Swati Dalmia
The youngest of the Jenner/Kardashian siblings, Kylie Jenner is a reality TV personality turned businesswoman. With her networth of about $900 million, she is on track to becoming the youngest billionaire in the world. Taking advantage of the plump lips that contributed to her rise to fame, Kylie Jenner launched her own cosmetics line called Kylie Cosmetics in 2015. But what was the reason for Kylie’s immense success? What was so special about her lip kits that made them sell out instantaneously and made her one of the richest teenagers in the world? Jenner’s strategic business plan that utilizes the concepts of scarcity and demand was a key element that helped her become an icon in the makeup industry. When the first three shades of Kylie Jenner’s lip kits were released, they sold out after a single minute due to high demand. With a new change in the taste of consumers (women wanting their lips to look fuller), the demand of her products drastically increased, causing subsequent releases of additional colours to be sold out in less than ten minutes. Despite retailing at $29, the lip kits became a unique phenomenon in the makeup industry for often being resold on eBay at a huge mark-up price, with bids on lip kits going as high as $10,000. This is because the lip kits identify as a status item and an item of scarcity. The high premium that consumers pay for Kylie Cosmetics is attributed to its scarcity in the market, the status that comes along with it, and the high number of beauty gurus and teenagers as consumers.
The selling out of new Kylie Cosmetics products in minutes after a release or restock is a classic example of demand exceeding supply. For marketing reasons, Kylie Cosmetics may be selling limited quantities of their products to create a frenzy around the brand. The buzz generated by the hyped brand can create more interest to consumers in the long-term and lead to higher demand. The difficulty of acquiring a lip kit cements its recognition as a status item. By creating scarcity in the market, Kylie Cosmetics is therefore able to make the brand seem more valuable. The demand for her lip kits increases due to determinants such as change in taste, change in expectations for the future and change in the number of consumers in the market.While speed is the key factor which allocates the lip kits in the primary market, in the secondary market, the goods are solely allocated by consumers’ willingness to pay. Many resellers bulk order in the primary market with the intent to price discriminate for profit on the secondary market. Due to scarcity, independent resellers can sell at exorbitant prices on the secondary market. Although resellers profit from taking up more consumer surplus, they may create value by providing product availability in the late market and provide a means for those who are willing to pay more to get the product.
A significant part of the lipstick’s value comes from Kylie Jenner’s celebrity status and the endorsement of her well-known siblings. Beauty gurus and teenagers have preferences for Kylie Jenner’s products because she is a celebrity known for her full lips. There are many substitutes on the market for a matte lipstick with similar formulas, colours and quality. For instance, the products of Kylie Cosmetics and its sister company ColourPop are made by the same manufacturer. Many beauty bloggers claim that ColourPop’s Ultra Matte Lip liquid lipsticks are the inexpensive replicas of the Kylie Lip Kits at a cost of $6 per lipstick. If ColourPop and Kylie have the same manufacturing costs, the $25 price differential between the two company’s matte lipsticks can be attributed to Kylie Jenner’s brand. Avid fans are often willing to pay premiums for products they associate with their favourite figures in entertainment. For this reason, sneaker enthusiasts paid up to $1000 on Kanye West’s limited edition Yeezy Boost sneakers which retailed for $315.
In conclusion, it is apparent from the Kylie Cosmetics craze that there has been a strong desire in the marketplace for full lips like Kylie Jenner. The brand’s success is a result of Jenner using the concept of scarcity and the law of demand in her business. Despite the public’s mixed feelings towards Kylie Jenner, there is no doubt that she’s a great opportunist who has fuelled and capitalised on the need for a plump pout.
Work Cited
Canal, Emily. “Kylie Jenner’s lip kits, social status and the economics of scarcity.” Forbes, 2 Mar. 2016, https://www.forbes.com/sites/emilycanal/2016/03/02/kylie-jenners-li p-kits-social-status-and-the-economics-of-scarcity/#62c41b412960.Erdogan, Melodi. “Kylie Jenner’s Lip Kits Are On eBay For Waaay More Then The Original Price.” Bustle, 1 Dec. 2015, https://www.bustle.com/articles/126850-kylie-jenners-lip-kits- are-on-ebay-for-waaay-more-then-the-original-price.
Homes, Sally. “Kylie Jenner’s Lip Kits sold out in less than a minute.” Elle, 30 Nov. 2015, https://www.elle.com/beauty/makeup-skin-care/news/a32225/kylie-jenners-lip-kit-sold-out-in-less-than-a-minute/.
Robehmen, Natalie. “How 20-Year-Old Kylie Jenner Built A $900 Million Fortune In Less Than 3 Years.” Forbes, 11 Jul. 2018,https://www.forbes.com/sites/forbesdigitalco vers/2018/07/11/how-20-year-old-kylie-jenner-built-a-900-million-fortune-in-less-than-3-years/.
I never thought that I would use Kylie Jenner and economics in the same sentence. But after reading your paper, my eyes have been opened to the reality of her company. As you stated, beauty gurus on YouTube are constantly advertising her product. With that help, the demand for the lip kits increases. Using YouTube as a platform can eventually help her raise the prices of her products, because the more of a luxury item it is to people, the more their willingness to pay will go up.
