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/.
