Mass Customisation in Cosmetics

When I was ten years old, we had gone to a fancy restaurant for dinner. There was a buffet table and an array of delectable dishes in front of us to sample from. But the section I was most fascinated by was the stir-fry counter. Why? Because there was a little card which asked us to choose any ingredients you wanted and hand them over to the chef who would cook it and plate it and give you the finished dish! When I tasted it, I believed it was better than anything else offered to me. This cognitive bias is often called the IKEA effect; where consumers ascribe a higher value to products that they help partially produce.

The restaurant’s ability to engage their customer ultimately pays off because being part of the choosing (decision making) process created a sense of attachment between me and the final product and in turn, to the restaurant (i.e. the brand) itself.

The IKEA Effect

When I was ten years old, we had gone to a fancy restaurant for dinner. There was a buffet table and an array of delectable dishes in front of us to sample from. But the section I was most fascinated by was the stir-fry counter. Why? Because there was a little card which asked us to choose any ingredients you wanted and hand them over to the chef who would cook it and plate it and give you the finished dish! When I tasted it, I believed it was better than anything else offered to me. This cognitive bias is often called the IKEA effect; where consumers ascribe a higher value to products that they help partially produce.

Satisfying the customer’s personal needs dictates Willingness to Pay

The restaurant’s ability to engage their customer ultimately pays off because being part of the choosing (decision making) process created a sense of attachment between me and the final product and in turn, to the restaurant (i.e. the brand) itself.

Let me give you an example — In one of my internships, my boss had asked me to assemble three IKEA boxes to help reduce clutter around our workspace. After a few attempts, I was a self-proclaimed box assembling genius. (I believe that they put in a few extra parts to confuse you.) I remember myself beaming for weeks on end at my handiwork every time I crossed the table with those boxes. Therefore, I ascribed a higher value on those boxes due to the personal effort I had put in with assembling them; i.e. the emotional attachment I felt, therefore, increasing its value for me.

Customers are no longer blind to what ingredients go into their products. They understand better what works with their skin. Hence, they are actively searching to know and to choose what goes into their products. This transparency was not available with the typical manufacturing model, where the customer has to trust the brand on their ingredients.

The choices Bite Beauty offers their client, range from the desired colour of the product, the product’s finish; matte, sheer, luminous and the scent which ranges from coconut, mint and vanilla to cherry, fresh citrus and wild berry. Focusing on their bespoke offering; its pricing is at $150 for two lip shades and the entire customisable experience from start to finish. Now, if we split that, the assumption is we are paying about $75 per lipstick. I love a good lipstick as much as the next person, but $75 is much higher than what luxury brands charge for their lipsticks.

How does a brand that positions itself as premium, similar to the likes of NARS or SMASHBOX, manage to offer a luxury price tag simultaneously?

Here is the interesting part, the other price package the brand offers is their ‘custom package’. The only difference from their bespoke package is that you cannot choose the colour specifications from scratch and instead need to choose from one of their existing 200 lip pigments. This package’s pricing is at $55 for one lip shade or $80 for two lip shades. So, why is this interesting? Because according to the search results, luxury brands Guerlain and Tom Ford’s lipsticks retail at the same price point.

It is because brands like Bite Beauty have identified their customer’s willingness to pay for a worthwhile brand experience. As a consumer, I am willing to pay a higher price because they are offering me a customised experience, which I am actively involved.

Now, it is critical to remember that there are different levels of engagement. Social media giveaway contests on your brand’s Facebook page might get you slight customer engagement. But not as much as inviting your top customers to a private event where they witness their products being made by artisans.

There is a fine line between effort and value within this equation. If the process requires too much effort from the consumer perspective; they might find the product too inconvenient or even question the price tag — “If I am doing all the work in this situation, why am I even paying the company for it?” Hence, causing a decrease in value. Customisation model is not a Do-It-Yourself project. Instead, it has to give the impression that the customers did it themselves. This is exactly the reason customers are willing to pay more. The rationale works in the following way — “As a consumer, I am ready to stand in line and wait for the release of Urban Decay’s Naked Smoky Palette. This palette retails at $54 and is a mass produced palette, so why would I not pay three times the price for an experience, where I can tell the lab expert my needs and preferences while being offered attentive service and be treated like royalty.”

Therefore, opting for a customisation service, on a deeper level, could be related to social status. We would like to be known as someone who spends on purchasing custom-made makeup. One could assume that this stems from the past where to get clothes ‘tailor made’ and to have a choice of fabrics like silk or lace and materials such as gold thread and expensive dyes were something only accessible to the aristocrats and royalty.

The Experience Economy

So would we see more mass customisation models in the future? Quite possibly.

Is the mass customisation model as a sole revenue stream sustainable for brands to adopt? Honestly, no.

So, how can brands implement this strategy without compromising their existing business model and the revenue stream?

Three reasons why this model is not universally applicable :

Brands can apply the customisation approach as an extension of their existing brand and limit availability to certain key markets.

A prime example of this would be Lancome’s ‘Le Teint Particulier’ which is the brand’s custom made foundation.

The experience involves the Lancome’s beauty advisor scanning three parts of the customer’s skin with a colorimeter to analyse their skin tone.

After which you can define your skin type as; oily, normal, combination or dry and the product’s coverage; sheer, medium or full coverage. It is all added and mixed in front of you and neatly packaged with your name and your colour ID. This helps make the process of re-ordering the product much easier. This entire experience retails for $80 and is a simple extension of Lancome’s existing product offering. Therefore, the brand earns financially during and after the launch of their ‘new experience’, but the brand’s main revenue streams remain unaffected even after the hype dies down as it is income is not dependent upon its mass customisation model.

In conclusion, the mass customisation model works because it caters to a customer’s need by adding value to the product/ service offered. As we move into the era of Experience Economy, mass customisation may not be just an option for many companies but a necessity.

Don’t just create products. Create memorable experiences.

#MassCustomisation #CosmeticsIndustry #ProductMarketing

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