Saturday, July 20, 2019

Testing -- forgotten or never known?

    My marketing mentors knew well the importance of testing but I suspect that you may be less acquainted with that art. There are times, such as when an individual or small company wants to launch a new perfume, that testing is hardly considered. Why?

    A major problem for testing is that you need a product to test with. Say you are planning to produce 50,000 bottles of a new fragrance. Can you, for a test, produce just 500 bottles? Will your vendors appreciate what you are doing and let you purchase just 500 bottles, 500 pumps, 500 boxes ... and just enough of the custom fragrance they have made for you to fill 500 bottles? Good luck with it! Here's a solution I once used.

    My company had what some thought might be an opportunity to sell a fragrance profitably. We had never sold a fragrance. The question was not the scent itself as we sold by mail and the buyers would have no opportunity to sample the scent. The question was, would our customers, the ones receiving our catalog regularly, have enough interest in a fragrance to make a fragrance offering profitable.

    A great many businesses are in this same situation. Their customers might go for a house-branded fragrance but developing one can seem like a very large financial risk.

    For us, to answer this question we purchased a few dozen bottles of a fragrance being sold by a competitor -- and advertised it in our catalog. The produce was a modest success.

    Here's where numbers come in. We projected what it would cost to make our own fragrance and how much money we could save on the cost per bottle by producing the fragrance ourselves. As it turned out, when we took charge and produced a fragrance ourselves, our cost per bottle was just 20 percent of what we had paid for the dummy fragrance. With the help of some inspired promotion, our new fragrance proved remarkably profitable.

Scent vs. market receptivity

    The test described above was for marketing receptivity. Would people in a particular market buy a fragrance from the marketer if it was presented to them "in their own language," so to speak. This  is really the first and most important test a fragrance entrepreneur needs to make. Your fragrance can be positively the best but if you market it to a universe of non-responders to your perfume, you'll get crushed.

    In my thinking, the most important question is not "will they like my perfume?" but rather "will they buy a perfume from me, the marketer?" Happily, while testing the appeal of various scents is a difficult undertaking for a small company, testing the potential receptivity of a particular market is considerably easier. Why Because you don't need the final product -- the real product -- to make a test. You simply need a product. This was my thinking when, in 2011, I wrote a little book called "How to make your first perfume for under $500". The book is now a free download from my website.

    The book guides you through the process of producing a small amount of your own fragrance but a large enough amount to allow you to test for the receptivity of your target market for a fragrance.

    With this test amount of a fragrance -- not necessarily the scent you hope to sell if your test goes well -- you can even establish a trademark. Once the fragrance is "out there" the name, if not in use by another, is yours -- and the trademark refers neither to the scent inside nor the bottle and packaging. If your test is a success you can upgrade to a more desirable fragrance and create nicer packaging while using same name -- the name that is now a protected trademark.

    This kind of test might not be your cup of tea but be aware that testing, to make sure that you have a receptive market, is important. It can save you many thousands of dollars that might be lost or, on the bright side, show you that putting your money into a perfume for this market will be a smart, profitable move.

    That free book download page is here.

Tuesday, June 18, 2019

Who will create the perfume you want to sell?

    Not everyone wants to sell perfume but I'm going to assume that you do. So I'm asking the question, "who will create the perfume you want to sell?" Once you've answered this question you can get started developing your perfume sales business.

    There are not a lot of options for creating your perfume. If you are confident and have some money and have a sense for what you want but know that you don't have the skill to create the fragrance you can hire someone to do it for you. The test here will be finding someone who can understand what you want scent-wise and who has the skill to give it to you. I wrote about this in Creating Your Own Perfume With A 1700 Percent Markup!

    If you don't have so much money and are willing to get your hands into it, you have two options. If you are not inclined to develop your own fragrance oil you can purchase an off-the-shelf oil from one of many sources and then build and bottle your fragrance with that. This is exactly what I went through for my first fragrance as detailed in Creating Your Own Perfume With A 1700 Percent Markup! and the venture was quite profitable.

