THE CONFERENCE PROCEEDINGS - IFEAT

Thus, if you take a woman’s magazine e.g.Vogue, Cosmopolitan or Elle magazine,you will see all the advertising that is doneon either high-end cosmetics or high-endfragrances, just imagine the destruction ofvalue should this business dwindle. Thesame thing if you watch television and youwatch a 60s commercial or a 30scommercial or a 15s commercial on ashampoo, just imagine the amount ofmoney that would disappear in the valuechain if fragrances, or what we call thisplatform technology industry, did not exist.Valuation Factors• Identify distinctive contribution of fragrances• Fragrances low proportion of total cost but highimpact on product value• In FMCG markets, fragrances key driver of repurchase• With perceived functional equivalence in manyproducts, fragrances a key point of difference• Brand image often depends on impact offragrances• Typology of benefits12Then we had to go into the valuation of the products. The chart illustrates the architecture of how wehave tried to value the global business. We looked at the different benefits of fragrances (right handcolumn), then we looked at the applications (left hand column), and then in the middle we tried to givethe value that the fragrance represents in the overall value of that category.Classification of Product ApplicationsCategory:Role of Fragrances/Typology ofBenefits“Masking Benefits” – Non BeautyApplications% of Category ValueDepending on Fragrances20%ApplicationsDishwashers, (Tablets/ powders/ liquids), Rinse AidsStain Removers (Textiles), Insecticides, Shoe Polish,Silver & other Metal Polishes, Car Polishes, OtherPolishes“Masking Benefits” – BeautyApplications30% Hair Colorants, Hair Control Products, Face Care, BodyCare Lotions, Hand Care,Sun Care, Make-up, Shaving Products, Feminine Care“Articulates the Benefit” 40%Anti-Perspirant, Shampoo, Conditioner, Toilet Soaps(liquid/bar), Oral Hygiene, Laundry Detergents,Dishwashing Liquid (Hand), Kitchen Surface Cleaner,Bath/ Shower/ Toilet Cleaner, Window Cleaner, Floorcleaner, Carpet Cleaner, Furniture Polish“Articulates the Benefit” and MeetsWider Emotional Needs60% Shower Gel, Bath Products, Deodorants & Body Sprays,Baby Care, Fabric Care ConditionersPrimary Functional or EmotionalBenefit80% Fine Fragrances, Air Fresheners, CandlesSo if you take the first category, the benefit - its a masking benefit - a masking of the mal-odour of theproduct itself, but its not a beauty application; this could go into dishwashers or stain removers,insecticides, shoe polish and so forth. Probably the perceived consumer value of the fragranceincluded in that product would only equate to 20 per cent of the product’s value. As you move downthe column, you see that the fragrance benefit increases because the category is definitely more relatedto the final appreciation of that fragrance. At the high end is the fragrance category itself, i.e. the finefragrance category. There we can say that on average, probably 80 per cent of the value of a finefragrance is linked to the olfaction perception that the consumer may have.13222