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History & Origin . . . . . . . . . . . . . . . . . . .

3
Early Evolution . . . . . . . . . . . . . . . . . . . . 6
Global Expansion . . . . . . . . . . . . . . . . . 8
Modern Business . . . . . . . . . . . . . . . . . . 9
Company Structure . . . . . . . . . . . . . . 16
Recent Efforts . . . . . . . . . . . . . . . . . . . .17
Company DNA . . . . . . . . . . . . . . . . . . 32
Summary . . . . . . . . . . . . . . . . . . . . . . . 35
Social Media Accounts . . . . . . . . . . . 36

During the 1920s in New York City, John Schotz, a Hungarian


chemist, developed a face cream with his niece, Josephine Esther
Mentzer
It was named Super-Rich All Purpose Crme
They gave samples to her customers at the Florence Morris Beauty
Salon
Josephine Esther married young, to Joseph Lauter, whose father,
on moving to the United States, had had his original family name Lauder
The couple decided to re-adopt the original family name and
Esther took the opportunity to nuance her own name
Este continued her uncles work and it was a big hit, and used her
salon job to sell the miracle cream to her customers
Her first big idea for sales was to give free samples of her make-up
products, for every item purchased in the salon

Este Lauders added-value hairdressing experience was a hit and


she was soon asked to demonstrate her products in other beauty
salons
With high standards, she recruited and trained saleswomen into
her own style
She thought of ways to make her face cream jars special by
engraving the brand name on it, and coloring it pale turquoise
Este wanted to sell her products in Saks Fifth Avenue but with an
order of $800 worth of merchandise
Determined, she pulled out her products in two salons and
invested their entire savings into buying their first factory
They prepared the creams on the restaurants gas burners and
then set about talking the buyer into a promotional campaign

Everyone with a duty account at Saks was sent a card announcing,


Saks Fifth Avenue is proud to present the Este Lauder line of
cosmetics: now available at our cosmetics department
Este Lauder had four golden rules:
She would open every new franchise herself, spending a week
in the store to get everything absolutely right.
Her salespeople needed to be not just walking advertisements
for her products, but be gushing enthusiasts for their efficacy
The counter had to be a turquoise magnet, a tiny, shining spa
The gift with purchase was mandatory, whatever the stores
policy regarding other cosmetic counters
Este approached New Yorks advertising agencies, budget into
more free samples and postcards were sent out saying, Madam,
because you are one of our preferred customers, please stop by
the Este Lauder counter and present this card for a free gift
In 1947, The Este Lauder Company Inc. was formed
3

Este noticed counters in the major department stores were the


counters of the French perfumers
If Este has to make it big, she needed a killer perfume. Estes
first step was to not call it a perfume at all
Her Youth Dew was dubbed a perfumed bath oil
As for the packaging, she chose a screw top rather than the more
usual cellophane wrapping
Youth Dew launched in 1953
It was immediately a huge success for the Este Lauder Company
Selling 5,000 units a week, it became a long-term best-seller, still
clearing $30 million a year in the 1980s
Este was now coming to her rivals attention. Being number three
behind Helena Rubinstein and Elizabeth Arden

Meeting Helena Rubinstein,a Polish-born American business


magnate for the first time, Este made an impact by telling the
madam that her neck would benefit from Estes Crme Pack
1958, annual sales hit $1 million, and earned leading name in the
American cosmetics industry
In the ten years from 1958, company sales grew at an average of
45% a year, and transform the company into an industry
powerhouse

In the 1960s, Este carried her sales bag around the world,
opening up concessions wherever she went: Hong Kong, Canada,
Austria, Italy and Germany
Este then handed over the task to an international sales manager

This role soon morphed into a separate division within the


company, Este Lauder International Inc.

