Case Study: When High-Tech Beauty Marketing Harms Teen Health

Maya Tran sighed with relief as she settled into her corner office and opened Maxinq Beauty’s newest quarterly deck. It wasn’t that she minded the public-facing parts of her job—TV appearances, investor calls, glossy cover shoots. She was the CEO of a beauty company, after all, and a former fashion model; it came with the territory. But Maya was a nerd at heart. After studying electrical engineering at Princeton (and moonlighting on the catwalk), she’d spent six years at McKinsey. Then she’d earned an MBA at Wharton, where her love of messy datasets and operational puzzles blossomed. Now, after a relentless day of meetings, she finally had time to dig into the numbers. On paper, everything sparkled. Digital revenue was up 24% year over year, driven almost entirely by Maxinq Mirror, an augmented reality (AR) tool within the company’s website and app. It let customers visualize how their faces would look with different beauty products applied to them. At launch, the tech media had gushed over its elegant user interface; since then, investors had come to adore its stickiness among customers, with several well-known stock analysts highlighting Maxinq’s digital-first strategy in their “buy” recommendations. Even the company’s traditional retail business—branded stores in select city centers and high-end malls, plus a partnership with Kohl’s—looked sturdy enough. Brick-and-mortar remained its cash cow, growing at a 6% compound annual growth rate even though Maya had put it on the back burner. Strategy, she liked to remind her executive team, was as much about what not to do as what to pursue. So when Kohl’s had offered to double Maxinq’s in-store footprint the previous quarter, she turned it down. She wanted her company’s attention and capital funneled into digital, and her bet seemed to be paying off. But Maya never stopped at the top line. Flipping to the appendix, she began to scan deeper cuts of customer data. On page 48, one set of numbers caught her eye. A small segment of under-21 shoppers—5% of them—were behaving differently from other Maxinq Mirror users. Internally, the team had nicknamed the segment digital superfans: young women deeply passionate about appearance and makeup, using AR not as a practical shopping aid but as a creative outlet. They spent triple what average customers did, bought twice as frequently, and rarely returned anything. Plus, their Maxinq Mirror sessions averaged 47 minutes, and they often logged in multiple times a day, with activity spiking between midnight and 3 AM. Over a three-year horizon, their projected lifetime value topped $4,500 each—the highest of any group of Maxinq shoppers. Maya frowned. Forty-seven minutes per session. Multiple log-ons per day. Midnight to 3 AM. She thought of her 16-year-old daughter, Lily, whom she’d caught staying up past her bedtime last week, experimenting with Snapchat filters on her phone. Maya scribbled a note in the margin: “Maxinq Mirror—compulsive buying? Addictive behaviors?” Winning the Wrong Way Maxinq’s chief digital officer, Daniel Rios, paced in front of a large screen, his arms carving arcs through the air as he spoke. His exuberance gave Maya a pang of guilt. When she’d asked him to present on Maxinq Mirror to her and the other senior executives, he’d clearly assumed she was ordering up a victory lap—not trying to probe deeper into an issue that had begun to trouble her. His enthusiasm was understandable: The numbers on the screen were dazzling. Maxinq Mirror users spent four times longer on the website or app than traditional shoppers did. Their conversion rates were three times higher. Their lifetime value projections had increased 25% since the tool’s launch. Daniel clicked to the next slide, which outlined the road map for Maxinq Mirror. The next phase, he explained, was to integrate AI so that it could track facial “imperfections” and microexpressions of dissatisfaction and then instantly recommend products. A/B testing of the new tech was set to begin next quarter. “Maxinq Mirror isn’t just a tool,” Daniel concluded, his voice brimming with conviction. “It’s a magnet. Beyond just creating engagement, it’s building habits. In an attention economy, we’re commanding our customers’ time, focus, and wallet share.” “Thank you, Daniel,” Maya said, keeping her tone supportive. “I wonder if we could double-click on one aspect: the hyperengaged users under 21.” “They’re our power users,” Daniel replied without hesitation. “They interact with us every day. Their basket sizes are enormous. Churn is practically zero.” He grinned. “I’m a superfan of these superfans.” Maya smiled, then gestured toward her copy of the slide deck. “Can I direct your attention to the appendix?” She’d earmarked a page with excerpts from customer interviews Daniel’s team had done. She read aloud three quotes from them: “I literally cannot sleep without checking if Maxinq Mirror has new recommendations for me.” “Maxinq Mirror is the only thing that makes me feel beautiful.” “Finally, I can see the version of me that people want.” Maya let the silence settle for a moment. “This is what worries me,” she said finally. “We’ve built something powerful, yes—but these are young customers, many still figuring out who they are. Do they have a healthy relationship with our tool? And if they are this dependent on the experience now, what happens when we start layering more AI into it? Could we be nudging them toward unhealthy consumption?” Daniel paused before answering. “I guess my answer