Just about every concept has been tried in cosmetic somewhere by somebody, so I don’t imagine the idea behind new brand The Ordinary is entirely new. But it is new to me and is certainly not one that anyone has tried before on a big scale. Cosmetic products typically have quite high margins when compared to the cost of actually making the product. The reason that cosmetics are not especially profitable compared to other sectors is simply that while they have unusually low manufacturing costs they have unusually high promotional costs. So it balances out.
The Ordinary puts this logic on its head. Rather than concentrating their spending on promotion and packaging they produce relatively high cost products but don’t spend as much money on selling them. So they come in plainish packaging and aren’t backed up by massive advertising spend.
There is a sort of similarity to the way some companies produce generic drugs. So rather than buy Nurofen, you can buy identical products containing the same active ingredients at around a third of the price. This is very big business indeed and generic pharmaceutical companies have a big chunk of the pharma market.
So why shouldn’t the same work in cosmetics? It certainly sounds worth a try. It is definitely something that consumers really ought to appreciate. With company’s like L’Oréal spending a third of their turnover on above the line advertising it means that a huge proportion of the money you spend on your skin cream goes directly into persuading you to buy the next one.
So I feel positively inclined towards the Ordinary even though I have yet to even set eyes on the products. There are couple of possible problems that I can see that they would have to overcome. For a start the reason that generic drugs can claim equivalence to the branded variation is that the level of the active is public knowledge. Cosmetic products rarely divulge how much of any ingredient is in it. You could buy a product and analyse it. But the consumers don’t know how much of the good stuff is in their favourite products so there isn’t any obvious way you can use that information to persuade them to switch to you.
There is a another more subtle reason why this concept may not work as well as it really ought to. Branding is a lot more powerful than most of us realise. Although generic drugs work and are good value for money, they don’t work as well the branded ones. Everyone knows logically that it makes no difference at all which factory a batch of ibuprofen was made in, or what name is printed on the packet. But when people take the tablets, the branded ones have a better effect on the symptoms. The plain fact is that we don’t have much control over our subconscious, and our subconscious doesn’t have a great grasp of logic. The nicer packaging and the positive impression created by the branded drug affects our metabolism enough for the drug to work better.
Indeed if logic came into it, branded drugs would never sell a single unit. The generic drug is absolutely better value for money by any rational assessment. And yet the branded drugs continue to sell well.
So if that is the case with drugs, and by definition generic drugs have exactly the same pharmaceutical content what about cosmetics? The logical argument is even weaker here. Cosmetics do contain materials that have an active effect, but they aren’t tested to anything like the degree that drugs are. And the kinds of effects they are trying to achieve are a lot harder to define. So the case for buying a generic version is a lot weaker logically. The effect of branding on efficacy is however the same. People will report that branded samples they are given to try work better than ones in plain white packs. This even works with made up brands created purely for the trial.
So although it makes a lot of sense in theory, I have a feeling that in practice the Ordinary is going to struggle to make their brand work against glossier more highly advertised competitors.
They might get around this by creating positive vibes about their products – though how they will do that without spending so much money on promoition that they have to raise their prices I am not sure. But it might be possible in these days of turmoil in the advertising world.
It is more likely that they will simply pick up a following amongst people who like the idea of a straight forward brand and not paying so much money for their personal care. There are probably enough of those folk out there to make it work. I quite like the idea as well, so I wish them well.