Celebrity names are no substitute for brands

BriefLetter - Issue 02/2006

Forever and ever have celebrities of both genders, primarily from cultural communities, sports, in their second profession, as designers of fashion and other durable and consumer goods been trying to market their names. Short-range they have even been rather successful, at least partially. However, this has died down lately. One reason for this might be that the interest of the industry in celebrity partners has decreased. For sure is that the consumer feels that the performance rendered by celebrities is too weak to justify the extra price for ‘their’ products. A well-known name by itself is no longer sufficient in winning over customers. At best, they might be impressed. However, being impressed alone is not enough to win over customers and convince them.

Celebrity names are not brands and no matter how interesting the stories that are draped around their names are. They are in general not impressive enough to shape supportive elements for a brand. Even testimonials, where celebrities advertise and endorse certain products are met with reserve by customers. It is well-known that companies reward celebrities generously or as the ‘man on the street’ would put it, they ‘buy’ them for lots of money.

Celebrities create publicity. This is true, but one has to consider that publicity cannot be equated with turnover. To put it differently, there are cases where the celebrity convinces the consumer with dedication and performance that at the end of the day there is going to be a higher turnover, but only at the end of the day and not long-term.

Why, I was asked recently, is the perfume industry is launching into marketing celebrity names for new fragrances , if there isn’t more to it than meets the eye?

The perfume industry is going through a phase of radical change. Perfume, or to put it more precisely, Eau de Toilette, is developing from a Luxury product for the satisfaction of wants to a product of daily use. Fragrances are nowadays in the bathroom next to tooth-paste. The development of perfume from want to need is changing the readiness of the consumer to expend. Resulting in changed pricing policies, changed margins and corresponding budgets. It is tough to make brand policy in such a situation. Only a few top products with corresponding brands can hold their position in the Luxury segment of the market.

Fragrances are short-lived. Similar to fashion are they seasonal products for one or two summers or winters, for a spring or fall. Classic marketing processes cannot be implemented for such short-dated projects; neither time-wise nor financially. The prevalent assumption that the perfume industry is making lots of easy money does no longer apply. The development and packaging costs, promotional monies the big retail chains demand and the splitting of the offer into hundreds of names and brands through the fashion industry causing decreasing individual sales volume. Margins and profits melt like ice in the sunshine.

A further problem of the perfume branch is the process of concentration on the side of the industry. The perfume industry used to be in the hands of medium sized enterprises. They catered to a national market, at best some international markets. Globalization and the future markets of Asia (Asia has recently discovered perfume) have prompted the detergent and personal hygiene industry to enter the perfume market and to snap up whatever was for sale. And now they have to make sure that aside from covering all other problems the market brings that the money spent on these acquisitions flows back into the company registers.

The consequence of all this for the perfume industry: Generate mass sales volume quickly without lots of investments into the market and best possible protection of the classic business with big brands in the Luxury segment. The solution: Use celebrity names as product promoter during their heyday; one or maybe two seasons, one name after the other. That in the end this is turning into a sales promotion instead of a business with brands, is not really of interest. And it is also not going to be the end. It is only going to be the end of one stage. Then, however, the detergent and personal hygiene industry is going to separate itself from the perfume business and herald a new era with new businesses. And then, and this I am convinced of, the classic brands will come into operation once again. And the celebrities are going to break new ground with their names. There is evidence that this is already happening today.

The situation on the perfume market should be seen as the exception that proves the rule: Celebrity names are no substitute for brands

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