Their first store in Moscow opened in 1981 while it was still the
capital of the Soviet Union
By the mid-1990s, the company was selling in over 100 countries
Este Lauder passed away in April 2004

By then the company had 45% of annual sales, amounting to


$5.7 billion, and over half of operating income, was coming
from non-US affiliates

Her son, Leonard - fresh from completing his Columbia MBA, joined
the company in 1958
By 1962, Este Lauder Company chose a different approach
She used only one model, who would be the face of the
company that would appear on every product over several
years
The first face of Este Lauder was Karen Harris
Este Lauders second masterpiece was mens fragrance in 1965
Aramis was launched - a fragrance, a cologne and an aftershave lotion
Due to uninspiring sales results, Aramis re-launched in 1967
Presented entire range of products: after-shave, eye pads and a
face mask and covered with brown and gold tortoiseshell livery
Este now presented an entire range of products: after-shave, eye
pads and a face mask
The Este Lauder name was relegated to small print and soon
dropped altogether
2

The first advertisement for the brand ran in The New Yorker
featuring the All-Weather Hand Cream Este was selling to
metrosexuals thirty years before the term came into common
jargon
A successful re-launch that Este Lauder promoted brand equity.
They could appeal to both sexes and all ages
Leonard appealed medical reassurance and partnership with Dr.
Norman Orentreich, an expert in skin sensitivities and formed
Clinique
At department stores, Clinique stood out for its bright, clean lines
and its not too clinical packaging; the artists lamp for examining
customers skin; and a question-and-answer board
Codenamed as Project Miss Este, Cliniques launch day
approached but a complaint was filled by Jacquet and Jacquet with
their trademark product called Astringent Clinique

Leonard loaded up and went to the Jacquet and Jacquets owners


with a $5,000 offer
He came back with the name but was $100,000 poorer
Clinique launched in 1968, and lost $3 million in its first seven
years; no mean sum for a company with a $40 million a year
turnover
By the 1970s, Revlon and Avon were their main competitors and
they were able to outdo Este Lauder in personalised selling
Este Lauder was being squeezed with the launch of Revlons
Charlie and Yves Saint Laurents Opium. Soft Youth Dew and
Cinnabar were rushed, and both fell well short of past standards of
success
Annual sales had reached close to $250 million by 1978
Cliniques Prescriptives: customer got one-hour consultation, with
a custom-coloured make-up to exactly match skin-type and tone.
This concept gave Estee Lauder $40 million worth of investment

More success came with the Launch of White Linen as part of the
trio of fragrances called New Romantics
The company returned to its skin care roots in 1983 with the
launch of Night Repair, trumpeted in ads as a biological
breakthrough
Unfortunately, the message was undermined by the Clinique
collaborator, Dr Orentreich, going rogue, and debunking the whole
idea in the press
Launched of Their Beautiful in 1985, was a blockbuster that
became another long-term success
Este Lauder were now un-disputed kings of the department store
cosmetics floor, and second only to Avon in sales of fragrances
In 1990, Leonard recruited Robin Burns from Calvin Klein. Under
Burns leadership, companys portfolio and advertising was
updated

A notable development was Origins, which was run as a separate


entity and headed by Leonards son, William
Origins was a range of botanically based products aimed at
heading off the threat posed by the rise of Body Shop
William described Origins mission as trying to rewrite the book
on how a cosmetics company operates and thinks in the 21stcentury.
Este Lauder signed a deal with Tommy Hilfiger to license his
name on cosmetics in 1993
Pro-active thinking was at the heart of the companys strategy
during the 1990s as it made the precarious transition from being
family-run to being run as a corporation
Joseph was deceased, Este in semi-retirement in an advisory and
figurehead role, and other family members uninvolved
2

In 1996, sales, which had grown every single year since the
companys inception, rose to nearly $3 billion
So far, the company had been hugely successful developing its
own brands, but around the IPO, they ventured into acquisitions
They decided to merge with Make-up Art Cosmetics Ltd.
(MAC) followed by another professionals beauty line, Bobbi
Brown Essentials

Sassaby Inc. with its Jane brand, was also purchased for its
populist appeal to teenagers