ReplyDeleteDefinitely agree, I found this article really interesting due to the fact that I never knew that lipstick could create the same hype/buzz around it that limited shoes (like the yeezy) or limited brands like Supreme do. That was super interesting to see that even though it's just lipstick do to the celebrity endorsement Kylie Jenner infuses into her own brand which then boosted the demand for her lipstick. The sheer fact that people were paying up to $10,000 for Kylie's lipstick was insane, but makes sense. If your favorite celebrity is using a particular product (and if you have the resources too) you'll do anything it takes to get that product. Overall, I totally agree that Kylie Jenner's success within her business is super smart because of the fact that she's an opportunist and capitalizes on the markets needs/wants.
ReplyDeleteI agree that Kylie Jenner has utilized her opportunities and platform in a very effective way, which has in turn allowed her to become a makeup giant in the business world. It's interesting that by limiting her supply, she is in fact maximizing the her revenue because she effectively creates a feeling of scarcity in the market (and as you say, status for those who are able to obtain the product). I also agree that the trends Kylie herself created have changed market tastes, thus further increasing the demand for Kylie products. Therefore, I do believe that Kylie Jenner is a smart businesswoman who took full advantage of the opportunities presented to her because of her fame (though many people do not take her seriously for that very same fact).
ReplyDeleteIt is very interesting to read about how celebrities are able to create such a high demand for their products and get people to be willing to pay so much more than the product is worth. If you think about a supply/demand graph it makes sense because the lower the supply the higher the demand and more people will be willing to pay. People may make fun of the Kardashians but at the end of the day they are doing something right based on their success in the business world.
ReplyDeleteIn a capitalist market, I feel like most times businesses have to change themselves to adjust to trends, but in this case, Kylie Jenner created the trend through her own business. A trend, might I add, that is so popular that people’s willingness to pay is quite ridiculous. Personally, I can’t imagine buying a lip kit for $10,000 on the secondary market when a similar product made by the same manufacturer is only $6. I wonder if this is something that the marketing team of Kylie’s lip kits tries to hide, or if consumers care less about the price, and instead care more about the higher quality they believe to be getting because of the brands association with a famous person.
ReplyDeleteI think this is a very interesting topic because it really shows how much social figures can influence us and our money making decisions. It is really easy to buy a $2 lipstick at Target, but people who idolize Kylie will spend almost 15 times that just because of the creator and the results the product claims to have. The fact that Kylie lip kits have resold for so much on ebay is crazy but it definitely is a good display of the effect that scarcity has on the cost of products with the law of demand. It is very clear to see the way that Kylie has made herself so famous and wealthy with these kits, but I wonder how well they actually work in comparison to the competitors with lower prices. If they work the same then it really shows how much people stay loyal to buying their idols products for very high prices.
ReplyDeleteGiven her family's popularity it really doesn't surprise me that her lip kits had a high demand from the get go. By keeping her supply limited it makes the lip kits more valuable and drives demand up. That being said, there have been a couple scandals with her kits, one in which people claimed her kits were the same as another cheaper brand, one that claimed she was reusing colors and naming them something else instead of putting together new colors, and one that claimed the kits arrived in horrible condition. Despite all of these reasons not to buy Kylie's lip kits, fans are still buying them. Which means demand for the lip kits are more inelastic due to the loyalty of Kardashian/Jenner fans.
ReplyDeleteIt is no surprise to me that Kylie Jenner's business is very successful. The Kardashians and Jenners get paid $20,000 per instagram post. There is no doubt any of them could become billionares. With Kylie being as young as she is, it is very interesting how she can be making more money then some of her sisters and is on her way of becoming a billionare. It is sad that people are making replicas of her lip kits and making money off of them, but does she really need more money than what she already has? Yeah, it is pretty bogus people are scamming her business, but she is still crazy successful so why get caught up in it. The only people being affected by the $10,000 lip kits are the dumb people who buy it for that much when they could be buying the lip kits for as low as $6. It is clear that Kylie's business is very successful and people are willing to pay anything for the product.
ReplyDelete^^ Ellie Reyes
DeleteIt amazes me how one’s willingness to pay can be so high for a product other than a need. I also find it impressive that someone who may not be so familiar with the business world, like Kylie Jenner, can build such a large company them self. Jenner’s utilization of her platform to create a high demand, and then a scarcity in product, effectively raised her to become the wealthiest 21 year old in the world. However, considering how much she inherited and where she began in terms of brand name, you have to realize that her experience with entrepreneurship was probably much different than just any other common man or woman trying to start up a business.
ReplyDeleteThe reason why people buy her lip kits in the first place is because they want "Kylie Jenner lips". But just because she makes the brand doesn't mean your lips will end up like hers. The reason why she's famous mostly for her lips is because of botox, not lipstick.
ReplyDeleteI like what you said about Kylie being an opportunist because one of the things that I remember hearing about her lip-kits was that she named one after her daughter very soon after she had her. She got a ton of press during her pregnancy and probably realized that this was a really good chance to attract customers. She posted on social media about having her daughter and about the lip kit named after, and many people commented negatively about it. This ended up generating more press and shows that she is really good at getting customers talking about her products and creating demand.
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