This is an assignment that we did for the course Strategic Marketing Management. Savvy is a new fragrance that a company called Flare Fragrances is about to launch, and this presentation describes the best target audience, positioning and branding for the new product.
Note: Every decision is based for the year 2008, because that's when the case is dated.
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Flare Fragrances - Harvard Business Case by Priyanka Samtani, Seneca College
1. Flare Fragrances Inc.
Analyzing Growth Opportunities
For Professor Duncan Reith
Submitted by Priyanka Samtani
MKM 805 – Strategic Marketing Management
Date: 03/21/2020
Savvy
2. Loveliest has acquired a unique brand image and
strong brand affinity
• Loveliest is the best selling fragrance –accounting
for 35% of Flare’s annual sales.
• It is positioned as a classic scent associated with
prestige & elegance and appealing strongly to
women over 35.
• The Loveliest Line falls under the category of
“prestige brands” and is priced $32 lying in the
lower end of the mid-tier range, i.e. $30-60.
• Leading brands in the mid-tier range have 3-3.5%
market share, and Loveliest acquires a market share
of 3.49%
Along with the launch & branding of
Savvy, Flare should also consider
pricing to allocate their funds towards
advertising and to achieve their 2009
year end goal of delivering $7.5
million incremental revenue.
Flare Fragrances has a strong presence in the US women’s fragrance market, Loveliest being the master brand. Their annual sales growth is on a decline, so they
are considering to increase their presence in drugstores and launching a new product called Savvy to reverse the declining sales trend.
Flare is doing good, considering the tough
economic climate & wants to keep up
• The economic climate was tough as the U.S.
was in recession.
• Flare Fragrances had grown into the number
4 player in the U.S. women’s fragrances
market.
• Flare’s products generated a total of 9.5% of
the total 66.66% of the women’s fragrance
market, exceeded only by Depuis, Suzanne
Weber and Aromatique with shares ranging
from 11.5% to 15.6%.
• The sales growth had declined from 12% in
2007 to 2% by the end of 2008. Their market
share also showed an annual decline of 3%.
• Flare is planning to introduce a new perfume
brand called Savvy to reverse their declining
sales brand and to deliver at least $7.5
million incremental revenue in 2009.
• Savvy is to be aimed at confident, successful
women who are starting their careers.
• The projected retail price point of Savvy is
$40 whereas the competitor Aromatique is
coming up with Dulcet targeting a similar
audience with a price point of $42.
Consumers buy perfume because of the
brand image and how that image resonates
with their personalities & lifestyle
• Perfumes use Pull strategy, i.e. they
attract customers and create demand
mainly by advertising.
• Advertising creates an image of the brand
in the minds of the consumers.
• Considering the sales of Flare, the
popularity of Loveliest and the fact that
brand image created through advertising
plays a big role in the sales of perfumes, it
is safe to determine that price is not the
biggest factor when it comes to purchase
decision. This is also an indicator of the
marketing expertise Flare possesses.
1
Flare has a strong distribution channel –
departmental stores having the most power as they
complement each other’s images, followed by mass
• Flare products are currently available in
departmental stores, mass stores, drug stores &
online.
• Having a strong presence in multiple channels
indicates that their distribution is strong.
• 50% consumers prefer buying perfumes from
departmental stores, 40% from mass stores and
only 20% from drugstores.
Situational Analysis
3. Segmentation Bases (Age &
Lifestyle)
Is this segment big enough? Does our product meet the
needs/benefits sought of
this segment?
Is this group of consumers likely to
choose us as a substitute for their
current solution?
Are we/other competitors
already serving this serving this
segment?
Summary
School Goers
(12-18 years old, they are still
studying and working part time
to manage expenses)
Yes, studies show that 75% of
teenage girls used fragrance
products.
No, they are influenced by
friends - want to smell fruity
or like bubblegum– sweeter
and girly.
No, they might look for cheaper
alternatives to fulfil their basic needs.
No, we aren’t serving this
segment, but others are, and they
are better at it.
