3/21/15

Let's Cut Costs By Spending More Money!



I guess there aren't many design majors on basenotes.

I'm not going to get long-winded here, because I've already made this point a few times before, but it bears mentioning again. Why? Because apparently there's only two or three of us in the fragrance community who base our thinking about reformulations on logic, instead of knee-jerk nonsense.

The point in question is simple: perfume brands do not change perfume packaging every time they significantly reformulate a fragrance. Reformulations happen more frequently than people realize, and they're never something a company wants to advertise. Repackaging a perfume requires considerable design work, paper purchases, press trials, and money. Reformulations are often conducted to cut costs in manufacturing, adjust an older perfume to contemporary trends, or both. If you're the head of a perfume firm, you're not going to cut costs in the formula but pay an unnecessary sum to change packaging just to "signal" to buyers that you've changed the formula. To do so would make absolutely no sense at all.

Yet people on basenotes put reformulations and repackagings in the same corner. Just read this thread to see how weird their logic is. As an aside, you can also see how they pile on a guy who believes many reformulated fragrances are just as good as, if not better than their originals, with an unnecessarily offensive air typical to the forum, unfortunately. But I'm more interested in how the thread participants blindly link reformulations to repackagings. These are often the same people who consider reformulations to be results of companies "cheaping out" on formerly complex and presumably expensive perfumes (actually the perfumes are rarely expensive).

I studied graphic design, photography, and print process. I hold a degree in graphic design. Redesigning a commercial package is a big financial task. Larger brands have in-house design firms. If they don't, then they outsource the work to whichever third-world company can undercut the competition and still produce the goods. Let's say it costs twenty or thirty thousand dollars to use an in-house perfumer for reformulating a scent, a job in which he merely swaps out ingredients at one price-point for ingredients at another, and then rebalances the formula to make the change as unnoticeable as possible. If he's in-house, this is simply salary money. The result is something that will be used for two or three years, and will save the company hundreds of thousands in manufacturing costs. But like any business, the motive for change is based on the here and now, and if that change involves cheapening something, it means current overhead is noticeably hurting profits.

You want to heal profits overnight? Cheapen the formula with an in-house perfumer without robbing the scent of its essential character. Sell it at the same price as before, in the same carefully budgeted packaging as before, and guess what? You'll start to see an improvement in your profit margin. Change one thing, and other things may change for the better.

You want to defeat the purpose? Cheapen a formula and add an additional one or two hundred grand to the bill. Prepare to pay anywhere from fifteen to thirty thousand for a logo redesign (the more known the logo is, the bigger the bill to redesign it), and another ten or fifteen thousand for a box redesign. Add another sixty thousand for millions of sheets of brand new hi-gloss paper, industrial print trials (with CMYK tweaks), and final press work. Expect additional bills from whatever packaging plant you're using, if it's not yours to begin with. And if the bottle is changing, look out for anywhere from ten to twenty-five grand for whoever is inking those lines and shaping the glass. Tangentially (and unavoidably) you'll also be spending millions of dollars to announce the "new look" with print ads, internet ads, and TV spots, if your perfume is relatively popular and still in chain stores. Brut is a prime example of this. By the time you're done, you could be looking at two or three million dollars just to "signal" to buyers that you changed the formula.

Some will argue that this is chump change for larger brands. If you've ever created a business plan, you know that there's no such thing as chump change. Every dollar counts. Every dollar is accounted for. Every dollar spent is a risk. This mindset is what keeps the big boys big.

Why not just change a package when you need to change it?

When these kinds of changes are made, it's due to market test results or a change in the packaging division's management structure. New blood brings a new approach. Such expenditures are made for their own reasons, but sending not-so-subliminal warnings about changed formulas to cynical buyers isn't one of them.




2 comments:

  1. I come from a food industry marketing background, and when I was starting out as a Product Manager my old boss was always chiding me for thinking of design - or God forbid - bottle changes to our dried milk powder and fruit juices. 'Think of the tooling implications' was his constant refrain. So I did, and desisted. Meaning that I can well believe in clandestine reformulations of perfumes to save money on the QT. Think I have spotted the odd instance myself, though you can never make it stick.

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    1. The costs associated with redesigning everything are tremendous and sometimes lasting. Yet if you take the chatter seriously, you'd think it was being done to communicate to fragrance fans that formula sins were committed. Yet another example of how people's perceptions are tainted by fantasy instead of reality.

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