Celebrity Effect & Price Advantage: Kylie Cosmetics

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Table of Contents

Kylie Cosmetics
Estee Lauder
Comparison
Conclusion
References

This paper presents an assessment of Kylie Cosmetics’ rapid growth that happened within three years. It features a detailed analysis of the possible reasons for it and compares the history of the enterprise to the Estée Lauder Companies, a large business that was established in the middle of the 20th century. The report shows that the celebrity effect and the price advantage may be significant factors for quick development compared to the brand effect and customer loyalty.

Kylie Cosmetics

The small business that was chosen for analysis is Kylie Cosmetics, the eponymous brand of Kylie Jenner. Its story is notable as the young woman built one of the most popular makeup companies in the world within three years. Since its launch, the organization has sold more than $630 million worth of products (Robehmed, 2018). The estimated dividends excluding taxes reach $60 million, and the market value of the company is around $800 million. The young woman owns 100% of the organization (Robehmed, 2018). Notably, Jenner’s company can allow her to become a billionaire in her early 20s.

The primary reason for such a rapid growth of Jenner’s business is the celebrity effect. The young woman has an extensive fan base; her social media following is more than 110 million followers on Instagram and more than 25,5 million on Twitter (Robehmed, 2018). In addition, being a member of the famous Kardashian family, Jenner has a significant advantage compared to little-known brand owners.

As Jenner is a highly influential person in the media, it is evident that customers are likely to buy products featured in her posts. The young woman often wears the lipsticks in her pictures, which raises public interest in them. She also interacts with her followers online, which increases their loyalty to her brand. Moreover, it is necessary to mention that the celebrity has chosen one of the most profitable industries that have always been driven by role models (Robehmed, 2018). Thus, Jenner’s online and TV presence has contributed to the rapid development of her brand significantly.

Another reason for the rapid growth of Jenner’s enterprise is the price advantage. The average price for lip kits by Kylie Cosmetics is $29, which is reasonable compared to the costs of other high-end makeup products (Robehmed, 2018). Moreover, for less than $30 customers receive a set of two high-quality items; there is a broad variety of products available. It is possible to say that although Jenner’s lipsticks may not be as affordable as some of the regular ones, the young woman developed the strategy that would make them attractive to the customers.

Estee Lauder

Estée Lauder Companies Inc is the organization that manufactures and sells cosmetics, as well as fragrance, skincare, and hair products. It was established in 1946 in the United States (“#137 The Estée Lauder Companies,” 2018). The company presents more than 150 brands, and each of them has distinct features and history (“The Estee Lauder Companies,” 2019). Estée Lauder is one of the leading global personal care brands.

The primary reason for the Estée Lauder Companies’ growth is customer loyalty. The organization does not focus on particular segments of the market. Instead, it offers a variety of products of different price ranges and types. Moreover, the enterprise has loyalty programs that allow individuals to receive free products and shipping, early access to events, birthday gifts, and other benefits (“The Estée e-list loyalty”, n.d.). Such an approach to customer care along with an extensive product range allow for the establishment of clients’ allegiance to the brand.

One of the other reasons for the Estée Lauder Companies’ growth is the brand effect. The company has a broad variety of brand that belongs to the high-end and low-end segments. For example, the enterprise owns Michael Kors Beauty and Tommy Hilfiger that offer luxury products along with MAC, which presents more affordable items. It means that the Estée Lauder Companies designs and manufactures products that meet the needs of all groups of customers. In addition, the company’s brands are very different from each other in terms of design and values but are similar in their high quality.

Comparison

The example of Kylie Cosmetics is outstanding compared to other enterprises in the field. In 2017 alone, its sales reached more than $385 million (Mejia, 2017). In contrast, the Estée Lauder Companies Inc reached the goal of $500 million only after ten years of its establishment; its market value is $54,2 billion (“The Estee Lauder Companies,” 2019). The Estée Lauder Company owns over 150 brands, most of which had developed online and offline campaigns for many years before they achieved success. For instance, Clinique has been in the market since 1968, but its value is approximately $7,170 million (“Clinique,” 2019; “Brand value of the leading,” 2019). This comparison shows that Jenner’s company is significantly more profitable and can potentially reach higher market value within the next several years.

Conclusion

The report shows that Kylie Cosmetics is an example of outstandingly rapid growth compared to large businesses. It suggests that today, extensive online presence and influence may play a significant role in the company’s success. The comparison with the Estée Lauder Companies Inc reveals that customer loyalty along with a wide range of brands may allow the organization to become highly profitable but not in a short time.