This segment is too young and are already
served by brands that specialize in girls’
products.
Young Professionals
(18-34, confident, independent,
ambitious women in the early
phases of their career)
Yes, there are a lot of young
women who are focused on
their careers.
Yes, they could use our
product daily to work or for
post-work gatherings.
Yes, because their needs complement
our product and the price range. They
are looking for something new as
they start their careers.
No, we are serving a younger
audience who prefer natural
products but not this segment in
particular.
This segment is attractive because they
have just started their careers and are
looking for mid-tier perfumes to wear to
work & post-work gatherings.
The Life of the party
(18-34 years old, who love
socializing and want to be
noticed in a crowd – seek
compliments)
Yes, with Social Media kicking
in, people want to get noticed
more.
Yes, they are extroverted and
active party-goers. They want
to feel confident about
smelling good. Fragrances is a
part of their look.
Yes, they would not mind switching
to our products because they are
social butterflies and might want
different fragrances based on
occasions or their mood.
No, we aren’t serving them, but a
long-lasting, strong perfume could
serve their requirements better.
Although this segment is attractive, they
like to socialize a lot and might be looking
for something very strong to match their
active social lives.
Status Seekers
(18-34, they are very conscious
of their image & want to use
brands/products that can raise
their standard in the society)
Yes, with increasing
competition & rise of social
media, women tend to seek a
higher status than others.
No, status seekers will be
more attracted towards
premium brands to fulfil their
needs of seeking status.
No, because they will rather choose
”premium brands” to establish a
desired status.
No, we aren’t, but premium
brands are serving them, and they
are much better at it then we
could be at this point.
The needs of this segment are better met
by high-end products. Although “Loveliest”
is considered as a “prestige brand,” they
are attracted towards something more
“premium”
Social Moms
(35+, stay at home moms who
often go out with their friends or
call them over for gatherings)
No, both the partners
generally work because of the
economy. Moms do stay at
home but only for a year or
two after the child is born.
Yes, for basic needs like
social gatherings, our
products are classic and can
fulfil their needs.
No, they could use the other products
from the Loveliest line, but not
Savvy.
Yes, our other products do serve
this segment along with other
competitors.
Our other products are already serving this
segment. Hence, we should look for a
segment who we aren’t already serving for
the launch of our new product.
Elites
(44+, have achieved a lot of
success – love pampering
themselves - go to the fanciest
restaurants & vacations)
No, this is a niche segment
and is not growing at a fast
place.
Maybe, they want high-end
perfumes and are very
choosy about brands they
want to get associated with.
No, with them being picky and having
already established favourite brands.
They are likely to purchase more
high-end brands
No, we do not serve these
customers, but other high-end
brands do.
The needs of this segment are better met
by high-end products because they want
the most unique products and are willing
pay a lot for the same.
Retired & Loving it
(60+, they are retired, relaxing at
home, want to spend maximum
time with their family, travel a
lot)
Yes, a lot of people get
retired every year.
No, they are more in the self
actualization phase and don’t
need more products until
absolutely required.
No, they are likely to be loyal towards
their preferred brand by this point.
Gifts can be purchased for them, but
maybe other products offered by
Flare.
Yes, our product “Loveliest” is
serving them and they love it.
Our other products are already serving this
segment. They are not very open to
experiments until gifted something new.
Segmentation & Targeting
2
In order to launch Savvy successfully, we decided to segment the market based on Lifestyle & Age and chose “Young Professionals” as our target audience.
4. Attributes Does it appeal to our target
audience?
Is this a point of difference? Can we deliver it? Can our competitors deliver this
better?
Summary
Younger Age Appeal/Chic Yes, because of their age, they might
like trendier products.
No, to target the younger age
group, most products tend to be
chic.
Yes, we could deliver this
through marketing and
product packaging.
Yes, one major competitor - Dulcet is
entering the marketing with a similar
product.
Although this an attractive
positioning, we should try to do
something different.
