Flare Fragrance

Introduction

Flare Fragrance Inc. is one of the leading producers of women’s fragrances in the U.S (Quelch & Donovan, 2010). In 2008 they had only 2% growth, compared to a 12% rise in 2007. Yet, the company reported revenues at $193.6 million in 2006, $216.8 million in 2007 and revenues are projected to be $221.1 million in 2008. This difficult economic environment has created growth challenges for Flare. The economic downturn led CEO Joely Patterson to look at various marketing strategies, which may lead to the greatest potential for growth.

Based on market research completed by the consulting group, Arlmont Associates, two options for 2009 sales growth were presented:

1. Expansion of current distribution into drug stores.

2. Introduction of a new brand.

The marketing team was asked to make recommendations on whether they thought they should move forward with one, or both, of these strategies.

Background

The overall fragrance market has experienced declining sales since 2001, with only a brief surge in 2008 when celebrity endorsed fragrances flooded the market (Sarfati, Negrelli, Wolfe, Wolfe, & Ziobro, 2010). On average 1000 new fragrances (400 in the U.S. alone) are launched globally each year. This industry continues to stay in a launch-frenzy mode despite continued declines in sales. The consumer is confused and overwhelmed, and market research suggests that these consumers are going back to what they know. As quoted, “Seven out of the top ten prestige fragrances are classics, having launched ten or more years ago. The strength of the connection the consumer has with these brands is unfazed by the industry’s insistence on newness (Sarfati, Negrelli, Wolfe, Wolfe, & Ziobro, 2010).” This bodes well for the Loveliest brand and its’ future success, but the question remains whether they will be able to sustain this growth without taking new risks in a highly competitive and segmented market.

Flare’s Position in Women’s Fragrance Market...