    The final option, which is currently of greatest interest to me, is to develop your own scent -- produce it, bottle it, and sell it yourself. Clearly this isn't a path for everyone because it requires the ability to create a scent with sales potential and then go through the production and bottling steps as described in Creating your own perfume from dropper bottles: Methods, mechanics, and mathematics. This is a risky path and the possibility of failure is high but this is also where you can achieve the greatest sense of satisfaction when a fragrance you have invented -- from scratch -- wins praise and dollars from others. If this path appeals to you but you are absolutely clueless in perfumery, a good starting point is the PerfumersWorld Foundation Course which provides both technical knowledge and materials to work with. My own latest fragrance was developed using nothing more than five out of the twenty six aroma materials that come with the course. Then, if you take this path to pick up some skill, you can return to  Creating Your Own Perfume With A 1700 Percent Markup! and  Creating your own perfume from dropper bottles: Methods, mechanics, and mathematics for production assistance.

    The issue of "who will create the perfume you want to sell" is the one that must be resolved if you want to be in the business of selling perfume.

Friday, February 8, 2019

Need help from an investor to launch your perfume?

Here's how to manage the money men!
     Look at this situation. You have a well developed concept for a perfume, the scent, the packaging, and the market. You've researched it. You've put hours into the planning. Everything is ready to go -- but you don't have money. It's the typical starting point for many successful promotions.

    Because you have all the details worked out (all except for the money!) you think if you could just find a few people with money, the perfume could be produced and marketed and everyone would make money. Sometimes it does happen like this, on nothing more than a handshake.

    But not always. Issues arise. Who controls the accounting? How are the books kept? Who selects the vendors? Is anyone getting kickbacks for placing orders? Are legitimate profits being sucked out of the business by tricky invoices? Do you have the right and the power to see how your money men are managing the financial side of YOUR business? [I could go on and on about this -- through experience!]

    The sad result that (really!) can happen is that your perfume sells well but, due to some major ignorance on your part, in the end you are left bitter, broke, and sorry you ever got involved with these people. It doesn't have to be this way.

    Over the last week I've been giving these possibilities quite a bit of thought. My "entry point" for this meditation was a new look at a celebrity licensing contract I've been offering for sale for a number of years. My ad never attracted many buyers and I thought a little editing might spark up demand. The big question was, "who cares about what's in a celebrity licensing contract?" I doubt if I'll ever meet a celebrity much less work with one. If I don't expect to work with a celebrity, why should I think you might?

    Then it struck me. Remove the celebrity (referred to as "OWNER" in the contract as the celebrity "owns" the rights being licensed) and remove the marketer (referred to as "LICENSEE" in the contract) and the entire contract can be seen as a negotiated arrangement between a creator (like yourself!) and a marketer (like your potential investors!). Or, to spin it the opposite way, as you, the marketer, and your investors "the creators" (they create the possibility that your project will fly.)

    Now this contract becomes exciting! It's a battle of wits, each side trying to protect their interests while extracting as much as they can from the other side. If you bring investors into your project your negotiations with them will be similar. Consider just these few issues --

    - Who will have the final say over development of the fragrance, its production and packaging? You or the investors? (Get it in writing!)

    - Who will have the final say over advertising and marketing decisions? You or the investors? (Get it in writing!)

    - Who will select the vendors to be used? You or the investors? (Get it in writing!)

    - Who will keep the books and will you and YOUR accountant have full access to them? (Get it in writing!)

    - Who will own the trademark (the name of your perfume) after the promotion has run its course? (Get it in writing!)

    - Who will be responsible for any taxes owed? Any customer service problems? Any queries from government regulators? (Get it in writing!)

    - Will the venture purchase product liability insurance? Will it protect you? (Get it in writing!)

    The list goes on -- for 42 pages.

