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Friday, 22 July 2016

Fragrance marketing budget goes to waste as consumers look to more exclusive brands

Much of the USD 800 mn spent on marketing fragrances every year is going to waste, says a new study from consultancy A.T. Kearney, according to Bloomberg. The reason? Largely a “one-size-fits-all”, non-personalised approach to marketing, with most shoppers purchasing the exact same scent over and over again. "They need to think about where the waste can be reduced," Nemanja Babic, a co-author of the report released on Wednesday. "Because at some point, it’s just not sustainable. It’ll just erode margins further." Shoppers largely ignore in-house advertising, TV spots aren’t even a blip on the radar (accounting for only 6% of purchases), in-store sampling is a waste of money and spritzers (may God smite them) are probably the most hated tactic, with customers looking for a more “individualized, guided way to purchase what is a very personal item.”

Enter niche perfumes, which are produced with better ingredients, in limited quantities and at much higher price points. The industry represents a USD 4 bn market in the US alone, according to data from NPD Group and the reason you haven’t heard about them much is because they largely do not advertise. Brand like Roja, Creed, and Nasomatto rely largely on word of mouth as customers follow perfume developers who break off from more mainstream brands, according to Reuters. Teresa Fisher, Senior Account Manager for UK Beauty at NPD Group, says niche fragrances are what’s currently the driver behind market growth. “In 2015, Niche fragrances represented 4 per cent of total Fragrance value sales, but contributed to 69 per cent of the growth,” she says, according to The Independent. “They have been continuously showing strong performance in the past few years: only last year, they added 28 per cent to previous year’s value sales.”

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