Flare Fragrances free essay sample

Since its origin as a small manufacturer of women’s perfume in 1955, Flare Fragrances Company, Inc. has grown into the #4 competitor within the women’s fragrance market. Loveliest was introduced in 1975 and has been Flare Fragrances namesake since. In 1996, Flare Fragrances introduced Awash and has introduced a new fragrance every two to three years since, with our most recent being Natural. Jump ahead to 2008, we are in the midst of a recession with most companies making little to no additional profit from the year prior. Flare Fragrance was fortunate to grab a 2% share increase and is contemplating launching their new fragrance Savvy or entering a new channel into Drug Stores. Most importantly, Flare sees their 2% share increase as weak and wants to ensure greater success for 2009. Â  It is 2008 and the United States is in the midst of a recession, Flare Fragrances is projected to end 2008 with a better recession story then most, they will have experienced a 2% growth. The CEO Joely Patterson is determined to do better in 2009. Arlmont Associates just completed an audit of the company and had several strategic options that might hold the greatest potential for growth. Their first suggestion was to increase efforts in the Drug Store channel; their second suggestion was to introduce a new scent keeping on track with the every two to three years new launch campaign. The question is which will be more beneficial to our company; do we do one, both or neither? My recommendation is to not only launch the Savvy line, but to enter into the Drug Store channel as well. Savvy, by Loveliest should be launched as a classical scent geared towards the young stylish upbeat professional woman. The launch should take place around Mother’s Day capitalizing on it as the promotional platform. By using the Loveliest brand name, we will be able to capitalize on its success while keeping marketing cost down due to brand recognition. In addition, we will reposition Awash and Natural within the Drug Store Channel hoping to capitalize on this market, rejuvenate, and increase the demand for these two scents. It has been a challenging year for Flare Fragrances, in 2007 we saw a 12% growth rate in the market, in 2008 we project we will only see about a 2% growth margin. The recession has hit some competitors harder than others; some have seen lower than 2% increase in growth, while others had not received any growth. Our goal for 2009 is to see a larger than 2% increase in growth, how do we get there from here will be our biggest challenge. In 2007 the women’s fragrance market generated $3. 80 billion in sales or 66. % of the U. S. market, Flare held 9. 5% of that market with a profit of $216. 8 million. Flare’s sales come from its six fragrance lines equating for 93% of all sales with 7% coming from line extension products such as soaps, shower gels and gift sets. Since 1996 Flare has launched a new scent every two to three years, as we near 2009 it is time to make a decision if we are ready for a new launch. In 2006 we positioned ourselves in the young and chic category wit h the launch of Natural. Savvy is our fragrance ready for launch, its scent has been seen as stylish, upbeat and classy and has been geared towards the 18-34 age group. The projected sales price is $40. 00 with a launch in the mid-tier brand category. The questions are do we position it in the young and chic category or do we enter into a new position such as young and classic. In addition, if we do launch this product do we umbrella it under Loveliest or do an independent launch and create a new brand. In addition, is a Mother’s Day launch obtainable? Our Second issue is whether to enter into the Drug Store channel. Our current channels are department stores both premium and mid-tier, we have stake in privately owned pharmacies and have positioned ourselves in the mass market to include stores like J. C. Penny’s, Target, Kohl’s and Wal-Mart. Chain Drug Stores are the one channel we have yet to hit with full force, perhaps it is time. In most circumstances, Drug Store channels prefer to sell only Flare’s highest turnover items, which could ideally damage relationships with other retail accounts. Key here will be to convince the Drug Store channel that whichever scent we position in their channel it will be a selling magnet for their store. Another challenge that could hurt us in both cases is that as we make our decision, we will also need to take into consideration that Aromatique is getting ready to launch their new scent Dulcet with plans to position it in the young and chic market. There price line for this item is $42. 