    In fact, this celebrity licensing contract is really about covering all that must be done right and all that could go wrong in a marketing venture between two parties operating at arms length. If you bring investors into your project be careful not to assume "we're all in it together."

    I know when you are starting out, getting attention from someone with money can be awe inspiring. It's easy not to want to rock the boat and just allow yourself to be led. But this celebrity marketing contract gives you a huge bank of knowledge you can use to guide your investors and protect your own interests! This is what got me excited when I re-read the contract. The celebrity's fame was forgotten.

    Hope I haven't said too much. I could go on and on on this topic.

    Thanks for reading another of my messages!

    -- Phil


Friday, January 25, 2019

"What will it cost me to produce my own perfume?"

"What will it cost me?" It's usually the first question on people's minds when they think of creating their own perfume and the question is important. But the really most important question that must be asked is "How much can you make with it?" If the potential for great profit is there, the real question is "How much can I spend per bottle to make the profit I envision?" Now the discussion begins to get realistic. If the potential is there, the question becomes, "Where can I find the money?" You might not have to look very far.

    Before having the success with perfume I've documented in Creating Your Own Perfume With A 1700 Percent Markup! I had two other encounters with perfume, one of which I would just as soon forget. The other, until recently, was almost forgotten.

    In the almost forgotten episode I was a new, inexperienced employee in a company that was making money selling perfume among the many other product of various natures they were marketing. The owners were promoters. Perfume was just another promotion. They made their money with perfume and then went on to something else -- towels, jewelry, electronics -- then sold the company and briefly retired.

    My next encounter with perfume was something of an embarrassment. I was riding high on a string of successes with other products and someone suggested we do a perfume. "Okay," I said, "Put it together and let's see what happens." They put it together and I butchered the advertising -- horribly. I don't recall what we spent to produce the perfume but it was far less that then $15,000 I flushed down the toilet on advertising media and production -- without producing a single order. Why? Because I was arrogant, I thought I could walk on water but the truth was I didn't have a clue about perfume, the market, or the media. I thought it could all be just one big (expensive) ad. I thought it would be easy. A lesson was learned.

    But then, perfume again and this time success. For this adventure, documented in Creating Your Own Perfume With A 1700 Percent Markup!, our budget for the production of 1,000 bottles of a men's fragrance was $2,000. Our cost per bottle came in at under $1.50. We advertised the fragrance at $26.95 and sold out out entire production. Advertising expense was minimal as it only involved producing a page for our own catalog.

    If you asked me what it would cost you to produce a perfume today my answer would be "Anything from a thousand dollars or so up to ... the sky's the limit." But the real issue is your market. How much are you going to sell? If you can sell a lot you can spend a lot; if your market is small, to be profitable your perfume has to be produced on a budget that can make it profitable in that market.

    So here's my advice. If you want to be involved in perfume, study how it is made, what goes into. Then study your potential markets. Can you spot a marketing opportunity, and do you have a marketing strategy that will work with that market.

    Get your ideas together. Estimate how much perfume you will need to serve that market profitably. Then start to calculate how much you can spend per bottle to address that market profitably.

    Now the real fun. Developing a product -- your perfume -- that can be produced at an acceptable cost. The hard work, the planning, can be done without spending a penny. But it will involve some serious thought.

Wednesday, December 19, 2018

Matching your project size to your market size

    You don't have to sell a lot of a perfume to make money. You don't have to sell a lot of a perfume to develop a profitable business, one that in time might feed your family. What you do have to do it to sell your perfume profitably. This means matching the money you spend for development and marketing to the size of your market and the potential sales you can reasonably expect.

    This article was inspired in part by a book I just finished by Seymour Stein, founder of the Sire record label which was acquired by Warner but kept alive for many years with Stein at its head. The "Sire" lesson was that you could make good money signing artists that would never be superstars. How? By judging the artist's potential popularity and then investing just enough in that artist to let them fulfill their potential within their niche. Yes, Stein signed Madonna, the Ramones, K.D. Lang, and the Talking Heads. But he also made money on Echo and the Bunnymen, Flamin' Groovies, Killing Floor, the Climax Blues Band, and many, many (obscure) others. 

