Gift with purchase promotions have become the lifeblood of the premium cosmetics and fragrance industry. For many companies they are the only way to attract customers to their brands rather than to their competitors’. No longer can the giveaway be considered a special event, as a walk through the perfumery department of any major store will demonstrate. On every counter, bags, china, bathrobes and watches jostle to attract the customer’s attention. In some cases they are in danger of eclipsing the fragrance brand itself.
The concept of offering a free gift for purchasing a fragrance was invented by EstÃ©e Lauder in the Fifties, when a sample of Youth Dew bath oil was given away with the fragrance. But it was not until the Eighties that this promotional tool was adopted extensively throughout the industry. Once it had gathered momentum, it became commonplace for fragrance companies to give away gifts that often exceeded the value of the brands they were promoting.
The “must have” fervour of the Eighties is not so pronounced these days. However, the number of promotions in the industry has remained high, with a greater emphasis placed on providing value-for-money.
“Gift with purchase (GWP) promotions continue to be an important element of the marketing mix in the UK,” says Rod Kelley, managing director of Prestige & Collections, one of the leading proponents of GWP promotions in the industry. “The fact that the market is more competitive today, and the retailer more demanding of sales-generating activity, has certainly heightened the overall volume and range of promotions of this type compared with the Eighties.”
Kelley highlights one of the key reasons why GWPs have become a standard part of his company’s marketing, as well as the fragrance industries. “Today the consumer is more responsive to promotional offers and less loyal to a single product. This encourages manufacturers and retailers to promote product trial through incentive offers.” Prestige & Collections’ pre-Christmas promotional strategy this year includes a weekend bag promoting Ralph Lauren’s Safari for Men and a satin dressing gown supporting Cacharel’s Anais Anais.Whether or not consumers trawl department stores for the best gift on offer is hotly contested by many of those operating in the fine fragrance markets. What is not disputed is the lack of loyalty that affects all but the best known brands. Jerry Adler, of Adler Marketing, which represents Trussardi fragrances in the UK, says: “The two things that sell a fragrance these days are whether it is new or whether it is on promotion. Many customers wait to see what is on offer and make their choice from the range of promotions across several brands.”
The industry only has itself to blame for the number of gifts now freely available, says Adler. “It is essential for the smaller brands to keep promoting because if we don’t, nothing happens.” Shafii & Schmid Enterprises, which represents Parfums Gres and Eurocosmesi in the UK, is in a similar position but realises there is no point trying to compete head-on with larger companies. Joint managing director Paola Schmid says: “The customer is constantly on the look-out for value-for-money, so even if you do not offer a fantastic bag, you can put together a GWP consisting of sample sizes of different products in the range. This also helps to get the customer back to the counter in the future, for the right reasons.”
Retailers can be equally demanding about the scale and number of promotions a company runs. It is commonplace for a fragrance brand to be supported by three or four major events each year. “Fragrance is very responsive to promotional events, so in order to maintain momentum you need to keep following up with new ideas,” says Schmid. “Not only does it keep up a repeat pattern of sales, but it helps to increase traffic flow at more difficult times of the year.”
Liberty in Regent Street, London, is celebrating the second anniversary of its perfumery department this October. It has tried more than most to rely on basic business rather than promotions. This has been possible because of the support it has given to niche brands, many of which have a limited availability elsewhere. The larger brands, such as EstÃ©e Lauder, Clinique and Clarins, do undertake promotions within Liberty but primarily as a tool to encourage consumers to buy other products in the range.
Per Neuman, managing director of the Lauder Group of Companies, is happiest when the gift offer includes a sample or collection of samples. This provides the opportunity to introduce products to new customers and show existing customers what else is available. He admits, however, that men do not respond to a collection of miniature products and that a substantial gift can help to win market share.
The latest Aramis “On the road bag” promotion, available at House of Fraser stores, seeks to do just that. “We carefully measure, with each of our retailers, the proportion of our business that is promotion-led and ensure that it does not exceed 30 per cent of the annual volume in any one store,” says Neuman.
One of Lauder’s biggest promotions is Blockbuster, a purchase-with-purchase promotion that has been running for a number of years in the run up to Christmas. Neuman says: “The Lauder Blockbuster has become a collector’s item, consisting of a wide selection of make-up in an elegant, re-usable box.” This year’s Blockbuster costs 29.50. It can be purchased with any two products from the Lauder range.
The two product qualification for a gift is not as widespread as it was when GWPs first gained popularity. Prestige & Collections was the first major company to reduce the qualification purchase to one fragrance spray. Others have followed suit. Recent examples last summer included a free satin-feel, kimono-style robe with the purchase of any Laura Biagiotti Roma or Venezia fragrance, and a free polo shirt with a 50ml Boss eau de toilette spray. Both brands are owned by Procter & Gamble and marketed under the Giorgio Beverly Hills name.
Adler is not convinced that this type of promotion delivers anything more than short-term sales. “It further encourages customers to shop around, hunting for the best possible bargain at the lowest price. It has even got to the stage where consumers are asking what promotions are on offer if they are not immediately evident.”
But bigger does not necessarily mean better. Perceived quality is more likely to attract the buying public.
“Quality is a major issue for the premium industry these days,” says Francine Last, account director at Product Plus, one of the few premium-sourcing companies with an account team working exclusively in the cosmetics and toiletries industry. “We are constantly on the look-out for new high-quality materials that reflect trends in the retail market, even if this means travelling to the Far East to find them. Companies can no longer get away with a cheap bag that looks the same as everybody else’s.”
Product Plus’ new product development service was recently formed to help its clients move away from the “me-too” premiums that are starting to dominate GWP schemes in the sector. Its new computer aided design system scans photographs of products into an Apple Mac, which can then be manipulated to show the brand logo and colours. Last claims: “It takes away the vagueness that often exists at the mock-up stage, and also sets out a tighter brief to the factory.”
Bags, robes, umbrellas and watches are still the most popular gift used in GWP promotions, making it hard to be truly innovative. “Instead, you need to look for an unusual twist, such as linking a designer fragrance name to a fashion statement. Care needs to be taken, though, if the fragrance is an extension of a designer clothing range,” says Last.
The Hugo Boss polo shirt promotion, for example, did not feature the Boss name on the shirt itself because this might have detracted from sales of the fashion label.
Yet for all this non-stop promotional activity, one company steadfastly refuses to join in. Chanel, best known for its No 5 women’s fragrance which tops the charts each Christmas, has never offered a gift with on any of its products in the UK. Chanel customers know better than to expect a freebie, proving that the premium fragrance market is not driven solely by promotions.
However, on the whole, consumers will continue to seek added value, whether in the form of a non-related gift or free samples. Adler concludes: “People are looking for added value, whatever consumer goods they are buying. The stark reality is that the recent economic cycle has engendered this type of purchasing behaviour which we all now have to face.”