Pricing and the Arden and Rubinstein Brands

photoNARRATOR: Elizabeth Arden’s relentless emphasis on the high-end market protected her from the worst effects of The Great Depression.

Women are cheered by make-up. When the moneyed spend less on clothes, they spend more on lipstick. —Elizabeth Arden

LINDY WOODHEAD: And this is where Arden was so clever. Because she kept her luxury brand lipsticks. She kept her luxury brand face creams. Everything that she did, her little boxes of powder with the swan’s down puff—they all became the affordable luxury item for someone who could no longer go out and buy an expensive dress or a cashmere twin set or take a vacation because price was an issue…And so buying into that little bit of luxury made people feel better.

NANCY KOEHN: Consumers actually buy more cosmetics throughout the 1930’s than they did in 1929. In gross terms, cosmetic sales increase almost 30%...And it probably has something to do with how cosmetics make consumers feel at a certain kind of economic and social moment….not unlike alcohol sales, or chocolate sales, or movie ticket sales, all of which rise during that decade.

photoNothing that costs only a dollar is worth having. —Elizabeth Arden

Some women won’t buy anything unless they can pay a lot. —Helena Rubinstein

NARRATOR: In 1932 a small bottle of Ardena Skin Tonic sold for 85 cents a bottle. Miss Arden’s profit? 80 cents!

NANCY KOEHN: If we think about brands as strategic assets, tools for companies, what does a really powerful, really effective brand do? It commands a sustainable, defensible, profitable source of differentiation. That’s what a great brand is, from a kind of financial or strategic perspective.

Both Rubinstein and Arden and Lauder afterwards, would figure pretty quickly that at the same time that a mass market was emerging for cosmetics—Max Factor, Avon, Coty, a little bit later—the same time that was emerging, they could sell at the upper end of the market. They could sell in salons and in department stores, which were quickly emerging as more elite and more fashionable and higher priced distribution channels, to use modern language.

photoThat was a really important set of decisions, a really important set of insights from a business perspective. Because what it enabled each of those companies to do was to create, in effect, a lot of margin, a lot of difference between what it cost to manufacture and market and distribute that product and what the consumer paid. Consumers were very willing to pay it. Because they were getting all kinds of advantages and, if you will, benefits from an Elizabeth Arden compact that they couldn’t get from a Max Factor compact sold in Rexall Drugs. So it was a fair deal on both sides.

If you think about the market for mass products, whether we are talking about canned soup or clothespins or lipsticks, there is always a great vulnerability when you are playing the cost game in mass distribution channels, like drugstores or grocery stores or discount stores today—that another competitor will figure out how to make what you make cheaper. So in that game you are almost always relegated to playing a kind of price competition, to duking it out on price, on sales, on sliding fees, payments to retailers or, if you are in mass channels, on couponing.

Arden and Rubinstein simply didn’t have to play that game. They could stay in department stores, stay in their salon. They could keep their prices exactly where they needed to be. And so they could, in some sense, have real distinctive landscape, safe landscape, that lasted all the way into the very last years of the founders’ lives. And that was a big strategic advantage for each company.

Sources: The Powder & the Glory, additional material from Producers’ interview with Nancy Koehn

Photos:

  • Elizabeth Arden, Courtesy Elizabeth Arden Archives; Color rendition by Matt Garneau
  • Ardena Skin Tonic, Courtesy Elizabeth Arden Archives; Composite by Powderglory Productions, LLC
  • Still frame from The Powder & the Glory—Boyd Estus, Director of Photography

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