COSMOFACTORY

94 - The Business of Product Development, featuring Erno Laszlo Chief Product Officer Patricia Schuffenhauer
Deanna: [00:00:00] This episode is about implementing a segmented market strategy. It's about skew renovation, about the rise of supply chain agility. And it's about corporate performance and the financial aspects of product development. For today's episode of the CosmoFactory Podcast, my guest is Patricia Schuffenhauer, chief Product Officer at Erno Laszlo.
Patricia, welcome to CosmoFactory.
Patricia: Hi, Deanna, great to be here. Thanks for inviting me and I'm happy to join.
Deanna: Yes, you're [00:01:00] welcome. I'm, I'm happy you're here as well. Would you start us off by just reminding us what the Erno Laszlo brand is known for?
Patricia: Happy to. So for those who don't know, Ernest  Laszlo is a skincare brand that's best known for its science spec formulation, ritual focused approach, and a personalized skincare philosophy. The brand is nearly a century long. Legacy. Yeah, we were founded in 1927. Next year's our hundred year anniversary.
And the brand has been known for bespoke or tailored made routines.
Tailored to the individual skincare and mental, um, wellness of the skin. A few things to note. Dr. Laszlo, uh, when he founded it was the first to focus on the skin and mind philosophy and the importance of that connection. Uh, he introduced 24 hour synergetic approach to skin and the skin wellbeing. He was one of the first to consider pH balance and skin barrier function as part of the essential to skincare. And, uh, he developed custom [00:02:00] treatments that considered each of his clients' individual skincare concerns, but also seasonality, geographics and her lifestyle. I'm proud to say that um, many of the beauty and skincare methods that we really take for granted today began with Dr. Arnold Laszlo. Um, and the brand has also a rich history in strong celebrity heritage.
Um, during his time, Dr. Laszlo personalized. His skincare treatments for stars such as Marilyn Monroe, Audrey Hepburn, and Jackie Kennedy Onassis. Um, the brand continues, the formulations that are all grounded in dermatological research, uh, with products set aimed for skin barrier support and protection pH balance, and we continue to offer targeted solutions for her various skincare concerns.
Some of our signature products, I think I wanted to call out is the iconic OTT cleansing bar, often called the Black Bar. Our [00:03:00] hydrating masks like, uh, skin vitality treatment mask, and our, uh, advanced moisturizer, um, AL Cream. And all of these remain best sellers and staples, uh, in our classic skincare routines.
I think probably good to call out the brand, um, is sold globally. And has a standing presence in Asia and North America, and we have offices in Shanghai, New York. And I think maybe just to sort of give everyone a sense, the global assortment is, uh, centered around premium masks and anti-aging treatments.
Deanna: No, that's very helpful. I, I appreciate that overview Cosmetics and personal care brands with any real history have certainly gone through formulation changes. Sometimes it's a new product launch, uh, maybe introducing new benefits or incorporating new ingredients.
But even hero products like the ones you've highlighted, I imagine need to be refreshed over time. Can you tell us about skew renovation? How do you prioritize the products that might get reformulated and, [00:04:00] and if there are some best practices your team has for this?
Patricia: Yeah, absolutely. So our. Product Pipeline is built around our strong brand, DNA at its core. We have three brand pillars we focus on, which is doctor founded legacy products and science backed innovations. And our product, um, portfolio is designed with a global view for that modern consumer, uh, but led by, um, market data coming from different markets such as China and also Western influences.
So we launch, uh, and leverage our heritage DNA to introduce new products with a focus on those masks, eyecare, and her daily ritual. And as a brand, we have taken the approach to launch existing formulas or relaunch them, right, as you said, uh, in new formats or delivery systems. And, um, remastering some of these classics with new technologies and that can be triggered.
Just by the consumer needs and demand [00:05:00] for, um, an, you know, updated version with new technologies.
Deanna: I, and I even like what you said there about like new formats and what have you, because I think that's just as important, isn't it? It's not necessarily that the formula itself is evolving, but how product, how consumers rather want to apply the product or perhaps take it with them when it used to be in on the vanity product.
That's so that's helpful to think about. Go ahead.
Patricia: Yeah, no, exactly like right her, her needs have changed as the world is changing. And so it's not just about adding new ingredients, it's also how the product is delivered, the format. And that is, you know, either a new technology. In sensorial experience and or packaging, you know? Right. There's a lot of innovation that has come also out of, um, the packaging side that has, you know, made it a lot easier for consumers to either apply or experience, uh, products.