Younger Age
Appeal/Classic
Yes, younger audience also like
fragrances that are timeless - their
choices start becoming more mature
in their mid- late 20s.
Yes, most products that appeal to
the younger audience are chic, we
can make ours stand out by playing
in the more classic space.
Yes, although Savvy is a new
brand, we can deliver this
based on the scent and
through marketing.
Maybe, but two of our major
competitors could deliver this better.
This is the best positioning for
Savvy because it complements
with our target audience’s needs
& personality perfectly.
Bold/Sophisticated Yes, positioning it as bold will appeal
to our audience because they are
young, confident and energetic, yet
sophisticated as they are now in a
professional space.
Yes, it is a point of difference from
their already existing products and
from the major competitor’s
offerings.
Yes, our advertising and the
already established brand
image of Loveliest can help
us deliver this. Product
packaging plays a major role.
No, the major competitor is portraying
it as bold yet unsophisticated (the
music-theme & associating with an
American Idol contestant popular
amongst teens and young audience).
This is a good positioning as there
are no direct competitors, but our
audience might want something
on the subtle side for the office
environment.
Classic
Chic
Older Age
Appeal
Younger Age
Appeal
Bold
Subtle
Unsophisticated Sophisticated
Based on our target audience, we should position Savvy as bold & sophisticated as these attributes would appeal to them and complement their needs.
Loveliest
Awash
Swept Away
Essential
Natural
Savvy
Savvy
Savvy can be positioned as
the chic fragrance
appealing to the younger
age groups.
Because none other
brands play in this zone,
we can launch our new
product as Classic
whilst appealing to the
younger demographic.
Savvy can be positioned as bold &
sophisticated keeping in mind
how young professionals who
have just begun their careers
want to be seen.
Savvy
Dulcet
Dulcet
Loveliest
Natural
Essential
Swept Away
Awash
Positioning I
5. Key Benefits
Do we have a strong reason to
believe?
Can we effectively
communicate it?
Does the benefit reflect my
chosen positioning?
Will it motivate our
customers to buy?
Summary
Functional
Long lasting Yes, since Eau de parfums are
potent and pretty long lasting.
Yes, our ads can be based
on this concept and show
people having a long day,
still smelling fresh.
Yes, we don’t talk about how
long the perfume lasts in our
positioning.
Yes, shows minimum usage
and that they can smell
good even after a long day.
We cannot sell our product based
on this solely because there are a
lot of cheaper alternatively that
can fulfil the same purpose.
Emotional
Mood
Enhancer -
Feel good
factor
Yes, smelling good makes one
feel groomed, plays with one of
the sense organs –enhances your
mood, making you feel good.
No, this emotional aspect is
a little difficult to
communicate.
Yes, although there is no
direct connection, but
feeling good is an added
advantage.
Yes, women are motivated
to buy products/services
that enhances their moods
(example scented candles)
This alone does not make us
unique enough to base our
positioning on.
Center of
attention
Yes, good smell always stands out
in a crowd.
Yes, this aspect is easy to
communicate through ads.
Yes, bold and sophisticated
can pretty much get
attention.
No, out target audience is
very focused on their career
to care about being the
center of attention.
This seems a little too much and
not everyone in our target
audience might want to be the
“center of attention.”
Status symbol Yes, a good scent acts as a status
symbol. Also, our brand comes
under “prestige” brands.
No, because our price point
is contradicting.
Yes, because it is more on
the sophisticated side.
No, our customers do not
want a perfume to define
who they are. They do not
seek this benefit.
This benefit can be better derived
from high-end products.
Source of
Confidence
Yes, not worrying about smelling
bad/ always smelling good could
boost confidence and make one
less conscious.
Yes, a comparison ad
showing the benefits of
using Savvy.
Yes, if someone is bold and
sophisticated, they are
confident too.
Yes, they will buy it because
this emotion resonates with
them and their daily lives.
Because they have stressful jobs,
they can use Savvy as a source of
confidence to perform their best
without being conscious.
