Estée Lauder Develops AI-Powered Trend Spotter Amid Marketing Overhaul
The Estée Lauder Companies is driving increased consumer recruitment and loyalty and optimized promotions via elevated precision marketing capabilities.
The company has developed an AI tool to identify trends and drive marketing innovation as part of its profit recovery plan and restructure. It formalized the process after finding success through a loose format of pilots, which tapped partnerships with AI leaders. Estée Lauder can now use AI to marry trends with its existing products and innovation to more quickly respond to market demand.
“We realized promising results, including successes with the peach makeup and bronzing trends,” said president and CEO Fabrizio Freda of the AI initiative during a recent call with investors.
It’s a data-informed approach that takes the company’s over 200 million consumer profiles — built over several years — and merges them with AI functionality to better target new consumers through product assortment, distribution, and media.
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The company is also reducing its discounting as part of the benefits. With increased focus on new consumer acquisition, Estée Lauder has been able to deliver on marketing activations with more efficient spend and accelerated effectiveness through strategic pricing strategies.
“Around the world, we are building growth momentum with social commerce, driving new consumer acquisition by engaging consumers where they're spending their time, leveraging a content-focused approach with live streaming and short-form videos, and activating full funnel integration of social media and commerce,” said Freda.
Looking Toward the Future
As a result of these efforts, Freda expects Estée Lauder to continue seeing lowered expenses into fiscal year 2025. At the end of this period, Freda intends to retire after 16 years in the leadership role, according to a recent company announcement. A succession plan is underway with Estée Lauder considering both internal and external candidates. Until a replacement is found, Freda will continue to oversee the business restructure.
The profit recovery plan is expected to drive $1.1 billion to $1.4 billion of incremental operating profit over the next two years, with efficiencies across the supply chain, marketing, and integrated business planning.