Aveda was purchased for $300 million - 85% of their sales


coming from the channel where Este started, hair salons
La Mer brand of high-end moisturisers was purchased
Deal with Donna Karen International Ltd., for use of the Donna
Karen New York and DKNY trademarks
2

Licensing deal with Stila, was acquired, as was a British brand,


Jo Malone
Five deals soon followed, adding the Bumble and bumble, Kate
Spade, Michael Kors, Darphin and Rodin & Fields brands to the
portfolio
By 1998, Este Lauder assumed an industry leadership role in
selling its products over the Internet and formed ELC Online
Este Lauder had become an industry giant covering a wide
variety of channels and consumers
It was also by now a global company, with sales in the billions and
promotional and advertising budgets that exceeded $1 billion
Each brand had its own president to drive sales and marketing and
the same was pursued within the international division. A matrixtype complex of manufacturing, finance etc. supported these units
2

In 2009, Fabrizio Freda, CEO, announced a major change in


company structure
The brands would now fall into one of four groupings:
High-end prestige brands and make-up artist brands: Este
Lauder, MAC, Bobbi Brown, Prescriptives, La Mer, Jo Malone,
Tom Ford Beauty
Prestige skin care and alternative channels: Clinique, Origins,
Ojon
Fragrance licensing: Aramis and designer fragrances
Salon and Pharmacy channel: Aveda, Bumble and bumble,
Darphin
North American business, together with Canada and Puerto Rico
was united into one North American affiliate. This gave one point
of contact for their customers

With 42% of sales coming from this one unit, it was a huge
multi-billion dollar enterprise in its own right

2004
The 58th successive year of sales growth saw a company-record
increase of $700 million, making the top line up to $5.8 billion
Five of the companys brands - Este Lauder, Clinique, Aramis,
Donna Karen fragrances and Tommy Hilfiger fragrances were
available in over 120 countries, Clinique in over 130 countries
Este Lauder and Clinique were growing rapidly in China
Aveda was launched in Japan
MAC was growing fast in Brazil via its own stores
Darphin, a high-end botanical beauty brand sold primarily through
independent European pharmacies, was acquired
BeautyBanks initial output was three new brands, which were
launched through the Kohls chain of 600 department stores

With Ashley Judd signed up as a brand face and P. Diddy as the


latest licensed fragrance, the machine was humming
The scale and scope of the Este Lauder business
8,000 product lines was now vast
400 scientists were working in 6 research centres around the
world
300 new product launches in the year
The Este Lauder Beyond Paradise launch took place
It utilizes essential oils developed exclusively for the company
It was a huge success
It reached the top five best-selling fragrances in US
Department stores

2005
Sales reached of $6.3 billion
Este Lauder had four of the top five best-selling fragrances in
department stores. But the fragrance market was getting tougher
all the time.
The company was now marketing a range of over 90 prestige
fragrance brands with over 200 new ones being launched by the
industry each year
Stood at 26 with the addition of fashion designer Tom Fords name
70% of sales was coming from the five core brands the company
had developed themselves: Este Lauder, Clinique, Aramis,
Prescriptives and Origins
Clinique was launched into Vietnam during the year, soon followed
by Este Lauder
2

MAC launched into both India and China during the year
Clinique and Este Lauder, launching in another 23 Chinese cities,
almost doubled sales
2006
Este Lauder being squeezed at either end: by category killer
chains and by Wal-Mart, experienced a huge struggle for the
company to keep growing sales
There was a slow but unstoppable decline in the effectiveness of
the gift-with-purchase promotional technique
Sales declined, despite makeovers for the venerable Youth Dew,
White Linen and Pleasures brands
MAC was the companys fastest growing brand, launching into
Russia as well as China and India

The super-premium skin care brand, La Mer, had quadrupled sales


since 2002
The managements strategic review resulted in the development of
five strategic imperatives to negotiate the more difficult trading
conditions

Optimising the Brand Portfolio

Strengthening Product Categories

Strengthening and Expanding Global Presence

Diversifying Distribution

Achieving Operational and Cost Excellence

9% increase drove sales over the $7 billion barrier


Mergers and Acquisitions disposed of Rodan & Fields, and acquired
the Ojon Corporation

