The ultra-luxury brand Hermès is known primarily for its extremely high priced handbags and scarves, luxury items that, by design, few people can afford. But it also claims that it should be known for quality, regardless of the products that bear its brand. Thus when it ventures into a new market, such as by introducing lipsticks (with the promise of other cosmetics to follow), it features the same design, production, and ingredient standards that it would apply to anything it makes.

Hermès is notable for still relying on traditional production methods; an estimated 70 percent of the products that bear its logo are produced in-house, often with handmade processes. This dedication to artisanship has persisted even as the company has grown, from 2,600 employees in the early 1990s to 14,500 workers today, and earning around $6.8 billion in revenues.

Such growth strongly depends on its expanding product range. The lipstick is a recent example, though Hermès also has introduced perfume, as well as furniture and tableware, to move beyond its traditional leather bags and silk scarves.

Yet even as it produces a more diverse range of goods, Hermès insists on high-quality production processes. In developing its new lipstick line, the company underwent two years of dedicated research and development. It hired a makeup expert who previously worked for Chanel and other high-end brands, who then spearheaded on a team that included various existing employees and Hermès experts: its women’s line artistic director, the head perfumer, and the creative director for accessories, for example.

The contributions of these different expert innovators guaranteed consistency with the Hermès image. Consider, for example, that the matte textured versions of the lipstick mimic the company’s fine-grained suede products, whereas its satin version evokes the calfskin leather that marks its famously soft bags. The refillable case is made out of the same brass that appears on shoes and bags. The 24 shades in which the lipstick is available all were inspired by the company’s libraries of fabric swatches and pigmentation formulas, which it has used for decades to design its scarves.

In line with these luxury design and production processes, the lipstick is not inexpensive: $67 for the initial tube, with refills selling for $42. Yet Hermès is unlikely to earn substantial profits from these sales, compared with a single sale of a Birkin bag, which can cost in the hundreds of thousands of dollars. But the company insists that profits are not its primary driver. Rather, it wants to establish its reputation and image as a company that consumers can trust to provide them with the highest quality, regardless of what they purchase. It wants people to refill their classically designed lipstick tube repeatedly over the years, secure in their knowledge that they are getting the very best cosmetics available, because Hermès promises it is so.

Discussion Questions:

1. What is the value of Hermès’s quality guarantee? Is it worth the high prices?
2. What kind of product extension strategy is Hermès adopting with its introduction of lipstick and promise of other cosmetics products to come?

Source: Alexandra Marshall, “Is This the Birkin Bag of Lipstick?” The Wall Street Journal, January 16, 2020