If you go into a department store and look at the cosmetics section generally the main floor – you will likely see the Estee Lauder brand – Youth-Dew, Clinique, Aramis, Night Repair, and others. Estee Lauder was a person, she founded the company and helped grow it to a successful company and her story was written by Lee Israel called Estee Lauder – Beyond the Magic, Macmillan Publishing Company, NY, 1985. It is always interesting in the beauty world – only a few companies were run by woman, most of them were run by men.

Part of the story of Estee is the person and part is building up the company. In the beauty business, there is a great deal of looking to ideal beauty and thus the emphasis on having the “right” people use the cosmetic. There is always many people in the “society” pages or entertaining is a good thing. Another aspect is how cosmetics are sold. At the present time, people can and do buy on line or the internet but usually the tried and true method is sampling. You need to try the cream or smell the fragrance and the cosmetic companies set up their booths within the department stores. This is where you need to sell to customers and Estee was very good at it and could teach it.

Everyone has an idea of what the best store is for items, including cosmetics. Just after the war, in the US the top of the line store was Saks Fifth Avenue, to be in Saks was to be in the business. Saks was in the demand business, if there was a heavy demand for the line, they would carry it. If a customer or two asked, often a salesperson went to a different store, bought the item and charged the customer the retail price. One method Estee used was to give her lipstick in metal cases as opposed to plastic ones, people demand the items and Saks carried the line.

Another method to attract attention which is still used is the gift-with-purchase. It came about because of Estee’s personality and belief in the superiority of the product. The gift says – Try it. I know you will like it. I know you will want more. From this idea flow the next step sending  “junk mail” out telling people your gift awaits you when you come to the store. It worked (still does) and people bought other items as well.

In later years, reflecting on what made the company successful – Leonard Lauder said listen to your mother (Estee); listen to your customer, and understand the essential nature of your business. What that translated to was Estee Lauder was very good at the care and cosseting of their customers where they bought their product or point of purchase. The emphasis is on sell-thru not the sell in. Sell in means create a demand (advertise), get the goods out, and sell them to a customer whose appetite is already whetted when she comes into the store off the street an example is the Revlon company. Sell-thru is more expensive – because you need to rent space at the department stores Sometimes the advertising through the department stores ads were co-operative, sometimes the department stores made the manufacturers pay the rate. The larger and more profitable you are will depend on the relationship.

Linking to dividend paying stocks, each company will have different strengths which allows them to be successful. The strategies that work for one, does not necessarily work for another, even though they are in the same broad category. The example above was Revlon and Estee Lauder, both in the beauty business, both doing things differently. It is important to understand what makes your company better than the others, so if they begin to do something different, you can ask why.

There are more questions than answers, till the next time – to raising questions