

https://www.loreal.com/en/group/culture-and-heritage/l-oreal-history/

https://www.loreal.com/en/our-global-brands-portfolio/

Current State of L'Oréal- Sales

According to the charts on the right:

• Sales have been at a consistent increase over the past 10 years.
• In 2019, L'Oréal rang in a profit of €29.8 billion (equivalent to about $35.35 billion)
• Of that $35 billion, 34.99% of it was from their skincare segment (about $12.4 billion)
• As of 9/30/2020, L'Oréal has done €20.11 billion in sales for the year which, despite the current pandemic, is only about €1.88 billion less than the same time in 2019.
• L'Oréal went public on October 8, 1963 when it was listed on the Paris Stock Market.
• It is now listed on Euronext (Compartment A).
• Over the last 3 years, the stock has been steadily increasing.
• Despite the global pandemic, over the past 6 months, the stock price has increased by €23.3.

https://www.loreal-finance.com/eng/news-release/sales-30-september-2020

https://www.loreal-finance.com/eng/news-release/sales-30-september-2019

https://www-statista-com.rocky.iona.edu/statistics/243986/consolidated-sales-of-loreal-worldwide/

https://www-statista-com.rocky.iona.edu/statistics/244012/consolidated-sales-of-loreals-cosmetic-branch-worldwide-by-business-segment/

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Competitors:�SHISEIDO Co

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• Founder: Arinobu Fukuhara
• Arinobu founded Shiseido in 1872 in Ginza, Tokyo.
• It began as Japan’s first private Western-style pharmacy.
• The company didn’t enter the cosmetics industry until 1897.
• Their portfolio is currently made up of 37 brands.
• The brand Shiseido offers both skincare and make up products.

1. https://corp.shiseido.com/en/company/history/
2. https://corp.shiseido.com/en/brands/

Current State of Shiseido Co.- Sales

According to the charts in the next two slides:

• Sales have been at a consistent increase over the last 3 years.
• In 2019 sales were equal to about $10.8 billion.
• 2019
• 46% of sales were from their “prestige” product group.
• The SHISEIDO brand falls under this category.
• 2020 (as of the 2^nd quarter)
• Shiseido Co. made ¥190.9 billion compared to last year where they made ¥291.0 billion.
• SHISEIDO brand is down 26% compared to in 2019.
• According to the outlook created, despite the major declines in the beginning of the year, the company expects a 1% increase in sales by the 4^th quarter of 2020.

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1. https://www-statista-com.rocky.iona.edu/statistics/879849/shiseido-sales-share-by-product-group/
2. https://corp.shiseido.com/en/ir/pdf/ir20191107_664.pdf
3. https://corp.shiseido.com/en/ir/pdf/ir20200806_718.pd
4. https://www-statista-com.rocky.iona.edu/statistics/739778/shiseido-net-sales/

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Current State of Shiseido Co.- Stock

• It was listed on the Tokyo Stock Exchange in 1949.
• The stock was doing well from late 2017 to 2019.
• It almost doubled in price from Oct. 2017 to Oct. 2019.
• The loss of sales from what the company assume was the global pandemic greatly affected their stock.
• By the end of April 2020, the stock dropped a little more than $20.
• It has since been on a slow recovery only increasing by $10 so far.

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1. https://corp.shiseido.com/en/company/history/

https://www-statista-com.rocky.iona.edu/statistics/739778/shiseido-net-sales/

Key

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Estee Lauder- Gold

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L’Oreal- Green

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Shiseido- Blue

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All three- white

Estée Lauder Current Brand Portfolio

Portfolio by Collections:

• Skin Care Collections
• Advanced Night Repair
• Advanced Time Zone
• DayWear & NightWear
• Micro Essence
• Nutritious
• Perfectionist
• Resilience Mult-Effect
• Revitalizing Supreme+
• Lady Aiko X EL

https://www.esteelauder.com/products/681/product-catalog/skin-care

• Fragrance Collections
• Beautiful
• Beautiful Belle
• Bronze Goddess
• Modern Muse
• Pleasures
• Sensuous
• White Linen
• Youth-Dew
• The House of Estee Lauder
• Private Collection
• Aerin Fragrance Collection
• For Men

