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Lauder Lays Down A Battle Plan

<CS:BOLD>NEW YORK -- Patrick Bousquet-Chavanne, a group president of Estee Lauder Cos., began showing off his new creative ensemble of executives last week and unrolling his blueprint to get the once-dominant Lauder brand back on a growth...

NEW YORK — Patrick Bousquet-Chavanne, a group president of Estee Lauder Cos., began showing off his new creative ensemble of executives last week and unrolling his blueprint to get the once-dominant Lauder brand back on a growth track.

While still chugging along at $800 million wholesale in the U.S. — according to estimates by industry sources — the familiar Lauder blue line has not ruled the roost in department stores for at least a year. That honor passed to its number-one-selling sister brand Clinique, which edged by during 2000.

“The electrocardiogram of the brand has been flat for two or three years,” said Bousquet-Chavanne, whose goal is to kick-start growth, starting in the spring and building to “a high-single-digit” rate sales increase by the end of 2002.

Bousquet-Chavanne comes across as an energetic and determined quick study, No fan of second place, he has “a three-year agenda” to regain the top spot in U.S. department stores. As part of last May’s corporate reorganization, Bousquet-Chavanne and two other group presidents acquired global responsibility for what had been U.S. brands. He noted that Lauder brand has made strides in Europe, moving from ninth place to fifth in fragrance in the last three years. The brand ranks fourth in makeup and third in skin care in Europe, he noted, adding that Lauder is the top-selling brand in Asia-Pacific outside Japan.

Referring to the U.S., Bousquet-Chavanne freely points out that December was a tough month for fragrances, particularly in light of price competition from the apparel floors, where sweaters were marked down 40 and 70 percent. Privately, a few major retailers talked about the Lauder brand being down 10 percent in December, primarily in some of its big established fragrances.

Bousquet-Chavanne reiterated his long-standing intention to increase traffic to the counter and hike both the rate and amount of transaction. Much of this will be done with a new and increased advertising campaign, aimed at recruiting users in the younger rungs of the core group around age 28 plus — and even “slightly younger.” He refused to divulge sales or advertising budgets, but he made it clear there will be an increase in ad spending this year, depending on how much can be invested in this fragile climate. According to industry sources, the Lauder brand spent about $100 million on advertising last year. Sources speculate that Bousquet-Chavanne would like his increase in ad spending to exceed that of his sales growth, or ultimately 10 percent. He noted that that a spending increase will be be “visible” in the spring and said he expects to gain even more “share of noise” as his competitors pull in their horns on investment.

To increase transactions, Bousquet-Chavanne said he wants to “speed up the process of consumers coming to the counter.” He plans to do this by making outreach tools work harder, such as direct mail and the internet, even co-op advertising, all of which can be used to tempt consumers to the Lauder counter with an offer of free samples of new products. “There’s got to be a strong call to action,” he said.

When asked how the Lauder brand slipped, Bousquet-Chavanne said there’s a fine balance between building brand equity and promotion. As the U.S. department store market grew increasingly promotional, the Lauder line, as the brand leader, followed suit and the priorities became skewed. He praised his predecessor Dan Brestle, who is now a fellow group president, for pulling back on promotion, sparing Bousquet-Chavanne that task.

He said the percentage of business now done on promotion is in the “low 30s, which is substantially reduced from three years ago.” Bousquet-Chavanne indicated that now the promotional balance is “healthier.”

He added, “I want to refocus the balance with a brand equity building strategy,” largely by bringing about an “image renewal.” This he intends to do as part of a quartet, aided by Aerin Lauder, vice president of global advertising; Peter Lichtenthal,senior vice president of global marketing, and Jim Nevins, who recently rejoined the company as a “senior partner in the conceptual renewal of image and design.” Nevins, who recently came from the Gap, previously played a key role in positioning Clinique for growth.

Bousquet-Chavanne says he has taken an unusual step in not investing the creative function in one person, which is usually done, but in allowing all four to combine “in a shared vision of the modernity of the brand.”

And he wants to push the envelope. “Everything we do as a brand is with an attitude and the attitude has got to be contemporary; it should not leave anyone indifferent, a brand with conviction,” he said, defining the attitude as “modern, something edgy.” Bousquet-Chavanne recalled a statements made by founder Estee Lauder. “It was a forceful voice. And in everything we do, I want to see the same strength in the voice of the brand visually and the copy in the ads and in the voice of the beauty advisers at the point of sale,” he said, adding that everything from package design to counters to uniforms of beauty advisers will be redesigned.

He plans to take the execution down to “how we recruit and how we train people and I’m going to bring a new twist to that.

“Let’s free the brand, let’s express our femininity,” he continued. “The woman of today, she has a relationship, she has a husband, she has a sexuality and I want to express that femininity. We want to be much more sensorial than we’ve been in the past.” For Bousquet-Chavane it boils down to greater relevancy. “I call it brand DNA and it’s going back to a very simple mission I learned that from Estee. She always said, ‘we are the brand defining beauty around the world.”‘

That phrase, “defining beauty”, has become the new slogan, and Lauder used it on a TV spot shot by Herb Ritts. The most noticeable image change was in hiring the 28-year-old Carolyn Murphy as its new model, while Liz Hurley continues to represent fragrances and make store appearances. One ad for Night Repair has already broken, and on Feb. 1, Lauder will unveil its new in-store visual icon. The photo, shot by Steven Meisel, who does all of Lauder’s stills, shows Murphy in a striking single-shoulder outfit.

An important objective for Aerin Lauder is consistency. “We are using the same team so there is that consistency that this woman is going from season to season with similar looks, a similar kind of approachability.”

Describing the icon, she said: “It’s a one-shoulder dress. And you realize that that is so timeless and so elegant, yet sexy and feminine. It’s also very of-the-moment right now fashionwise. We think it is definitely Estee Lauder for 2002 looking forward. Just the shirt and the pants and a modern version of this dress.”

Speaking of her larger vision, including using props to create an environment in the picture, Lauder said, “It’s that whole idea of glamour with a soul. It gives you that realness and it gives people something to look at.”

Nevins, in discussing counter redesign, also hit upon connecting at an emotional level. “I think we’re going to look at all aspects of what the customer comes to the counter to see,” he said. “Everything from the packaging to the in-store environments. We want to send a message that we’ve changed and the customer feels it’s valid to their age group again.”

Lichtenthal summed it up: “We decided that we needed a full court press in every segment.”