Scent Marketing as a Lever of Experience Marketing – an Asian Perspective By Hydroemission

Hong Kong, June 2016

Mr Paolo Nalin Managing Director

EmbodiedCogni,ontheideathatwithoutourconsciousawareness,ourbodilysensa3onshelpdeterminethedecisionswemake

FRIENDLY

UNFRIENDLY

Impact of holding a warm or cold drink in your hands

A stranger is perceived…

ByLawrenceE.Williams,oftheUniversityofColoradoatBoulder,and

JohnA.Bargh,ofYale

CONFORMING

Impact of environmental temperature

SOURCE“WARMTHANDCONFORMITY:THEEFFECTSOFAMBIENTTEMPERATUREONPRODUCTPREFERENCESANDFINANCIALDECISIONS,”BYXUN(IRENE)HUANG,MENGZHANG,MICHAELK.HUI,ANDROBERTS.WYERJR.

WARMTHINDUCESPEOPLETOCONFORMResearchparUcipantsinawarmroom(versusacoolbutnotuncomfortableone)reportedfeelingclosertothepeoplearoundthem,andtheyweremorelikelyto:

saytheywouldbuytheTVremotepreferredbymostoftheotherparUcipants;

matchtheirstockpricepredicUonstothoseofpreviousparUcipants;

andbetonthe“favorite”inahypotheUcalhorserace.

Why does cinnamon taste increase sales of a heating pad?

Sensesamplifyoneanotherwhentheyarecongruentinsomeway.

Consumersdon’tperceivesensorialinfluencesasmarke3ng

messagesandthereforedon’treactwiththeusual

resistancetoadsandotherpromo3ons.

Becausecinnamonsuggestswarmth,itcanenhanceaheaUngpad’sappealandapparenteffecUveness.

Scent Marketing Value Ladder

The diffusion of fragrances in retails and other business environments in not a new practice, but the application of a fragrance identified and reserved for a Brand is a growing trend among Marketers, Brand Managers and Visual Merchandisers.

Scent Advertising

Lev 1 – ODOR CONTROL = ERADICATE DARKNESS

Odor control means to remove odors that compromise the viability of the store. Sources can range from sewage, to dead animals, dirty A/C, nearby food stands.

It applies to any kind of business, it is more common that expected, and can be found at any level of the market.

Lev 2 – AMBIENT SCENTING = FURNISH YOUR SPACE

Ambient Scenting is the exercise of identifying a fragrance that matches your Interior Design, with the goal of improving the overall experience in your premises. Choices are limitless, driven by taste and design direction.

Lev 3 – CUSTOMER JOURNEY = GUIDE YOUR CUSTOMER

The concept of ‘Customer Journey’ arises from the Hotel Industry, and refers to follow the Customers along the various moment of engagement with the hotel: from arrival to check in, rooms, amenities, and finally check out. Defining a set of fragrances your Customer Journey means to assess the various points of contact with your customer and ensure that he/she is guided through them consistently, but not necessarily without variations.

Lev 4 – SCENT MARKETING = ENHANCE YOUR BRAND

Scent Marketing refers to enhancing elements of Branding and Marketing through the fragrance. Fragrances used for scent marketing are usually designed exclusively taking into consideration elements ranging from Interior Design, to Corporate Values and brand Positioning. It gives additional depth to the brand strategy and it helps to make a point in the

customers’ mind.

SCENT MARKETING vs SCENT ADVERTISING

SCENT MARKETING vs SCENT ADVERTISING

LibraryFragranceWewillguideyouinthefragranceselecUonfromourlibrary,basedonourexperience.ThisisusuallyarapidprojectwithoutspecificMOQ.FragranceMatchThisopUonisusuallychosenifyouhaveapreferredorsignaturefragrancethatyouwanttouse.Wetakeasampleofyourfragranceandwesendtoourfragrance-houseformatching.SignatureScentIden,fica,onWecollectasetofinformaUonfromyourmarkeUngteamandwewillliaisewiththeperfumersofourfragrancehousetofine-tuneafewfragrancedirecUonstopropose.SignatureScentDesignWehavedevelopedapartnershipwithafragrancedesignerfromNYC,withahugeexperienceinfragrancedesignforlifestyleandcelebritybrands.Thedesignerwillguideyouinthedifferentstepsoffragrancedesign,andwewillprovidefurthersupportcasebuildingandmediadistribuUon.

Maximum flexibility in the fragrance selection

SCENT MARKETING EFFICACY

•  People’s moods improve 40% when exposed to a pleasant fragrance •  Humans recall 35% of smells and can associate them to particular

memories or situations

•  You can expect an sale increase of 20% in scented environment assumed that the scent is pleasant, congruent, of the right intensity.

•  Simple notes have been proved to be 20% more effective in revenue generation EricR.Spangenberg,ThePaulMerageSchoolofBusiness

JochenWirtz,ProfessorofMarkeUngattheNaUonalUniversityofSingapore(NUS)

SCENT MARKETING EFFICACY

•  Las Vegas slot players spent 45% more money in a scented environment than those

in an unscented location

•  Between equivalent products, 84% of respondents preferred items presented in scented rooms

•  The addition of a scent to a visual ad increased the recall rate by 500% respect to same ad without a scent

•  Between equivalent products, respondents remember more attributes of products being presented in scented environment

•  When asking customers about their impressions of a DIY store, positive responses rose 50% after scenting.