Makes one
feel Attractive
Yes, since it triggers pleasant
feeling especially to the opposite
gender, it makes one feel
attractive.
Yes, by showcasing both
genders and how a good
scent makes women more
attractive.
Yes, not directly but bold is
attractive.
Yes, women want to feel
attractive, and will buy the
perfume – the same reason
why they buy make-up.
Although this is a general benefit
that women seek from perfumes,
it is used for a different mood
altogether.
Positioning Statement
[Target Audience]
[Frame of Reference]
[Key Benefit]
[Reason to Believe]
For Young Professionals
Savvy
makes you feel like your best, most confident self
because of the prestige associated with the brand. 4
Positioning II
After assessing the potential benefits that can be derived from Savvy, we chose to highlight “Source of Confidence” as the key benefit in our positioning statement.
6. Should Savvy be a stand-alone brand?
Should it fall under the “Loveliest” brand umbrella?
How should the new
product (currently called
“Savvy”) be branded?
Savvy should be launched with a new name as an endorsed brand – ‘Panache by Loveliest’ because this new name fits better with our target audience. The
association of Loveliest with the name creates a positive impact and reduces efforts required to market the new product.
5
• Already well established brand name that associated with “prestige.”
• The halo effect of Loveliest can create a positive impact which means less efforts to
establish a new brand from scratch.
Stand Alone brand –
Savvy
Sub Brand –
Loveliest Savvy
Endorsed Brand –
Savvy by Loveliest
House of Brands –
Savvy (Loveliest)
New Name & Endorsed
Brand-
Panache by Loveliest
Does it build/enhance
the master brand?
No, because the master brand is not
there in the branding of the new
product.
Yes, it does build the master
brand because of the greater
emphasis on it.
Yes, it enhances the master
brand - shows that the product
lies under the the same brand.
Not Clearly, a lot more
emphasis is placed on the
product itself.
Yes, it enhances the master
brand - shows that the product
lies under the the same brand.
Does the master brand
build/enhance the
product brand?
No, there is no association of the
master brand with the product
brand.
Yes, but it steals the attention
from the new product. The
audience’s focus could shift
from Savvy to Loveliest.
Yes, it does because it shows
that the product is under the
master brand, Loveliest.
Yes, because the name is
associated with the product.
Yes, it does because it shows
that the product is under the
master brand, Loveliest.
Does it enable us to
better compete? Does
it reduce competitive
impact/threats?
No, creating a brand from scratch
without Loveliest being associated
with it takes a lot more efforts and
increases the potential competitive
threats.
Yes, any option with Loveliest
in it enables us to compete
better because of the “halo
effect” and reduces
competitive threats.
Yes, any option with Loveliest in
it enables us to compete better
because of the “halo effect” and
reduces competitive threats.
Yes, any option with Loveliest
in it enables us to compete
better because of the “halo
effect” and reduces
competitive threats.
Yes, any option with Loveliest
in it enables us to compete
better because of the “halo
effect” and reduces competitive
threats.
Does it make sense to
our target consumer?
No, the name Savvy does not make
sense to our target audience. The
name sounds masculine and for
younger people.
No, because it is confusing –as
there is more emphasis of
Loveliest than the actual
product.
No, although endorsed brand is
a good way to be associated
with Loveliest, the product name
does not resonate with our
target audience.
Not Clearly, it is an indicator
that Savvy is a product under
Loveliest but it is a little
confusing.
Yes, Panache is more feminine
name targeted towards young,
confident women who would
use the fragrance as a source of
confidence.
Will channels support
this branding?
No, they would like the new product
to be associated with Loveliest
because of the positive association &
chances of higher sales.
Yes, because of the positive
association & chances of
higher sales/faster growth.
Yes, because of the positive
association & chances of higher
sales/faster growth.
Yes, because of the positive
association & chances of
higher sales/faster growth.
Yes, because of the positive
association & chances of higher
sales/faster growth.
