Marketing Notes

5Cs •Company •Customers Flare Fragrances: Analysis •Collaborators •Competitors •Context

Company & Competitors

• A leading U.S. producer of women’s fragrances. • Projected annual growth in 2008 sales declined to 2% after rising 12% in 2007. • Revenues were $193.6 million in 2006, followed by $216.8 million in 2007, and projected to be $221.1 million in 2008. • Options for 2009 sales growth • expansion of current distribution into drug stores • introduction of a new brand. • Late in 2008, major competitors is also planning to introduce a new brand in the same price range and targeted at the same market but with a substantially higher level of advertising and promotion support.

Company Situation

• At the end of 2007, Flare had a 9.5% share women's fragrance market • Strong, 33-year-old Loveliest brand name • Acts as an umbrella for five more recently introduced brands. • May add to the efficiency of Flare's advertising expenditures • Flare also has a good record of • (1) regular new product introductions • (2) good brand and advertising awareness • (3) good penetration of general merchandise chains and mass merchandisers • (4) a high-quality sales force with low turnover. • Loveliest brand gradually broadened its potential customer base and its appeal to more priceoriented classes of trade. • With the increasing number of prestige products selling through mass channels • May be partly responsible for weak dollar sales in 2008. • Flare department store distribution is weaker than its mass market penetration • Flare is dependent on the medium-price segment and mass market for the bulk of its sales. • Flare's dependency on a single brand name may be inadequate to straddle an increasingly segmented market. • Flare's share of industry advertising is weakening. Flare advertising expenditures in 2007 were 19.2% of sales ($41.6 million/$216.8 million—Case Exhibit 4), compared to 23% for the industry. In 2008, Loveliest appeared likely to be outspent by its competitors...