Flare Fragrance Company

Inc.
Analyzing Growth Opportunities

Anchal
Sharma 16004
Pritam Kumar
Patro 16039

Company Background and

Industry Position
In 1955, started as small manufacturer of Women Fragrances.
Grown into 4th ranked player in USAs Women Fragrance Market.
In 1975- Introduced 1st Brand Loveliest.
Flare has Positioned itself as Prestige Brand.
In 1996- Launched 2nd Brand Awash under Loveliest .
Have 6 lines of fragrances under Loveliest.
Fragrances generate 93% sales. 7% by products based on
different lines of Fragrances.
Latest launch of Natural in 2006 (got $7million launch and is
at $9.1million after 2 years)

The US Fragrance Market

74% of Adult Women and 75% of Teen girls (2008)
Total Market(Men and Women)- $ 5.7 Billion (2007)
Women Fragrance Market- $3.8 Billion (2007)
Flare product generated 9.5% of total (2007)
Top 4 Market Share are captured by:
1) Depuis
2) Suzanne Weber
3) Aromatique
4) Flare

Flares
Market
74% of Flares Fragrance are sales through Mass Outlets
Company Growth-

2007 > 12%

2008(end estimate) > 2%

A declining trend!

2009(plan) > 3.39% (target 7.5 million)

Reason for Decline Increase in Competition
Comparatively low spending on advertising and promotion(Flare spend
19% of sales while competitors spend about 23%)
Economic Crisis in US

Strengths and Weaknesses of

FLARE

Dominance in sales of fragrances through mass channels

(23.1%)
Power of Loveliest as a strong umbrella brand
Loveliest has the larger share of the annual advertising and
promotions budget (about 70% within Brand)(about 40% of Total
Communication Budget)
Strong and Loyal customer base among 34-65 aged successful
women
Small market share in Prestige/Department stores, drugstore
chains and Internet
LOVELIEST have maximum sales which targets 35+ aged
women only which makes other age-groups under-utilized

Possible Strategies for Target

$7.5 Million
Increase the effort in drug store channel
through promoting Natural Brand
Introduce a new brand - SAVVY

SWOT Analysis - Savvy

STRENGHTS
Savvy- Stylish, Upbeat and Classy Name
Received Favorable response in focus groups
WEAKNESSES
Unknown brand name(without LOVELIEST)
Chances of Cannibalization of current product sales
Investment in current & established brands may reduce
Higher price ($40) for Young-age-segment to afford

SWOT Analysis Savvy (cntd.)

OPPORTUNITIES
Reach a new customer segment: 18 24 year old females
Arlmont study predicts prestige image fragrances will be best
performers
Innovation & originality Build relationships with department
store channel

THREATS
Dulcet launched at same time High competition in market
Difficult economic conditions Declining sales in high-end
department stores
Competitors outspending Flare in advertising

Launching Savvy
PROS

Diversification of product portfolio

Prevents stagnation of the brand
Better utilization of channels
Keeps the brand relevant
Will boost the sales
CONS

Will increase cost (capital expenditures)

May dilute the brand image of Loveliest leading to loss of faithful and
loyal customers
Risks of failure with new launch, lost position in the segment will be
hard to gain back

SWOT Analysis- Drugstore and Natural

STRENGHTS
Presence of a dedicated drugstore sales team
Strong brand image of LOVELIEST in prestige market which
umbrella's Natural and other Flare products
LOVELIEST is one of best-selling womens fragrances in mass market
Halo effect of LOVELIEST have continued to work
WEAKNESSES
Natural is the only Flare product for younger age-group
Drugstore sales team performance was uneven and are still learning

SWOT Analysis- Drugstore and Natural (cntd.)

Opportunities
Expand into market areas in which Flare products are less sold
Trend shows the sales of prestige brands to grow in mass
markets
Can increase advertising for current brands
Increase scented product availability outside of gift sets

Threats
Two years since last product launch
Drugstore chains only want to sell highest turnover items
Drugstore sales could damage relationships with other
channels and may harm brand image

Strategizing
Natural/Drugstore
Natural has been on the market for two years under Loveliest's
umbrella & promotes green lifestyle
Increase promotional support of Natural along with other
products to continue sales growth
Start co-op advertising program and Contribute some
percentage to store ads that feature Natural and other Flare
products.
Partner with an eco/green-charity in weeks bordering Earth Day;
percentage of sales go to eco charity
Strengthen presence of other products in drugstore channel
Position Savvy so as to reduce competition from Natural

Strategizing Natural/Drugstore
(cntd.)
Take advantage of growing trend in mass market
Focus on existing brands by increasing advertisements and
promotions
Tough economic climate driving customers to more affordable
retail outlets
Capture new consumers at a young age(U.S. Market: 75% of
teen girls)
Holiday promotions entailing gift baskets of Natural fragrance,
soap, shower gel etc.
Gift with Purchase promotions
Better display cases at store-promotion corners and more
attractive packaging

Recommendations
The best option will be to go with both the strategies; that is
launching Savvy and to increase the effort in drug store
channel through promoting Natural brand
Savvy launching should be in forefront.
Savvy Plan 3 of Adv. and Promotion ($7.5mill.) brings
expenses to 22.59% of Sales (Plan 2 brings 21.23%)

Estimates 2008
Drug Stores: Naturals share in Flares sales= 0.5% (1.1 mill.)=
0.003% of The Channel
Current(2008) Estimates of Flares Share in:
Drug Store Channel (2.64%)
Departmental Stores/Prestige Channel (5.73%)
Other(Inc. Internet) Channel (1.82%)
1.5% of Drug Store Channel= 5.5 mill.
Departmental Stores/Prestige Channels 0.5% = 4.65 mill.
Other(Inc. Internet) Channels 0.5% = 1.235 mill.