The Hair Trade's Dirty Secret - Case Study Example

NEW VENTURE CREATION Introduction: Starting up a new venture is not an easy task; many people open a new business and get fail in one to two years. There is a wider range of factors that make an impact on ideas and before the implementation of ideas, analysis of such factors is pivotal. It is essential to analyze the validity and implications feasibility of idea and to analyze that either the thought can be turned into valuable opportunity; in order to attain this objective it is important to realize existing market, financial, competition and personal issues. for the successful implementation of business ideas making an analysis of uniqueness of product, analyzing its sale growth, customer availability, and products and services availability is crucial; and this can be made possible by conducting situational analysis. This report aims to conduct feasibility analysis for a Marvelous Hair Salon and to analyze that either the concept is marketable and valid, does the idea proves the marketability and visibility, should the salon take a start, will the project be according to the budget, quality and schedule, and are the goals of the business will be attainable in creative and consistent manners (Kaiser, 2008). In order to achieve this objective, a report has been divided into five sections. The First section gives the general description of the business with its vision and mission; second section consists of the description of products and services and unique selling point. In the third section, detailed market analysis has been performed. Fourth section is based on the market plan that discuss the tactics to get the product and services to customers and to attract customers. The Fifth section is based on financial implications. 1. General description of company: Businesses can take place in the market through making alliances, joint ventures, and partnerships (Trost, 2013; Miller and Cross, 2013). Marvelous Hair Salon is a small start-up business that will be initiated by making partnership. Salon will provide all hair related treatments, and the focus of business would be particularly on hair related treatments from cutting and styling to hair transplantation. A good vision statement is written as a future state and mission statement is a guide to company (Shattock 2010; Castleberry 2010; Knapp, 2013) Vision “To be a leader of UK hair salon industry.” Values: Values that will guide in the attainment of salon’s vision include: Strong relationship building with clients by providing them high quality and consistent services through researching their preferences. Efficiency will be in the core of marvelous hairdressing and treatment salon that will maintain safety and simplicity of original ingredients. We believe that this is the time to know and care about the things we use and understand that nature has been provided with the aim to take care and protect us. Mission: Provide memorable and unique experience for the mission to be constant provider of fresh ideas and styles through keeping up the salon’s partners (employees) with current trends and educating them best practices; all is to exceed the expectations by maintain the highest standards in order to keep customers. 2. Product and services: Marvelous Hair Salon will be available to provide full hair range services. This will include hair treatment, hair transplantation, hair cutting, permanent and temporary hair extension services, coloring, oiling, shampooing and conditioning services, hair drying, weaving, hair styling, perming, curling, and other basic services that are provided by other salons. High-quality hair related herbal products would be available at the salon from oil and jell to hair treatment creams. Products will not be of a marvelous hair salon, these are the high-quality company products that will be recommended to customers such as oil, shampoo, conditioners, and hair sprays. In such way, the salon will earn some money through manufacturing companies. This strategy will not be a threat to the competitive advantage of the salon because uniqueness is not in products but in the techniques and experiences through which high-quality services take place. 2.1 Unique selling point: In the business of thousand players, it is essential to create unique selling point or unique selling proposition in order to have the competitive advantage that would lead organization to sustainable long-term profitability. Unique selling point differentiates a business from competitors and creates a reason for customers to visit the salon or buy product (Stone, 2001). In order to be successful, Marvelous Hair Salon has to be different and unique (Gregory 2013). Things that will make the salon different from competitors and create uniqueness will include the complimentary nails services (Pedicure, manicure, sculptured nails, and polishing). Nature has been provided to take care human beings and, therefore, organic products will use mostly in hair treatments and styling (See Appendix 2) (Escoto, 2014). Modern technology will be used to reduce the time with highly qualified and experienced workforce. The Number of customers has been treated in the salon will be mentioned outside the door of the salon so if anyone does not have appointment can see