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.

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.