Advertising Age: Why has Coty decided to make a big play in prestige?
Mr. Scannavini: In the last few years there has been an acceleration of our investment and presence there because of the growing potential to become a top player worldwide. In the last four years, our sales have multiplied by four in prestige, going from $450 million to $1.6 billion through a combination of the organic development of our own portfolio and the acquisition [of Unilever fragrances.]
AA: Much of your success has come from the development of fragrances based on celebrity personalities from Jennifer Lopez to Sarah Jessica Parker. How much further can you push?
Mr. Scannavini: Today, mostly for the young consumer, role models come more and more from the entertainment world. It's not enough to drive strong awareness or get a good-looking actor, what's important is the celebrity. The characters we are licensing represent a point of reference, a role model, a piece of a dream for the consumer.
AA: How has the fragrance category changed in recent years?
Mr. Scannavini: Winning today means winning in innovation, not just product and technology innovation but conceptual innovation like developing new categories like celebrity fragrance, which virtually didn't exist three or four years ago. We have to be faster at grabbing new trends and getting products to market.
AA: How have your marketing tactics changed in order to stand out?
Mr. Scannavini: Sampling has become more and more important in fighting competitors and we will continue to leverage that in unique ways. For example, with the launch of the Jennifer Lopez fragrance, we put samples inside her latest CD that was being launched simultaneously. In terms of media, traditionally the beauty category is more focused on magazines than on TV. But in the celebrity-fragrance arena, TV commercials are hugely powerful in terms of visibility and recall and we will use them more heavily. Also, depending on the brand, roughly 10% to 20% of advertising budgets will be put toward living media and new communication tools, including the Internet.
AA: What are you doing to adapt to the new retail landscape?
Mr. Scannavini: The newly consolidated Federated Group represents about 60% of our business now and, at the same time, specialty stores play a more and more important role, especially for prestige. As a result, we have created two different sales forces with different skills and different ways of marketing to give our entire portfolio the chance to develop in the right way. Specialty stores are the fastest-growing channel and we see there a desire for prestigious and selective products like our Marc Jacobs and Vera Wang brands. But those stores require a much more daily presence in the store and the assistance of qualified personnel.