• Makeup Collections
• Double Wear
• Futurist
• Pure Color Envy
• Pure Color Desire
• Pure Color Love
• The MET 150 Collection
• Lady Aiko X EL
• Bronze Goddess
• Pink Ribbon Collection

Estée Lauder Current Brand Portfolio

https://www.esteelauder.com/products/631/product-catalog/makeup

Portfolio by Product Type:

• Face
• Foundation
• Concealer
• Blush, Bronzer & Highlighter
• Powder & Compacts
• Primer
• Eye
• Eyeshadow
• Mascara
• Eyeliner
• Brows
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• Lip
• Lipstick
• Liquid Lip color
• Lip Gloss
• Lip Care
• Lip Pencil
• Crème, Matte, Shimmer, & Gloss Finish
• Accessories
• Brushes & Tools
• Makeup Remover

Estée Lauder introduces:��Kneading Bead Moisturizer

New Product

• Introducing, a new product line of facial moisturizers called “Kneading Bead Moisturizer”. This will be a line of premeasured balls of moisturizer, curated for different skin types. The outer-layer of the ball will melt when the user rubs it in their hands, uncovering the inner filling of moisturizer.
• There will be a moisturizer for normal skin, sensitive skin, oily skin, and dry skin.
• Each moisturizer will be made using only organic/clean ingredients.
• The outer-layer of each type of moisturizer will be comprised of the plant-based butter and a little bit of bees-wax to create a sturdy enough layer that will still melt when rubbed in the user’s hands.
• The first-time purchase packaging will be similar what is pictured on the right.
• the glass jar will be a glossy, very pale/light green.
• Any writing will be black and engraved into the jar.
• The top will screw on and will be made of gold metal.

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Product Concept

The Estée Lauder brand offers high quality, effective skincare products but currently, these products are not considered all-natural, nor do they come in sustainable packaging.

Introducing Estée Lauder Kneading Bead Moisturizers- our newest line of clean facial creams made with natural ingredients, sold in sustainable packaging. The product will be available for first-time purchase in a pale green, glass jar filled with 5oz of pearl shaped balls filled with moisturizer along with small metal tongs to grab the product from the jar. These small, premeasured beads of cream melt when massaged in your hands to reveal the perfect amount of product for every use. After your first use, the product will be available to purchase in pale green, refill bags made of 100% recycled paper.

There are four different moisturizes, each catering to a certain skin-type. Each of these will contain vitamin C and collagen, as well as the following:

1. For Normal Skin
• Base-Shea butter mixed with evening primrose oil
• Drops of Teatree, tangerine, and grapefruit essential oils.
2. For Oily Skin
• Base-Kokum butter mixed with jojoba oil
• Easily absorbed without leaving a greasy residue
• Drops of clary sage, tangerine, and grapefruit essential oils.
3. For Dry Skin
• Base- Hemp seed butter mixed with sweet almond oil
• The omega-6 fatty acids in hemp seed butter help keep skin moist
• Drops of lavender, tangerine, and grapefruit essential oils.
4. For Sensitive Skin
• Base-Olive butter mixed with jojoba oil
• Helps lower inflammation
• Drops of lavender, tangerine, and grapefruit essential oils.

Kneading Bead Moisturizers are perfect for any woman wishing to lower her carbon footprint while maximizing the benefits provided by natural skincare!

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First-time Purchase

Refill Bag

Product

https://nezzanaturals.com/blogs/news/top-10-nut-butters

https://elizabethvanburen.com/articles/oil-uses-by-skin-type/

https://www.healthline.com/health/essential-oils-for-skin#pigmentation

Why?

• Oftentimes, if a consumer uses too little of a skincare product, they may not experience the benefits that the product is supposed to provide; likewise, using too much product could negatively affect the user’s skin.
• This design will provide the user with the recommended amount of product for every use, preventing the user from using too much or too little of the product.
• According to a 2019 Forbes article, the cosmetics industry produces more than 120 billion units of packaging a year.
• The sustainable packaging will help reduce the Estée Lauder brand’s contribution to this waste produced every year.
• The market size of organic/clean skincare has been trending upwards since 2005.
• The segment’s growth rate is also higher than that of the cosmetics industry as a whole.
• According to a study:
• 60% of consumers consider sustainability to be an important factor when purchasing a product.
• 64% of consumers consider organic ingredients to be an important factor.
• When looking at the US, UK, Germany, France, and China; an average of 72% of people that partook in the study indicated that clean beauty was important to them.

