flare fragrances presentation final
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Britt Miller
Rebecca Orsher
Allie Steinle
12/07/2010
Flare Fragrances Company, Inc.
Executive Summary
Flare Fragrances
• Flare Fragrances has experienced declining sales growth
• CEO set goal to increase incremental revenue by at least $7.5M and reverse declining sales trend
• Conducted two SWOT analyses to determine best strategy
– Emphasize Natural and increase drugstore presence
• Developed advertising budget and implementation plan
Agenda
Flare Fragrances
• SWOT – Savvy launch
• SWOT – Natural emphasis and drugstore expansion
• Financials – advertising budget and pro forma income statement
• Implementation
• Conclusion
SWOT Analysis: Savvy Internal factors
Flare Fragrances
Strengths • Name • Favorable sales projections
Weaknesses
• Unknown brand name • Cannibalization of current sales • For-go investment in current, established brands • Higher price
Opportunities • Reach a new customer segment: 18 – 24 year old females • Arlmont study predicts prestige image fragrances will be best
performers • Innovation and originality • Build relationships with department store channel
Threats • Dulcet brand to be launched at same time • High competition in market • Difficult economic conditions – consumers trade down • Declining sales in high-end department stores • New fragrance may migrate to mass market quickly • Competitors outspending Flare in advertising
SWOT Analysis: Savvy External factors
Flare Fragrances
Strengths • Already have a drugstore sales team
• Strong brand image and well-known products in “prestige” market
• Loveliest is one of best-selling women’s fragrances in mass market
Weaknesses • Without Savvy launch, Natural will be the only product for younger
market
• Drugstore sales team performance is uneven
SWOT Analysis: Natural/Drugstore Internal factors
Flare Fragrances
Opportunities • Expand into retail areas in which Flare products are not currently sold
• Sales of prestige brands expected to grow in mass markets
• Increase advertising for current brands
• Increase scented product availability outside of gift sets
Threats • Two years since last product launch
• Drugstore chains only want to sell highest turnover items
• Drugstore sales could damage relationships with other channels and may harm brand image
SWOT Analysis: Natural/Drugstore External factors
Flare Fragrances
Pursue Natural/Drugstore Strategy
• Increase support of Natural to continue sales growth
• Strengthen presence in drugstore channel • Take advantage of growing trend in mass market
• Focus on existing brands – increase advertising • Special emphasis on Natural and sponsorship events as well as
sales materials for drugstore expansion
Conclusion of SWOT Analyses Natural/Drugstore
Flare Fragrances
Objectives: • Grow revenues by at least $7.5M in 2009 and reverse declining sales
trend
• We believe we can achieve 5% sales growth in 2009 and 7.5% in 2010
• Increase support for Natural
• Increase presence in drugstores
Tasks: • Increase advertising budget for all lines and communications
• Special emphasis on Natural and sponsorship events as well as sales materials
Budget: Objective-and-Task Method Natural/Drugstore
Flare Fragrances
Financial Analysis: Advertising Budget Natural/Drugstore
Flare Fragrances
2008 Budget 2009 Budget 2010 Budget
Media, Advertising, & Promos
Loveliest $16,770,443 $18,782,896 $20,285,528
Awash $169,827 $190,206 $205,423
Summit $2,717,236 $3,043,304 $3,286,769
Essential $1,443,532 $1,616,756 $1,746,096
Swept Away $509,482 $570,620 $616,269
Natural $2,755,447 $3,306,536 $3,571,059
Subtotal $24,365,967 $27,510,319 $29,711,144
Co-op Advertising $7,926,688 $8,877,891 $9,588,122
Sponsorships $2,233,229 $2,679,875 $2,894,265
P.O.S. Samples $6,457,682 $7,232,604 $7,811,212
Sales Sheets/Flyers $878,856 $1,054,627 $1,138,997
Gift/Purchase Promos $297,198 $332,862 $359,491
Public Relations $297,198 $332,862 $359,491
Subtotal $18,090,851 $20,510,720 $22,151,578
Total Communications $42,456,818 $48,021,039 $51,862,722
As % of Sales 19.20% 20.68% 20.78%
Total Sales $221,129,257 $232,185,720 $249,599,649
Financial Analysis: Income Statement Natural/Drugstore
Flare Fragrances
2008 2009 2010
Gross Sales $221,129,257 $232,185,720 $249,599,649
COGS $122,660,399 $128,793,419 $138,452,925
Contribution Margin $98,468,858 $103,392,301 $111,146,724
Mftg Overhead $5,019,634 $5,270,616 $5,665,912
Real Estate, Taxes, Ins,
Util, & Dep $4,334,133 $4,550,840 $4,892,153
Adv & Promo $42,456,817 $48,021,039 $51,862,722
Field Sales Force $16,142,436 $16,949,558 $18,220,774
G&A $15,390,596 $16,160,126 $17,372,136
Net Pretax Operating
Income $15,125,241 $12,440,123 $13,133,027
• Natural has been on the market for two years
– Under Loveliest umbrella; promotes “green” lifestyle
• Natural’s current performance in Drugstore channel: 0.5% of all perfume sold
• Tough economic climate driving customers to more affordable retail outlets
• Flare has great opportunity to leverage the Drugstore channel – Further develop Drugstore channel company reps’ skills in
negotiating product placement and store relationships
Implementation Current Market Standing
Flare Fragrances
• Capture new consumers at a young age – U.S. Market: 75% of teen girls, 74% of adult
women use fragrance products.
• Taking sales from competitor’s brands in the $30-$45 range
• Has not actively pursued the Drugstore channel in the past – Drugstore chains evolving, offering high-end
beauty features
Implementation Drugstore Channel Benefits
Flare Fragrances
• Coordinate with chain Drugstores to be prominently featured with their more ‘upscale’ beauty offerings; physical stores and online
– Attract younger customers
– Affordable offerings
• Prominent display cases
• Holiday promotions entailing gift baskets of Natural fragrance, soap, body mist
• Gift with Purchase promotions
Implementation Growth in the Drugstore Channel
Flare Fragrances
Drugstore channel Online sales and Promotion
Flare Fragrances
• Spark Drugstore’s interest with co-op advertising program
– Contribute percentage to store ads that feature Natural
• Partner with an eco/green-charity in weeks bordering Earth Day
– Percentage of sales go to eco charity
• Sponsor green fashion events and eco/green conventions
Implementation Strategies to invigorate sales
Flare Fragrances
• Recommendations:
– Increase marketing support of Natural along with other products
– Further penetrate drugstore channel
• Projections:
– 5% increase in top line sales for 2009 ($11M incremental revenue)
Conclusions
Flare Fragrances
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