Marketing assignment essay help on: Market strategy analysis on Beauty Saloon

Snapshot of the Business

1. Name of the Organization – Beautica

2. Name of Promoters/Directors – Ms. Emma Hopkins and Mr. Kevin Horne

3. Site Address – Dunedin, New Zealand

4. Management – A team of six workers will comprise the middle management and line management, out of which one will work as supervisor (for the rest) and directly report to directors of the salon. One will be receptionist and the remaining four will be beauty experts and provide beauty solutions to customers. Names of the supervisor and rest of the staff are as follows-

a. Peter Keating (Manager/Supervisor)

b. Jessica Rendell (Receptionist)

c. Harold Chambers (Beauty Expert)

d. Albert Cross (Beauty Expert)

e. Maria sanders (Beauty Expert)

f. Jennifer Perkins (Beauty Expert)

5. Financial Profile – The promoters have equity of $ 20,000 to start this beauty salon. However, this working capital will prove inadequate in the long run, say 6 months and will need another source of funding. Promoters are thinking of having a bank loan for proper funding. An amount of additional $ 30,000 has been estimated to be sufficient for smooth operations until the salon starts rolling profit and break-even the investment. All these funds will be allocated according to the operations of the salon and optimum utilization of it will be ensured.

           

Business Objectives and Strategies

 

Objectives – Every business house is driven by some objectives and goals. Beautica’s objectives are as follows-

 

a. To provide economical and quality beauty solutions to customers

 

b. To achieve a 5% market share in its first year of operation in local beauty salon market

 

c. To break-even its investment within 6 months of operation

 

d. To initiate a chain of beauty salons in Dunedin and the other parts of New Zealand

 

SWOT Analysis

 

a. Strength

 

1. The experience and expertise of Beautica Promoters.

 

2. Growing market for beauty products and beauty solutions

 

3. Economical yet best services among the competitors

 

4. Innovative services and new promotional strategies

 

b. Weaknesses

 

1. Low knowledge of the market place as compared to its competitors

 

2. No practical exposure of operating in a real market place

 

c. Opportunities

 

1. Being a new player in the industry, it can try any strategy to gain a foothold in the market.

 

2. It can tap the market and cut the market share of existing players with powerful marketing strategies

3. Beautica can always enjoy the second mover’s advantage as it can avoid the strategies which have been proven unsuccessful for other firms in the past and form the other marketing strategies which are contrary to those unsuccessful activities.

 

Threat-

 

1. There is always a threat of survival in front of the other established players. Strategies incompatible with the market scenario can lead to disastrous outcomes for Beautica

 

2. An incomplete market research regarding opening a salon could prove fatal for the business’ future.

 

External Considerations

 

The location of the first beauty salon of Beautica will be in Dunedin , the second largest city situated in the south island of New Zealand. A stylist needs a minimum space of 32 square feet to operate in an ideal beauty salon (Salon Profit 2012). A room catering to pedicure services will account for a minimum of 24 square feet. A room of the measurements of 8’ x 10’ concentrating on electrolysis, massages, and facial and skin care facilities will further need a minimum space of 80 square. However, in a perfect scenario, a therapist at least needs around 108 square feet for carrying out massaging activities. One can always add a place for men’s hairstyling which will further account for 90 square feet which will also include a small waiting area. A tint room comprising a minimum of 4 lineal feet per station and usually a ledge of only 12” deep is required; thus accounting for only about 20-25 square feet per chair (Salon Profit 2012).

All these measurements are focused on minimum possible space required for running a beauty salon. However, any place which measurements vary between 500 square feet to 700 square feet will provide for an ideal beauty salon.

Demographics – Dunedin is a city with higher female population as compared to male and represents a higher proportion of population under age of 25 years. This scenario is an ideal indicator for a business as attractive as a beauty salon. It also houses a lot of people from Asian and European descent. It is also a place with a high rate of unemployment but represents highly-educated youth population. As compared to the national average of $ 24,000 per year of per capita income, Dunedin’s average per capita income stands at a significantly lower data of $ 19,400 (Statistics New Zealand 2012).

The salon will be accessible from each and every part of the city via public transport. For parking, a space approximately measured to 200 square feet will be enough.

Legal Requirements and Council Regulations

Every business needs compatibility with local government and authorities for hassle free operations. If you want to perform actions like ear piercing and electrolysis on customers, the permission of environment health department is a must. Since this business operation involves handling of several hazardous equipments and chemicals like hair color, nail polish remover etc., the business owner must comply itself with Control of Substances Hazardous to Health (COSHH) Regulations (Forbes 2012).