would be: Our job is to delight customers, and that’s what we’re doing—across the board. I don’t think we should let this tiny segment of our shoppers slow us down.” Across the table, Joan Smith, head of PR, cleared her throat. “Delight can sour fast,” she pointed out. “Remember Selenya Skincare? They were buried in a PR nightmare after the media exposed how kids were buying expensive products like retinol serums and exfoliating acids because TikTok influencers hyped them. Some of those kids got chemical burns. The backlash was brutal.” Maya shifted in her chair, gaze fixed on the glowing numbers behind Daniel. The growth Maxinq had dreamed of was right there, in bold font. She exhaled. “Look, I don’t want to undermine the value of what we’ve created,” she said. “But I think we have to ask: Are we winning the wrong way?” Balancing Growth and Ethics Maya sat at the head of a conference table in Maxinq’s executive suite, watching the company’s ethics advisory board file in. It was an eclectic group—internal executives, outside experts, and key investors—assembled in the wake of the Selenya Skincare backlash to give counsel on sensitive consumer issues. But scheduling conflicts and shifting priorities had left it mostly dormant. The group hadn’t met in nearly 10 months. Maya opened the discussion. “You’ve all seen the data,” she said evenly. “Engagement is off the charts, but some customer behavior patterns suggest we should look beyond the positives and assess the possible risks of deploying a tool like Maxinq Mirror.” Priya Das, a Stanford professor specializing in corporate values, leaned forward. “Isn’t this a chicken-and-egg problem?” she asked. “Are teens with body image issues naturally drawn to Maxinq Mirror, or is it amplifying those issues? Is Maxinq attracting vulnerable customers or creating them?” Maya turned to Evelyn Cho, a clinical psychologist specializing in body image. “What does the science show on that question?” “We can’t know causation yet, and research into the effects of body-altering AR is still nascent,” Evelyn replied. “But my early clinical observations are concerning. In my practice, I’m seeing more teens reporting compulsive, late-night use of AI-powered filters and beauty apps. Many seem to have heightened anxiety when they’re offline, and some even have feelings of detachment from their actual appearance.” Sophie Malek, Maxinq’s chief marketing officer, jumped in. “With respect, I think we’re overindexing on outliers. For most users, Maxinq Mirror helps them experiment with looks they might never try otherwise. And let’s be realistic: Our competitors are moving far faster. Direct-to-consumer brands are already gamifying beauty, driving social sharing, and capturing Gen Z loyalty. AR is even happening in healthcare. Medical spas are using AI tools to show people what fillers, neurotoxins, and breast augmentations would look like on them. The entire industry is sprinting forward,” she concluded. “If we don’t, we’re handing over market share.” From the far end of the table, Liam Price, a recently retired longtime investor, chimed in: “Maxinq’s success was based on human connection. Our in-store beauty advisers built trust, and you can’t replicate that with an algorithm. AI tools are designed to show customers they look great in everything. But at some point, people are going to crave honesty. I’d like to see Maxinq Mirror deployed only in stores, used by beauty advisers during one-on-one consults—not as an unsupervised experience.” Sophie started to interject, but Liam kept going: “Kohl’s offered to double your in-store space, which is a growth lever you haven’t pulled. Why not? Back in the mid-2000s, Procter & Gamble went all in on digital—then got overextended and eventually retreated to focus on its core retail partnerships.” “I’m sorry,” Sophie said, “but can you name one beauty company that has stayed competitive without leaning hard into digital? Maxinq Mirror is already driving the growth of our e-commerce revenue, and our three-year growth projections are tied to this tool being on the website and app. If we walk that back, we’ll be leaving $120 million in high-margin revenue on the table.” Paul Leo, head of investor relations, cocked his head slightly. “I feel similarly. Not all our investors are as patient as you, Liam,” he said. “That growth is already built into our guidance. Without it, we’d be looking at a 15% to 20% drop in projected earnings per share next year—and the stock would take a hit. We have moral responsibilities, no question, but fiduciary ones too.” After an hour of debate, Maya drew the meeting to a close. “I appreciate hearing all your perspectives,” she said. “I’ll make a decision by the end of this week.” The Experts Respond: Should Maya press forward with Maxinq Mirror or rethink the strategy? Jori Bolton Jim Steyer is the CEO of Common Sense Media and an adjunct professor at Stanford University. Maya should take Maxinq Mirror down from the company’s website and app. She already knows young users are logging in compulsively, and she has quotes from them like “Maxinq Mirror is the only thing that makes me feel beautiful.” All of this should sound the alarm. Maya may feel that she’s looking at a tiny segment of her customer base. But as the parent of four children who have wrestled with body image issues, in part because of technology use, I can tell you her concerns are not small. The problems she points out can damage kids and destroy trust. The beauty industry has always faced risks around body image, but those risks evolve as