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Mismanagement Of Fragrance Brands

Fragrance sales today are not as strong and robust as they have been in prior years. Undoubtedly the recession has affected this industry as it has so many others. Perhaps, too, a greater awareness of the environment prompts some potential users to refrain from wearing fragrance, concerned that its scent might be offensive to others, thereby, also negatively impacting sales. But I believe there is another factor at play emanating from fundamental changes in the fragrance market itself: more designer fragrances (every new designer needs several in his or her portfolio), more celebrity fragrances (that is anyone whose name is in the public eye regardless of talent), the tendency for many companies to bring a fragrance to market without a well-defined identity other than the name of the designer or celebrity (which generally is not enough), and even, to be rather blunt, the mismanagement of some previously successful brands.

Mismanagement can occur when sales of an established brand begin to fall, perhaps because its target consumer base is declining (a natural cause) or it lacks sufficient or the right kind of support (a self-inflicted cause). But this can also be attributed to corporate pressures on the brand manager for continually increasing sales and profit as well as well as market pressures from the ever expanding universe of new brands that, to the brand manager, seem to have unlimited resources of advertising and promotion funds. To meet these pressures and bolster their sales line, the brand manager can embark on tried and true ways to generate sales volume.

The stable of ideas begins with a review of current excess packaging in the form of bottles, pumps, caps and cartons (because the brand for which they were purchased has not met its sales objective). Perhaps the answer is a promotional program to attract customers with some sort of giveaway (gift with purchase) or a special promotion joining two versions of the product (e.g. an eau de toilette and a bath gel-every brand needs a bath gel) at a special price. This might work at the top line in the short term (as well as get rid of excess inventory), but likely at a cost that does not send profit to the bottom line. Then again, what does one do the following year to match that inflated volume? On the other hand, what does one do with all that excess inventory?

So the brand manager looks at the brand and concludes that what's really needed is another version of that brand name. So to Designer Jones' Midnight (the original version with a deep gold fragrance color), is added Designer Jones' Daylight (the new version with a somewhat lighter scent and a pale gold color fragrance-easy enough to whip up). Problem solved and now there are two brands to support the sales objective. Next year there may even be a third. This is not to suggest that Designer Jones should not add additional fragrances to its collection. Indeed, that is a positive way to build a brand when those fragrances are well thought out with distinct positioning-but not if their raison d'??tre is the need to add fast volume.

As unhealthy a practice as this is, there is a variation that is potentially even more damaging to a brand's long term health and that is the prostitution of a successful fragrance brand's name with a second version like Kung Fu Panda 2. So let's go back to Designer Jones' Midnight brand and suppose that when it was launched it had a very distinct positioning through its name, packaging, and advertising, which made a promise to the woman who wore it and its scent delivered on that promise. It was a winner, but unlike diamonds (even White Diamonds), fragrance brands do not last forever, and over time its volume eroded. But Midnight still had a good name, so the brand manager decided to extend it with Midnight Belle (beautiful for those unaccustomed to the French language), with the same packaging, but, at best, modifying Midnight's positioning and fragrance-If it didn't, why modify or change the name?

Unlike a movie with the same name and similar characters that tells a different story in each version or a toiletry such as Vaseline, which created an entirely new line based on the integrity of its brand name but with products of similar yet different utility, a fragrance is a far more emotional purchase. You don't see ads proclaiming the value of a fragrance because it smells better or protects against mosquitos. Obviously even a toiletry can be and is sold with some romance, but beyond that it has functional utility. A successful fragrance is one for which a distinct positioning and a corresponding scent have been created all of which strike an emotional appeal to the consumer. So there is significant risk to the brand if the addition of the clarifier or flanker (Belle) ranges too far from that positioning.

These practices are employed by most fragrance brands, some with more finesse than others, but in either case it seems to be a recognition of an erosion in brand loyalty justified by the need to add increasing sales volume. Perhaps this is the wave of the past, but does it bode well for the future of the industry?