 

For employment legislation, an owner must be aware of these following acts

The National Minimum Wage Act

 

• The Working Time Regulations
• The Employment Rights Act

 

Type of the company-

Every new salon owner has five choices at his disposal to give his business a proper legal structure. These legal structure are – sole proprietorship, partnership, limited liability company, S corporation or C corporation. Many small business units usually prefer LLC as their legal form (Forbes 2012).

An LLC structure makes you safe from any personal liability; in this case, only the owner’s equity will be at risk. This will prevent you to pay for any work-related accident like if one of my beauty experts accidently causes a damage to my customer, the customer won’t be able to sue me. If a salon owner wants to initiate a chain of its salons, he must make each salon an LLC operating from different locations (Forbes 2012).

In addition to that, LLCs provide the most beneficial tax treatment possible among any legal entity (Forbes 2012).

Floor Plan

 

For developing a floor plan, we have to take the measurements of length and width of the space and design the place accordingly. We should place the waiting area and cash register toward the front, and put mirrors, salon chairs and hair drying and shampoo equipment in other parts of the salon. Equipments used in conjunctions or in a group must be put together.

Color Patterns

A salon is generally known for its ambience and aesthetics. Colors are an integral part of their structure.  An owner must use a combination of 2-3 colors a time. He should apply this color scheme throughout the salon premise. If possible, one must place flower within the salon to have a presence of nature.

Display Theme

 A display theme is that thing which acts like a memento in customer’s mind for a long time after he visits that place. This theme should convey positive things. Generally a natural scenery work thee wonders for a business place, sometimes movie stars and kittens do the trick. One must add complementary decorations to the place to make it more attractive and pleasant.

3. Financial Plan

 

1. Sources of funding- Owners are putting $ 20,000 into the beauty salon business. However, this money won’t be sufficient for initiating the operations. They will further need an additional $ 30,000-40,000 to buy all the salon equipments, fulfill the renting duties and all the legal compliances. So a possible bank loan will suffice the need of the hour.

 

2. Income Statement, Balance Sheet & Cash Flow Statement

Since the company‘s owners are experienced professionals and experts in their designated field, they have project following financial plan for the operations of Beautica-

 

Beautica Beauty Salon: Pro Forma Income Statement (All figure in American Dollars)

 

Net Sales	240000
Less: COGS	180000
Gross Income	60000
Operating Expenses
Labor	12000
Insurance	3000
Utility	2400
Promotion	12000
Delivery and Transportation	6000
Miscellaneous	1500
Total Expenses	36900
Net Income before taxes	23100
Less: Income Tax	6930
Net Income After tax	16170

 

 

 

Beautica Beauty Salon: Pro Forma Cash Flow Statement

 

Month	Revenue	Expenses							Total Cash Flow
		COGS	Utility	labor	Insurance	Sales promotion	D & T	Miscellaneous
Jan	11000	8000	100	0	200	500	200	50	9950
Feb	11000	8000	100	0	200	500	200	50	9950
March	11000	8000	100	0	200	500	200	50	9950
Apr	11000	8000	100	0	200	500	200	50	9950
May	11000	8000	100	0	200	500	200	50	9950
June	11000	8000	100	0	200	500	200	50	9950
July	11000	8000	100	0	200	500	200	50	9950
August	30000	12000	400	2000	200	1500	900	200	12800
Sept	30000	12000	400	2000	200	1500	900	200	12800
Oct	30000	12000	400	2000	200	1500	900	200	12800
Nov	30000	12000	400	2000	200	1500	900	200	12800
Dec	30000	12000	400	2000	200	1500	900	200	12800
Total	227000	116000	2700	10000	2400	11000	5900	1350	77650

 

 

 

Beautica Beauty Salon: Pro Forma Balance Sheet (All figures in $)

 

Current Assets
Cash	7000
Accounts Receivables	60000
Inventories	80000
Pre Paid Expenses	1000
Total Current Assets	148000
Fixed Assets
Building	100000
Equipment	40000
Gross Fixed Assets	140000
Less Accumulated Depreciation	16000
Net Fixed Assets	124000
Total Assets	272000
Liability and Owner’s Equity
Liabilities
Current Liabiliities
Accounts Payable	50000
Accrued Payables	3000
Total Current Liabilities	53000
Long Term Liabilities
Mortgage Payable	20000
Total Liabilities	73000
Owners Equity	199000
Total Liability and owner’s equity	272000

 

 

 

3. Pricing Strategy/Menu of Service

 

Since Beautica is a new entrant in the market, it will try to penetrate the market with its pricing strategies. Pricing of the services will be discounted at first to gain a foothold in the industry but soon be Potencompetitive in the market to enable Beautica break-even as soon as possible. Following is a list of services provided at Beautica Beauty Salon along with the prices-

 

Hair Services
Haircut	variable – starts at $30
Child Haircut	$15+
Color Roots to Ends	$75+
Color touch up	$60+
Full Foil	$100+
Partial Foil	$70+
Perm	$90+
Spiral Perm	$110+
Blow Out	$20+
Style	$35+

