New Study Finds Prestige Fragrance Marketing Investments Have Questionable ROI

CHICAGO, July 20, 2016 /PRNewswire/ -- A new report by A.T. Kearney, "Dollars and Scents: Winning in Fragrances," found that in 2015, there were more than 100 new fragrance launches and brand extensions, backed by significant media and promotions; however, there has been little change among the top fragrance brands. Four out of the top five women's fragrances in 2015 held the same spot as in 2010. Fragrance brands and retailers make significant marketing investments, but much of this spending is wasted. This report provides recommendations on how fragrance marketers can deliver a more targeted marketing approach that is more efficient and delivers results.

In a survey of prestige fragrance sector shoppers, the study found that one-third of fragrance purchasers are loyal to an existing brand—34 percent of in-store shoppers say their last purchase was to replenish their favorite fragrance. The survey also found that another one-third of survey respondents also purchase fragrances on an impulse or as a gift, suggesting that there are opportunities to influence consumers' decisions at the point of sale. When asked what motivated their latest in-store purchase, 21 percent of shoppers point to a product trial, either in the form of in-store testing and sampling or a magazine insert.

Hana Ben-Shabat, A.T. Kearney partner and co-author of the report, stated, "Fragrance manufacturers are stuck in an expensive marketing cycle that rarely turns brands into new best sellers. There are opportunities for marketers to optimize these investments by better understanding what resonates with shoppers."

Despite the large share of the fragrance marketing budget spent on point-of-sale materials, training and staffing of retail sales specialists, and sampling, the survey found that fragrance shoppers find more value in promotions, discounts, gifts with purchase, and customer service provided by beauty advisors. The latter play an important role as every sixth respondent points to a sales associate when asked why they switched to another fragrance product or make an incremental purchase.

With regard to marketing programs, fragrance shoppers are most heavily influenced by promotions and discounts. In response to the question, "To what degree did in-store factors influence your purchase decision?," promotion and discount received the highest score for "Influenced me strongly" at 32 percent, followed by service (25 percent), free gifts (20 percent), samples in-store (22 percent), spritzers (12 percent), and POP ads or materials (12 percent).

The study found that a significant portion of point-of-purchase (POP) advertising is wasted. As many as two-thirds of shoppers do not notice in-store advertising or are not influenced by it—some even consider it unpleasant. POP materials contribute to in-store marketing clutter and either become irrelevant to shoppers or annoy them.

Samples represent the most alarming waste, considering the effort and cost of producing them and of hiring, training, and managing retail sales specialists. Less than one in two samples (45 percent) given out in stores leads to a purchase. A one-size-fits-all approach to sampling, with "spritzers" offering a sample to every customer who passes by, is a drain on marketing resources and return on investment.

Finally, the survey found that an online shopper is less likely to stray from an intended purchase, compared to an in-store shopper. In fact, 64 percent of online shoppers say they typically buy products they are familiar with. Online fragrance shoppers are motivated by promotional offers (29 percent), a previous trial (20 percent), and a desired product being out of stock in stores (20 percent). Fragrance marketers need to reinvent the online experience for these shoppers as they are motivated by expanded product assortments, competitive prices, and free shipping.

Nemanja Babic, A.T. Kearney principal and co-author of the report, stated, "Today's consumers still want the luxury and social desirability that prestige perfumes represent, but they also want value and convenience. By understanding and meeting the needs of both in-store and online customers, fragrance marketers will reach consumer segments more economically and effectively."

For a copy of the report, please go to www.atkearney.com/consumer-products-retail/dollars-and-scents-winning-in-fragrances

About the Study
This A.T. Kearney study on prestige fragrances is based on an online survey of 844 shoppers 18 years of age and older—72 percent women and 28 percent men. Respondents talked about what draws them to perfume counters, what keeps them buying fragrances, and how they feel about buying fragrances online. The report identifies steps that perfume brands and retailers can take to enhance the consumer experience while maximizing their return on marketing investment.

About A.T. Kearney
A.T. Kearney is a leading global management consulting firm with offices in more than 40 countries. Since 1926, we have been trusted advisors to the world's foremost organizations. A.T. Kearney is a partner-owned firm, committed to helping clients achieve immediate impact and growing advantage on their most mission-critical issues. For more information, visit www.atkearney.com.

Contact: Jim Brown
A.T. Kearney
312-223-6220
[email protected]

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SOURCE A.T. Kearney

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