FLARE FRAGRANCE INC.

Flare Fragrance Inc.



Flare Fragrance Inc.

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:

Expansion of current distribution into drug stores.

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.

Flare's Position in Women's Fragrance Market

Flare had a 9.5% market share in the women's fragrance market at year end 2007. The Loveliest brand has held strong for 33-years, and acted as an umbrella brand for five recently introduced brands—Awash, Summit, Essential, Swept Away, and Natural (Quelch & Donovan, 2010). The key component to any successful brand is how it distinguishes itself within the competitive landscape and connects with the consumer (Marks-McGee, 2010). This unique connection with the consumer is what fuels a brand and generates revenue, and eventually leads to market share gains.

Strengths

Flare Fragrances Company Inc. has multiple market strengths within the women's fragrance; as the No. 4 ranked player in the U.S. market (Quelch & Donovan, 2010). The strength and power of the Loveliest umbrella brand, streamlines advertising for each of the brands under the Loveliest name. The Loveliest brand is a clear example of how successful “brand extensions” can be, under a strong brand name (Kotler & Keller, 2009). Approximately, 80-90% of new products are brand line extensions, and this gives these products a much higher probability for success. Brand extension products are much more affordable to launch and can also enhance the current brand's image by improving customer loyalty and perceptions of the company's credibility . Other strengths of Flare Inc. include that they historically launch new products into the market every few years, have solid penetration in general merchandise chains and mass market retailers, and they have overall good brand and advertising awareness.

Weaknesses

One of the identified areas of weakness for the Flare is their low presence in certain channels and defined segments. Flare's distribution and sales are strongest within the mass-market channels (74% of gross sales), and sizably weaker in department stores. (Kotler & Keller, 2009) The opposing argument to the Loveliest brand power and strength is whether Flare's single brand image, in an increasingly segmented market, is limiting Flare's potential growth? Also, Flare Fragrance, in general, is spending significantly less on advertising their brands compared to its' competitors (Quelch & Donovan, 2010). Flare's overall advertising expenditure in 2007 was ...