•  Staff is perceived to be harder-working and more knowledgeable in scented stores.

WHY ISN’T IT WIDESPREAD?

•  Applied since 1931 by Cartier Paris in retail •  Common knowledge in the industry

•  Widely implemented by ANY company selling products having a fragrance (bakeries, soap shops, spas)

•  Implemented more as Scent Advertising rather than Scent Marketing in the US

•  Maintained at a subliminal level in many environments

•  Expensive to ship (oil is an hazardous good)

•  Require servicing

•  Introduce PMI

•  SAFE to ship (it can be brought in your hand luggage on the plane)

•  Can be self installed

•  NO PMI, Green Label and Halal certified

Nebulizers(currenttechnology) ScentFilm(newgeneraUonofScentMKT)

Actually,nottrue…

But…

•  VOCs vs Harmful VOCs

HEALTH IS A GROWING CONCERN

20 micron scent particle

1 – 10 micron scent particle

VOCs are not necessarily harmful. You need to ask evidence that the VOC used for the fragrances are not listed by WHO as harmful.

•  PMI

Study of Nebulizer’s Impact on IAQ

Test parameters

Fume hood model Esco PW1-3A_C

Temperature 28 oC

Ambient space 0.5 m3

Test Results (ug/m3)

Background ScentFilm (Hydroemission)

Nebulizer (TEST done using a machine made in EU)

PM 2.5 31 37 36300

PM 10 41 51 40600

Remarks -

Qty: 1pc Fragrance: Orange Spice Capacity: 10 sqm Run time: 30 mins

Fan speed: 1.5 m/s

Qty: 1pc Fragrance: Orange Spice Capacity: 150 sqm Run time: 2 mins

NEA-WHO IAQ Guidelines

PRACTICAL ISSUES IN ASIA

When a Marketing manager looks into Scent Marketing, the characteristics that he should look at are: cost, scalability, and safety.

Safety A retail manager has enough problems to keep him awake at night, and he doesn’t need to add any more related to the health of its personnel, leakages or fire hazards.

Cost You may like the concept of Scent Marketing, but you are constantly firefighting against increasing costs. It is understandable that he may only want to allocate a limited budget to Scent Marketing.

Scalability You may be able to set up a sophisticated scenting system in your flagship store in HK, but how to ensure that the same is applied and properly managed in Tier 2 cities across China?

INCREASING INTERESTS BY GOVERNMENT RELATED BUSINESSES

•  ScentFilm Certified Green Label by the Singapore Environment Council

•  ScentFilm Certified Halal by Singapore MUIS

•  The ScentFilm™ is NOT a dangerous good for shipment, drastically reducing shipping costs and lead-time

•  The ScentFilm™ can access Airport premises and brought in as cabin luggage. We regularly service Clients in Singapore Changi Airport, HK International Airport and in environments with security concern.

•  In solid form, not subject to spills

TRANSFORM SCENT MARKETING INTO A PROFIT CENTRE

BRAND purchases the ScentFilm™ from Hydroemission

with a blanket order.

Upon order, Hydroemission ships the ScentFilm™ to the BRAND

HQ for redistribution to

franchisees. Minimum production batch : 10

pcs

The BRAND introduces usage of the ScentFilm™

with its exclusive fragrance among the requirements towards its franchisees.

The BRAND adds controls on

the application of the ScentFilm™ into its internal

audit plan.

BRAND FRANCHISEES

BRAND

SCENT ADVERTISING in ASIA

LEVERAGING THE SIGNATURE FRAGRANCE

BRAND

AMBIENT SPRAYS CANDLES CANDIES SOAPS REED DIFFUSERS CAR FRESHENERS …

SCENT MARKETING FOR E-COMMERCE

As retailers scale up their efforts to improve the customer journey off and online, and as they look for new opportunities to synergize the two markets, the capability of extending Scent Marketing choices online represents a natural development of Hydroemission’s technology.

UNIQUE SELLING POINTS •  High fragrance load factor •  No heat applied •  Ability to work with custom fragrances •  Low MOQ •  End to end support for customized

products

The application of our Scent Marketing technology to the Product Packaging offer you new forms of engagement with your online Customers.

SCENT MARKETING FOR POINT OF SALES

Point of Sales are moving toward a multi-sensory experience, combining visual, tactile, visual and olfactory experiences. Hydroemission is collaborating with Imagine-POS (Li & Fung) to explore applications of the ScentFilm™ to POS to enable Scenting.

Inthepast,communicaUonswithcustomerswereessenUallymonologues—companiesjusttalkedatconsumers.Thentheyevolvedintodialogues,withcustomersprovidingfeedback.Nowthey’rebecomingmul,dimensionalconversa,ons,withproductsfindingtheirownvoicesandconsumersrespondingviscerallyandsubconsciouslytothem.”

Scent Marketing Supports a Multidimensional Dialogue

AradhnaKrishna,DirectoroftheSensoryMarkeUngLaboratoryattheUniversityofMichigan

Singapore Hydroemission Corporation Pte Ltd Email: SG@hydroemission.com

Hong Kong Hydroemission (HK) Limited Email: HK@hydroemission.com

China Hydroemission Corporation Pte Ltd Shanghai Representative Office Email: CN@hydroemission.com

Mr Paolo NALIN

pn@hydroemission.com

www.hydroemission.com