00 per bottle priced a little high for Mass Brands, so we can anticipate that they will position in the Mid-Tier level looking to launch in department stores both mass and discounted, keeping them out of the Drug Store channel perhaps allowing us to enter it with an old favorite. Savvy By Loveliest Brand Name:| Savvy| Target Customer:| Women, Aged 18-34 Who are highly brand-aware with sensitivity to premium and prestige branding, prefer images of elegance and exclusivity, believe in word of mouth as an influence and have a high willingness to try new scents| Product Line:| Eau de parfum initially; to be followed by bath soap and body lotion| Retail Price Point:| $40. 00 for a 1. 7oz. Spray bottle. Variable cost structure similar to other Flare Fragrances| Trade Margin:| 40%| Introductory Deals| 5% and 10% off-invoice allowances on small and large size prepacks, respectively. Sales of each prepack were expected to account for 1/3rd of 2009 Savvy Sales| Sampling:| Production of one million 1/8oz. samples to be distributed free at the point of sale at a cost of $400,000| Merchandising Aids:| Counter display materials, brochures, and testers at a cost in 2009 of $100,000| Timing of Launch:| First orders accepted in April 2009; first shipments in September 2009. Consideration is being made for a Spring launch| Sales Target| Gross factory sales of $7. million in 2009| Potential Product| Gift Packs, Lotions and Shower Gel| Daily scent choice influenced by mood, activity, time of day, season and wardrobe choice| Almost 50% prefer to shop for fragrances in department stores| Nearly 40% shop for fragrances in mass stores such as Target and Wal-Mart and specialty stores like Sephora, through use of these channels declines with age| Just over 20% shop at drugstores for their fragrances purchase| Most fragrance-wearing respondent says they switch between two or three brands over time. Flare Fragrance is in a good position for either introducing a new scent or entering into the Drug Store channel. Loyalty to the Loveliest brand has allowed new scents to excel in sales and as new scents were added, new markets emerged. The current recession has encouraged perfume consumers to rethink their brand and price level and has changed purchasing habits. As department stores are forced to close their doors for good the attractiveness of sales at the Drug Stores channel become more important. Drug Stores have seen this as an opportunity to capitalize on the demand and have placed more focus in their health and beauty departments. Aromatique’s launch of Dulcet could be a threat, but only if we position in the same category. See Exhibit B for Details Although our competition has higher budgets when it comes to marketing and promotion ours is 19%, theirs is around 23% we are still able to be one of the top four sellers of perfume products. Aiding in keeping our marketing cost down is the use of Loveliest as our brand name. Our scents have seen greatest sales in the Mass Market Channel for all scents, but the least amount of profits has been achieved by Awash and Natural. Something to take into consideration is that the recession has caused several stores that carried our product to close. In addition, 400 new SKUs had been introduced into the market in 2007 and a recent influx of celebrity-endorsed scents has proven to be a force in the perfume market. One thing to keep in mind is that sources have indicated that Aromatique is preparing to launch their newest scent, Dulcet with a suggested retail price of $42. 00. Their Communication budget is $10 million and they plan to feature an American Idol contestant as a means to capture their target market of young and chic. MIX One of the main concerns that marketing management needs to consider is whether to launch Savvy and in addition whether to launch it as a new brand or as an umbrella brand under Loveliest. The current product is Savvy, which provides a stylish, upbeat classy scent ready to take on the wild at heart. The roll out price will be set at $40. 00 for a 1. 7oz spray bottle. Anticipated channels of delivery will be selling exclusively at department stores before mainstreaming into mass markets or we can consider sales at mass markets from the outset. Currently we are planning to provide a 5%-10% off-invoice on both small and large size pre-packs; one million 1/8oz samples will hit our channels for distribution at point of sales. Additional promotional advertising will take place via counter top display material in our current channels with additional brochures and testers available. Current launch is estimated to take place in September of 2009, perhaps a quicker roll out around Mother’s day will be more beneficial to the company especially since history shows that Fragrance industry sales are seasonal and concentrated heavily around Mother’s Day and Winter Holidays.