Branding I
Criteria
Branding
7. 6
Savvy could increase the price of Loveliest by 9% and change the marketing spends on other brands in the year 2009 to allocate those funds to marketing Savvy, and
to meet the year end objective.
Will the channels react negatively? Will customers be influenced to
buy?
Will it help us meet our short
term objective?
Will it help us meet our long term
strategy?
Plan 1 - $2,250,000 Yes, although they will be making 40% of
the sales, this amount is too less to
generate a good amount of sales for a
new product, especially since the
competitor is spending 5 times the
amount.
No, this is too less marketing for a
new product. The new product
might not reach the audience as
we wanted to.
No, the competition is investing
four times the amount – they will
create a buzz and do better than
us - ultimately steal our potential
market share.
No, sustainable growth is
doubtful by reducing the market
spends so drastically.
Plan 2 - $4,500,000 Yes, although they will be making 40% of
the sales, this amount is too less to
generate a good amount of sales for a
new product, especially since the
competitor is spending 5 times the
amount.
No, this is too less marketing for a
new product. The new product
might not reach the audience as
we wanted to.
No, the competition is investing
more than double – they might
do better than us and steal our
potential market share.
No, sustainable growth is
doubtful by reducing the market
spends so drastically.
Plan 3 - $7,500,000 No, this amount is enough to generate a
decent amount of sales.
Yes, this is a good enough
amount to reach our target
audience and motivate them to
buy, but our competitors are
doing better.
Yes, this might help us to achieve
our sales target, but we will still
be behind our competitor.
Yes, achieving the long term
strategy is possible.
Plan 4 - $9,900,000 No, this is how much the competitors are
spending. Also, increased amount in
marketing would mean a chance of
increased sales.
Yes, this is more than the
competitor is spending and
should influence our customers
to buy.
Yes, it helps us to reach our target
sales of $7.5 million.
Yes, first impression of the
product is crucial to the long term
goal. First impression is the last
impression and we need to do
our best.
Alternatives
Criteria
Branding II
8. Analyzing the six power bases, we can determine that mass stores have the most power, followed by Departmental stores and this should be considered while
creating our Channel Strategy.
Reward Coercive Expert Informational Legitimate Referent Summary
Flare No, they are not different
from any other fragrance
company.
No, they can just
dissociate
themselves from
certain channels.
Yes, about the
fragrance industry
because of how long
they have been in the
industry
No, because they
don’t know how
much margin the
stores make on
other brands.
Yes, they can
influence channel
members to
display their
products.
Yes, because of the
positive brand
association, it has this
power
Flare has low power.
Departmental
Stores
Yes, the beauty
consultants can market
the products more &
increase sales.
Yes, they can just let
the products be and
not market it
enough to the
consumers.
Yes, they know a lot
about how the trends
in the industry are and
how other brands are
doing.
Yes, they have the
latest information
about most brands.
Yes, they have the
right to influence
other channels
because selling
fragrances is a part
of their primary
business.
Yes, because it creates
a positive image of
Flare . Dept. stores get
credibility because it
shows they are up to
date. They
complement each
other’s image.
Departmental stores
have the second most
overall balance of
power.
Drug Yes, they give us sales. No, they do not
possess this power.
No, they are not
experts in this arena
because fragrances
No, they don’t sell
enough fragrances
to have this power.
No, because selling
fragrances is not
their primary
business.
Yes, it creates
negative impression of
our brand because of
highly discounted
products.
Drugstores are not
powerful. This should be
taken in account to
determine launching in
this channel.
Mass Yes, because 40% people
shop for fragrances at
mass stores - they might
increase Flare’s shelf
space.
Yes, they might
reduce the shelf
space dedicated to
Flare causing sales
figures to decline.
Yes, they have a lot of
consumer data
generated on a daily
basis
Yes, they sell a lot
of brands and have
a lot of data from
their sales.
Maybe, they may
influence
drugstores where
the same products
are available for
cheaper.
Yes, it diminishes the
‘exclusivity’ of our
product., but it
increases the image of
the channel.
