Flare Fragrances Company, Inc.

: Analyzing Growth Opportunities Group

D5
1. Understand Flares position in womens fragrance market.

Market and Competition: Starting out as a small manufacturer of womens

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 womens 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 Flares 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: Flares communication budget is roughly 19-20% of sales, with 5658% of the budget being spent on media, advertising and web promotions. Loveliest is
the most aggressively advertised brand.
Pricing: Flares 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 Flares 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 - Currently under-utilized; may help
- In conflict with the prestige
in the drug
achieve penetration
image
store channel - Opportunity as drug stores will have
- Direct competition with mass
higher-end features
brands
Introduce
- Venture into the young demographic
- Will be pitted against
Savvy for
with an image independent of Loveliest
Aromatiques Dulcet
young chic
to increase sales through department
- May partly cannibalize Natural
segment
stores
Increase
- Caters to the young demographic;
- Not enough to meet target
budget of
potential to increase sales if promotion
(assuming YOY growth=30%);
Natural
investments are made
very niche
Building other - Currently low contributor, scope for
- Tangential to core marketing
scented
more sales during gifting occasions
and sales expertise
products
Introduce
- Positioning resonates with results of
*********
Savvy for
FGDs wanting image of elegance and
young classic exclusivity within 18-34 demographic
segment
- 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.**