Making NPC's appearance show differently

[Fulg0reSama]

I assume this is possible in some way, but how would you go about creating a NPC (let's say for simplicity, a noob character) and if you had a particular item, you would see the noob in a new form, like some other kind of person? (Simple outfit change based on meeting a criteria of having an item or flag checked to true) ?

I guess what I'm trying to say is how would this be gone about script wise?

Would it go something like default appearance if you don't have the item and then if you do then the apperance changes or is there a better way to handle this?