Flare Fragrances Company, Inc.

: Analyzing Growth Opportunities

Key issue: Flare wants to deliver at least $7.5 million incremental revenue in

2009 and survive the severe economic environment. Two methods are

the other involves intensifying Flare’s penetration into the drugstore channel. Current situation of the industry: In US market. exceeded by Depuis. women’s fragrances market. Flare dominates sales of fragrances through mass channels. 74% women and 75% girls use fragrance products.8 billion was women fragrances. department stores and others. 2008. . Suzanne Weber and Aromatique. Sales channels of fragrances include mass market. SWOT analysis of Flare Fragrances Company: S: Flare is the No. Flare takes 9. The total US fragrances retail market was $5. one involves launching a new brand – Savvy.7 billion in 2007.available. The drugstore sales team lacks experience and management level O: The potential market for women’s fragrance is huge Traditionally higher-end fragrances will be the best performers in the coming years. W: The company was confined to the United States. Loveliest is maintaining its 3% share of the market-$77 million.5% market share. drug stores.4 player in the U. among them $3.S.

5 million incremental revenue. after the penetration. Savvy’s target market and its price are not so much different from those of other brands under the Loveliest. As is shown in Exhibit 6. since Loveliest already has five brands with it.8%. Savvy should be .6% T: major competitor Aromatique would launch a new perfume brand.7% and 2. Moreover. Mid-tier and premium brands increasingly available in mass channels Evaluation of each option: Project 1: Launching Savvy Project 2: Deepening Flare’s penetration into drag store channel Project 3: Launching a new premium brand targeting at high-end market and thus shore up and even penetrate department stores/Prestige channel According to Exhibit 1. with the each market size of $367 million and $930 million. Therefore.Department/drugstore channel have huge markets but Flare accounts for only 5. respectively. Dulcet. the adding of another will not dilute so heavily. Flare’s shares of drug store channel and department store channel are 2. the shares of drug store channel and department store channel should increase by 2% and 0.6% and 5. To meet the goal of $7. Savvy is not a proper to be a breaking-out brand and is less likely to shore up department store market.7%.

5 million Risk Cannibalization of existing brand. Increasing revenue. Return A breaking-out brand with possibility to make halo effect . who have the highest likelihood to buy perfume and to be loyal to a favourite brand and scent. Project 3 Launch and advertisin g ($4.8%. open high0. making $7.00 according to Exhibit 7. Shore up market share of Possible failure of department store the channel by the launching channel. Revenue end market. Flare can gain more profit in long-term . using its possible halo effect due to umbrella brand.25 million) advertisin g Expected task Revenue 7.advertised with Loveliest labelled on it and the media plan should be $2.5 million halo effect to launch more premium brands. In addition. thus Flare thus can shore up and even penetrate department stores/Prestige channel. the final recommendation is Project 3: introducing a new breaking out premium brand targeting at high-end market (Retail price $80 for 1. The new brand’s target consumers are women aged from 34 to 65. possible failure of launching Damage to relationship with other retail accounts.5 million) Increase the High cost. more share in drug store channel Project 2 Increase the market share of the channel by 2%.7 oz. The risk-and-return analysis of each option is as follows: Project Project 1 Cost Launch and advertisin g ($2.).2500. Final recommendation: According to the above analysis.

Sales team for department store Channel: the whole 2009 Risk and contingency assessment of the recommendation plan: 1. 2009. Implementation plan: Based on the media plan for savvy. 2009.profits. samples to be distributed free at the point of sale costs $0. The trade margin and introductory deals are as the same as savvy in Exhibit 6. Accordingly. The production of 0. first shipments in September. the retail sales are estimated to be $7. February Earlier-stage advertising (targeting at both men and women): March to September Launching: first order accepted in May. the advertising budget for this new brand is $4. Consumers under economic pressure trade down from luxury brands to .5 million for a celebrity launch.4 million. the implementation plan is as follows: Plan and preparation: January.5 million.5 million 1/8 oz. Taking full advantage of the earlier-stage work that has been done for Project 1 and Project 2.

2. But the current market is still large. The difficulty of rooting a new brand into the target consumers as they have low willingness to try new scent. they will have high loyalty. . But once they choose this brand. which is a negative trend for premium brands.mass alternatives.

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