Estee Lauder's new chief executive officer is copying the format already made so successful by fashion designers, expanding into diffusion labels to capture more of the market share.
But while William Lauder was reportedly opposed by company executives who balked at the down-market switch, Estee Lauder already accounts for around half of sales in US prestige market, whereas it was felt that there was a niche the market, between low-value drugstore products and the high end of the market.
However, the company is seeking to ensure that the new products will not dilute the Estee Lauder brand, which has traditionally occupied the prestige end of the market, as the products will be launched by the company's BeautyBank division.
Estee Lauder has reportedly allocated around US$15 million to BeautyBank to develop new brands and had announced a deal with mid-market Kohl's department stores, which will stock the BeautyBank products from October this year.
The new brands are relying heavily on the 'celebrity' factor. American Beauty announced recently that actress Ashley Judd would be the face of the brand, while BeautyBank has announced that Grammy award-winning musician Michelle Branch will be the first guest creator for its new colour cosmetics diffusion label Flirt!
Twice a year, Flirt! plans to enlist the creative talents of pop culture personalities to express their unique sense of style and creativity in cosmetics. The guest creator may work on a new colour, a new product, a new accessory or an entire collection.
Senior vice president and general manager of BeautyBank Jane Hudis said: "The concept of rotating Guest Creators is a fresh and original approach."
"Flirt! is a brand driven by pop culture. Having artists express their creativity on a seasonal basis will keep Flirt! fresh and relevant. We are thrilled to have Michelle Branch because she truly reflects the energy and spirit of the brand," added Hudis.
Michelle Branch's collection is an exclusive line of nail polish and matching lip colour with each shade named after her songs from the album Hotel Paper.
The collection and the full Flirt! cosmetics line will debut in October 2004 at Kohl's department stores across the United States.
Flirt! is the second BeautyBank brand to be announced. BeautyBank is the sole provider of branded cosmetics for Kohl's newly created beauty department. Launch distribution will include over 280 Kohl's locations and the rollout will be completed by autumn 2005.