Tom Ford Beauty added to Este Lauders range of brands in the


ultraluxe niche
Two Daisy Fuentes fragrances were launched exclusively in Kohls
A Coach-branded fragrance was introduced through distribution in
Coach stores
Este Lauder collaborated with the Ford Motor Company to launch
Mustang onto the mid-tier retail channel
Internet sales grew another 25% with the expansion of the online
business to the UK, Australia and France
Certain brands were listed in Sephora, Canadas Shoppers Drug
Mart and ULTAs 450 beauty superstores
Este Lauder now had more than 450 free-standing stores around
the world for its prestige brands
Origins was available in the European pharmacy channel
2

Bobbi Browns debut on QVC


The company now had 35 international affiliate organisations.
These supported sales in over 130 countries
Eight brands were now available in China with Este Lauder
leading the way in 32 cities
2008
12% increase that seemed to belie the global economic crisis
Skin care was again the best category, and generated almost
$3 billion in sales
Their performance was driven by the Asia/Pacific regions very
strong sales of skin-whitening products and fast growth in
China
Make-up, another $3 billion category, grew 10% , MAC and
Bobbi Brown

$3.2 billion, international sales had doubled to nearly $4.7 billion impressive by any standards. This was due to three factors:

The companys core product range was well aligned to the


aspirations of the fast-growing middle classes around the world

The company was flexible in positioning itself


Emerging markets, where the company accounting of 9% in
sales
Another significant factor behind the continued good news was the
companys success in positioning itself not as a reactive victim of
the changes in how their consumers were reached, but as
proactive beneficiaries
In the US, selling their products was in trouble - slipping from being
worth 41% of sales in 2003, to 30% in 2008
But the international department stores were doubling the sales to
over $2 billion in the previous five years, were Este Lauders

The company was then most excited about the potential offered in
four up-and-coming channels:
The Internet 15 brands became available for sales online in
a growing number of countries - Korea being the latest. In line
with Este Lauders trademark personal touch, Clinique,
MAC, Bobbi Brown and Origins all offered live chat, with real
make-up artists providing personalised advice
Direct Response TV - This was another arena where a
prolonged interaction with the audience played to company
strengths. Clinique, Origins, Bobbi Brown and Ojon had all been
big hits, but only Ojon had been acquired because it was
primarily a direct response TV brand

Company Stores - Este Lauder now operated 577 stores,


which acted as advertising billboards in some of the worlds
most prestigious real estate
Travel Retail - Este Lauder brands had always been well
featured in Duty Free outlets
This combination of routes to the consumer also gave the company
an opportunity to develop ground-breaking, multi-channel launch
strategies for new products
Tri-Aktiline Instant Deep Wrinkle Filler was launched internationally
in 2008 via speciality cosmetics stores, direct response TV, the
internet and travel retail

2009
A declined of 7% to $7.3 billion was more due to currency
fluctuations
Este Lauder reduced its SKU (Stock Keeping Unit), count by 16%
and cut merchandising, advertising and sampling budgets
At the Bobbi Brown counters and in the Origins stores: for the
traditional fragrance brands, smaller, less expensive pack sizes
were introduced
Bouncing back with a 6% sales increase to $7.8 billion
Asia and Europe drove the growth
Sales in China increased by almost 30%, with E-commerce
chipping in a 23% increase
The launch of Este Lauders Advanced Night Repair was the most
successful in the companys history
79 MAC stores opened around the world
2

Bobbi Brown line was launched into Poland


The fragrance category declined, as sales of the franchise name
brands such as DKNY, Hilfiger and Sean John fell off
The major acquisition was the Smashbox Beauty Cosmetics
Company, a prestige brand sold primarily in speciality beauty
channels in the US and 40 other countries
A decision to discontinue the Prescriptives brand was partially
related due to a social media campaign by its core followers
The company was a year into its new four-year strategy, which
involved a significant restructuring (covered previously) and
resizing of the company
The number of SKUs was reduced again, by 10%, and a programme
to trim the workforce by 2,000 was put into place

