Flare Case

Subject: Flare Fragrance Recommendation Background: Flare was founded in 1955 as a small manufacturer of women’s fragrances. Over a period of time, Flare has dominated the fragrance market, generating 9. 5% of the total women’s fragrance market and had grown in to a No. 4 player in the U. S women’s fragrances market. Flare has released 6 brands in the market namely Loveliest, Awash, Summit, Essential, Swept Away and Natural. Economic crisis has impacted Flare’s market share. Sales in 2007 were 12% and by 2008, the estimate was only 2% growth.Flare’s goal for 2009 was to generate $7. 5 million in incremental revenue and reverse declining sales trend. Recommendation: Flare should promote Natural with loveliest umbrella in 18-34 years age range and expand its efforts in the drug store channel. Rationale: 1. Natural fits Flare’s portfolio, both financially and strategically. Promoting Natural with loveliest umbrella will benefit Flare to meet its target sales numbers for 2009. Loveliest brand was introduced in 1975 and it still holds a strong equity in the market.It is positioned as a classic scent in the older age group. These customers will serve as evangelist and contribute to the promotion of Natural brand. As a result of the focus group sessions (ex 5), Projected sales for 2008 for Natural is $9. 1MM(ex 1). Based on forecasted numbers in table1, expected sales for 2009 could be $10. 15MM. Keeping the same communication budget from 2008 of 2. 7 MM to Natural in 2009 (exhibit 4), the expected revenue from Natural would be around 7. 45MM (table 2). 2.Natural is a recent launch under the loveliest umbrella and it is reaching slightly younger demographic, who are looking for the environmentally safer products or so called â€Å"green product† (page# 2). Natural is currently positioned as a chic brand in the younger age group (ex 3). 18-34 year age group women are highly brand aware with sensitivity to premium and pre stige brands and word of mouth is influential for this age group(ex 5). Promoting Natural in the slightly younger age group will benefit Flare’s overall sales. 3.Arlmont’s review of current recession era (page#3), shows that mid-tier and premium brands will be increasingly available in the mass channels. Market development strategy can be used to expand Natural in the drug store. As a result of the focus group sessions (ex 5), 20% of customers shop at the drug store. Flare’s sales at the drug store do not mirror overall market and there is a potential for expansion in that space. Drug store chains have evolved over time and some of them also have high end features like on-site aestheticians to assist shoppers in selecting a particular brand.With the current economic conditions, customer with 18-34 yrs age group would get directed to the drug stores in search of cheaper prices. Placing free samples of Natural in the drug stores and Natural testers in the point of purchase will generate trial. Based on the information from table 3, after increasing the % allocation in drug store for Natural from 0. 5% to 2. 5% in (ex 1), the flare factory sales for 2009 will increase from 9. 1MM to 11. 3 MM. Additional 1. 15 MM can be spent on promotional budget for point of sale samples, expected revenue from natural can be 7. 45MM. Risk: 1.Drugstores would typically sell only Flare’s highest turnover items, which might damage Flare’s relationship with other retail accounts. 2. It can be difficult to position Natural in the 18-34 age group with the loveliest umbrella as women in this age group can perceive loveliest as a classic brand. Table 1 | Natural brand Sales forecast| 2006| 2007| 2008| 2009| 7|   Not available| 9. 1| 10. 15| 2009 sales figures are forecasted based on the % sales increase from 2006 to 2009. Table 2| | Natural brand| 2009 – expected factory sales(MM)| 10. 15| 2009 – communication budget(MM)| 2. 7| Incremen tal revenue| 7. 45| Table3