if any seat is available and can take treatment. Fully computerized data will enable “marvelous” to keep the treatment history of clients so related offers can be suggested to them, and special benefits will be offered to premium clients. Before treatment in case of styling and cutting, customers will be provided with several options though saved files on a tablet that will be placed on the table at the front of the seat. 3. Situation analysis Situation analysis is an evaluation of threats and opportunities facing an existing business or the approaching one (new one) (Berman and Evan, 2007); situation analysis explore the competition, customer information, market needs, and segmentation through market analysis, competitor, and customer analysis (Berry and Wilson 2001; Deck 2007). Turning the hobby into a business without any research is a bad idea. Before starting-up a new business and making investment, it is pivotal for entrepreneurs to known the reason to be in particular segment and to know the opportunities that exist in market because this allows entrepreneurs to make informed and wise decisions; satiation analysis is best tool to give the entrepreneurs chance to make well-versed decision by providing the view of changing opportunity structure (Ogden and Rarick 2010; Corbetta, Huse and Ravasi 2004). This will help in either analyzing the project’s need in the market and the idea will work or not (Hisrich 2011). 3.1 Market analysis: For the startup of a new venture, market analysis is a crucial part of the strategy. It helps entrepreneurs to identify the current and future attractiveness of the idea (Winer, 2008) 3.2 Market size and Market growth: The annual hair and beauty salon industry of UK is worth of 7.1 billion of the economy (Anderson, 2015). The salon market is growing immensely, and hair salon market is dominating the overall beauty salon market. It had been expected that after recession the growth of the industry will decline but it did not happen and businesses continued to grow (SBH 2012); even only the extension trend increased by 70% and the revenue of salon only by providing extension services includes approximately 3.64 billion in 2013 (Khaleeli 2012) and this segment is expected to grow more (Khaleeli 2012). 3.3 Market Trend: The hair and beauty salon industry is booming due to the increased trend of male grooming. In UK, men are fifth of hair and beauty salon customers and in term of percentage number of men customers have been increased up to 66 percent; salons are hiring more employees to meet up the increased demand and trend of the industry is going upward (Gribben 2014; Whitelocks 2012). UK has 35000 salons and barbers are 3000, 1500 nail bars, and 13000 beauty salons. Young people from the age of 16-34 represent the half of market’s workforce and up to 93.5 percent cater less than ten workers (Oxfordshire 2011). Barbers represent 67% of the industry (See Appendix 1). 3.4 Customer analysis: Customers of hair salons vary with services; some hair salons provide services for males only, some for female, and some for both (Piotrowski and Rogers 2010). This target market does not vary by gender and services but also by age. For example, some salons provide services for professionals and young women only. It has been encountered that Male grooming trend is increasing in UK while still the women represent the mass of salon customers; they give immense importance to manage their hair (HBS 2012). Target market The target market of “Marvelous hair salon” will be the men and women of all age from 10 years children to 65 years men and women. Separate sections will be available for their treatment so the hesitation issue can be avoided. It has been encountered that in London the unemployment ratio is 6.6 percent, which is lower than other cities. Overall ratio of unemployment is going down; numbers of middle-class people are falling from 61 to 51 percent and upper income increased from 14 to 20 percent of the population (IMSC 2015; BBC News 2015; Frank 2012) which means more people can afford salon services. Therefore, Marvelous Hair Salon will provide high-end services in order to target high-end clients who do not care about prices but pay high for the superior quality (Horn 2014). 3.5 Competitor analysis: Competitor analysis is an important tool to understand the competitive landscape and serves as an input to decide on service offerings or in other words, to the design process of competitive strategy through providing the relative comparison of strengths and weaknesses (Norton and Houghes 2009; Wright, 2014). Direct competitors of Marvelous Hair Salon include Saco salon, The Soca (Cutting) and Barber at Alfred Dunhill (services for men only), Brooks, and Brooks (Cutting), and Charles Worthington (cutting and coloring) and indirect competitors are all those salons that provide full range services. Direct competitors are the salons that provide limited hair services and other hair and beauty salon due to full range service lose their expertise and revenue as well (IBIS World 2015). The Marvelous Hair Salon will soon gain competitive advantage over these salons due to unique value proposition and complimentary, high quality, and full range hair services will attract customers; unique services enable salon to create specialized image in hair treatment, styling, and cutting. 