    So how does this relate to perfume? Your perfume? The lesson is simply that, as a marketer of perfume, everything depends on your ability to spot viable markets -- audiences -- for your perfume, judge with reasonable accuracy how much perfume you will be able to sell to each of these markets, and then produce just the amount of perfume each market is likely to require.

    It's not uncommon for someone who is new at perfume, even someone with a marketing background who should know better, to feel that if they are going to launch a perfume they must produce a certain minimum number of bottles because "that" quantity makes "economic sense," that is, "that" quantity produces a low cost per bottle and thus, runs the wisdom, you are buying cheap so you can make a greater profit on every bottle sold. Production is guided by cost, not market size.

    What is overlooked is the production cost of bottles that go unsold. How many would-be perfume entrepreneurs have produced 10,000 bottles of a new fragrance and then found buyers for less than 2,000? Each bottle you pay to produce but fail to sell reduces your profit by the cost of that unsold bottle. (Here's a link to the math of an example.)

    The real disasters come when lots of bottles go unsold. The best profits come when few or none of the bottles you produced go unsold.

    What makes this "matching the market" strategy work for the long run is your very necessary unending search (and perhaps seat of the pants analysis) for markets. This is what marketers do. They find and exploit markets. If you seriously want to develop a business selling perfume rather than just having a colorful and expensive frolic, forget about moon shots. Go for a steady drumbeat of undramatic but profitable promotions.

Tuesday, December 4, 2018

Here's One Way To Sell Perfume ... marketing strategies aren't always nice

    We put perfume in the "health and beauty" category, products that make you feel nice, look nice, and smell nice. But, like all other products in this category, perfume has be be sold. You can't be in the perfume business unless you can sell your perfume. If you want to develop a profitable perfume -- or any other -- business it helps to be aware of marketing strategies that have been used successfully by others, even ones a little rough around the edges.
    1975 gave birth to the "Perfect Pretenders" promotion. The company, Perfect Pretenders, Inc., was an offshoot of Canyon House, a long forgotten mail order company that, in its origins, was largely focused on the teen and pre-teen market, advertising products from its "Super Values" catalog in magazines such as Teen, Tiger Beat, Grit, and Boy's Life. The promotional emphasis was on groupings of products that seemed to offer a lot for a little -- "6 iron-on patches," "100 stick-on decals" -- always for $1.00 plus $0.35 postage and handling and a limit of two per person as larger orders could have invited refund requests. These and other products that Canyon House developed could be packed into inexpensive envelopes and mailed at bulk rate for pennies per order. The Perfect Pretender fragrances were born out of this "$1.00 plus $0.35 for shipping and handling" milieu.

    The thinking must have been simple. Young girls love fashion items, especially when they can be purchased for just one dollar. And certainly young girls must love perfume, especially when it can be purchased for just one dollar. The challenge was to develop a perfume product that could be sold profitably for $1.00 plus $0.35 for postage and handling and shipped in a cheap envelope in the same way as other Canyon House products were being shipped. The Perfect Pretenders filled the bill.

    What were these fragrances? Advertising left this largely to the buyer's imagination but to help the buyer's imagining the advertising showed ten full size bottles of famous fragrances and specified what each of these might cost per ounce -- Arpege at (approximately) $40 per ounce, Chanel No. 5 at (approximately) $40 per ounce, Joy at (approximately) $100 per ounce -- and so on. You can see one of their ads here.

    The Perfect Pretenders were ten glass "nips" packaged in a snap-top plastic box. To use them the consumer broke off both tips of the glass vial. The vials were color coded and a package insert identified which famous fragrances each was said to imitate. Each nip held approximately one drop of fragrance. You can see them here.