Mass market is the most
powerful channel,
mostly because of the
high number of sales &
the amount of data they
have.
Online Yes, mainly by spreading
awareness.
Yes, can generate
negative reviews
and publicity.
No, selling products
online is a relatively
new concept..
No, because online
is the last place
where people buy
perfumes.
No, this channel is
not strong enough
to have this power.
No, they do not have
any referent power.
Online is the most
powerless channel.
7
Channel Strategy I
Channels
Power
9. Does it fit with our
brand?
How well can we do in the
channel?
Will the channel agree to
our decision?
How will other channels react? Summary
Departmental Yes, makes our brand
look classy and
credible.
Very well, because 50%
women prefer to shop for
fragrances here. Also, beauty
consultants can market our
products and help to
increase sales.
Yes, increased presence
chances of increased
sales increased profits
for channels. Also, it will
show that they are up to
date with new products.
Positively, because dep. stores
are customer’s first point of
awareness as mid-tier fragrances
often originate there, which
might increase sales at other
channels when they come across
it.
We should work on increasing
our presence in departmental
stores because they have the
power, makes mass (the channel
which accounts for the most
sales) happy and complements
our brand image.
Drug No, it lowers the
perception of the
brand because of
discounted pricing.
Below average, only 20% of
women buy fragrances from
drug stores. Also, they offer
heavy discounts on such
products.
No, because they want
to be associated with
brands like Loveliest or
with any new products
that they come up with.
Negatively, Departmental would
not like Flare growing in a new
channel or supporting a channel
that hurts their business.
We should decrease our
presence in drug stores because
of negative association and the
risk of lowering our brand
perception.
Mass No, it diminishes the
exclusivity of the
brand.
Very Well, 40% women
prefer to shop for fragrances
in mass stores.
Yes, because it wants to
maintain its relationship
with Flare.
Positively, because it increases
the credibility of mass stores and
creates a positive association.
Mass should maintain mass as a
channel because it accounts for
the maximum number of sales
and generates high awareness.
Online No, the products sold
online are not
trustworthy and might
hamper our brand.
Not Well, not many people
shop for fragrances online.
Yes, because they won’t
face any losses
whatsoever.
Neutral, this channel does not
impact sales in other channels.
We should remove this channel
altogether because it is not
doing anything that we can
benefit from.
8
Our channel strategy should focus on growing presence in departmental stores, maintaining mass channels, reducing presence in drug stores and eliminating
online because it fits our brand best and appeals to our target audience.
Channel Strategy II
Channels
Criteria
10. Core Competencies Is it valuable? Is it rare? Is it hard to imitate?
Is the firm organized
around it? What is the result?
Brand Equity
Yes, it takes a very long
time & efforts to create
such a strong feeling for
a brand. It also works to
our advantage when it
comes to launching a
new product.
Yes, despite of the tough
economic crisis Loveliest
sales grew.
Yes, it will require a lot of
marketing efforts and
financial resources to
imitate and build something
like this.
Yes, they always use
Loveliest as the master
brand.
Competitive
Advantage
Strong Distribution
Channels
Yes, it helps us to
establish our presence
in multiple channels,
increasing awareness
and sales.
Yes, it is difficult to build a
sustainable distribution
channels whilst
maintaining good
relations with the
distributors.
Yes, experience and time is
required to imitate this.
Yes, a strong distribution
channel is required for
companies to maintain their
inventory and to run a
multi-channel strategy.
Competitive
Advantage
Marketing Expertise
Yes, because the sales of
perfumes are purchased
on marketing.
Yes, had everyone been
an expert, Loveliest would
not be so well known and
preferred by customers.
No, it can be imitated by
any brand because they can
outsource marketing to an
agency. It also depends on
the financial resources they
have.
Yes, consumers buy
perfumes based on how it is
marketed. Flare has
managed to create such a
strong brand because of
their marketing expertise.
Competitive Parity
9
VRIO Analysis
Appendix 1