4. Market plan In order to attract customers and for the success of the Marvelous Hair Salon it is crucial to decide on pricing philosophy, distribution of the product and its promotion. 4.1 Pricing Strategy: Several strategies are available to implement such as penetration, skimming, value-based pricing strategy, and competitive pricing strategy. Marvelous Hair Salon will use competitive pricing strategy because salon is not offering limited services as other competitors; rather to reduce the price as compared to competitors, Marvelous Hair Salon will offer complementary services and benefits to its premium customers. This pricing strategy will not let the customers perceived Marvelous Hair Salon as a lower end service salon. People always compare products and services; choosing skimming pricing and penetration pricing strategy could be risky. 4.2 Place: Place refers to the distribution of the product; in order to get the products and services to the customer it is essential to decide how to get to the customers. The services and products of Marvelous Hair Salon will be available at the salon; people can place an order online, and salon will ask product companies who are the manufacturers of products to deliver the products to customers. 4.3 Promotional mix: To catch and attract customers, it is essential to communicate the advantages of product (marvelous hair salon) and let them know that how they can achieve the services and products from the salon; hence, deciding on promotional mix is important. Social media: In UK, people use internet at a broader level and in London, the ratio of internet utilization is 90% that is highest amongst other cities (Office of National Statistics, 2014). Hence, the aggressive advertisement will be done on social media. In order to share the customer experience, videos will be placed on YouTube, before and after results, service offerings, and unique value proposition advertisements will be share at Facebook, twitter, and other social forums. Feedback always play important role in improving businesses therefore; company’s website will provide option to give feedback that will let the customers perceive that Marvelous Hair Salon is customer oriented salon and care for its customers and their suggestions and ideas. Magazine and newspapers: Ads will take place in beauty magazines and newspapers and promotion packages will be introduced to customers in order to attract them and having rapid sale growth such as “take a basic high quality hair services at the cost of high quality cup of coffee”. Billboard Advertisement: Billboard advertisement will take place for a limited time, in order to show the before and after results and to communicate organic products utilization. This tactic will encourage customers to visit customers and experience the services (See Appendix 3). 5. Financial Implication Start-up funding Start-up expenses to fund $2200 Start-up assets to fund $ 207800 Total funding requirement $ 210000 Assets Noncash assets $ 14640 Cash requirements $ 193160 Total assets $ 207800 Liabilities and Capital Liabilities Current Liabilities $0 Long-term liabilities $ 90000 Total liabilities $ 90000 Capital Planned investment Partner 1 $ 60000 Partner 2 $ 60000 Total planned investment $ 120000 Loss at start-up ($2200) Total capital $ 117800 Total funding $ 210000 Conclusion: In order to be successful in a new venture, it is pivotal to be creative and innovative. Customers compare business services and products with others’ products and services, therefore; it is necessary to create differentiation and offering unique services to customers. It has been encountered that due to a variety of services hair and beauty salons lose their unique selling point and cannot gain expertise in a single segment. Hence, it has been decided that Marvelous Hair Salon will provide hair specific services with a full range of cutting to hair transplant. The advantage of being specific to hair related services will be the immense and deep focus on new fashion and styling and salon will be able to create the expert image; people will perceive marvelous salon as an expert in hair related services and products. Such perception will attract style conscious men and women. Services that will differentiate product (marvelous hair salon) will include full range hair specific services, utilization of organic products, high-quality modern technology, and skilled and experienced workforce. Technological advancement has changed the way to communicate the product and by taking the advantage of it, aggressive marketing technique has been decided to implement. The overall analysis exposes that Marvelous Hair Salon idea is valid and would work in the market. References Anderson, E. (2015). Rise of style-conscious men boosts UK hair and beauty industry. The Telegraph, Available from http://www.telegraph.co.uk/finance/businessclub/sales/11459654/Rise-of-style-conscious-men-boosts-UK-hair-and-beauty-industry.html [Accessed 11th April, 2015] BBC News. (2015). Economy tracker: Unemployment. Available from http://www.bbc.com/news/10604117 [Accessed 11th April, 2015] Berman, B., and Evan R. (2007). Retail Management: A Strategic Approach, 10/E. 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