Deanna: Sure.
Patricia: So that said, right. So that's the approach we've been taking. And, um, for all of these, I think it's important. [00:06:00] Um, you know, that we leverage that local market insight and, um, you know, validate that consumer data to make sure we create products that matter to our life. Um, I have a few examples, um, that I'm happy to share for how we've approached this, right?
Deanna: Yeah, that would be really helpful.
Patricia: and, and sort of where we've applied this thinking and how we've executed it. So, um, our, you know. Hero category is the mask franchises. We have, uh, two, um, hero SKUs, the Vitality Treatment Mask, and, um, which is a modeling mask or a peel off mask. And then a memory sleep mask, which is, uh, an overnight sleep pack.
So VTM, which is known as the Vitality Treatment Mask, uh, I call it the OG of Modeling Masks. Um, uh, we successfully remastered that, um, a while ago by just upgrading some of the ingredients. [00:07:00] And in recent, um, the last 12 months, we've been able to roll out a completely new formula addressing, uh, longevity and anti-aging, which continues to be a growing market trend and global demand I think we all know about.
And, uh, the other example, and I think it touches on what you were saying, um, earlier. Is the sleep Pack franchise. And here we actually did not change the formula. We just introduced a new format, which is a single use, so very, uh, convenient and smart pack part, um, which is a trend that we continue to see on the rise with consumers, um, around the globe, right?
Just due to lifestyle changes and wanting to have that sort of single used comfort. And so we've applied and rolled that out, this concept of single use for a few other recent launches, but in this incidence is for the memory sleep mask we introduced, uh, as it is a new, uh, delivery system. And then the other one, um, I think [00:08:00] that is worth mentioning is, um, our fellow franchise, this, uh, term fellow is something Dr. Lasal originally coined. Um, so it's a brand term and uh, here we were able to remaster this original blend. With a new, uh, sensorial experience while still keeping to the tr the original true DNA, being a skin barrier protector, but also, uh, looking for new ingredients and new, um, you know, benefits to add to that formulation.
Deanna: I I wanna ask, because you've mentioned there are new ingredients, um, a couple times in your examples, when you do look for new ingredients or when you choose to work with them, can you comment on if your. Turning to the same suppliers that you've always worked with and sort of getting their latest innovation or, or update, or are you really shopping the entire market and seeing what's a fit?
How do you approach that?
Patricia: Good question. Uh, I think as a, as a mix of both, right? Um, [00:09:00] we do have a very strong established network of existing partners that we've worked over years with, and we've built relationships and launches together, right? But at the same time, we also, um, continuously. Stay close to the market as there's new raws coming and new brands are being created.
And then there's, um, you know, different industry shows. I think we've might have crossed paths at one or the other, but, uh, in cosmetics, uh,
Deanna: I need, I'm sorry, I need to jump in here. They'll make me take, uh, other show names out. So it's great that you said, you know, we, we see each other at shows and you can even say at a, you know, a recent show or some sort of thing. Like, it's fine to mention trade shows, but we try not to
Patricia: Fair enough. I did not think of that.
Okay. Sorry about
Deanna: No, pick it up. When you're ready. Take your
Patricia: Yeah. Um, yeah, so we, we also obviously travel the shows, uh, around the world. Um, I think we've come across each other at cosmoprof. [00:10:00] Um, we're also raw material suppliers are present. And, um, you know, we, we continue to search through other, you know, either with the help and support of AI that's, you know, building up further and or, um, you know, many other ways that you can, you know, stay on top of all these, uh, various trends or new launches coming out.
Deanna: No, of course. That makes good
Patricia: a combination of both. Uh, to answer your question, right, it's maintaining this existing relationships and we have great partners and, um, but also, you know, keeping a close ear to what is happening in the world. And there's been shifts where trends are coming from, right? It's not always been this, it's no longer just, you know, historically I would say there's a lot of movement have come out of Europe, but I think now there's a global, uh, you know.
Buzz, I would say is maybe the right word. Um, where, you know, there I've seen some very interesting concepts coming out [00:11:00] of Asia that, uh, historically I would say, you know, that wasn't their strong suit.
Deanna: No, thank you for all of that. And you've rightly described Erno Laszlo as a legacy brand, uh, throughout the conversation and mentioned, uh, international expansion as well. I think over the last 10 or 15 years in particular, and I, I believe you launched in China in 2014.
