Cosmetics Companies… What Are You Doing?

Makeup consumers can all agree on one thing: makeup companies release eyeshadow palettes literally on a weekly basis. Consumers are expected to love all of them and purchase all of them. And the best part is that prices have been increasing and consumers are getting less product.

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As a consumer, this is frustrating (Links to an external site.). You want the most bang for your buck and it feels like you’re being skimped out. As someone on the makeup manufacturing side of things, this is just business for you. You know that costs have increased and the company still needs to keep its profit margins. And that doesn’t necessarily mean your equivalized volume is increasing… so many things affect a consumer’s likelihood to purchase a product and if a company will get what they expect in return. 

If costs are increasing on the manufacturing end, a company has the option of decreasing the size of their product and keeping the price the same. This can ultimately lead the equivalized (EQ) volume to decrease. This could be explained by the fact that manufacturers downsized the product to keep the price the same but haven’t been buying more cases because they don’t see much demand for the product. After all, how many eyeshadow palettes does a consumer need and is willing to buy? In the last 2 – 3 years, many influencers have been championing Project Pan and similar efforts to use up their makeup products and purchase less.

PROJECT PAN 2019! FINAL UPDATE FOR THE YEAR

PROJECT PAN 2019! FINAL UPDATE FOR THE YEAR (Links to an external site.)

Or a company can go with the more popular option: increasing the price of their product and decreasing the size of the product. A great example of this is with Anastasia Beverly Hills. Their eyeshadow palettes are some of the most notable in the cosmetics industries with a high level of quality and variety at a relatively reasonable price point. Last year, their president announced via Twitter that eyeshadow palettes will increase from $42 to $46. Consumers were upset and noticed the weight of the product decreased, indicating less product per eyeshadow per ounce.

On top of that, Anastasia Beverly Hills started releasing more eyeshadow palettes, but customers weren’t convinced because although they were larger, it was still much more expensive than the regular palettes, being valued at $60 instead of $46. In this instance, the EQ is still declining because the higher price point led to fewer units being sold.

Despite the likely decline in EQ volume, Anastasia Beverly Hills will probably continue to keep releasing eyeshadow palettes constantly at higher price points because of the increase in dollar growth. While this isn’t a bad metric to go off of,  it’s not the only thing that should be considered. Trends in sales can obscure what’s happening from the consumer standpoint. Looking at the number of units sold and equivalized volume can reveal if dollars are up because people are buying more products or if prices have increased. This is especially important is package sizes have changed like it did with the eyeshadow palettes. Dollar growth is just a starting point for analyses; it’s up to marketers and other related teams to take it further.

For more information on dollar growth, units sold and equivalized volume, read more here (Links to an external site.).

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