For Ralph Lauren's fragrance line, should we invest in developing new scents or allocate resources to improving the packaging and marketing of existing popular fragrances?

Introduction

The trade-off we're examining today is whether Ralph Lauren's fragrance line should invest in developing new scents or allocate resources to improving the packaging and marketing of existing popular fragrances. This scenario touches on key aspects of product development, brand management, and resource allocation within the luxury fragrance market. I'll approach this analysis by first asking clarifying questions, then diving into the product understanding, identifying key metrics, designing an experiment, and finally providing a recommendation with next steps.

Step 1

Clarifying Questions (3 minutes)

• Context: I'm thinking about the current market position of Ralph Lauren fragrances. Could you share how our fragrances are performing relative to competitors in terms of market share and growth?

Why it matters: Helps understand the urgency and scale of the decision. Expected answer: Middle-tier market position with moderate growth. Impact on approach: Would influence whether to focus on market expansion or consolidation.

• Business Context: Based on industry trends, I'm assuming luxury fragrance margins are higher on established scents. Is this true for Ralph Lauren, and what's our current revenue split between new and existing fragrances?

Why it matters: Informs the financial implications of the trade-off. Expected answer: Established scents have higher margins, accounting for 70% of revenue. Impact on approach: Would lean towards improving existing products if true.

• User Impact: Considering consumer behavior, I'm curious about our customer loyalty metrics. What percentage of our fragrance customers are repeat buyers versus new customers?

Why it matters: Helps determine whether to focus on retention or acquisition. Expected answer: 60% repeat customers, 40% new. Impact on approach: High loyalty might suggest focusing on existing products.

• Technical: Thinking about our production capabilities, how much lead time do we typically need for developing a new fragrance versus updating packaging?

Why it matters: Affects the feasibility and timeline of each option. Expected answer: 18 months for new fragrance, 6 months for packaging updates. Impact on approach: Shorter lead times might favor packaging improvements.

• Resource: Considering our team structure, do we have separate teams for fragrance development and marketing, or is it a shared resource pool?

Why it matters: Influences the resource allocation strategy. Expected answer: Shared resource pool with some specialization. Impact on approach: Shared resources might make it challenging to pursue both options simultaneously.