I'm hoping you can tell us, um, what you've learned, what's most valuable, uh. In terms of what you know now about, can we call it the complexities of product development or launch in markets beyond the us, which was your home market, if I may.
Patricia: Yes. No, I think one of the most important learnings for p um, you know, expanding outside our traditional markets was agility for sourcing, right? Localizing manufacturing, and then the real time consumer data and needs. Reacting in [00:12:00] sort of real time to those, those consumer trends that we see and we hear about, right. Those that obviously are fitting to our brand and our brand DNA. But having that agility and being able to be closer to the market and reacting faster has been, uh, a great learning.
And we as a brand have been able to bridge, um. That, um, I think quite well. Um, some of the opportunities we've taken is, um, you know, building a stronger presence, uh, with some of the supply chain in Asia. And, uh, that has been helpful as you are closer to the market. Um, yeah, so I think that will be one of the things I would call out, right?
Sort of the agility of sourcing has been, uh, one of the biggest, uh. Learnings, but also I think a great opportunity for us to really improve efficiencies and, uh, you know, driving that speed to [00:13:00] market by being closer to the markets that are driving the demand.
Deanna: Mm-hmm. That's so cool. And I'm endlessly fascinated by ingredient science, formulation innovation, but your work is about more than this. I'm, I'm hoping you can help me also think about the financial aspects of product development. What, what's going on there?
Patricia: Uh, yes. So I think the, the e exactly as you said, right? Product development is beyond just creating beautiful formulations, right? There is a lot of things that you have to take into consider, um, from a financial aspect when you develop. It's not, um, just the formula itself, right? It's about cashflow timings, it's about risk management.
It's your margin architecture, and it's your, you know, um. Capital efficiencies. So a few things that, you know, we always, uh, review as we design new product development [00:14:00] opportunities, um, is built around all the expenses associated to that development. So the upfront cost. Um, there's the term of, you know, the cost of goods, the actual cost of the product, um, there's the inventory and um, working capital requirements, and then there's the driver of the marketing.
Expenses and the customer acquisition. Um, so the overall margin and lifetime value of that particular product we're creating. Um, the financial piece associated directly to the formula is what we refer to as the upfront development cost. So that includes, you know, all the expenses associated to the formula development.
So any, you know, fees associated with that? Um, compliance and safety testing. Um, you know, any packaging design or sampling. And then, um, regulatory and registration. So global compliancy is important [00:15:00] as a global brand, and so all the, you know, expenses associated to that. And then creating the assets for the launch.
So the, you know, the support for the go to market strategy. And then there is the cost itself of the product, right? That includes, um, bulk, uh, the formula packaging, the fill and assembly, the warehousing, et cetera. And then I would say outside of PD and those costs is the marketing and customer acquisition, which, you know, depending on the type of product and where the product sits in the product architecture and hierarchy, that, um.
You know, is, is tentatively one of the larger expenses associated within that product, uh, development cycle.
Deanna: Yeah. No, that's fantastic. I appreciate you sharing those details. That helps give us a much bigger picture of what's going on in product development. Can I ask as well if there are particular sort of corporate performance [00:16:00] responsibilities or targets? That the product development team is actually watching or, or, or tasked with, with hitting.
Patricia: Yes, yes, yes, yes. Um, so as, as it relates to the product architecture. Right. Um, we're tasked to make sure we have the right, um, innovation mix, you know, um, there's a lot of, um, analytics and, and making sure the matrix are right for the hero product. Hence, and, you know, the, the hero product strategy and any newness that we add to the product, um, we, you know, need to manage and maintain the innovation pipeline and make sure that we have a rolling calendar for, you know, 24 months, um, delivering on that pipeline as well.
Um, I think we touched on it earlier, there is a, a strong importance to maintaining our relationships with our partners, our strategic partners, um, and, you know, ensuring that [00:17:00] we have a, a, a good front seat there. And then there's the financial piece we just talked about, right? We also have some KPIs from a financial perspective.
Making sure that we hit the margin targets, uh, stay within the cost of good development. Um, and in some cases there's specific or more detailed KPIs depending on the type of the launch, um, agility we touched on, right? Um, so there's the time to market the testing and how, uh, we maintain that in timely manner. Um, and there's, you know, I think some quality and regulatory compliance aspects to consider from a pd, KPI. And then there is the cross-functional, um, leadership targets, right? The interaction. It's not just about the product development itself, but it's also the cross-functionality with the other teams.