 

 

Bridal Services

 

Up Do	$55+
Style	$40+
Makeup	$40+
Travel Fee	$65+
All day at your event	$450 per stylist

 

 

Manicure/Pedicure
Manicure						$15
Spa manicure with paraffin dip						$30
Pedicure						$35
Spa pedicure with paraffin dip						$50
French						plus $5
Polish change						$7
Waxing
Eyebrow Wax						$6
Lip Wax						$7
Chin Wax						$7
Complete Facial Waxing						$15
Under Arm Wax						$20
Leg Wax						$35+
Back Wax						$35+
Bikini Wax						$40+
Acrylic Nail Care
Tips with Overlay				$35
Overlay for Natural Nails				$20
Fill-in				$23
Nail Repair				$3 per nail
	Massage Therapy
	Swedish Relaxation Massage
	Swedish and Deep Tissue Massage
	Deep Tissue Massage
	Warm Healing Stone Massage
	Relaxing Foot Massage
	Chair Massage

 

 

 

4. Marketing Plan-

 

1. Potential Customer & Target Market – Target market, for the time being, will be the local market of Dunedin. Potential customers will primarily be the youth population of Dunedin. Also the working professionals, especially ladies, falling in the age-group of 25-45 will be on the radar of Beautica.

 

2. Promotional Material – Business cards containing the name of the executives and managers along with the menu of service will be distributed to prospective customers of Beautica.

3. Advertisement & Promotional Strategies – For the first six months, Beautica should build a promotional plan which introduces itself to masses. Promotions in Malls, Community Centers, exhibitions and trade expo will be excellent for its brand-exposure. As far as the advertisement plan is concerned, Beautica should concentrate on local media campaigns like Radio Ads, Print Ads in local news papers and advertising itself with the help of billboards, holding and banners.

 

4. Competitors –

 

a. Bangz Salon

 

 

 

b. NYC Barber & Styling Shop

 

 

 

c. Fred’s Barber & Styling Shop

 

 

 

d. Mantrap Hair Salon

 

(Yahoo Local 2012)

 

These are some of the most renowned beauty and hair salons in Dunedin. They have adopted some new marketing strategies to stay ahead of the competitors. They provide concessions on public holidays and Fridays on merchandising and services. Also various add-ons like complimentary services in addition to a hair cut or hair color are very popular. Loyalty and referral programs are also in the kitty of these big beauty solutions which enable them to woo their customers and make them loyal (Chron 2012).

5. Product & Services

a. Product/Services opening order amount – Beautica will provide almost every services which are prevalent in the beauty salon industry right now. This services will include massaging, hair cutting and hair coloring, manicure and pedicure, waxing, nail solutions, bridal make-ups etc.

b. Equipments required- Hairdressing chairs, wash basins ( preferably those that come attached with the chairs), reception desk, well furnished cupboards and drawers, Hood dryers and utensils trolleys, a couch per beauty station for massaging, nail stations for manicure comprising nail files, hand creams and nail polishes, Lamps, Mats, color centers (Salon Equipment 2012).

6. Human Resources Management Plan

a. Number of Staffs- As it has been discussed earlier; the salon will consist of 8 people including the two owners. All the workers will be working on full-time basis and salon will not entertain the possibility of hiring part-time workers. There will be one manager who is responsible for supervising the performance of beauty experts. There will be one receptionist who takes care of customers’ queries and resolves them.

b. Working Roaster – A working schedule of 9 hours consisting of one-hour break for lunch and other activities will be introduced and this schedule will run for 6 days a week.

c. Employment Conditions – Employees will have 2 weeks of paid holidays in a year time. Bonus will be paid to the employees on festivals like Good Friday, Easter, Christmas and on the occasion of New Year. Incentives will be based on employee performance and paid quarterly in conjunction with his/her salary.

d. Training & Development Requirements – Training and development activities are closely related with the performance of the employees. If the performance is up to the task, then the organization needs are fulfilled, if not, then there is some problem with the employees. Situations like lack of motivation, work-stress, and work-life balances affect the employees’ performance in a negative way. If Beautica faces such a situation in the future, it will provide post-graduate T & D seminars to its employees.

 Hair and beauty salon industry is a very big part of hospitality industry in every part of the world. The possibility of immense grows persist in this sector. Gone are the days when a barber was only a barber. Today he is known as a hair-care expert. So this industry has grown considerably in the last two decades and will continue to grow in near future. Beautica will be a new start-up for a Beauty Salon and in an up-market like Dunedin, it has every chance to become a household name. This salon is a viable business opportunity for every entrepreneur by any marketing scope and one must go ahead with this noble idea.

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