Hailing queen of cream

Lauder changed beauty business with freebies

April 27, 2004|By Stephanie Shapiro | Stephanie Shapiro,SUN STAFF

A skin-care product's promise of radiant, rejuvenated skin is tempting enough. Throw in a gift with a purchase and who can resist?

Estee Lauder, who died Saturday at age 97, will be as remembered for her marketing prescience as her self-named beauty empire. Just say the magic words, "This special gift is yours at no extra charge," and wallets automatically opened, Lauder discovered early in her career. A gift is a gift, she realized, no matter how much you pay for it.

Lauder, who started her business by selling four homemade skin-care products in 1930, "absolutely, superbly understood the counter and how to engage the customer," says Adelaide Farah, group editorial director for Beauty Fashion Magazine, a monthly trade publication. "The gift with purchase was a brilliant idea; is still a brilliant idea."

As Lauder promoted creams, lotions and bath oils, her "gift-with-purchase" offers, as well as product demonstrations and free samples, lured department-store customers to her brand.

Competitors snickered, but profits skyrocketed for Lauder. The strategy ultimately transformed the cosmetics industry for both prestige lines such as Clinique, which is part of Lauder, and more populist direct-sales companies, such as Avon.

Pumps, gels and lipstick shades may come and go, but "gift with purchase" remains an industry staple for new products, says Jenny B. Fine, editor of Beauty Biz, a monthly magazine published by Women's Wear Daily. Just about every department-store cosmetics counter offers a freebie such as a lipstick with a minimum purchase. "It became an amazing promotional vehicle for Lauder and every other beauty company," Fine says.

Lauder's marketing breakthroughs spawned further innovations. "Purchase with purchase," the conceptual offspring of gift with purchase, is another way to snag cosmetic customers who gladly buy a certain elixir if it means getting a second product at a reduced price or for free.

Just who gets the gift with purchase, or who benefits from a purchase with purchase is open to question. "Ask any salesperson at an Estee Lauder counter when she gets her biggest paycheck. It's the month of the [gift with purchase] promotion," says Paula Begoun, author of Don't Go to the Cosmetics Counter Without Me.

For the consumer, though, a gift with purchase is not a real gift, Begoun says. "It's not necessarily your lipstick color, not necessarily a product your skin needs. You are being lured in to buy the full sizes and to buy other lipsticks and to buy other products, and these are not anything you can return."

Still, women willingly fall under the spell. "We fall for it every time," says Begoun, who nevertheless admires the Lauder conglomerate's trailblazing work in cosmetic technology.

At times when customers get wise to the seasonal rhythms of the bonus cosmetics, the strategy can lose its marketing punch. "From the point of view of the company, what's bad about it, consumers have been trained to only buy when there's a gift with purchase," Fine says. "You might wait to buy the fragrance until a particular store has a gift-with-purchase promotion going on."

Still, customers are always willing to spend more money to get something for free. "The gift with purchase is a great marketing tool," says Beth Ratrie, a Mary Kay beauty consultant who lives in North Baltimore. "You set a certain dollar amount and as people get close to it, you just say, `Well, you know, you can get one of these if you just spend five more dollars.' It's amazing. It really works."

Just because you know the game, doesn't mean you don't want to play it. Ratrie, as a consumer, is just as beguiled by freebies as her clients. "Certainly, from the other side of things, I've at times purchased things because I've wanted the gift with purchase."

Today, the gift-with-purchase idea has traveled far beyond the beauty industry. "We have seen in the last 20 years now, frequent-flier programs, getting points for groceries, for car purchases and all those kinds of things," says Katherine Wilson, acting chairperson of the graduate department of marketing at the Johns Hopkins University's School of Professional Studies in Business and Education. "We're seeing a lot of these types of relationships being formed in order to keep the customer loyal to the product."

A gift is a way of telling a customer, "You are important to us and we want to reward you for being a part of our family," she says.

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