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https://www.forbes.com/sites/lucysherriff/2019/09/17/the-minimalist-beauty-company-tackling-the-industrys-waste-problem/#26bc66ee4326

file:///C:/Users/19147/Downloads/study_id81197_natural-and-organic-cosmetics-market-worldwide%20(1).pdf

Why?

• According to the chart
• 32% of consumers already by organic beauty products while 37% want to buy them.
• 35% already buy sustainable products while 38% want to.
• 25% already buy plant-based products while 39% want to.
• This new product will cater to the 25-35% of consumers that the Estée Lauder brand currently isn’t serving by not participating in the organic/plant-based market segment.
• It will also serve the 37-39% of people that may buy products in the future produced in that segment.

https://www-statista-com.rocky.iona.edu/statistics/1132248/consumers-interests-in-natural-and-clean-beauty-product-attributes-in-the-us/

Value Proposition

Estée Lauder’s Kneading Bead Moisturizer provides individuals with a hydrating facial cream made with clean ingredients that reduces waste produced by packaging.

Positioning Statement

For women that desire naturally healthy skin, Estée Lauder’s Kneading Bead Moisturizer is a facial cream that delivers your skin the perfect amount of hydration every time without the use of harmful ingredients, while also reducing your carbon footprint.

Demographic Profile

• The target group is women that want to purchase clean/sustainable skincare products.
• Age: 22-41 years old
• According to the chart on the top right, 49% of Gen-Z and 41% of Millennials in 2019 were buying more natural beauty products than in 2018.
• These groups spend more on skin-care than other generations.
• They are willing to pay more for natural and/or sustainable options.
• Gender: Women
• Income: Middle income +
• Education Attainment: College education
• Household Size: 1-3 people
• Buyer rates per year: (based on the assumption that the product is purchased twice a year.)
• First-time purchasers: $130
• Jar ($75) + refill bag ($55)
• Refill only purchasers: $110
• 1 refill bag twice a year (2 * $55)

file:///C:/Users/19147/Downloads/study_id81197_natural-and-organic-cosmetics-market-worldwide%20(1).pdf

Market Size

https://blog.globalwebindex.com/chart-of-the-week/green-consumerism/

https://www-statista-com.rocky.iona.edu/statistics/241488/population-of-the-us-by-sex-and-age/

https://www.statista.com/statistics/203183/percentage-distribution-of-household-income-in-the-us/

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To find the market size we would use the information above. First, we would multiple each total number of women in the US by its prospective percentage of people willing to spend more. We would then add those 3 totals together to reach a total of 50.61 million women in the US willing to spend more on these types of products. After that, we will multiply 50.61 by 62.9% to find the number of women making over $50,000 that are willing to spend more since we are targeting women making over $50,000 a year. Once we do that, we arrive at 31.834 million women. We then must multiply that by both $110 and $80.

Retail & Pricing Strategies

Retail Strategy

• The line will be sold internationally on the Estee Lauder website, as well as at department stores and beauty retail stores but for purposes of the project we will focus on the retail strategy for the US.
• We will focus on getting the products on shelves as well as on the retailers’ websites for the stores that Estée Lauder products are currently sold. Some of these retailers are:
• Sephora
• Ulta
• Macy’s
• Bloomingdales
• Nordstrom
• We have decided to line our strategy for this new product line with those of our current product lines to reach as many consumers as possible.

Pricing Strategy

• We will use a product-line pricing strategy.
• The first-time purchase will include 5oz of the product in the reusable glass jar as well as the metal tongs.
• This will cost $75.
• The re-fill bags will come with 3oz of product.
• This will cost $55.
• The pricing is pretty much in line with other Estée Lauder moisturizers. Although Kneading Bead Moisturizer is a clean, sustainable line of products, we don’t see fit to charge higher prices. Studies show that consumers are willing to pay more for all-natural products, however price is the main factor taken into consideration when making these purchases. As much as 56% of people find the prices to sometimes still be too high. By pricing this line similarly to our other best-selling facial creams we hope to eliminate the pricing concerns amongst potential buyers.

file:///C:/Users/19147/Downloads/study_id81197_natural-and-organic-cosmetics-market-worldwide%20(1).pdf

Market Research Plan

• We will use a quantitative research method to gauge interest in topics that correlate with the new product line.
• Online survey/questionnaire about the Estée Lauder brand.
• This survey will ask questions that will collect data like:
• Participants age group
• How familiar they are with the brand.
• How likely they are to purchase Estée Lauder products.
• How important eco-friendly/all-natural ingredients are to them when purchasing skincare products.
• The average price they are willing to pay for sustainable/all-natural skincare.
• Other brands they purchase skincare from and why.
• We will also bring in test groups to sample our new product line and give feedback.