2011
13% increase which was three-times the growth rate of the total
industry
Here increased footfall in department stores encountered Este
Lauders revitalised counters:
special lighting
interactive touch screen tools
a host of new products
Business also grew in other US channels, particularly fast-growing
multi-brand beauty retailers like Sephora, where Bumble launched
in 298 stores
In digital selling, sales rose by 28%
The company became leaders in China in the prestige beauty
category
2

Selling 11 brands in 38 cities through a variety of department


stores, company stores and multi-brand specialist retailers
Este Lauder opened a larger R&D facility to focus on new products
La Mer grew by 55% through increased distribution and the launch
of an E-Commerce site
Combined sales in China, Hong Kong, Taiwan and Korea grew by
$181 million
In Brazil, company growth was spearheaded by Clinique and
MAC, focused on opening company stores and expanding ECommerce
2012
10% record increase grew at double the sector rate make Este
Lauder brand became the largest prestige beauty brand in the
world
US sales grew by over $250 million

Clinique consolidated its position as the number one overall beauty


brand
New products in the Este Lauder range brought many new
customers into the brand
Outside the US, another 50 company stores opened and online
business increased by 24%
The company had now 340 marketing and E-Commerce sites
across more than 50 countries
In China, opened more company stores helped them drive up brand
availability to 58 cities
In Brazil, opened with seven new MAC stores cementing the
brands number 1 position in the beauty market
Jo Malone and Bobbi Brown also opened stores in the Middle East
Este Lauder became the market leadership in Mexico, Venezuela
and Peru

Consumer Contact
The most important aspect was making human contact
Product selection is personalized
Companys greatest achievement has been to translate their USP
(unique selling point) into areas such as company stores, direct
response TV and, most successfully, the Internet
Global
Helping to meet basic needs applicable across all races, countries
and languages
Este Lauder is in an ideal position to benefit hugely from the
rapidly increasing new middle classes in emerging markets - having
powerful, leading positions in the BRIC markets (Brazil, Russia,
India and China) and elsewhere

Innovation
Innovation has always been at the heart of the company: both what
the products did and how they were sold
8 global R&D laboratories provide an endless stream of hundreds of
new products a year
The companys prowess in innovation is best illustrated by the
Forbes 2012 lists: The Este Lauder Companies ranked #933 in
sales, #716 in profits, #348 in market cap and #23 in Innovative.
This is one place above Google.

Brand Management
All of the original brands have been developed and adapted to be
still relevant today
Every acquired brand has gone on to much greater heights under
their stewardship. MAC. Brand equities have been passionately
protected, a process continues today.
Which brands should appear in which retail environments has
always been a company obsession - iron discipline in this area is
the key reason that the Este Lauder brand itself is now the worlds
leading beauty brand.

As exposed to spending downturns in the economy and currency


fluctuations, their strengths in brand portfolio, consumer contact,
innovation, emerging markets and E-Commerce mean that any
such problems have a solution
They have strong competitors but they are exceptionally wellpositioned competitively. They have never been a company to
slavishly follow what someone else is doing
Although the company has been publicly quoted for almost two
decades, it is still in the control of the family. It deserves much
credit for cherishing the companys heart and soul, while bringing
in outside expertise to keep it up-to-date and relevant

Website:

www.esteelauder.com/index.tmpl

LinkedIn:

www.linkedin.com/company/estee-lauder-group-of-companie

Facebook:

www.facebook.com/EsteeLauder?fref=ts

Instagram:

www.instagram.com/esteelauder

Youtube:

www.youtube.com/user/EsteeLauder

Google+:

plus.google.com/110286608411428712603

Pinterest:

www.pinterest.com/esteelauder/

Flickr:

www.flickr.com/photos/este_lauder/

Twitter:

www.twitter.com/EsteeLauder

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