    The promotion for the Perfect Pretenders perfume nips was successful. Very successful and it provided a breakout for Canyon House and it's owners. While sales of "Super Values" catalog items had been respectable, available teen media had limited circulation. Sales of the Perfect Pretenders were dramatic, so much so that ads could be run profitably in general media including both full color pages in monthly magazines and large black & white ads in daily newspapers. Lots of perfume was sold, or rather lots of "nips."

    Like so many other over the edge mail order promotions of it's era, the Perfect Pretenders drew heat. Legal issues were addressed, marketing was halted, and the corporate registration for Perfect Pretenders, Inc. was forfeited. Little remains of the promotion but an occasional Perfect Pretenders collection found on EBay and offered for many times the original price.
    The concept was strong; the pitch was simple: get a large value for very little money. But the advertising crossed the line and ultimately killed the promotion. Could it have been "cleaned up"? Certainly. But then would it have been as successful? Not likely. But if your aim was to found a lasting perfume business, this concept could get you started ... if you could develop a very low cost product, sell it at a very low price, and deliver a package so nice that it left buyers wanting more. (Not easy to do!)

    Followup: The Perfect Pretenders disappeared and Canyon House was acquired by a publicly traded company.

Wednesday, November 14, 2018

Perfume is calling out for YOU. Find your natural place in this business.

    November 14, 2018 -- I've been distracted for the last two months preparing books for publication on Amazon, books that I formerly offered as pdf downloads from my website. In an effort to keep the file size manageable, I never bothered to prepare fancy cover art (perhaps a mistake?) but now, for Creating Your Own Perfume With A 1700 Percent Markup!, I was faced with the proposition, "what should the cover be?"

    At Amazon, just as in retail stores, presentation is all important and I'm not a brilliant graphic designer. Lack of a cover -- a requirement for Amazon -- was holding me up. Then, in a doctor's waiting room last week (eyes!), an idea came to me. It involved some photography and some Photoshop. You can see the results here.

    One thing leads to another. While fiddling with the requirements for Amazon and looking at what others have done I kept coming across books on perfume, really good books, and although even a single title can blow your budget real books give you inspiration, marketing insights, and greater knowledge of the perfume business. Today I want to focus on one book in particular, Jean-Claude Ellena's Perfume: The Alchemy of Scent.

    Were it not for Chandler Burr's fascinating article and book on Ellena's creation of Un Jardin sur le Nil ("Garden on the Nile") for Hermes, I might never have found a particular interest in Ellena. As it was, the book inspired me to purchase the perfume for my wife (brilliant as it was, it wasn't really her taste!) and learn a bit more about this French perfumer. Over the last week I have been absorbed in his book and I'd like to share a bit of it contents with you.

    This book could be a textbook, required reading for anyone aspiring to a career in perfume. But calling it a textbook makes it seem analytical and boring (although parts, to some, will be!). Two particular chapters alone are worth the very modest price of the book. Ellena writes about methods and inspiration for perfume creation ... and then shares his own unique method of creation. And he writes about marketing and the distinction between the closed world of global giants and the open world of the niche perfumers, the world where you and I can make our stand profitably.

    But the "soul" of this book is in the creation of perfume with soul! -- "distinctiveness is more important that novelty" writes Ellena -- a real challenge for any perfume creator or entrepreneur. Ellena presses the argument that perfume is something special, that perfume is a work of art, and within the global cosmetics and fragrance business there is still excellence.

    If you are wondering where you might "fit" in the perfume business, this book can help you sort out your thoughts and give you some guidance.

    One final book note. If you have an interest in the chemistry behind perfumes, here's a professional level book that can help explain it. It's chemistry and, with a few pages of exception, a real but worthwhile slog for the non-chemist such as myself. But if you look on page 9 you'll find my name, as I was asked for a photograph to liven up the text.

-- Phil Goutell