technologies do. Polling data from Common Sense Media shows that a majority of parents and young people distrust AI platforms and worry about how they affect health and safety. Social media companies like Meta have faced significant public scrutiny for their impact on teen mental health. In the AI chatbot space, several families have filed lawsuits following teen suicides. These examples—though involving different technologies and business models—underscore the importance of proactively creating safety measures for emerging technologies. The introduction of any AI functionality requires careful consideration of the potential psychological impact on young people. Maya should convene independent experts in technology design and adolescent mental health—people like former Surgeon General Vivek Murthy, who sits on Common Sense Media’s board and has led the national conversation on the youth mental health crisis. Together they can design guardrails for areas like late-night use and AR features. Transparency is key. Parents and investors alike will respect a CEO who explains the dilemma openly, even if it means admitting missteps. And any business school professor can tell you that leaders who do the right thing despite short-term risks are the ones who ensure long-term brand health. Still, Maya doesn’t have to sacrifice immediate growth. Three-quarters of her e-commerce revenues come from outside Maxinq Mirror, and opportunities like the Kohl’s expansion remain. She can lean into areas that are safe and trusted while rethinking online tools and marketing. She may lose Daniel, who most likely won’t agree with this decision. But customer trust is more important than any employee. She should also cultivate allies among board members and investors, such as Liam. That support will make backlash easier to manage. Ultimately, Maya should look in the mirror—literally—and ask what kind of leader she wants to be. When you prioritize the well-being of customers, particularly children, the correct choice usually becomes crystal clear. Jori Bolton Jaleh Bisharat is the former CEO and a cofounder of clean beauty e-tailer NakedPoppy. Maxinq Mirror is a breakthrough product, so Maya should move forward with it. The beauty industry has long struggled to sell color cosmetics online. Shades often don’t match what customers think they’ve seen, so return rates are high, which is costly because opened items can’t be resold. As a result, most cosmetics companies use digital channels primarily for customers who are making repeat purchases. If Maxinq Mirror has cracked that challenge, it’s a potential game changer for the entire industry. I do understand Maya’s concern about compulsive shopping, but I don’t see Maxinq Mirror as inherently exploitative. Only about 5% of young customers appear to be affected. It feels analogous to a wine shop: Some customers will abuse alcohol, but the store still meets an important need for the majority. Compare this with truly problematic offerings like “buy now, pay later” services, which lead many customers into overspending and debt. Maxinq Mirror, by contrast, saves most users time and money, reduces returns and waste, and increases customer satisfaction. Those are significant results. That said, Maya should address the risks for young users head-on and consider some technological solutions, such as usage monitoring tools, spending limits, “cooling off” delays for big purchases, and parental controls for younger shoppers. Beauty products are inherently high margin, so she should have plenty of cash to fund these consumer protections. At the same time, she should spearhead a digital wellness initiative, bringing along NGOs, industry organizations, and even competitors to speak up about teens’ use and misuse of technology and how best to support mental health and build consumer trust. Whether at conferences, in the press, or in investor communications, if she frames this initiative as protecting customer well-being in addition to generating other positive business outcomes, it will resonate. I do think Maya is facing a false choice about whether to invest in AR/AI or in the Kohl’s brick-and- mortar expansion. These are not mutually exclusive bets. When a beauty company partners with a department store chain, the up-front costs are high and include negotiations, training, and integration. But Maxinq has already absorbed those costs. Expanding the footprint now is comparatively easy and strategically smart. A good customer loyalty program can help retail and digital reinforce each other, with people discovering products in stores and purchasing online or vice versa. Finally, I’d caution Maya about language. Daniel’s framing of Maxinq Mirror as an attention magnet may excite people internally but would be toxic externally, especially if that comment were leaked. The product’s narrative must focus on benefits to customers: more convenience, fewer returns, and less waste. If Maya can expand both Maxinq Mirror and the Kohl’s partnership while simultaneously leading the industry in acknowledging and managing digital wellness risks, it could revolutionize Maxinq Beauty’s fortunes. HBR’s fictionalized case studies present problems faced by leaders in real companies and offer solutions from experts. This one is based on the Kellogg School of Management case study “Sephora: Transforming the Beauty Experience Through Technology” (case no. KE1374), by Mohanbir Sawhney and Pallavi Goodman.

Case Study: When High-Tech Beauty Marketing Harms Teen Health

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