Um, which, you know, also there's some responsibility here how we interact [00:18:00] with marketing supply chain. Uh, regulations or regulatory and finance,
Deanna: Yes, yes.
Patricia: I think that's important to note as well.
Deanna: Yeah, there's so much going on. I love it. And you know, another business aspect to all of this, and you've certainly mentioned it, is, is this idea of speed to market and, and the fact that the cosmetic industry really continues to see the pace of innovation and production accelerate. And I think this is especially true as digital technologies like automation and AI are more commonplace.
I wanna just share a recent, uh, piece of news, uh, as an example here from the manufacturer, Colemar Korea. Um, their newest facility in the US is, uh, they've automated 80% of production there, and in October of last year, so 2025, um, Colemar actually announced that their company is participating in a project of South Korea's Ministry of trade industry and resources.
It's called the AI Factory Alliance [00:19:00] Project. Under this project Coal Mar Choa, I am gonna quote from a media release. Now, coal Mar Choa will develop an AI autonomous manufacturing system that integrates all cosmetic production processes from planning and formulation to quality control filling and packaging.
The company says, and I continue to quote here, AI factories use artificial intelligence to analyze data in real time and autonomously optimize production operations. Uh, the company has a goal of 95% process accuracy. And will not only roll out this technology globally at their facilities, but also share learnings with the cosmetic, uh, manufacturing, uh, infrastructure or other companies, I should say, throughout Korea.
And I'm sharing this because I think this piece of news is a particularly good reminder that what we think of today as speed to market and supply chain agility is only going to become faster and more reliable. Um, Patricia, through your work, you've [00:20:00] certainly as, as you've mentioned, seen speed to market increase and seeing the value that that can bring.
I'm curious to know how this acceleration in our industry. Is impacting product development, maybe impacting market competition or corporate performance. What are, what are you noticing?
Patricia: Yeah. Super interesting fact. Thank you for sharing. I, I think they've, I've seen this being written up, so I've heard about it. Um, I've had, um. The pleasure to see various, uh, manufacturers in Asia and their sort of capabilities to translate, um, some of this, you know, AI or apply some AI with some speed to market.
I have not had the opportunity to see commerce, but, um, it sounds, uh, very impressive and it addresses that point that you and I just discussed, right? Sort of the efficiencies, uh, and the, um, agility, um, changing some of this, um, you know. The way they [00:21:00] operate. Um, and, and to what I have seen in in market, um, in particular in Korea and China is very impressive.
And, you know, use the, those robot operated, um, uh, environments are very, uh, impressive to see.
Deanna: Absolutely. And as the supply chain becomes more agile and the, the pace of manufacturing only gets faster. In my imagination, uh, there's sort of a, a best case scenario for the future of beauty, but there are also risks associated with increasing the speed of production. I'm just curious, as we finish up here, what are your thoughts on, on all of this?
Patricia: Yeah, there, you know, obviously there is. Associated with it. Right. Um, I think the importance is, um, to, or I think one way to manage is that we've seen success with is to. Uh, focus on smaller batches [00:22:00] so that you, you don't have any sort of risk associated with speed, where potentially there could be some scaling issues or, um, you know, o other unforeseen circumstances.
Um, that also smaller batches also help with, uh, lower inventory, right? That's another, uh, it allows you more flexibility and agility. Um, and there are, I, I've, I've heard of, uh, smart replenishment systems, right? I think some of our strategic competitors have already, um, invested in this what is referred to flexible manufacturing network, um, that can have that kind of, uh, responsiveness, right?
Um, and that I think will set, uh, everyone up for success with, you know, maintaining that.
Deanna: Sort of the idea there is warehousing less inventory and producing
Patricia: Exactly.
Deanna: as demand requires.
Patricia: Yes. I think, I think that will make a [00:23:00] difference. And it's my understanding that it, it exists or is being implemented, and I think it sort of touches on what you were just sharing this, uh, latest industry news, right?
So I think that all is, is heading in the same direction.
Deanna: Wonderful. Patricia, this was very informative. I, I'm so glad you shared your experience with us today. I, I thank you very much for being my guest on the Cosmo Factory Podcast.
Patricia: Thank you so much for having me. It was great to be part of your, uh, podcast.