Flare Fragrances Company, Inc.

: Analyzing Growth Opportunities – Group D5

1. Understand Flare’s position in women’s fragrance market.

 Market and Competition: Starting out as a small manufacturer of women’s fragrances in 1955, Flare
has grown into the No. 4 player (behind competitors Depuis, Suzanne Weber and Aromatique), accounting
for 9.5% (~$361 million) of the total U.S. retail market for women’s fragrances (~$3.8 billion). This is a highly
cluttered market, with 400 new fragrances being launched in the U.S. in 2007 alone.
 Product Mix: By 2007, 93% of Flare’s sales came from its six lines of fragrances, while the remaining
7% was attributed to other brand extensions/products that were part of gift packs. The contribution to 2008
projected sales of each of the products is shown in Fig 1.
 Place (Distribution): Mass market is the main distribution channel, followed by department stores (Fig
2).
 Promotion: Flare’s communication budget is roughly 19-20% of sales, with 56-58% of the budget
being spent on media, advertising and web promotions. Loveliest is the most aggressively advertised brand.
 Pricing: Flare’s brands are sold at price points for $30-$36 (with Loveliest at $32), placing them in the
mid-tier categories of fragrances.

2. What are the pros and cons of Flare’s possible growth strategies?

Patterson requires a minimum of incremental $7.5 million sales in 2009, which implies a 3.4% YOY growth over the current
2008 sales of $221 million. The strategies should therefore be evaluated on their ability and probability to achieve this target.
Strategy Pros Cons
Increase efforts in - Currently under-utilized; may help achieve - In conflict with the ‘prestige’ image
the drug store penetration - Direct competition with mass brands
channel - Opportunity as drug stores will have higher-end
features
Introduce Savvy - Venture into the young demographic with an - Will be pitted against Aromatique’s
for young chic image independent of Loveliest to increase sales Dulcet
segment through department stores - May partly cannibalize Natural
Increase budget - Caters to the young demographic; potential to - Not enough to meet target (assuming
of Natural increase sales if promotion investments are made YOY growth=30%); very niche
Building other - Currently low contributor, scope for more sales - Tangential to core marketing and sales
scented products during gifting occasions expertise
Introduce Savvy - Positioning resonates with results of FGDs *********
for young classic wanting image of elegance and exclusivity within
segment 18-34 demographic
- Avoid competition with Dulcet, and
cannibalization of Natural

3. Should Joely Patterson introduce the new perfume brand?

Joely Patterson can introduce the new perfume brand Savvy to achieve the incremental sales target. However, it is suggested
to change the positioning from the chic segment to the classic segment for the young demographic to avoid competition with
Dulcet and cannibalization of Natural. **Some calculations on expected sales, and which media plan to use.**