Internal Marketing Communications Plan

• We will survey our employees as well as employee’s working for our suppliers and vendors. These will be separate surveys to ensure that we know what we must improve on with each group, but the answers will be anonymous so that employees will feel free to be as honest as possible. We will ask things such as:
• How familiar are you with the Estée Lauder’s brand? Our advertising?
• How likely you are to use or recommend our products if you were not employed here?
• On a scale of 1-10, how much do the Estée Lauder products inspire you?
• If we used sustainable packaging, would you be more likely to use or recommend our products?
• If we used all-natural ingredients, would you be more likely to use or recommend our products?
• Our team will then set up a series of meetings with teams in our own offices (each department will send 1 or 2 employees), with our vendors, and with suppliers. We will educate each group on what they may be lacking knowledge in based off their answers to the survey, ie: our brand and advertising.
• After the first meeting we will send out an email to all who participated. This email will give a brief overview about what was discussed in the meetings, as well as introduce our new product-line concept.
• We will then conduct a few more meetings; in these we will speak about this new product line to get everyone excited. Participants will be able to sample the products and give feedback. This will go hand-and-hand with our marketing research as it will be another way to gain feedback using our own employees, vendors, and suppliers as focus groups.

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External Marketing Communications Plan

• We will market via different social media platforms to reach our target audience (women ages 22-64).
• We will focus on 4 major social media platforms:
• Facebook
• Instagram
• Snapchat
• YouTube
• We will market via sponsored posts, posting on our own profiles, and hiring a celebrity to represent this product line; this will begin running at the time of the new product line launch and continue throughout the product’s lifetime.
• In the first year we will pay for many sponsored posts, post to our platforms often, have our retailers post on their pages, and have our product-line representative post often as well.

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https://sproutsocial.com/insights/new-social-media-demographics/

Percentages of ages groups using each platform:

Facebook

Ages 18-29: 79%

Ages 30-49: 79%

Ages 50-64: 68%

Instagram

Ages 18-29: 67%

Ages 30-49: 47%

Ages 50-64: 23%

Snapchat

Ages 18-29: 62%

Ages 30-49: 25%

Ages 50-64: 9%

YouTube

Ages 18-29: 91%

Ages 30-49: 87%

Ages 50-64: 70%

Celebrity Endorsement

Similar to what our brand did in the 1970s when we deemed Karen Graham, “The Estée Lauder Woman”, we will partner with Kourtney Kardashian to promote this product line. Kourtney runs her own website/brand, Poosh. Poosh is dedicated to helping women live a healthier lifestyle. As explained previously, Knead Bead Moisturizer is a facial cream line using all-natural ingredients, sold in sustainable packaging. Kourtney, encourages people to pay more attention to the ingredients they put in and, on their bodies. In 2018, she addressed Congress to discuss cosmetics regulation reform. Kourtney is perfect to represent this moisturizer line as she represents both a healthy and sustainable lifestyle through her own practices in her everyday life.

https://www.health.com/celebrities/kourtney-kardashian

Advertising Campaign�

Estée Lauder

Kneading Bead Moisturizer

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The hydration your skin craves without the unwanted ingredients.

Less is more.

Media Laydown Plan

Recommendations

https://www.elcompanies.com/en/our-brands

In conclusion, the natural/organic skincare market has been at a constant increase, gaining traction particularly among younger generations. Sustainability has also become increasingly important to many consumers; however price is the main concern for both types of products. My recommendation for Estée Lauder is to consider entering one, if not both markets while keeping their pricing in line with current products. Many brands tend to price products that are made of all-natural ingredients or use sustainable packaging at higher prices because studies show that consumers are willing to pay more. I believe that by keeping the pricing the same, it will encourage consumers to make the shift over to eco-friendly products. Estée Lauder could increase their customer base, in turn increasing sales.